Askew v Fresh 'n' Clean Pty Ltd

[1997] IRCA 268

DECISION NO:268/97

CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - APPLICANT summarily dismissed by employer in a heated argument, for the reason that the employer lost his temper - Not for a VALID REASON - No PROCEDURAL FAIRNESS - UNLAWFUL TERMINATION OF EMPLOYMENT.

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - COMPENSATION - It is always necessary, when determining the question of the quantum of COMPENSATION, to consider the possibility that the employee’s employment would have been terminated in the near future in any event, even if the termination of that employee’s employment was not for a valid reason, and even if the employee was denied procedural fairness - In this case, the applicant had, about six weeks before the termination of his employment, indecently assaulted a young woman on the company premises - It was therefore likely that, upon proper investigation, the applicant’s employment would have been terminated lawfully in the near future - Five weeks wages already paid to the applicant after the termination of his employment - Not appropriate to make an order for COMPENSATION - Only order a DECLARATION that the termination of the applicant’s employment was unlawful.

Workplace Relations Act 1996ss 170CC, 170DC, 170DE, Reg 30B
Evidence Act s 60

Briginshaw v Briginshaw (1938) 60 CLR 336

Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199

ASKEW -V- FRESH ‘N’ CLEAN PTY LTD
NI 1546 of 1996

BEFORE:  Judicial Registrar Patch
PLACE:  Sydney
DATE:  15 September 1997
           

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY

NI 1546 of 1996

BETWEEN:

DAVID WHAYMAN ASKEW
Applicant

AND

FRESH ‘N’ CLEAN PTY LTD
(ACN 060 412 926)
Respondent

BEFORE:      Judicial Registrar Patch
PLACE:         Sydney
DATE:           15 September 1997

MINUTES OF ORDERS

THE COURT DECLARES THAT:

1. That the termination of the applicant’s employment was unlawful.

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
NEW SOUTH WALES DISTRICT REGISTRY

NI 1546 of 1996

BETWEEN:

DAVID WHAYMAN ASKEW
Applicant

AND

FRESH ‘N’ CLEAN PTY LTD
(ACN 060 412 926)
Respondent

BEFORE:      Judicial Registrar Patch
PLACE:         Sydney
DATE:           15 September 1997

REASONS FOR DECISION

The applicant claims that his employment was terminated at the initiative of the respondent, and that it was unlawful.  He seeks compensation only.   The applicant submits that reinstatement would be impracticable, due to the breakdown in the personal relationship between himself and Mr Joe Farrugia, the principal of the respondent company.

The respondent claims that the applicant resigned.  The respondent also submits that, in any event, the applicant was a probationary employee, and excluded from the operation of the Workplace Relations Act 1996 (“the Act”) by virtue of the operation of Regulation 30B and section 170CC of the Act.

BACKGROUND FACTS

In 1995 the applicant was employed in a managerial capacity by a company called Dalton Packaging Pty Ltd. 

Towards the end of 1995, some discussions took place, principally between the applicant and Mr Joe Farrugia.  Mr Farrugia is the principal of the respondent company.  The business of the respondent was the supply of various hygiene and cleaning products, and services, in the Illawarra and Shoalhaven regions of New South Wales.  The business had been growing, and Mr Farrugia and his wife, Sandra Farrugia, wished to have more time to themselves and their family.  Accordingly, they were thinking about the possibility of employing a manager.

There had been some prior contact with the applicant in his capacity as an employee of Dalton Packaging Pty Ltd, which developed into concrete discussions between the parties on the question of whether or not the applicant would come to work for the respondent.

In December 1995 there were discussions between the applicant and the respondent. The terms and conditions of the applicant’s possible employment with the respondent were canvassed.

WAS THE APPLICANT A PROBATIONARY EMPLOYEE?

There was a meeting on 11 December 1995 in the office of Mr John Cains, the company’s accountant.  Those present were the applicant, Mr Cains, Mr Joe Farrugia and Mrs Sandra Farrugia.  I note here, in passing, that Mr Cains did not give evidence.

