Blanch v Tjuwanpa Resource Centre (Aboriginal Corporations)
[1996] IRCA 118
•03 April 1996
DECISION NO: 118/96
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - Unlawful termination - whether employee guilty of serious misconduct - whether there was a valid reason for dismissal - whether long service leave payable - assessment of compensation
Industrial Relations Act 1988
Long Service Leave Act (NT)
Matter No. DI 1024 of 1995
ALF BLANCH v TJUWANPA RESOURCE CENTRE (ABORIGINAL CORPORATION)
and
Matter No. DI 1025 of 1995
INGRID BLANCH v TJUWANPA RESOURCE CENTRE (ABORIGINAL CORPORATION)
VON DOUSSA J
ADELAIDE (heard in Alice Springs)
3 APRIL 1996
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
NORTHERN TERRITORY ) No. DI 1024 of 1995
DISTRICT REGISTRY )
BETWEEN: ALF BLANCH
Applicant
AND: TJUWANPA RESOURCE
CENTRE (ABORIGINAL
CORPORATION)MINUTES OF ORDER
JUDGE MAKING ORDER : VON DOUSSA J.
WHERE MADE : ADELAIDE
DATE OF ORDER : 3 APRIL 1996
THE COURT:
Declares that the termination of the applicant's employment by the respondent contravened s.170DE(1) of the Industrial Relations Act (1998).
Orders that the respondent pay to the applicant $30,738 less any sum required to be deducted therefrom by the respondent pursuant to the Income Tax Assessment Act 1936 and actually paid to the Commissioner of Taxation.
Liberty to apply as to the terms of this order.
Note: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
NORTHERN TERRITORY ) No. DI 1025 of 1995
DISTRICT REGISTRY )
BETWEEN: INGRID BLANCH
Applicant
AND: TJUWANPA RESOURCE
CENTRE (ABORIGINAL
CORPORATION)
Respondent
MINUTES OF ORDER
JUDGE MAKING ORDER : VON DOUSSA J.
WHERE MADE : ADELAIDE
DATE OF ORDER : 3 APRIL 1996
THE COURT:
Declares that the termination of the applicant's employment by the respondent contravened s.170DE(1) of the Industrial Relations Act (1998).
Orders that the respondent pay to the applicant $24,900 less any sum required to be deducted therefrom by the respondent pursuant to the Income Tax Assessment Act 1936 and actually paid to the Commissioner of Taxation.
Liberty to apply as to the terms of this order.
Note: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
NORTHERN TERRITORY ) No. DI 1024 of 1995
DISTRICT REGISTRY )
BETWEEN: ALF BLANCH
Applicant
AND: TJUWANPA RESOURCE
CENTRE (ABORIGINAL
CORPORATION)
Respondent
No. DI 1025 of 1995
BETWEEN: INGRID BLANCH
Applicant
AND: TJUWANPA RESOURCE
CENTRE (ABORIGINAL
CORPORATION)
Respondent
REASONS FOR JUDGMENT
Coram: von Doussa
Place: Adelaide (Heard in Alice Springs)
Date : 3 April 1996
These two applications for remedies under Part VIA of the Industrial Relations Act 1988 ("the Act"), for unpaid long service leave and for other alleged entitlements, have been heard together. The applicants are husband and wife. I shall refer to them as Mr and Mrs Blanch. They had been employed at Hermannsburg in the Northern Territory of Australia in permanent staff positions with the respondent from 1 January 1985 and 1 August 1985 as Garage Foreman and Bookkeeper respectively. They were dismissed by letter delivered to them on 16 September 1994. The applicants were away from Hermannsburg at the time, having left on annual leave on 2 September 1994. At the date of their dismissal Mr Blanch was aged 62, and Mrs Blanch 52. They had been born, educated, and married in Sweden. They had migrated to Australia in 1972.
