Annette Louise Johnson v Halsmoree Pty Ltd and Bryant George v Halsmoree Pty Ltd

[1995] IRCA 233

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1265 of 1995

B E T W E E N :

JERRY GLENIS
Applicant

AND

HELLER FINANCIAL SERVICES LTD
Respondent

Before:       Judicial Registrar Murphy
Place:         Melbourne
Date:          24 May 1995

REASONS FOR JUDGMENT
(Ex Parte revised from Transcript)

This is an application under Division 3 of Part VIA of the Industrial Relations Act (the Act) whereby the applicant seeks reinstatement and/or compensation following the termination of his employment by the respondent. From October 1992 until 6 January 1994 the applicant was employed by the respondent as its Corporate Business Manager. The applicant has had extensive experience in banking and finance and his task with the respondent was to manage a portfolio of loans advanced by the respondent to various businesses.

He was originally paid a salary of $46,500 per annum.  That was subsequently increased to $49,000.  In addition he was entitled to various other benefits including superannuation, a bonus and a motor vehicle.  The respondent took a preliminary point that the total value of the respondent's package was above $60,000.  I rule against the respondent on that point and refer to an earlier decision of this Court (Brown v Listaglen Pty Ltd, Industrial Relations Court of Australia, Murphy JR, 21 December 1994).

The authorities make it clear that for the purposes of whether or not an applicant is entitled to make a claim under the Act, the critical matter is the wages rather than various other aspects of a salary package.  Here the relevant wage for the purposes of the Act was, at the time of the application, $49,000 per annum.

The Evidence in the Proceeding:
The evidence in the proceeding was that the applicant performed his duties satisfactorily during 1993 and indeed as a result of the performance of those duties he was awarded a bonus by the respondent in early 1994.  The respondent had a performance appraisal system whereby at the commencement of each calendar year individual objectives were outlined for the employee and he was then assessed for the purposes of a bonus at the end of that year.

The applicant had a very high percentage assessment for the 1993 calendar year.  During 1994 the business of the respondent expanded and some problems arose with some of the portfolio managed by the applicant.  The respondent's business operation in Melbourne is small with three management staff within the office and one secretary, and the evidence was that on a weekly basis there was a meeting between himself and his supervisor, Mr Studebaker, along with a business analyst employed by the respondent, to review the portfolio.

In the course of those reviews, over the period August to December, various matters were raised in relation to a number of the loans within the portfolio.  The thrust of what Studebaker was saying was that the applicant had to be tougher with some of the clients in order to obtain relevant financial information from those clients for the business purposes of the respondent.  This concern with the applicant's performance culminated in a pointed discussion on a car trip to Geelong in early December 1994.  Again the comments made by Studebaker to the applicant never rose to the point of formal counselling and on the evidence were never related to the matters in his objectives worksheet under the performance appraisal system.  Further, it was made clear that at no stage was it ever explicitly said to the applicant that his job was on the line.

In late October 1994 the applicant gave evidence that at a conversation over lunch at a restaurant with Studebaker of the respondent, Studebaker indicated that the applicant's salary for the coming calendar year would be increased to $51,000.  That evidence was not challenged by the respondent.  I accept the applicant's evidence on this point.  The applicant made it clear that at no time was Studebaker of the respondent critical to the extent of putting the applicant's position on the line.  Studebaker in his evidence candidly accepted that at no time did he make that clear to the applicant.  Further, at no time did the applicant ever disobey any directive given by Studebaker on behalf of the respondent.

The fact that the applicant did not breach any directive of Studebaker and that Studebaker regularly reviewed the applicant's loan portfolio makes it difficult for the Court to accept the respondent's evidence which was that the applicant was subsequently terminated because he was unable to perform his duties and that the job had got too big for him.  That was the thrust of Studebaker's evidence and was the basis of a decision made between himself and his superior in Sydney in early to mid December whereby it was decided to terminate the applicant's employment.

On 6 January 1995 Studebaker called into the applicant's office and handed him a letter indicating that he was to be terminated and invited him to discuss the manner of that termination.  Later that evening the applicant signed a letter of resignation, effective 28 February 1995.  I accept the applicant's evidence that that letter was a letter tendered not as a resignation but in response to the earlier notice by Studebaker that he was to be terminated. 

Was There a Valid Reason for the Termination of the Applicant's Employment:
Under section 170EDA of the Act the respondent carries the onus of proof that it had a valid reason to terminate the applicant's employment under section 170DE(1) of the Act. The respondent's evidence was in effect that the job had grown too big for the applicant and he was unable to perform and was thus terminated. The applicant admitted that he was behind in the provision of some reports but denied that he was incapable of performing the duties of the job. I accept the applicant's evidence on this point and reject the respondent's evidence that the applicant was incapable of performing the tasks within the portfolio. What happened was that the respondent terminated the applicant's performance without giving him any opportunity to meet performance criteria which the respondent said now applied to the position.

It also never considered the extent to which the applicant met the performance criteria set out in his performance worksheet.  The respondent thus has failed to discharge its onus of proof that it had a valid reason to terminate the applicant's employment.  I further take into account in determining whether it had had a valid reason the fact that the applicant had extensive experience in the finance industry, had satisfactorily performed during calendar year 1993, and also the conversation between Studebaker and the applicant a month or two prior to the termination to the effect that he would be given a salary increase.  I therefore conclude that the respondent did not have a valid reason under section 170DC(1) of the Act.

