Baddeley v State Trustees Ltd
[1996] IRCA 229
•31 May 1996
DECISION NO: 229/96
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - VALID REASON - ONUS OF PROOF - whether the employer is able to discharge its onus of proof without calling the ultimate decision-maker - SERIOUS and WILFUL MISCONDUCT - whether circumstances may exist where an employer may discharge its onus of proving the existence of a VALID REASON without satisfying the Court that there was MISCONDUCT
Industrial Relations Act 1988 ss.170DE(1), 170DE(2), 170EDA(1)
Conciliation and Arbitration Act 1904-1976 (Commonwealth).s.5(1)
State Trustees (State Owned Company) Act 1994 s.19
Sale of Land Act ss.32, 32(5), 32(6)
CASES:General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605
Sangwin v Imogen Pty Ltd (trading as Carleton Custom Upholstery) (unreported, von Doussa J, No. SA 1161R of 1995, 8 March 1996)
Selvachandran v Peteron Plastics Pty Ltd (unreported, Northrop J, No. VI 1322R of 1995, 7 July 1995)
Briginshaw v Briginshaw & Another (1938) 60 CLR 336
Blythe Chemicals Ltd v Bushnell (1933) 40 CLR 66
Bostik (Aust.) Pty Ltd v Gorgevski (No.1) (1992) 36 FCR 20
Byrne v Australian Airlines Limited and Frew v Australian Airlines Limited (1995) 131 ALR 422
GAVAN BADDELEY - v - STATE TRUSTEES LTD
No. VI 5316 of 1995
Before: Judicial Registrar Millane
Place: Melbourne
Date: 31 May 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 5316 of 1995
B E T W E E N :
GAVAN BADDELEY
Applicant
AND
STATE TRUSTEES LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Millane 31 May 1996
THE COURT ORDERS THAT:
The applicant’s application is dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 5316 of 1995
B E T W E E N :
GAVAN BADDELEY
Applicant
AND
STATE TRUSTEES LTD
Respondent
Before: Judicial Registrar Millane
Place: Melbourne
Date: 31 May 1996
REASONS FOR JUDGMENT
The applicant is a young man who was employed for nearly nine years by the respondent until October 1995 when his employment was terminated. He now alleges that the termination of his employment was unlawful; in that it contravened Division 3 Part VIA of the Industrial Relations Act 1988 (the Act).
Initially the applicant’s counsel, Mr Borenstein, informed the Court that the applicant relied specifically on contraventions of sections 170DE(1) and (2) of the Act. Because the respondent carried the first onus of proof in proving on the balance of probabilities that there was a valid reason for termination of the applicant’s employment, the applicant had the opportunity to hear the respondent’s case before his counsel was called upon to fully open the applicant’s case. In his opening and closing submissions, the applicant’s counsel argued that there was no valid reason for termination. In particular, it was argued the Court should not rely on the letter of termination (Exhibit R36) as evidence of the reasons for termination in the mind of the ultimate decision maker who was responsible for the decision to terminate. This was because the letter was authored by the respondent’s solicitors in the name of the respondent on instructions from the respondent’s human resources officer, who was not the decision maker. On the evidence the recommendation to terminate the applicant’s employment was made by the respondent’s estate manager to the company’s managing director, Bernard Francis Carmody (Carmody), who accepted and endorsed that recommendation. In turn the human resources manager instructed the respondent’s solicitors to draft the letter, which was eventually sent out under the signature of the human resources manager. The human resources manager could not recall who instructed her to send the letter of termination other than recalling that she knew that the estate manager had made the recommendation to the managing director and that had been acknowledged. As a result she had proceeded to put into effect the termination process.
Relying on the abovementioned events it is the applicant’s submission that no valid reason was proved by the respondent by reason of its failure to call the actual decision maker, Carmody, to give evidence of the reason or reasons he relied upon to terminate the applicant’s employment.
Although there was no order made for written submissions, both parties having had an opportunity to make oral submissions to the Court, Mr Borenstein filed a supplementary submission. The respondent responded to that supplementary submission, drawing a further submission in reply from the applicant’s counsel. The supplementary submissions were primarily directed to the applicant’s amplification of his submission that the failure to call evidence from Carmody was fatal to the respondent’s case because it had not discharged its burden of proving there was a valid reason for termination.
PROOF OF VALID REASON
It is appropriate to dispose of the primary submission made by the applicant before dealing with the substantive allegations made by both parties.
In his written submissions Mr Borenstein sought to support his argument by referring the Court to the decision of the High Court in General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605 as a case in hand. In particular I was referred to the segment of the judgment delivered by Mason J. (as he then was) at pages 618 and 619 where His Honour says:
“The suggestion that the respondent’s position as a shop steward was not associated with the reason for dismissal in the minds of Mr Rosenboom and Mr Gould is based partly on the assumption that one need not look beyond the consideration which they gave to the matter of dismissal. Yet it is clear enough from the evidence that the effective decision to dismiss the respondent was not made by them in South Australia but by the two directors in Melbourne after they had consultation with Mr Gould, not with Mr Rosenboom. ...
In the light of this evidence it is impossible to treat the directors in Melbourne as having no more than a power to veto a decision arrived at in South Australia.
The unexplained failure of the applicant to call the two Melbourne directors then becomes significant. It left uncontroverted the possibility that the respondent’s position as a shop steward was an influential, perhaps even a decisive, consideration in their minds.”
In the abovementioned case the Court was concerned with a conviction of the employer pursuant to section 5(1) of the Conciliation and Arbitration Act 1904-1976 (Commonwealth). Broadly speaking, that section contained a prohibition against the dismissal of an employee by reason of a number of matters including the holding of office as a shop steward. It was incumbent on the employer to prove a negative; that is, that its decision to dismiss the shop steward had not been actuated by the circumstance that he was a shop steward.
I am unable to accept that the decision in Bowling’s case can be applied to the provisions of the Act requiring the employer in all cases, so as to discharge its burden of proof pursuant to sections 170DE(1) and 170EDA(1) of the Act, to call every person involved in the decision making process and, in particular, the last person in the chain of management who ratifies or endorses a decision to dismiss.
The relevant parts of section 170DE(1) and section 170EDA(1) are set out as follows:
“170DE(1) An employer must not terminate an employee’s employment unless there is a valid reason, or valid reasons, connected with the employee’s capacity or conduct or based on the operational requirements of the undertaking, establishment or service.
...170EDA(1) If an application lodged under section 170EA alleges that a termination of employment of an employee contravened subsection 170DE(1):
(a) the termination is taken to have contravened subsection 170DE(1) unless the employer proves that, apart from subsection 170DE(2), there was a valid reason, or valid reasons, of a kind referred to in subsection 170DE(1); and ...”