The respondent was incorporated under the Aboriginal Councils and Associations Act 1976 (Cth) on 27 April 1984 as an Aboriginal Association. The objects of the respondent, according to its Rules, are to provide support and assistance for the development of the Outstation movement in and around the Hermannsburg area; to help bring about the self support of the members of the Association; to provide job training and employment; to encourage its members to keep to their traditional culture, language and law; and to provide a resource centre whereby members may develop their Outstations upon their own lands.
A number of Outstations were first established by the Finke River Mission, and were occupied by family groups from the 1950's as cattle camps. The area was surveyed in the 1970's and freehold title granted in 1981. In 1974, the Department of Aboriginal Affairs ("DAA") commenced funding a scheme in the area under its Homeland Center (Outstation) Development programme. The respondent was incorporated to further this scheme. In 1984 the respondent received its first formal budget allocation of $148,000 from DAA. At that time there were 22 Outstations. Mr Glen Auricht became the manager of the respondent on its incorporation, and continues to hold that position. In November 1984 the applicants joined the staff to provide physical and administrative support to Mr Auricht. At first they were employed in casual positions with DAA providing additional funds for their wages. Over the years since then the undertaking of the respondent has greatly expanded. By September 1994 there were 35 Outstations and budgets overall amounted to close to $5 million per annum. In 1988 the DAA Outstation Development programme was replaced by the Community Development and Employment Programme (CDEP) administered through the Aboriginal and Torres Straight Islander Commission ("ATSIC"). Under the CDEP grants to the respondent, wages were paid fortnightly to participating members. From the 1991-92 year there were in excess of 300 CDEP participants engaged in a wide range of development programmes. Many of these activities were coordinated through the Works Division of the respondent which had become an income earning enterprise. There were three sections of the Works Division: the motor vehicle workshop and fuel outlets (under the supervision of Mr Blanch); the building section; and the steel prefabrication section.
Increases in ATSIC grants and the CDEP programmes led to corresponding increases in the workload and sophistication of the administrative and bookkeeping requirements of the respondent. The evidence gives a plain picture of dedicated staff including Mr Auricht and the applicants, who worked long hours, often in a stressful environment, doing their best to keep up with the demands of the enterprise. As the increases occurred staff numbers and associated support did not keep pace with the workload. Factors which limited the ability of the respondent to engage outside assistance as required were ATSIC budget constraints and the lack of residential accommodation.
In the latter half of 1992 Mr Charles Cuff, a professional management trainer with extensive experience in Aboriginal communities reviewed the effectiveness of the operations of the respondent. He submitted a draft report in September 1992. It seems that this report was discussed at length; amendments were made to some of his recommendations; and substantial parts of it were implemented. The report recommended programmes be instituted to instruct and inform the members of the community about the CDEP scheme and to increase their involvement in the administration and management of the respondent. Following the report, and as required by the Rules of the respondent, a "Governing Committee" (often referred to as the Management Committee) comprising elected representatives from the Outstations was established. That Committee was assisted by Mr Cuff to become the controlling body of the respondent. This development towards "self determination" appears to have received the encouragement and support of the non-Aboriginal members of staff who hitherto had played a substantial part in the making of decisions relating to the expenditure of funds and development programmes. The steps taken by Mr Cuff to bring the elected community representatives into an active management role were designed to overcome what he described as an "us and them" syndrome, which had given rise to suspicion and anger amongst the Aboriginal community about the control of the respondent by non-Aboriginal staff.
ATSIC funding grants included annual grants to cover the CDEP programme, the central administration including the salaries of Mr Auricht, Mrs Blanch and the bookkeeping section (the Community Infrastructure grant), and housing projects. In addition to these annual grants, special purpose grants were made by ATSIC from time to time, and also by other departments and bodies. ATSIC grants were invariably made subject to "Standard Conditions" which included requirements for quarterly and annual financial statements and a requirement that grant moneys only be used for the purpose for which the grant was made. An incident of these requirements was that grant money paid for one purpose (and banked into the particular grant account) should not be transferred (or "loaned") to another account designated for a different purpose.