It is common ground that Mr Farrugia did say to the applicant something to the effect that he wanted a six month period of probation to be part of the terms and conditions of employment.  The question is whether the applicant accepted or rejected that.

Mr and Mrs Farrugia both insist that the applicant accepted that proposition - the applicant says he did not.

At the meeting on 11 December 1995 Mr Farrugia told the applicant that a contract of employment would be drawn up by Mr David Swan, a solicitor from the firm of Verrekers.

On 14 December 1995, the applicant went to the solicitor’s office and picked up a copy of the contract (Exhibit 2) which had been drafted by Mr Swan.  I accept that that contract was drafted by Mr Swan in accordance with the instructions given to him by Mr and Mrs Farrugia. 

The question as to whether or not the applicant was serving a period of probation at the time that his employment came to an end, is (at least in part) to be answered by the question as to whether that draft contract reflected an agreement of the parties made at the meeting on 11 December 1995. 

The applicant did not examine the draft contract in the solicitor’s office.  Instead, he looked at it on the way home.  He gave evidence that he telephoned Mr Swan and told Mr Swan that he did not accept the contract and that he would not sign it, saying to Mr Swan that the contract was “a load of crap”.

That particular part of the applicant’s evidence was not challenged in cross-examination and no evidence was called to the contrary.  Later that same evening, when he was at home, the applicant drafted another version of the contract of employment, which was typed up by his wife.  There was no period of probation specified in that document.  It was subsequently signed by Mr Farrugia.  It is Exhibit 1 in these proceedings.

The applicant’s actions in redrafting the contract are consistent with what he says he said to Mr Swan.  Mr Swan was not called to give evidence.

I accept the applicant’s unchallenged version of the conversation with Mr Swan.  That is to say, I accept that the applicant’s immediate reaction upon reading the contract as drafted by Mr Swan was to telephone him and reject it.  That rejection is not consistent with the applicant having orally agreed to identical terms and conditions (including a six month period of probation) at the meeting on 11 December 1995.

Mr Farrugia gave evidence that later that afternoon he received a phone call from Mr Swan and that, in response to that call, he then phoned the applicant.  He said that there were two conversations with the applicant, but that the only matter that the applicant was disagreeing with in the contract was the requirement for only one weeks notice during the  period of probation.  He said that the applicant wanted four weeks.  He said that the applicant did not dispute the fact that there would be a six month period of probation.

On this point, once again, there is a clear conflict in the evidence between the applicant and Mr Farrugia. 

It was put to the applicant when he was cross-examined that, at the meeting on 11 December 1995, he had agreed to a six month period of probation.  He denied that.

In cross-examination, Mr Farrugia initially said that the only period of probation discussed at that meeting was a six month period.  Shortly afterwards in cross-examination, when the applicant’s solicitor, (in obvious possession of a statement filed in Court by Mr Swan, but which did not go into evidence (MFI 2), asked Mr Farrugia if he had ever said to Mr Swan that, at that meeting on 11 December 1995, a three month period had been suggested.  Initially, Mr Farrugia answered, “yes, I think so”.  Virtually immediately, however, he back-tracked from that answer.  He went on to say that he was “confused” about that, that it would have happened 14 months ago, that it was “quite difficult to remember” and “I don’t recall”.

That particular passage of Mr Farrugia’s evidence, in my view, was enough to tilt the balance in favour of accepting the applicant’s version.  The fact that the applicant had immediately disputed the contract with Mr Swan is a further reason to accept the applicant’s version. The fact that Mr Farrugia signed the contract (although he says he didn’t read it) is another reason.

I therefore accept the applicant’s version of this aspect of the case - and find that the applicant was not serving a period of probation at the time his employment came to an end.

I should add here that, in my opinion, Mr Farrugia, having signed the contract in circumstances where he had the opportunity to read it (even accepting, for the moment, his evidence that he did not read it), he is, in my opinion, bound by it.

DID THE APPLICANT RESIGN, OR WAS HIS EMPLOYMENT TERMINATED AT THE INITIATIVE OF THE RESPONDENT?

Once again, on this aspect of the case, there is a sharp conflict in the evidence given by the applicant and the evidence given by Mr Farrugia. 