There have been many decisions in this Court concerning the meaning of “valid” reason in the context of section 170DE(1) of the Act. In his recent decision in Sangwin v Imogen Pty Ltd (trading as Carleton Custom Upholstery) (unreported, No. SA 1161R of 1995, 8 March 1996), Justice von Doussa referred to some of those decisions and made the following comments on its meaning:
“It has been held that a "valid" reason exists where the employer had a "sound, defensible or well founded" reason for termination of the applicant's employment: see Senathirajah Selvachandran v Peteron Plastics Pty Ltd, Industrial Relations Court of Australia, Northrop J, 7 July 1995; Burazin v The Blacktown City Guardian Pty Ltd, Industrial Relations Court of Australia, Madgwick J, 3 November 1995; Ball v Tip Top Bakeries, Industrial Relations Court of Australia, Marshall J, 12 January 1996. These dictionary definitions for the word "valid", whilst wide enough to include a reason based on an honest belief held on reasonable grounds, do not assist in determining whether on the true interpretation of the section such a belief, if later shown to be erroneous, could nevertheless still constitute a "valid reason" for a dismissal. The expression "valid reason" must be read in the full context of the Act. The reason must be a "valid” reason connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service".
In virtually every situation of termination of employment, hardship to a greater or lesser degree is likely to come to the employee. Often the economic and personal hardship to the employee and to his family will be considerable. But in considering the application of Division 3 of Part VIA of the Act, it must be recognised that its provisions are intended to operate in the practical arena of commercial activity, and that in the endeavour to achieve industrial fairness it is necessary to balance the interests and well being of an individual employee against the interests of the employer, and also to have regard to matters of wider public interest which may be involved. The construction of the Act is not to be considered only from the viewpoint of the employee.”
To elucidate the meaning of “valid reason” in the section under consideration, His Honour went on to provide some examples of relevant factual situations including those set out below:
“... Other examples based on the serious risk of property damage or monetary loss which might arise if employees against whom serious allegations of a breach of safe operating practices or dishonesty had been made were allowed to continue performing their normal employment duties would pose similar rhetorical questions. Although the examples may not be representative of the risk of harm that could arise in many workplace situations, they lead me to the view that s 170DE(1) should not be construed so as to exclude from the notion of a "valid reason" an honest belief held on reasonable grounds by the employer, after inquiry of the type envisaged in Bi-Lo Pty Ltd v Hooper, that a state of fact exists which justifies termination of the employment. In my opinion if the employer honestly believes on reasonable grounds after sufficient inquiry that the employee has been guilty of serious misconduct a valid ground within the meaning of s.170DE(1) exists for terminating the employment of the employee.”
It is clear from the authorities in this Court that the Court determines whether or not there is a “valid” reason for termination by reference to the facts. This is an objective test to ascertain what facts existed at termination to justify the employer’s actions.
If Justice von Doussa’s more comprehensive notion of what constitutes a “valid reason” is accepted, the employer’s honest belief on reasonable grounds after sufficient enquiry that there has been serious misconduct on the employee’s part should protect employers, acting reasonably in all the circumstances, from the consequences of a subsequent finding that a court is not satisfied the misconduct occurred.
I have referred to Justice von Doussa’s opinion to both set in context the discussion concerning the existence or otherwise of a valid reason at termination and to draw attention to another weakness in the applicant’s case if His Honour’s view is applied to the facts of this case, referred to in more detail below.
It is not a requirement of section 170DE(1) and section 170EDA(1)(a) that an employer prove a negative; that is to say that it did not have other discriminatory or prohibited reasons for terminating the applicant’s employment. It only has to prove the facts upon which it seeks to justify the termination and this may or may not involve calling the person who carries the responsibility of firing employees. In the present case, there was no suggestion that the applicant was dismissed for any reason other than serious and wilful misconduct related to his handling of a particular estate file during 1995. What the evidence demonstrates is that the decision to terminate came about as a result of a recommendation from the estate manager who had investigated the allegations made against the applicant and who was instrumental in interviewing the applicant and seeking explanations from him for his conduct. Solicitors represented both employer and employee during most of the investigative period and, because the respondent took the view that the employee through his solicitors had not provided a satisfactory explanation of the misconduct alleged, the estate manager made a recommendation to Carmody that the applicant’s employment be terminated. Her uncontradicted evidence is that she informed Carmody of the matters alleged, the results of the investigations conducted and provided him with information concerning the applicant’s work history. On her recommendation, and again her evidence on this matter is uncontradicted, she alleges that Carmody in effect ratified her recommendation.
The structure of the Act and sections 170DE(1) and 170EDA(1)(a) are entirely different to the provision the Court had before it in Bowling’s case. In order to discharge its burden of proof an employer is only required to establish on the balance of probability that there was a valid reason or valid reasons connected with the employee’s capacity or conduct or based on the operational requirements of the undertaking establishment or service. I venture to say that there may be other subservient reasons motivating a termination. So long as those reasons are not the dominant reasons for termination and do not fall into the class of reasons prohibited by the Act (see, for example, section 170DF(1)), termination may be justified by reference to the reason or reasons relied upon as the principal reasons for termination. It may be that in some cases the ultimate decision maker is intimately connected with the termination process and it is necessary for that person to give evidence in order to discharge the employer’s burden of proof. However, in other cases, such as the present case, where that person plays no active role in the termination process other than to exercise their power to terminate an employee by approving the decision made to terminate at another level of management it may not be necessary to call that evidence. In the case before me I am satisfied that the reasons referred to in the correspondence passing between the solicitors and finally the letter of termination were comprehensively addressed by the respondent through the evidence of its witnesses and, in particular, the reasons for termination were all identified at hearing by the witness who was responsible for recommending termination and having that recommendation endorsed by the managing director.
In summary, the reasons for termination were that the applicant prepared what was referred to as a section 19 certificate which was given to a superior for signing when it wrongly represented that, at the date of signing, probate had been granted to the respondent on the Estate of James Kirby (the Kirby Estate). When called upon to explain this conduct on a subsequent date, the applicant failed to provide an adequate explanation and, in fact, provided contradictory explanations. At hearing the applicant relied on the explanation that there was a genuine error in the preparation of the document as distinct from serious and wilful misconduct.
Having heard the evidence, I am further satisfied as will become apparent from the matters discussed below, that not only were the reasons for termination known and properly identified during the course of hearing, but such reasons as were advised to the applicant were valid reasons in the sense that, on the evidence, they were sound, defensible and well-founded. Moreover, if Justice von Doussa’s analysis is applied to the facts, the respondent at the relevant time held an honest belief on reasonable grounds after sufficient enquiry that there was serious misconduct on the part of the applicant both as to the preparation of the document and the provision of his explanations for doing so.
BACKGROUND
The respondent company is the modern successor of what used to be known as the Public Trustee. Its role is to administer deceased estates and the estates of individuals who are unable to administer their own affairs. The respondent is divided into a number of divisions and for the purposes of this case it is only necessary to deal with the estate division in which the applicant was employed as an estate management officer; the property division, as its title suggests dedicated to the sale of estate properties on instructions from the estate management division and the legal division which, amongst other things, attends to the preparation of documents such as contracts of sale required for the disposal of estate property.