On 2 September 1995 the applicants left Hermannsburg on their annual holiday. Nothing was said to either of them by anyone - neither by Mr Auricht, nor by the Chairman of the Management Committee, Mr Peter Stuart, nor by any other member of the Management Committee - suggesting dissatisfaction with their conduct or performance, or that their jobs would come under consideration whilst they were away.
On 16 September 1995 they received a facsimile copy of the letter of dismissal dated 12 September 1995 at their home at Venus Bay in South Australia. The letter read:
"The Tjuwanpa Management Committee at the Annual General Meeting on the 09/09/1994 unanimously Passed the motion to terminate your employment with this Company as Garage Foreman and Book keeper effective as of 12/09/1994. The Committee has felt the necessity to terminate your services on the following grounds.
(1). Garage Foreman:- For quite some time Staff and Management Committee have been aware of an unsatisfactory attitude towards aboriginal people and problems experienced with satisfactory operation in the Garage and Associated Works Division.
(2). Bookkeeper:- Recent developments regarding Unsatisfactory accounting practices in Tjuwanpa Office have resulted in serious breaches being identified by the various funding agencies particularly A.T.S.I.C. which have resulted in funding schedules being seriously jeopardised. The consequences of this have had serious repercussions on the current and future operations of the Tjuwanpa Resource Centre Incorporated.
...
Accordingly you are hereby given one months notice Commencing 12/09/1994. This period allows two weeks current leave plus two weeks in which you are required to perform a hand over of duties and responsibilities in your respective work areas here at Tjuwanpa.
...
Signed:
Peter Stuart:
CHAIRMAN
12/09/1994.
Gilbert Forbes
VICE CHAIRMAN
12/09/1994."
The Annual General Meeting had been duly called for on 9 September 1994, and was attended by Outstation representatives, members of the non-Aboriginal staff, Mr Cuff, and a representative of ATSIC (Mr O'Bryan). The Agenda for the meeting was in the customary terms for an annual general meeting of an incorporated body. The notified business was to be:
•Minutes of 1st AGM August 1993 to be read
•Chairman's Report
•Manager's Report
•Financial Report
•General Business
•Election of New Management Committee Members
The minutes of the meeting record that at the commencement of the meeting Mr Auricht explained that:
"...THIS MEETING WAS SPECIFICALLY TO VOTE FOR AND ELECT A NEW COMMITTEE AND CHAIRMAN, NO FAMILY BUSINESS OR COMPLAINTS OR CDEP QUERIES WERE TO BE DISCUSSED, THAT THE NEW BOARD OR COMMITTEE WOULD HOLD A MEETING IN THE NEAR FUTURE TO GIVE THE PEOPLE THE OPPORTUNITY TO DISCUSS OTHER BUSINESS."
Notwithstanding this accurate description of the purpose of the annual general meeting, when the item of general business came up, after a number of questions about the operations of the respondent had been raised and answered the minutes go on to record:
"THE STAFF OF TJUWANPA WERE ASKED TO LEAVE THE MEETING WHILE THE ABORIGINAL PEOPLE DISCUSSED OTHER BUSINESS DURING THE COURSE OF THE MEETING.
CHARLIE CUFF WAS ASKED TO STAY TO OVER SEE PROCEEDURES (sic) FOR A SHORT TIME.
STEWART PARELOUTJA TABLED 2 LETTERS FROM ATSIC WHICH EXPRESSED CONCERN ABOUT THE ACCOUNTING PROCEEDURES (sic) AT TJUWANPA.
LES O'BRIEN (ATSIC) WAS ASKED TO IDENTIFY THE LETTERS AS COMMING (sic) FROM HIS OFFICE AND THE EFFECT THE CONCERNS EXPRESSED WERE HAVING ON CURRENT FUNDING.
LES O'BRIEN AGREED THAT THE FAXES DATED DEC 1993 AND MARCH 1994 WERE FROM ATSIC AND THEY DID INDICATE THE CONCERN ATSIC HAD.