The applicant says that, on 2 April 1996, he had, during the day, had a disagreement with Mr Farrugia at the company warehouse about the purchase of some shelves from BBC Hardware. 

The applicant says that about 7 pm that night, he was at home when Mr Farrugia telephoned him.  He said that Mr Farrugia raised the subject of the conversation between them earlier that day, about the shelves, and that the conversation became heated.  The applicant said that he twice said to Mr Farrugia that he did not want to talk about the matter at that time, as it was 7 o’clock.

The applicant said that Mr Farrugia then said “You’re finished.  You’re finished.  Don’t come back tomorrow, don’t ever come back.”

The applicant said that he replied by saying to Mr Farrugia something like, “you can stick it.  You’re a loser.  I’ll see you in court.”  The applicant later agreed that, in the conversation, he actually said “You’re a fuckin loser.”  But nothing particularly turns on the use of the swear word.

Mr Farrugia gave evidence that he indeed telephoned the applicant at his home that night, and that a heated conversation developed.  He said that there were a number of reasons why he telephoned the applicant that evening, which included:

• The question of the shelves;

• A complaint that he had received a short while before from a young woman called Vanessa Hamilton alleging that the applicant had indecently assaulted her in the company’s premises at the end of February 1996 (that matter is dealt with in more detail below);

• The applicant’s lack of diligence in chasing up outstanding accounts;

• The applicant’s lack of diligence in reporting on a regular basis to the company accountant, Mr Cains.

Mr Farrugia said they started talking about the timber and, (the shelves) before he knew it, “it got really heated”.  Mr Farrugia said that the conversation then went as follows:

Applicant            “You’re a fuckin loser!”

Mr Farrugia         “If I’m a fuckin loser, why do I run a million dollar business and      you work for me.  If you don’t fuckin like it, why don’t you fuck           off?”

Applicant            “Put it in writing!”

The words that Mr Farrugia said he used, namely “If you don’t fuckin like it, why don’t you fuck off?”, come very close indeed to a termination of employment at the initiative of Mr Farrugia.

However, it is not necessary for the Court to determine that question, because I accept in essence the applicant’s version of the conversation - and I accept that the applicant’s employment was terminated in that conversation by Mr Farrugia.

The principal reason I accept the applicant’s version of the conversation is because of the evidence of Mr Frank McKenna.

Mr McKenna gave evidence that on the eve of 2 April 1996, when he returned home, there was a telephone message on his answering machine from Mr Farrugia.  The message was for him to call Mr Farrugia urgently, and not to ring anyone else.  He said that before he telephoned Mr Farrugia, Mr Farrugia rang and spoke to his wife - but not to him.  His wife spoke to him, and he then rang the applicant, and spoke to the applicant.

Mr McKenna went on to say that, after that conversation with the applicant, Mr Farrugia telephoned him again, and that they had had a conversation.  He said that Mr Farrugia said that he had “sacked” the applicant, and that Mr Farrugia gave Mr McKenna reasons for that sacking:

• The main one was an argument over the ordering of timber (ie. the shelves) from BBC Hardware in Wollongong.

• Another reason was that the applicant was costing the company too much and not coming up to scratch with sales and covering his expenses.

Both the version given by the applicant and the version given by Mr Farrugia are inherently believable.  In the absence of Mr McKenna’s evidence, it would have been very difficult indeed to decide who to believe.  However, Mr McKenna’s evidence corroborates the applicant’s version.

For that reason alone I accept the applicant’s version of events in respect of this aspect of the matter.

I find as a fact that the applicant’s employment was terminated by Mr Farrugia on the evening of 2 April 1996.

MR FARRUGIA’S ATTEMPT TO “GET THE STORIES RIGHT”

Mr McKenna gave evidence that, in early May 1996, he was in Goulburn.  Mr Farrugia rang him and said that he wanted Mr McKenna to return to Wollongong to have a meeting “so we could all get our stories right on Mr Askew’s sacking”.  Mr McKenna said he didn’t go to Wollongong as he was on his way to Canberra that weekend.

It was never put to Mr McKenna when he was cross-examined that that particular testimony was not right.  I accept his evidence.