The applicant commenced his employment with the respondent’s pre-decessor in about 1986, starting in the mailroom and moving to the position of assistant trust officer assisting in the winding-up of deceased estates.
The applicant was promoted in approximately 1988 to a position as trust officer. In 1994, when State Trustees Ltd was incorporated, the applicant’s title was altered to estate management officer. This position, generally speaking, required him to manage and administer a portfolio of estates, draft wills and other related documents, give executor advice and cross-sell the respondent’s products/services to clients. For instance, a beneficiary of a will might be asked to re-invest the proceeds of a bequest with the company.
The estate division was also broken up into two operating divisions supervised by separate business unit managers. One was for smaller estates under $50,000 and the other dealt with larger estates. The applicant was employed in the larger estate division, working from August 1994 under the supervision of the business unit manager, Frank Basset Gay (Gay). Gay in turn was answerable to the overall manager of the estate division, Jacqueline Lee Owen (Owen).
It was contended by the applicant that from 1994 through to 1995 he worked under an extremely heavy workload. Having heard the evidence of all the witnesses I am satisfied that at the very least the applicant was busy during the relevant period and that the review sheets tendered in evidence for reviews conducted in May and July 1995 (Exhibit A1) support a conclusion that the applicant was having some difficulty in coping with his workload. However, as will be seen from my comments below, I am not satisfied that the workload carried by him was responsible for him falling into error in the management of the particular estate. In any event, the contention that the applicant carried a heavy workload also permits an inference that the applicant deliberately “cut corners” in his management of the estate files, with the misconduct alleged against him being an instance of this sort of poor file management.
The respondent is a state owned company and its functions are covered by the State Trustees (State Owned Company) Act 1994. In particular, section 19 of that Act provides a means by which the respondent is able to deal with the assets of an estate without the necessity of producing the original grant of probate or letters of administration authorising the company to act as executor and trustee or administrator of an estate. Section 19 provides as follows:
“19.
A certificate issued by State Trustees which -(a) certifies that -
(i) an order under the Guardianship and Administration
Board Act 1986 appointing State Trustees
administrator of the estate of any person is in force; or(ii) State Trustees is responsible for the management of
the estate of a person who is a protected person; or(iii) State Trustees is, whether by original appointment or
subsequent authorisation, entitled to act as the
personal representative, and administer the estate, of any
deceased person; and
(b) specifies the date -
(i) of the relevant order of the Board; or
(ii) upon which its authority in relation to a protected
person commenced; or(iii) of the grant of probate or letters of administration
authorising State Trustees to act as executor and
trustee or administrator -
is, until the contrary is proved, for all purposes sufficient evidence of
the facts so certified and stated.”
Apart from the abovementioned legislation the respondent also drew the Court’s attention to the provisions of the Sale of Land Act and, in particular, subsections 32(5) and (6). Generally speaking section 32 deals with the giving of a statement to a purchaser of land detailing certain matters. The subsections relied upon by the respondent for the purpose of this proceeding are set out as follows:
”32(5) Where a vendor -
(a) supplies false information to the purchaser in the statements
or certificates required to be given by this section; or
(b) fails to supply all the information required to be supplied in the
statements or certificates required to be given by this section -
the purchaser may rescind any contract for the sale of the land which has been entered into on the basis of that information at any time before he accepts title and becomes entitled to possession or to the receipt of rents and profits.
...
32(6) Where a vendor knowingly or recklessly -
(a) supplies false information to the purchaser in the statements
or certificates required to be given by this section; or
(b) fails to supply all the information required to be supplied in the
statements or certificates required to be given by this section -
he shall be guilty of an offence and liable to a penalty of not more than 50 penalty units.”
The respondent’s reason for referring the Court to section 32 of the Sale of Land Act lies in its contention that in respect to the Kirby Estate file handled by the applicant during the currency of his employment with the respondent, he prepared a false section 19 certificate which was included in the contract of sale of real estate in circumstances where there was, at the date of signing the section 19 certificate, no grant of probate; such grant being made two days after the sale by auction of the estate property. Apart from any other liability the respondent may have been exposed to by this alleged conduct, it was contended by the respondent that it could have led to the recission of the contract of sale entered into by the purchaser at auction in respect to the estate property; not to mention exposing the respondent as vendor to a conviction and penalty in accordance with subsection 32(6) of the Sale of Land Act.
The transaction relating to the sale of the property and any matters relating to the management of the particular estate appear to have been successfully resolved without the purchaser or the beneficiaries of the estate suffering any loss or being aware of the mishandling of matters to do with the proper grant of probate and the sale of the property before the respondent was authorised to do so. Therefore, the reference to the provisions of the Sale of Land Act only serves to demonstrate the seriousness of and the possible consequences of the applicant’s actions had, for instance, the purchaser sought to withdraw from the purchase.
The effect of a section 19 certificate issued by the State Trustees is apparent on the face of the document produced (see the certificate included in Exhibit R14) because it tells the recipient of the document that the State Trustees is entitled, until the contrary is proved, to, for instance, act as the personal administrator and administer the estate of the named deceased person. Where a grant of probate is relevant it specifies for the recipient the date of that grant. The person to whom the document is presented whether that be a bank or a purchaser of estate property is without further investigation entitled to rely on the authority of the State Trustee to deal with the assets of the estate as evidenced by the document. So that if, for example, a section 19 certificate forms part of a contract of sale of real estate of deceased property the State Trustee by reason of the purported grant of probate and the certificate issued by it is the vendor of the property and named in the contract of sale of real estate as such.
The evidence supports a finding that the existence of a grant of probate and, for the purposes of preparing contract of sale documentation, a section 19 certificate are prerequisites to the final preparation of a contract of sale of real estate and the sale of the deceased estate property. There is one exception to this state of affairs and that is where the real estate is put up for sale with a contract of sale of real estate containing special conditions to the effect that the property is sold subject to or conditional upon a grant of probate.
The weight of the evidence favours a conclusion that a conditional contract of sale entered into in anticipation of there being a grant of probate is a rare occurrence and one which some of the witnesses, whilst acknowledging the facility for this to occur, denied ever experiencing in the years they had worked for the State Trustees and its predecessor; it commonly being understood that a contract of sale of real estate offered on such a basis would be of less attraction to potential purchasers because of the likely detriment to the market in which the property was saleable. The applicant’s refusal to accept that a conditional sale could impact adversely on the market in which a property is sold was, to my mind, disingenuous.
WITNESSES
Having heard the evidence of the respondent’s witnesses and having had the opportunity to assess their demeanour when giving their evidence, I am satisfied that each of them was a witness of truth who did not show any desire to embellish the evidence or directly harm the interests of the applicant. In contrast, I have already observed that on at least one occasion the applicant appeared to be disingenuous in giving his evidence. When pressed in cross-examination the applicant was evasive and non-responsive to questions; the obvious answer to which would cast a poor light on his actions. His demeanour as a witness and the implausibility of his answers led me to the view that his evidence should not be accepted on issues of significance where that evidence purports to contradict the respondent’s witnesses.