THE FUNDING SCHEDULES FOR TJUWANAPA (sic) WERE BEING INFLUENCED AS BRECHES (sic) HAD OCCURRED.
MOVED THAT THE SERVICES OF ALF * INGRID BLANCH BE TERMINATED - MOVED BY STEWART
SECONDED - BARY COOK
CARRIED UNANIMOUSLY"
It will be necessary to discuss in more detail the two ATSIC letters tabled by Mr Pareloutja but I shall assume for the moment that the letters insofar as they refer to the respondent's accounting procedures raise issues that reflect on the competence of Mrs Blanch in the performance of her duties.
A number of points immediately arise from a consideration of the minutes, and the letter of dismissal.
First, the purpose of the AGM, as specified in the agenda and notice calling the meeting, did not include as an item of business consideration of a motion to terminate the employment of the applicants. For the management committee or a general meeting of members of an incorporated body to make a valid decision on an important matter like the termination of the employment of senior staff members, advance notice of that item of business must be given to all the members eligible to vote, usually by referring to the proposed item of business in the notice calling the meeting. This requirement exists so that all members who may wish to have a say on the topic, or to vote, are aware that the topic will be considered and can be present at the meeting. This rule applies to meetings of all corporations in Australia. Properly understood it is not a rule which interferes with the right of self determination by members of an Aboriginal association of their own affairs. It is a rule intended to ensure that when decisions are made, they are properly and fully considered decisions in which all members entitled to have a say have received an opportunity to do so. This would be particularly important where decisions are to be made which affect one section of the community or a particular Outstation differently from another section or the other Outstations. If proper notice of the topic is not given to members in advance, any decision made on the topic will be open to challenge and may be invalid.
In the present case the applicants do not seek to take any point that the decision to dismiss them was invalid because it was not properly before the meeting. Nevertheless there appears to have been a serious failure to follow the requirements for a valid resolution of an incorporated body.
Secondly, the manager of the respondent who could have been expected to know the significance of the matters raised in the two letters - which were not recent ones - was not consulted by the meeting. No information or explanation was sought from him as to whether the criticisms in the letter indicated a breach of duty or level of incompetence on Mrs Blanch's part that would warrant dismissal, or whether the matters of apparent concern to ATSIC raised in the letters were ongoing matters of concern or whether they had been remedied. Further, no attempt was made to offer Mrs Blanch any opportunity to defend herself against the allegations. It is most unfortunate that these steps were not taken, as any such enquiry would probably have revealed that the course proposed to the meeting - dismissal - was not justified by the letters, and would be contrary to the law of Australia.
Thirdly, no reason for the dismissal of Mr Blanch is mentioned in the minutes. However, the letter of dismissal purports to offer the reason stated in it.
In their proceedings the applicants alleged that no valid reasons existed for the dismissals. In reply, the first defence filed to Mr Blanch's claim alleged that he had "demonstrated an unsatisfactory attitude towards aboriginal people by swearing at and verbally abusing aboriginal people from time to time" which amounted to serious misconduct disentitling Mr Blanch to the period of notice otherwise required by s.170DB, and also to any payment for long service leave under the Long Service Leave Act (NT). Both applicants had been employed by the respondent for less than 10 years but more than 7 years. In such cases s.10(2)(b) of that Act provides an entitlement to long service leave on termination of the employment for a reason other than "serious misconduct."
At the commencement of the trial an amended defence was filed which withdrew the allegation of "serious misconduct" against Mr Blanch, and admitted liability to pay long service leave, and to make an additional payment in lieu of notice to comply with s.170DB. The amended defence however continued to assert that a valid reason for terminating Mr Blanch's employment existed for the reason stated in the letter of dismissal, and that Mr Blanch had been counselled in relation to his bad temper, his use of inappropriate language, his argumentative nature and his irritability. It was alleged that a number of employees had left because they could not work with Mr Blanch, and that he had been warned on a number of occasions in the twelve months preceding the dismissal that if his conduct, attitude and performance did not improve he faced dismissal.