It follows that Mr Farrugia was engaging in an attempt to, at the very best for him, co-ordinate the stories of his employees, in an apparent attempt to make sure that there were no differences.  That reflects adversely on his general credit as a witness.

WAS THERE A VALID REASON FOR THE TERMINATION OF THE APPLICANT’S EMPLOYMENT?

The applicant’s employment was summarily terminated by Mr Farrugia in the middle of a heated argument. 

The reason for the termination of the applicant’s employment was because Mr Farrugia lost his temper during that argument, having already been considerably annoyed because of the reasons leading up to the making of the telephone call by him on 2 April 1996.

It is clear that that reason cannot be a valid reason for the termination of the applicant’s employment.

It follows that the termination of the applicant’s employment was in breach of section 170DE(1) of the Act, and was unlawful.

That finding, strictly speaking, makes it necessary to consider whether the termination of the applicant’s employment complied with the requirements of section 170DC of the Act.

However, that said, it is clear that the termination of the applicant’s employment, being a summarily dismissal, made during a heated telephone conversation, did not comply with the requirements of that section of the Act and was unlawful for that reason as well.

REMEDY

Reinstatement

It is clear that the reinstatement of the applicant would be impracticable, because of the mutual animosity between the applicant and Mr Farrugia which now exists.  Another reason why it would be impracticable is because of the incident involving Ms Hamilton, which is dealt with below.

Compensation

Although the applicant’s employment was terminated on 2 April 1996, he continued to be paid by the respondent until 9 May 1996, when the sum of $692.70 was deposited to his credit union account (see Exhibit 11).  That sum is the amount remaining from $1000 after the deduction of tax.  So the applicant received five week’s pay in lieu of notice.  That is a factor to be taken into account on the question of the quantum of compensation.

In Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199, Wilcox CJ said at page 212:

“.......in assessing compensation for a breach of s 170DC, it is appropriate to consider what would have been likely to occur if that breach had not occurred.  It should not be assumed that the employee would have been dismissed anyway.  Such an assumption ignores the rationale of procedural fairness and everyday experience that decision makers often change their minds when presented with another side of the case.  It devalues s 170DC to the point of redundancy.

On the other hand, it would be unrealistic for a court automatically to assume that, if this employer complied with s 170DC, the employee’s employment would have continued indefinitely.”

His Honour was dealing with the question of the quantum of compensation which could be awarded following the breach of the procedural fairness requirements of s 170DC of the Act. Nonetheless, in my view, his comments are useful in a case such as this.

It is always necessary when determining the quantum of compensation to consider the possibility that an applicant’s employment would have been terminated in the near future, in any event, even if the termination of that employee’s employment was not for a valid reason, and even if the employee was denied procedural fairness.

An example might be a person who is dismissed for smoking in a prohibited and dangerous area - and it later turns out that the person who was smoking in the area was not that particular employee, but someone else.

If, however, the factory in that particular example were to close down for economic reasons some six weeks later, then the quantum of the employee’s compensation, for that, obviously unlawful, (not being for a valid reason) termination of employment would probably be limited to six weeks wages.

Likewise, if during the investigation following the termination of that particular employee’s employment, it was discovered by accident, that that particular employee (although he had not been smoking at the factory) had been stealing goods from the warehouse, and, for that (previously unknown) reason his employment would have been terminated, the quantum of compensation awarded to him would be very low indeed, even if the factory remained open.

In this case, Ms Vanessa Hamilton, a young women currently employed by the respondent as a sales assistant, gave evidence of an indecent assault committed upon her by the applicant at the end of February 1996.  The applicant denies that allegation.

Ms Hamilton said that she was currently employed by the respondent as a sales assistant.  She said that she had come to work at Dalton Packaging when the applicant was there, at his request, and she was still working there when he went to work for the respondent.

She said that, as part of her duties as an employee of Dalton Packaging, sometime towards the end of February 1996 she had to deliver a price gun to the premises of the respondent.  She said that the applicant was there, and that they talked for a while down the back.

Ms Hamilton went on to say that, as she was leaving, the applicant “started to get physical, put my arm up behind my back, and pushed me towards the back toilet.”