THE KIRBY ESTATE
Following James Kirby’s death on 15 November 1994 the applicant was charged with the management of the deceased estate on or about 21 November 1994. That involved him in opening a file and on 21 November 1994, preparing a notice of intention to apply for probate as well as advertising the making of that application on 30 November 1994 (see Exhibit R4).
The Kirby Estate included a property at 6 Shepparson Avenue, Carnegie (the property) for which a property file was opened in the respondent’s property division. This led to John David Eccleston (Eccleston), a property officer, whose duties included the sale of properties as instructed by the respondent, to forward a memorandum to the applicant dated 1 December 1994 (Exhibit R5) confirming certain matters in relation to the preparation of the property for sale and stating that, “... We shall await your further instructions before appointing agent to sell the property. In due course please forward four copies of Section 19 certificate and advise if Legal Branch is attend (sic) to the conveyancing.”
It was not disputed at hearing that the task of applying for probate to be granted and, subsequently, preparing the section 19 certificate for signature was part of the estate management officer’s duties. This meant that the property division and the legal division were both reliant upon the applicant to instruct them on the progress of this matter and provide them with the section 19 certificate to enable them to take the steps necessary to finally prepare the property for sale.
By a memorandum dated 20 January 1995 (Exhibit R6), Eccleston directed the following enquiry to the applicant:
“I refer to previous correspondence and enquire if any decision as to the future of the property has ben (sic) reached.
A brief update of current position would be appreciated.”
The abovementioned document contains a hand written note from the applicant dated 24 January 1995 showing that the applicant communicated with Eccleston informing him that he would advise Eccleston when the property was ready to be placed on the market.
By a hand written memorandum dated 6 February 1995 (Exhibit R7) the applicant instructed Eccleston to arrange for the sale of the property on Saturday, 18 March 1995. A hand written note made by Eccleston on that document states that the applicant advised Eccleston by telephone that “legal” meaning the respondent’s legal division, were to prepare the contract of sale.
On the same date Eccleston communicated with the applicant by a memorandum (Exhibit R8) confirming that he had arranged the auction for 18 March 1995. He requested that the applicant, “... forward 4 copies of Section 19 certificates when available.” He also asked that he be advised when the applicant had, “... retrieved C/T from CBA Carnegie”. This latter request was a reference to the certificate of title and a bank.
On 6 February 1995 Eccleston advanced the matter by sending a memorandum to Diane Marjorie Vorwerk (Vorwerk), the conveyancing clerk for the State Trustees working in its legal division (Exhibit R9), requesting Vorwerk to draw, amongst other things, contracts of sale. Accompanying the same memorandum Eccleston provided Vorwerk with a number of relevant documents except for the section 19 certificate advising her that that document was “... to follow”.
A week later on 13 February 1995 Eccleston again forwarded a memorandum to the applicant (Exhibit R10) confirming a number of matters in relation to the arrangement of the auction and noting that the date of the auction had by then been notified to the legal division with a request that it provide Eccleston with the contract of sale for signature and despatch to the selling agents.
By a memorandum dated 14 February 1995 (Exhibit R12) Vorwerk informed Eccleston that “... documentation cannot be completed without a section 19 certificate. Please do the same as soon as possible.” Vorwerk’s memorandum also contains some hand written notations two of which are of particular moment in this proceeding. The first records that on 14 February “Gavan advised probate has not yet been granted. Will forward as soon as he can”. On the evidence this is a reference to a conversation between Eccleston and the applicant to the effect recorded. The second hand written notation is that of Peter Misale (Misale), a property officer in the property division, recording that the section 19 certificate was “In Legal Tray 17/2/95”. The lastmentioned notation refers to the section 19 certificate for the Kirby Estate being received by the legal division on 17 February 1995.
The makers of the abovementioned statements contained in the documentary exhibits were all called to give evidence on the contents of the documents; recording as they do a sequence of events leading up to the production of a section 19 certificate by the applicant. The contents of the documents and the notations made were not challenged by the applicant in his evidence.
It was not disputed that on a date between 14 and 17 February 1995 the applicant submitted for signing by one of the respondent’s business managers, Michael James Richards (Richards), a section 19 certificate for the Kirby Estate. A copy of the relevant certificate is contained in Exhibit R14, the contract of sale of real estate.
The evidence given indicates that the respondent has a proforma section 19 certificate document on its computer which is accessed by estate management officers preparing the certificate. In order to complete the document on the computer the person completing the document is required to enter the file reference of the estate file, which provides the details of the estate and the date of death, with the system then prompting the operator to state whether there has been a grant of probate by entering that information and requiring the date of the grant of probate to be entered to finalise the preparation of the document before printing. Having prepared the certificate the estate management officer is not authorised to sign it on behalf of the respondent. The usual practice is for estate management officers to take the documents for signing to their immediate business manager. In this case that should have been Gay, under whose direct supervision the applicant worked from August 1994.
If the appropriate business manager is not available for any reason, and in this case it was alleged by the applicant that Gay was not available, the estate management officer can take the document to, for instance, the other business manager Richards, as the applicant appears to have done in this case.
The evidence given by Richards was that he did not read the section 19 certificates presented to him, however, it was his practice when approached by estate management officers who were not part of his section to ask if they had a grant of probate before signing the section 19 certificate. If there was no grant of probate and, had he known that there was none at the date of the request to sign the document, Richards was adamant that he would not have signed it. Having regard to the evidence of the respondent’s witnesses and their understanding that a grant of probate is essential to the completion of the document where such a grant is relied on, I accept Richards’ evidence that had he known otherwise he would not have signed the document.
The section 19 certificate, the subject of this proceeding, bears Richards’ signature and makes the following statement:
“This document certifies that the State Trustees is entitled to act as the personal representative and administer the Estate of JAMES KIRBY (hereinafter called “the deceased”) late of 6 Shepparson Avenue, Carnegie, in the State of Victoria, and who died on the 15 NOV 1994 pursuant to a Grant of Probate dated 14th February, 1995.
Signed by State Trustees Ltd
by being signed by ........ ........ ........ ........ ........ ........ ....
MICHAEL JAMES RICHARDS MICHAEL JAMES RICHARDS
its attorney pursuant to BUSINESS MANAGER
power of attorney a copy of ESTATE MANAGEMENT AND
which is filed in the Permanent COMMERCIAL SERVICES
Order Book No 277 Page 7. DIVISION”
Richards has no independent recollection of signing the section 19 certificate, only being able to identify his signature on the document. Otherwise the respondent relied on Richards’ practice in signing these documents for advancing the proposition that it was more likely than not that the applicant represented to Richards that he had a grant of probate before the document was signed.