It is convenient to deal with Mr Blanch's proceedings before further considering those of Mrs Blanch.
In support of the allegation that there was a valid reason for the dismissal of Mr Blanch, Mr Forbes, a member of the community, gave evidence that in 1993 whilst he was working on his motor vehicle in the Works Division workshop, Mr Blanch came up to him and said, "Can't you black bastards do the thing properly?" Mr Forbes says he "fumed" and said to Mr Blanch "You are working in black bastards' country", then stormed out. He says he complained to Mr Auricht. Mr Forbes also gave evidence of another incident late in 1993 or early in 1994 when he had an altercation with Mr Blanch about a motor bike tyre which he had ordered through the workshop. This incident was witnessed by Mr Stuart. There is no suggestion in any of the evidence that on this occasion Mr Blanch was in any way abusive. On the contrary he was threatened by Mr Forbes who had lost his temper, and was not prepared to listen to an explanation.
Mr Forbes said that on a couple of occasions he had warned Mr Blanch that "if he doesn't wake up to himself he can be fired", because he was being cheeky, rude, and members of the community had complained to Mr Forbes about his behaviour. After these warnings no further complaints about Mr Blanch's attitude had been received by him.
Mr Stuart added that over the years he had received complaints about Mr Blanch's attitude. He had passed these on to Mr Auricht with a request that he speak to Mr Blanch and cool things off.
This was the extent of the evidence led in support of the respondent's case against Mr Blanch.
The evidence overall reveals that Mr Forbes was renowned for his quick temper and language. It was common for him to threaten all non-Aboriginal members of staff that they could be sacked, and he would make comments to the effect that the community did not need white people there. Mr Blanch had known Mr Forbes for many years. He let remarks of that kind pass, and in evidence he described Mr Forbes as a "nice guy".
Mr Forbes was appointed a member of the Management Committee at the AGM of the respondent in August 1993. However, as a matter of law, an elected committee member of the respondent, unless specifically instructed by the committee or an annual general meeting to act on its behalf, has no authority to speak on behalf of the respondent. There is no evidence that he was authorised at any time to deal with matters relating to the employment of non-Aboriginal staff, or specifically with matters relating to the employment of Mr Blanch. As a matter of law he had no authority to give a formal warning to Mr Blanch about the future of his employment. As a matter of fact the evidence in any event does not establish that any real warning or counselling was given by Mr Forbes or any other officer of the respondent to Mr Blanch.
Mr Blanch has no recollection of an incident of the kind described by Mr Forbes when the expression "black bastard" was used. Mr Blanch denied that it was an expression that he used. In the absence of any other evidence to support Mr Forbes' evidence on this point I am not satisfied that the onus of proof resting on the respondent has been discharged. But even if something of that nature were said, I am not satisfied that it was treated seriously at the time by Mr Forbes. There was an occasion when another section manager used such an expression, and, undoubtedly, Mr Forbes then reacted in very strong ways. That incident was well remembered by those who gave evidence. Had such an expression been used by Mr Blanch in a way that created offence it is highly likely that Mr Stuart would have heard of it, yet he said that he had not heard any suggestion of any such incident involving by Mr Blanch prior to the AGM on 9 September 1994.
It is also likely that Mr Auricht would remember being told of it. But when Mr Auricht gave evidence for the respondent he was asked no questions relating to complaints that he had received about Mr Blanch's behaviour, whether from Mr Forbes or otherwise, or about any warnings or counselling given to Mr Blanch.