Was There a Breach of Section 170DC of the Act:
The manner in which the applicant was terminated was such that he had no opportunity to respond to the suggestions by Studebaker that he was not performing properly in his position.  There was no explicit statement that his job was on the line in the event that he did not properly perform.  Given the close way in which the office operated, the respondent through Studebaker, knew the position in relation to the portfolio.  Studebaker failed to give the applicant any explicit directions in relation to the obtaining of financial information from the clients.  Although the applicant was in a senior position I am satisfied that he applicant was genuinely shocked that he was terminated. 

The discussions on the car trip to Geelong suggesting that the applicant should get tougher in the performance of his duties could not, on any view, meet the requirements of section 170DC which are substantive but flexible.  The requirements have been set out in the decision of Nicholson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233 at 243 and as Wilcox CJ said require that an employee be given a fair go. Those requirements have not been met here and as Wilcox CJ also said “mere exhortation to improve” is not sufficient.  I therefore find that the respondent has breached section 170DC of the Act.

Remedy:
The majority of the court in Liddell v Lembke (1994) 127 ALR 342 have made it clear that reinstatement is the primary remedy for breach of Part VIA of the Act. Here the evidence of the respondent is that the applicant's position has been filled. In fact it has been filled twice as the first replacement apparently left. Counsel for the applicant submitted that this fact should not prevent the court ordering reinstatement of the applicant to his position. Counsel for the respondent on the other hand submitted that the filling of the position made an order for reinstatement of the applicant impracticable. As I said in a decision of Paule v McKinnon House, (Industrial Relations Court of Australia, Murphy JR, 3 March 1995):

“It follows that the fact that another employee is doing the applicant's duties is insufficient [to make reinstatement impracticable] because if it was sufficient it would allow employers to frustrate the clear intention of the legislature by replacing employees who have proceedings pending in the Court.”

I am satisfied that it is not impracticable to reinstate the applicant to his position.  The respondent could have filled the position on a pro tem basis or with a temporary employee.  It chose not to do so but that does not make it impracticable to order that the respondent re-employ the applicant.  I propose to make an order that the respondent re-employ the applicant in his previous position and to order that wages and remuneration lost be paid to the applicant less the amounts that he has already been paid following his termination.  This makes it unnecessary for me to determine the matters also raised by the respondent that the applicant had failed to mitigate his loss by taking an alternative position.

I reject that argument because the law in relation to mitigation only requires that a wronged party to a contract act not unreasonably.  It was not unreasonable for the applicant to refuse to take a lower paid job particularly having regard to these proceedings remaining on foot.

The Order of the Court is:

1. that the respondent reappoint the applicant to the position in which the applicant was employed immediately prior to the termination;

1. that the respondent within 21 days pay to the applicant the remuneration which he would have earned in the period from the date of his termination to date, less amounts already paid;

1. that the period from the date of termination to date be treated for all purposes as continuous employment.

MINUTES OF ORDERS

THE COURT ORDERS:

1. that the respondent reappoint the applicant to the position in which the applicant was employed immediately prior to the termination;

1. that the respondent within 21 days pay to the applicant the remuneration which he would have earned in the period from the date of his termination to date, less amounts already paid;

1. that the period from the date of termination to date be treated for all purposes as continuous employment.

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

I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.

Associate:            
Dated:  

Solicitors for the Applicant:    Messrs Slater & Gordon
Counsel for the Applicant:     Mr L Maher

Solicitors for the Respondent: Messrs Coltmans
Counsel for the Respondent:   Mr A R McNab

Date of hearing:  24 May 1995
Date of judgment:                   24 May 1995

C A T C H W O R D S

INDUSTRIAL LAW - Termination of employment - valid reason - procedural fairness - employee terminated without opportunity to respond to matters on which termination based - Reinstatement - whether re-appointment impracticable.

Industrial Relations Act 1988 ss.170 DC, 170 DE(1) & 170 EDA.

CASES:Brown v Listaglen Pty Ltd, (Industrial Relations Court of Australia, Murphy JR, 21 December 1994);

Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 126 ALR 233;

Liddell v Lembke, (1994) 127 ALR 342;

Paule v McKinnon House, Industrial Relations Court of Australia, Murphy JR, 3 March 1995.

JERRY GLENIS v HELLER FINANCIAL SERVICES LTD

No. VI 1265 of 1995

Before:  Judicial Registrar Murphy
Place:  Melbourne
Date:  24 May 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1265 of 1995

B E T W E E N :

JERRY GLENIS
Applicant

AND

HELLER FINANCIAL SERVICES LTD
Respondent

MINUTES OF ORDERS

Judicial Registrar Murphy      24 May 1995

THE COURT ORDERS:

1. that the respondent reappoint the applicant to the position in which the applicant was employed immediately prior to the termination;

1. that the respondent within 21 days pay to the applicant the remuneration which he would have earned in the period from the date of his termination to date, less amounts already paid;

1. that the period from the date of termination to date be treated for all purposes as continuous employment.

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