On the evidence I accept that it is more likely than not that Richards did ask the usual question as to whether or not there was a grant of probate and it is further more likely than not the applicant represented to him that there had been one. Even if the oral representation was not made the written representation was false and misleading.
It is not disputed that the signed section 19 certificate was received by 17 February 1995 and incorporated in the contract of sale of real estate (Exhibit R14). The section 32 statement contained in that document was also completed presumably by the legal division with the representation that “probate has been granted”. The contract of sale contained no special provisions making the auction sale subject to any grant of probate.
The sale of the property took place on 18 March 1995. It was the applicant’s belief that he attended the auction on behalf of the respondent, although there is no record of his having attended or claiming the usual expenses payable for his attendance.
As already noted, the applicant was responsible in November 1994 for opening the Kirby Estate file. The file cover contains specifically marked sections where an estate management officer can insert certain information concerning the progress of the file (Exhibit R13). It was not disputed that apart from general information such as the file name, file number, the address of the estate property and the date of death, the applicant wrote other critical information on the file cover representing various steps undertaken in progressing the estate. For instance, where provided for on the file cover the applicant inserted the date upon which the notice of intention to apply for a grant of probate was submitted on 21 November 1994 and the date it was published on 30 November 1994. The file cover also provides for the insertion of “Grant Particulars” on the cover under the headings “Type”, “Date Submitted” and “Date of Grant”. Under these three headings the applicant wrote, “Probate”, “2/3/95”, and “20/3/95”, respectively. The date submitted; namely 2/3/95 is a correction in the applicant’s handwriting of another date not otherwise legible. The last two insertions could only have been made after the section 19 certificate was signed and submitted to the legal division.
The grant of probate was produced to the Court (Exhibit R15) evidencing a grant on 20 March 1995. The insertion of the grant of probate date could only have been made after the applicant alleges that he attended the auction of the property on 18 March 1995.
What the abovementioned matters confirm is that at the date of the preparation of the section 19 certificate and, when the document was signed, there was no application for a grant of probate as yet submitted; much less there being a grant in existence. By the time the property was auctioned the applicant had made an application for a grant of probate but had not taken any steps to either delay the auction pending the receipt of a grant of probate or at the very least have proceeded to obtain authorisation to auction the property as a sale conditional on the grant of probate.
The anomalies in the Kirby Estate property went undetected until there was an unrelated complaint on 30 July 1995 (Exhibit R16) against the applicant concerning his handling of another estate file. That complaint and the respondent’s belief after investigation that the particular estate had not been managed properly by the applicant (Exhibit R17) were the catalyst for the respondent initiating an audit of the applicant’s files.
In introducing evidence of the complaint against the applicant and the preliminary investigation entered into because of that complaint, the respondent did not seek to prove or rely on the applicant’s conduct in respect to any other files handled by him apart from the Kirby Estate file; the handling of that file and the subsequent explanation given being the only reasons advanced or relied upon for justifying termination.
The decision to review all the applicant’s files was imparted to the applicant at a meeting between Owen, Hilliard, the applicant and the applicant’s solicitor on 17 August 1995. This happened also to be the date after which the applicant was due to take ten days’ leave. Because of the respondent’s concerns about the applicant’s files, he was at that meeting offered what the respondent’s witnesses, Owen and Hilliard, described as an amnesty on any files that he identified as problem files or files with which he had concerns before he commenced his leave. The purpose of the amnesty was to allow the employee to identify with immunity areas of concern prior to the respondent conducting any file audit in his absence. On any view of the issues, this was a generous concession for the employer to make where, by that stage, there were some real reservations about the applicant’s file management.
It was Owen’s evidence, corroborated by Hilliard, that at the meeting on 17 August 1995 the applicant raised with Owen the question of his heavy workload, to which she responded by offering the assistance of another employee and other part-time employees. Owen described the applicant as being very co-operative during the meeting and following that encounter he identified twelve files as problem files before taking his leave.
The twelve files identified by the applicant did not include the file on the estate of Mary E. Gill. During the applicant’s absence this file was reviewed by Gay who identified a number of defects in the handling of that file including the alleged failure of the applicant to consult a life tenant about the sale of the estate property. Again it was not the respondent’s objective or desire to attempt to prove the allegations made in respect to this particular file. It was, however, the existence of this file and the allegations surrounding it that then prompted the respondent to meet with the applicant on his return to work on 28 August 1995. At this second meeting Owen and Gay sought an explanation from the applicant on the Mary E. Gill Estate file regarding a number of allegations made against him. Following this discussion it is not contested that Owen, against the applicant’s protestations, insisted that he take a further two weeks’ leave on full pay while the respondent conducted a full review of all of the applicant’s files. The arrangement was confirmed by a letter dated 6 September 1995 from Hilliard to the applicant. That letter reiterated the allegations concerning the Mary E. Gill Estate file; noting that the respondent viewed the applicant’s behaviour as a serious breach of his contract of employment. Hilliard further noted that the applicant would be afforded the opportunity of providing an explanation once the audit had been completed.
So that by early September 1995, the respondent had expressed concerns about the applicant’s management of his files. By 11 September 1995 and a letter of that date (Exhibit R20), Hilliard wrote to the applicant indicating that the audit and investigations were nearly complete. More importantly, the letter enclosed audit results on each of the files reviewed under the applicant’s control, with the following observations:
“... The files have been placed into the following categories:-
1. Files that contain serious discrepancies.
We have identified 20 such files although 7 of these were disclosed by you to STL.
2. Files that contain discrepancies.
We have identified 11 such files although 1 of these were disclosed by you to STL.
3. Files that are satisfactory.
We have identified 25 such files.
Our audit and investigations have revealed, in our view, instances of serious misconduct, breaches of contract and fiduciary duties. An unsatisfactory explanation my (sic) lead to an immediate termination of your employment by STL.
STL requires written explanations from you by 4.00pm Friday, 15th September, 1995 in relation to the discrepancies contained in the attached results. However, as agreed, you are not required to explain any matters concerning the files that you have previously disclosed to STL as files containing problems.
You will be required to provide explanations (if required) for the other 6 files upon completion of our audit and investigation.
STL is prepared to provide you with a room at STL’s premises and the files to assist you in providing the explanation required above. Please let me know if you require this assistance.”
One of the audit results referred to the Kirby Estate file which was reviewed on 31 August 1995 by Owen, who prepared the report, making these observations in her findings:
“Gavan subsequently set up an auction for 18 March, 1995 without a legal Grant of Administration or possession of the Certificate of Title for the property. Under Section 19 of the State Trustees (State Owned Company) Act 1994, State Trustees can issue a Certificate for inclusion in the Vendor’s Statement attached to the Contract of Sale as legal evidence of our entitlement to sell the property. This document certifies that State Trustees is entitled to act as the personal representative and administer the estate of the deceased. It is used in replacement of the Grant of Administration. Attached are copies of the Section 19 Certificate showing that State Trustees was issued a Grant of Probate by the Registrar of Probates on 14 February, 1995. This Certificate has been falsified. In fact, the Grant of Probate was issued to State Trustees on 20 March, 1995 and a copy of the Grant is also attached as evidence.”