This topic was raised with Mr Blanch in the course of his cross-examination. He said, and I accept, that he had no knowledge that there was any dissatisfaction about any aspect of his performance when he left on 2 September 1994. He said he had been spoken to by Mr Auricht on 6 occasions over the 10 years that he had been employed by the respondent about arguments and disputes that had occurred with Aboriginal people. The evidence paints a clear picture of there being many disputes between Aboriginal members of the community and white staff over a range of matters, and it is probable that disputes of one sort or another were common in the workshop where motor vehicle repairs were often requested in a hurry, and where there were restrictions on the provision of credit. Mr Blanch said that when complaints were received by Mr Auricht from community members, Mr Auricht would then obtain the other side of the story from the staff member concerned and sort out the problem. This process does not relevantly constitute either counselling or a warning. No specific incident of counselling or warning was put to Mr Blanch by counsel for the respondent.
As to whether any reason was discussed for the dismissal of Mr Blanch at the AGM on 9 September 1994, Mr Cuff and Mr Gilbert said that the discussion was limited to Mrs Blanch. Mr Stuart had a recollection that someone at the meeting said that Mr Blanch had used inappropriate language on one occasion, but that he had not earlier heard that complaint made. The weight of the evidence is in favour of a finding that the decision to dismiss Mr Blanch was made, not because of his conduct, but because the meeting favoured the dismissal of Mrs Blanch.
The evidence does not establish that Mr Blanch had an unsatisfactory attitude towards Aboriginal people. On the contrary his long service with the respondent suggests to the contrary. Further, the evidence does not establish that he was given any warning by the respondent in the 12 months preceding dismissal that if his conduct, attitude and performance did not improve he faced dismissal, as alleged in the amended defence.
No evidence was led to support the allegation that any employee had left because he or she could not work with Mr Blanch.
In support of the allegation in the letter of dismissal that the staff and Management Committee had been aware for some time of problems experienced with the satisfactory operation of the Garage and Associated Works Division it was suggested that Mr Blanch had failed to comply with a duty statement obligation to prepare an operational budget for the mechanical workshop, and had failed to maintain adequate records in relation to daily sales and an asset register. On the evidence these allegations are either not made out or, in my opinion, are not of sufficient seriousness or significance to constitute a valid reason for dismissal.
The alleged obligation to prepare an operational budget for the workshop section is said to arise from the suggested duty statement contained in the report of Mr Cuff. There is no satisfactory evidence that the duty statements were ever accepted in the form in which they appear in the first draft report. In the case of Mr Blanch's duty statement his evidence is that only part of it was implemented, and that it was not his function to prepare an operational budget for the workshop - a task for which he had no training or experience which would enable him to fulfil it. It was not suggested by Mr Auricht that the preparation of such a budget was part of Mr Blanch's duties.
In relation to daily sales, considerable evidence was led about inaccuracies in daily sheets filled out at the workshop to record the sale and use of fuels and spare parts. For the financial year ended 30 June 1994 these records indicate that there were many sales or uses of fuel that were not recorded, with the result that profits that would otherwise have been made were not made. Those of the daily sheets which can be found are contained in Exhibits R21 and R28. Mr Blanch says he designed the form for the daily sheet, but no criticism on that account is made. The difficulties that arose originated from the fact that not all fuel sales and uses have been recorded. The evidence disclosed a complicated system of charging designed to meet the complex requirements of the respondent and all the Outstations. The system endeavoured to provide a service of a kind which no longer exists in urban communities because it is too expensive and cumbersome to maintain. The service endeavoured to permit Outstation members to book up small purchases of fuel. It also depended upon plant operators and staff members who had access to fuel keys to record all fuel uses for which they were responsible. Small purchases should have been written up transaction by transaction by the driveway attendants, and large fuel drawings by plant operators and Outstations should have been written up by those that drew the fuel. In reality transactions were often not recorded. It was not Mr Blanch's function to make the entries on the daily sheets, and often he was away from the workshop for long periods of time fulfilling duties at Outstations. At the end of each day, the day sheets were taken to the administration section where they should have been added. This happened with many but not every sheet. When discrepancies between fuel volumes and "sales" were identified members of staff then endeavoured, with a fair measure of success, to identify unrecorded transactions.