She went on to say, “he had me up against the basin - with my arm up behind my back.  He pushed himself up against me, and I threatened to hit him.”  She said that the applicant then let her go saying to her, “it’s not worth it.  There’s my marriage, and I’d lose half my property.”

She said that she complained to her mother that night (although her mother was not called to give evidence) and that she went to the police who advised her not to proceed.

She said that she first worked for the respondent at the open day on 4 April 1996, when they were opening a new store there, just helping them out on that day.  She said she actually started working for the respondent in June, when she was made redundant in her Dalton Packaging job.

She said that, three weeks after the incident with the applicant, she was having a conversation with Mr Farrugia about the possibility of her going to work for the respondent.  She said the conversation occurred as follows:

Ms Hamilton  “If you are still interested in me working for you I still      have some concerns about the situation which arose          with David Askew when I delivered the price gun.”

Mr Farrugia  “What happened?

Ms Hamilton  “On that day he forced me into the bathroom, and pushed himself up against me from behind.  I       threatened that I’d hit him if he kept going.”

Mr Farrugia  “What happened after that?”

Ms Hamilton  “David Askew said, “I wouldn’t do anything like    that.”  “It’s not worth losing a quarter or half of my assets with a divorce.”

Mr Farrugia  “Are you alright?  When did it happen?”

Ms Hamilton then gave evidence that she explained to Mr Farrugia that she was concerned with working alone with the applicant.  She said that Mr Farrugia responded by telling her not worry, and that he would confront the applicant about the incident.  Ms Hamilton said that she asked Mr Farrugia to “leave it”, and said that she did not want it brought up if it could be helped.  She said that Mr Farrugia replied by saying, “OK, leave it with me.”

In cross-examination Ms Hamilton said that the date of the incident 23 February 1996, and that she had spoken to Mr Farrugia in the “middle, towards the end of March”.

That evidence as to the time she spoke to Mr Farrugia is consistent with the time (2 April 1996) that Mr Farrugia rang the applicant intending to raise the allegation, (amongst other things) with him.  Mr Farrugia, as it turned out, did not raise that particular allegation, as he lost his temper and dismissed the applicant before he got to it.

This is not a criminal trial.  If the evidence was as it stands now, without the evidence of Ms Hamilton’s mother and of the police to whom she said she complained, it would be difficult to arrive at a conclusion, beyond reasonable doubt, that the applicant had indecently assaulted Ms Hamilton in the way that she said.

However, this is a civil case.  The standard of proof, in respect of a grave allegation such as that made by Ms Hamilton, is that set down by the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336.

I carefully observed Ms Hamilton giving her evidence.  I carefully observed the applicant giving his evidence.  I take into account the fact that Ms Hamilton complained some three weeks after the alleged incident to Mr Farrugia.  I accept the evidence of that complaint as evidence of the fact of the matter. (See section 60 of the Evidence Act).

Having carefully considered this aspect of the case, I am of the clear opinion that Ms Hamilton’s allegations should be accepted.

Furthermore, in my opinion, it is highly likely that, if Mr Farrugia had fully investigated the matter, he would have reached the same conclusion.

Such conduct on behalf of the applicant would have been conduct warranting the immediate and summary termination of employment, without notice, for grave misconduct (to use the terminology in Exhibit 1).

In my view, it is probable that the applicant’s employment would have been terminated within the five week period in respect of which he received payment.

It follows that it is not, in my opinion, appropriate to order any compensation at all to the applicant.

ORDERS AND DECLARATIONS

In view of the above circumstances, the only order or declaration that the Court will make is a declaration that the termination of the applicant’s employment was unlawful.

I certify that this and the preceding 16 pages are a true copy of the reasons for decision of Judicial Registrar Patch.

Associate:      J. Flores


Dated:           15 September 1997




APPEARANCES

Counsel appearing for the applicant:	J. David
Solicitors for the applicant:	Hansons
Counsel appearing for the respondent:	R. Moore
Solicitors for the respondent	Devitt & Swan
Dates of hearing:	8 and 9 May 1997