By 14 September 1995 the audit was complete and Hilliard wrote to the applicant (Exhibit R21) classifying the files as ones containing “serious discrepancies”, which group included the Kirby Estate file; “major discrepancies” and “other files”. In each classification the respondent set to one side those files which were identified by the applicant and comprised the twelve amnesty files. Notably, eleven files classified as “serious discrepancy” files were the subject of the amnesty granted.
In respect to each of the many files not the subject of an amnesty and classified as either “serious discrepancy” or “major discrepancy” files, the respondent sought a written explanation from the applicant extending the time for doing so to 4.00pm on 20 September 1995.
No doubt by September 1995 the seriousness of his position vis-a-vis his employment with the respondent was well understood by the applicant. On 20 September 1995 his solicitors, Messrs Slater and Gordon, commenced their correspondence with the respondent and, subsequently, the respondent’s solicitors. The initial correspondence, besides enclosing a written explanation of the matters alleged in the Kirby Estate file, made a number of observations which included the following:
“Our client has provided nearly nine years of exemplary service to your office and we are instructed that to date he has never received any counselling or warnings, either written or verbal, in relation to unsatisfactory performance. Further, we are instructed that our client has reported to his Senior Officer, Frank Gay, on several occasions over the last eighteen months that he was finding his workload excessive and was having difficulty in attending to the files in a satisfactory manner as a result of the excessive workload.”
It is apparent from Exhibit A1 that when the applicant’s performance was reviewed in May and July 1995 by Gay, there were a number of highly critical remarks directed at his overall performance and management of his caseload. Indeed, the May review records his refusal to sign the document because he did not agree with its contents. The July review is critical but records improvement by the applicant and is signed by the applicant. I can only conclude from these matters that the applicant’s solicitors were not instructed in detail when they made the abovementioned comments. The review record also shows that the applicant had discussed his heavy workload with Gay as part of his performance review and by July 1995 there was acceptance that he had improved his management of his caseload.
The written explanation provided by the applicant concerning the section 19 certificate includes the following explanation:
“It does appear that the date on the section 19 certificate is incorrect. The application for probate was lodged on the 2/3/95 and it is my recollection that I telephoned the probate office to check what date the grant would be approved, knowing the auction was arranged. I was advised the grant would issue on the 14/3/95 and this is the date that should have appeared on the certificate. It is noted the grant issued on the 20/3/95 prior to the settlement.”
As can be seen from the explanation provided, the applicant relies on a specific recollection of actions taken by him on the file. What needs to be borne in mind is that although the applicant had been offered the opportunity to attend the respondent’s premises and view its files it appears that he had not, when giving his explanation, viewed the files held by the other divisions containing the memorandum dated 14 February 1995 (Exhibit R12) with the hand written notes; first, confirming that on 14 February 1995 he told Eccleston that probate had not been granted and, secondly, recording the receipt of the section 19 certificate “In Legal Tray 17/2/95”.
Had the applicant availed himself of the opportunity to inspect all the relevant files, no doubt he and his advisers would have understood the inaccuracy of the recollection he claimed to have. This is quite apart from the evidence of Owen about her knowledge about the practice of the Registrar of Probate when dealing with an application for a grant of probate. She deposed to having had some twenty years experience working with the respondent and its predecessor. I understood her evidence to mean that it was highly unlikely that the probate office could tell a telephone enquirer what date a grant of probate would be approved because, until the Registrar deals with the probate application, this information would not be known. Further, the date upon which the Registrar deals with the application is the date upon which it is granted or refused. In other words, the date for granting probate is not usually a matter capable of being forecast. I accept the commonsense of her evidence on this particular point.
Even without the benefit of the notes made by the other witnesses, the explanation given by the applicant lacks internal consistency. It appears to suggest that after having discovered that there would be a grant of probate on 14 March 1995, the applicant incorrectly prepared the section 19 certificate with the date 14 February 1995 instead of 14 March 1995. The grant of probate according to the applicant’s own file cover note was 20 March 1995. If the explanation was only that there was a confusion between the February and the March dates it still means that the document was prepared by him in anticipation of a grant of probate on 14 March 1995, which did not occur, and was presented for signing by the business manager without first ascertaining that there was no grant of probate on that date. The proposition that an experienced estate management officer, as the applicant was, would prepare and arrange for signing a section 19 certificate on the strength of a projected date of grant of probate and not ensure that it had occurred before the projected date, the auction date or the date of signing the section 19 certificate is, in itself, a remarkable one.
Not surprising, acting on her own experience of these matters, Owen regarded the explanation given as being an untruthful one. The explanation was then a basis for the respondent forming the view that the applicant had prepared the section 19 certificate when he knew there was not grant of probate and was “cutting corners” in his management of the estate.
The respondent instructed its solicitors to reply and by a letter dated 25 September 1995, Brian Ward & Partners informed the applicant’s solicitors that the respondent was not satisfied with the explanation given; advising them that the section 19 certificate was delivered to the respondent’s legal division on 17 February 1995.
The applicant was invited to provide a written explanation of “the discrepancy” by 5.00pm on 27 September 1995. The applicant’s next attempt to provide a credible explanation was contained in a letter from his solicitors dated 28 September 1995 (Exhibit R25), the substance of which is set out below:
“Our client instructs that if the certificate was prepared on the 17 February, 1995 or prior to that date, that this would appear to be a genuine error and one that should have been detected by the Manager whose responsibility it is to check and sign same.
It is noted that the grant of probate in this matter was approved by the Supreme Court on the 16 March 1995 and as such State Trustees had the legal authority to sell the property at auction.”
As can be seen from the second attempt at an explanation, the applicant retreated behind the argument that the preparation of the section 19 certificate was a genuine error; that is to say negligence rather than deliberate misconduct, whilst trying to deflect some responsibility onto the shoulders of Richards and, quite inaccurately, claiming that the grant of probate occurred prior to the auction date.
In response, the respondent extended the time for providing “an explanation to the reasonable satisfaction” of the respondent to 2 October 1995, putting the applicant on notice that his employment may be terminated and advising his solicitors as follows (Exhibit R26):
“Mr. Baddeley is well aware of the requirements of candour in his position as a Trust Officer. The Managers must be able to rely on the honesty and integrity of its Trust Officers in relation to the preparation of documents like Section 19 Certificates and also in relation to explanations concerning discrepancies or any inaccuracy in those documents. Any failure in this regard is serious and wilful misconduct.”
Because of what is clearly an unsubstantiated suggestion by the applicant that he was denied access to the respondent’s files to complete his explanation, arrangements were made for him to access the respondent’s files. Following this access his solicitors informed the respondent’s solicitors (Exhibit R29) that, “... he reiterates the advice provided in our letters to you dated 20 October 1995 (sic) and 4 October 1995 regarding the preparation of the Section 19 Certificate.”