Plainly the recording process was unsatisfactory during the 1993-1994 year. The inadequacies of the system were due to many circumstances including the administration's endeavour to provide facilities and credit services which were beyond the capacity of the staff and accounting processes then available. The system has been much improved more recently with the advent of further administrative staff.
This evidence does not establish a shortcoming on the part of Mr Blanch which justified his dismissal in September 1994.
The allegation that Mr Blanch failed to adequately maintain an asset register did not get off the ground. No documentary evidence was produced by the respondent relating to the asset register which would have aided an understanding of the evidence of the auditor Mr Hill and the accountant Mr Sharma. Their evidence touched on concerns held by ATSIC about the adequacy of the asset register, but did not point an accusatory finger towards Mr Blanch. Mr Auricht accepted responsibility for the asset register about which the auditors and ATSIC were concerned. Obviously some information for the asset register would have been necessary from the workshop, and this Mr Blanch said he supplied.
In my opinion the allegation that there existed in September 1994 a valid reason for the dismissal of Mr Blanch has not been established. Therefore, s.170DE(1) of the Act has been breached. The dismissal of Mr Blanch was said to be on grounds relating to his conduct or performance. Before the dismissal occurred no warning was given to him; the conduct or performance relied upon was not specified; and he was given no opportunity as required by s.170DC to defend himself against the allegations.
It is common ground that reinstatement is impracticable. In relation to these contraventions, the appropriate remedy is one of compensation to be assessed in accordance with the provisions of s.170EE(3) and (4).
Mr Blanch intended to continue working until aged 65, that is for some 3 years beyond the date on which he was dismissed. After his dismissal he and Mrs Blanch moved to their home at Venus Bay, a remote part of South Australia. They both registered with the Commonwealth Employment Service at Port Lincoln, and Mr Blanch made various enquiries for work on Eyre Peninsula but without success. At his age it is hardly surprising that he would encounter difficulty in finding employment. Notwithstanding the evidence led by the respondent as to the demand for the services of young mechanics prepared to work for Aboriginal communities in the Northern Territory, I find that the prospects for employment for Mr Blanch would have been dismal even if he had been prepared to remain in Alice Springs to seek work. In my opinion the losses which he has sustained by reason of his wrongful dismissal exceed the maximum amount which this Court has jurisdiction to award by way of compensation under s.170EE. It is agreed that he was receiving a salary of $41,733 gross per year at the time of his dismissal. In my opinion compensation should be assessed at $20,866.
A claim for damages for inadequate notice is made pursuant to ss.170DB(2) and 170EE(5). Although the letter of dismissal was not received until 16 September it is convenient to treat the notice, according to its terms, as operating as from 12 September 1994. On this footing an additional payment of 3 days wages is necessary to achieve the payment required by s.170DB(2), viz $482.
I have chosen to treat the notice period as operating from 12 September 1994 for the purposes of the above calculation as this then means that on the calculations relating to annual leave, no overpayment occurred. If the notice were taken to operate from 16 September 1994 there would have been an overpayment of 4 days annual leave. It is agreed that in respect of the period from 1 January 1993 to 12 September 1994 each of the applicants were entitled to 42 days annual leave. In the case of Mr Blanch the amended defence alleges that he took in this period the following annual leave:
July 1993 4 weeks (20 days)
10 December 1993 to
27 January 1994 7 weeks (35 days)
21 April 1994 to
16 May 1994 4 weeks (20 days)
2 September 1994 to
12 September 1994 1 week & 2 days (7 days)
16 weeks & 2 days (82 days)
In my opinion the two periods of four weeks each in July 1993 and April-May 1994 should not be treated as annual leave. In relation to the first period, Mrs Blanch had a nervous breakdown in early July 1993. She was certified unfit for work for five weeks. At the end of the first week Mr Auricht told Mr Blanch to take his wife away from Hermannsburg for four weeks, and the applicants went for this period to Venus Bay whilst Mrs Blanch recovered. The absence in April and May 1994 was due to Mr Blanch taking time off to travel to Sweden to visit his aged mother who was in ill-health. At the time, both periods of absence by Mr Blanch were treated as compassionate leave by decision of Mr Auricht. Ordinary remuneration was paid throughout both periods. There was no suggestion at the time that either absence was to be treated as annual leave.