The respondent’s immediate response to that letter was to set out its two areas of complaint in some detail as follows (Exhibit R30):
“Our client alleges that Mr. Baddeley:-
1. knowingly prepared a false Section 19 Certificate in the period 14th February to 17th February, 1995. Details are as follows:-
*Mr. Baddeley arranged for an auction of the estate property for 18th March, 1995;
*he was advised by the Property Department at STL on 14th February, 1995 that a Section 19 Certificate was required prior to preparation of the Contracts and documents for the auction;
*prior to 17th February, 1995 he prepared a Section 19 Certificate which included reference to a Grant of Probate on 14th February, 1995, for approval by his Manager;
*the Section 19 Certificate was signed by Mr. Baddeley’s Manager and delivered to the Legal Department tray on 17th February, 1995;
*at the time he prepared the Section 19 Certificate and provided it to his Manager for signature, he knew it was false. At that time he knew that the Probate Application had not even been lodged with the Registrar of Probates;
*he did not inform or discuss with his Manager his failure to apply for a Grant of Probate prior to preparation of a Section 19 Certificate for the Estate.
2. He did not provide to STL a candid, truthful and honest explanation of the manner in which the Section 19 Certificate was prepared.
Details are as follows:-
* In STL’s audit report of 31 August, 1995 it was disclosed that:-
“... Gavan subsequently set up an auction for 18 March, 1995 without a legal Grant of Administration or possession of the Certificate of Title for the property. Under Section 19 of the State Trustees (State Owned Company) Act 1994, State Trustees can issue a certificate for inclusion in the Vendor’s Statement attached to the Contract of Sale as legal evidence of our entitlement to sell the property. This document certifies that State Trustees is entitled to act as the personal representative and administer the estate of the deceased. It is used in replacement of the Grant of Administration. Attached are copies of the Section 19 Certificate showing that State Trustees was issued a Grant of Probate by the Registrar of Probates on 14 February, 1995. This certificate appears incorrect. In fact, the Grant of Probate was issued to State Trustees on 20 March, 1995...”
* Mr. Baddeley replied on 20 September, 1995 as follows:-
“...It does appear that the date of the section 19 certificate is incorrect. The application for probate was lodged on 2/3/95 and it is my recollection that I telephoned the probate office to check what date the grant would be approved, knowing the auction was arranged. I was advised the grant would issue on the 14/3/95 and this is the date that should have appeared on the certificate. It is noted the grant issued on the 20/3/95 prior to the settlement...”
*He has been given further opportunities to explain the manner in which the Section 19 Certificate was prepared but still fails to provide a complete and satisfactory explanation.
The manner of preparation and submission of the Section 19 Certificate and subsequent failure of Mr. Baddeley to give a truthful and candid written explanation is, in STL’s view, serious and wilful misconduct. The concealment by Mr. Baddeley was not a “genuine error”.”
The substance of the applicant’s further response to the respondent’s insistence on the explanation is set out below (Exhibit R32):
“In response to your client’s allegations, we are instructed as follows:
(i)Our client vigorously denies that he knowingly prepared a false Section 19 Certificate in relation to the Kirby file. As has previously been communicated, we are instructed that the Section 19 Certificate appears to have been prepared in error. We reiterate that the preparation of the Certificate was a genuine error and our client vigorously objects to the characterisation of that error as deliberate or knowing falsification. Indeed, our client instructs that in the past, the STL has sold properties prior to obtaining a grant of probate, and this can be accommodated by the inclusion of a clause in the contract of sale stating that the settlement is subject to a grant of probate. We are instructed that our client has used that process in the past and would have used that process in similar circumstances if he believed that at the relevant time it was necessary to follow that process. The suggestion of knowing falsification can simply not be sustained.
(ii)Our client also instructs that in the past where errors have been made by staff within the office, those are usually referred back to the staff by other officers whether they be in the conveyancing, property or investment areas.
(iii)We are also instructed that to the best of our client’s recollection, he was not advised by the property department at STL on 14 February 1995 that a Section 19 Certificate was required prior to preparation of the contracts and documents for the auction.
Our client accepts that he appears to have prepared a Section 19 Certificate prior to 17 February which included a reference to a grant of probate on 14 February 1995. Again, we emphasise that the Section 19 Certificate appears to have been prepared in error.
Our client accepts that the Section 19 Certificate was signed by his Manager. Our client vigorously denies that at the time he prepared the Section 19 Certificate and provided it to his Manager for signature, he knew it was false.
(iv)Our client instructs that he accepts he did not inform or discuss with the Manager his failure to apply for a grant of probate prior to preparation of a Section 19 Certificate for the estate, because at the time he did not realise an error had been made. The error has only been brought to his attention as a result of the investigation and audit of his work and in those circumstances, he cannot possibly be expected to have informed or discussed with his Manager the error, prior to becoming aware of it.
(v)We are instructed that our client vehemently denies that he did not provide to STL a candid, truthful and honest explanation of the manner in which the Section 19 Certificate was prepared. As we have previously indicated, our client was unlawfully suspended from the workplace and asked to respond to numerous queries concerning the work he has performed over a substantial period of time in relation to a number of files. He was forced to respond as best he could without access to the files in question. He has attempted at every opportunity to answer any queries or allegations to the best of his ability and to the best of his recollection. ...”
As can be seen from the further explanation provided by the applicant, in attempting to explain his conduct he also relied on an allegation that in the past the respondent sold properties conditional upon a grant of probate and, if he had believed that it was necessary, he would have adopted this process. The evidence of the respondent’s witnesses, which I have accepted, indicates that not only is this practice rare because of its impact on the market in which the property is to be sold, but it is one which requires authorisation by a business manager. At hearing the applicant also argued that if he had known that there was no grant of probate he could have taken the step of delaying the auction of the property to a later date. That there may have been other more sensible ways of dealing with the problem does not dispose of the allegation that the applicant knowingly and deliberately took the steps he did to manage the Kirby Estate file.
For completeness it is necessary to set out the contents of the letter dated 16 October 1995 detailing the decision to terminate the applicant’s employment (Exhibit R36):
“Having considered your explanations carefully, STL hereby gives you notice that it has decided to terminate your services as an employee of STL effective immediately.
Nothwithstanding (sic) that STL believes it has grounds to effect your dismissal without further obligation, STL has decided to offer you an “ex gratia” payment of an amount equal to four weeks salary in addition to your statutory entitlements.
I attach a cheque that STL has determined is payable to you (including the “ex Gratia” payment) summarised on the attached schedule.
As you are aware, your performance has not been regarded as satisfactory for some time. Had STL’s concerns been limited to matters of competence, STL would have persevered with the retraining and supervision program previously discussed.
However, the audit of your files during the period you have been on leave on full pay has brought to our attention the Kirby matter which raises other concerns.
These concerns have been set in great detail in correspondence between solicitors. You explanation in relation to the preparation of the Section 19 Certificate on or before 17 February, 1995 certifying that a Grant of Probate had been obtained by you in that Estate when you did not lodge the application for Grant of Probate until 2 March, 1995, namely that it was a “genuine error” is not acceptable.
Moreover, you did not bring the Kirby file to the STL’s attention when you were asked by your manager to identify “problem files”. You did not explain the true facts to Michael Richards when you obtained his signature to the Section 19 Certificate.
You chose to proceed with an auction of the property in reliance on a false Section 19 Certificate.
Reluctantly, STL has determined that this behaviour falls below the minimum standards of honesty required by STL in the discharge of fiduciary duties by each and every STL trust officer.
Please return all STL’s Security Pass, records and information in your possession to our office immediately.”
The applicant appears to have received from the respondent his entitlements and salary up to and including 16 October 1995.
At hearing the applicant relied on his claim that the preparation and signing of the section 19 certificate was the result of a genuine error. For the first time he raised the possibility that such error could have occurred because, when he prepared the section 19 certificate, he had more than one file on his desk and mistakenly entered the wrong information on the grant of probate and the date of the grant. This, of course, does not explain how he came to be preparing a section 19 certificate on the Kirby Estate file at all until there was a grant of probate.
FINDINGS - Section 170DE(1) and Section 170DE(2)
The decision of the High Court in Briginshaw v Briginshaw & Another (1938) 60 CLR 336 is often referred to and relied upon where there is an issue of dishonesty and the extent to which the employer must go to discharge its burden of proof justifying a dismissal of its employee because of this. In Briginshaw, Justice Dixon discussed these matters at pages 361 and 362 of his decision explaining the task confronting the Court in the following way:
“... The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences.”
Essentially, although the burden of proof must be discharged on the balance of probabilities, the standard of proof may vary according to the gravity of the facts to be proved. In this case the dishonesty alleged did not carry with it any criminal sanctions, although the consequences for the applicant in being terminated by reason of his dishonesty are serious ones.
The facts revealed by the evidence in this case and, largely the matters the applicant referred to in his own evidence, persuade me to the view that the applicant was, on the balance of probabilities, dishonest. The existence of a section 19 certificate prepared by the applicant and taken by him to a superior for signing in circumstances where there was clearly neither an application for, nor a grant of probate in existence at the date of signing may not be sufficient to discharge the burden of proof because the explanation for its existence may be one of innocent error. This is putting the applicant’s case at its highest. However, the facts go further than that. It is the applicant’s behaviour and untruthful explanation given through his solicitors when confronted with the problem, which allow me to conclude that it is more likely than not that the applicant created the document dishonestly and, when challenged, provided his employer with an explicitly dishonest explanation; being then unaware as he was of the inconsistency between the matters he purported to specifically recall and the information contained in the employer’s files. When all became known and the explanation was revealed to be a sham the applicant then adopted the stance maintained at hearing that with the passage of time he in fact had no recollection of the matters surrounding the creation and signing of the document. The dishonesty in relation to the explanation given of itself is a basis for justifying dismissal because it too is incompatible with the fulfilment of his duty to his employer and is further destructive of the confidence between him and the employer. (see Blythe Chemicals Ltd v Bushnell (1933) 40 CLR 66 at page 81 et seq.).
I have already alluded to the opinion of Justice von Doussa in the Sangwin case. Applying his reasoning to the facts before me, this is a case where had the employer not satisfied me that there had been misconduct it might be said that the evidence supports a finding that the employer held an honest belief on reasonable grounds after sufficient enquiry there was serious misconduct on the employee’s part and, therefore, a valid reason existed at the date of termination.
In his oral submissions, Mr Borenstein referred the Court to the decision of Judicial Registrar Likenbagh in Australian Rail Tram & Bus Industry Union (West Australian Branch) and Christopher John Kirkpatrick v Metropolitan (Perth) Passenger Transport Trust, (unreported, No. WI 131 of 1994, 11 October 1994). In deciding whether or not an allegation of dishonesty; namely, theft was made out the Judicial Registrar said at page 14 of her decision:
“It is always worthwhile to look for a motive when a person is acused of a crime. The respondent argued that a motive was not relevant. The existence of a motive can tend to indicate perhaps whether there was an intention to commit the crime. The absence of an apparent motive can put a question mark over the possibility that a crime has been committed. In this case, no motive has been advanced and, in fact, the applicant argues what is almost a negative motive, or factors tending to show that he was not motivated to steal, and that is because of his desire to maintain his job security and his income and also because of the small amount that was at stage in what he is said to have stolen.”
Whilst I agree that the absence of any motive for dishonesty and, more importantly, the existence of other countervailing factors may be persuasive and tilt the balance against the Court being reasonably satisfied there was dishonesty, it cannot be said that the absence of a compelling motive for dishonesty is entirely decisive of the issues before the Court. In the present case simply forgetting to make a timely application for a grant of probate may have been sufficient reason for the applicant managing the Kirby Estate file in the manner it is alleged he did. The threat of discovery and the related threat to his employment would also be good reasons for subsequently providing an untruthful explanation for his actions.
The handling of deceased estate affairs and investment matters placed the applicant in a position where his employer was entitled to expect candour and honesty in the performance of his duties and his dealings with his employer. Indeed, it was agreed that had the applicant identified the Kirby Estate file in the group of amnesty files in August 1995, this file would not have been the subject of any further action; much less the requirement that he formally explain his conduct. As it turned out this file became the focus of the employer’s attention without any need to rely on the other major discrepancy files and matters relevant to performance, had the employer been minded to dismiss this employee come what may.
In determining whether the applicant has discharged the burden of proof he carries to show that the termination was harsh, unjust or unreasonable the Court must look at all the relevant circumstances and weigh any mitigating circumstances against the gravity of the misconduct giving rise to the decision to terminate (see Bostik (Aust.) Pty Ltd v Gorgevski (No.1) (1992) 36 FCR 20 at page 28 and Byrne v Australian Airlines Limited and Frew v Australian Airlines Limited (1995) 131 ALR 422 at pages 463 and 464).
Evidence of serious misconduct and, in this case, evidence of a false explanation weigh heavily against considerations such as the applicant’s lengthy period of employment and the impression I gained from his colleagues that he was generally liked in the workplace. Accordingly, I find that there is no objective basis for saying that the termination was harsh, unjust or unreasonable in all the circumstances. This being so, the application is dismissed.
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The applicant’s application is dismissed.
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 thirty-four (34) pages are a true copy of the reasons for judgment of Judicial Registrar Millane.
Associate: ........ ........ ........ ........ ....
Dated: 31 May 1996
Solicitors for the Applicant: Slater & Gordon
Counsel for the Applicant: Mr H. Borenstein
Solicitors for the Respondent: Brian Ward & Partners
Counsel for the Respondent: Mr J. Peters
Date of hearing: 25 & 26 March 1996
Date of judgment: 31 May 1996
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