Each of the applicants was employed at an annual salary. Generally they were not paid overtime. They were expected to achieve what was required to the extent that their physical ability permitted. They worked way beyond a usual 35-40 hour week. In the early stages of his employment with the respondent Mr Blanch worked 7 days a week, then 6 days a week from 7.00 a.m. to 6.00 p.m. Later this was reduced to 5½ days per week with the hours remaining at 7.00 a.m. to 6.00 p.m. during week days. The understanding which the applicants had with Mr Auricht was that time would be allowed to them for compassionate or pressing personal reasons as required. Apart from these two absences of four weeks each it seems that little time was taken by either of the applicants. The arrangement appears an entirely reasonable one to both sides. The absences were allowed as compassionate leave on full pay and that should remain the position. In the result in respect of the entitlement of 42 days leave from 1 January 1993, Mr Blanch (and also in her case Mrs Blanch) had taken exactly that period if the dismissal notice is taken to operate as from 12 September 1994.
I do not allow any extra payment on account of unpaid holiday pay as claimed by Mr Blanch, nor do I make any contrary adjustment for overpaid holiday as sought by the amended defence. It also follows that the holiday leave loading actually paid was in respect of the appropriate period and no adjustment on that account is necessary.
It is agreed that Mr Blanch has an entitlement to long service leave pursuant to s.10(2) of the Long Service Leave Act (NT) of $9,390.
Mr Blanch is therefore entitled to judgment for $30,738 gross, before tax. No claim at common law for breach of contract is made in the associated jurisdiction of this Court. Although compensation has been assessed under the provision of the Act, had a common law claim for damages for breach of contract been made by Mr Blanch, the damages, in the circumstances of this case, would probably have been of much the same order as the compensation.
I turn now to the claim by Mrs Blanch. By the amended defence the respondent pleaded that the dismissal was for the reasons stated in the dismissal letter. Further it is denied that Mrs Blanch had not been given an opportunity to defend herself against the allegations as required by s.170DE of the Act. The amended defence pleaded:
"5.1The applicant was made aware of problems with her work through discussions with the management of the respondent for at least one year prior to the termination of her employment.
5.2The management of the respondent employed from time to time people to assist the applicant with her work.
5.3The applicant was advised that her failure to properly maintain the books and financial records of the respondent was jeopardising the respondents continuing funding through ATSIC and other funding bodies.
5.4The applicant failed to take steps to remedy defects in her work performance.
5.5The applicant had the opportunity to defend herself and to remedy defects in her work performance.
5.6The applicant failed to bring to the attention of the management committee of the respondent correspondence from funding bodies, in particular ATSIC, which disclosed problems with the applicants work performance and which threatened the continuation of funding for the respondent.
5.7The respondent says that the failure to bring such information to the attention of the respondent constitutes serious misconduct."
It is pleaded that as Mrs Blanch had been guilty of serious misconduct she was not entitled either to a long service leave payment or to a payment in lieu of notice. As there had been a partial payment in lieu of notice it was sought to set off this amount, along with other alleged overpayments against any entitlement which might otherwise be due. In the statement of claim Mrs Blanch sought a payment of $8,537.50 for overtime under an agreement allegedly reached with Mr Auricht in January 1994 that she be paid overtime from that date at a rate of $25 per hour. The entitlement to overtime was denied and a further set off of $1,000 was pleaded in the amended defence in respect of a payment of that amount made on account of overtime to Mrs Blanch on about 15 August 1994.
In opening the respondent's case, counsel contended that serious misconduct should be found to have occurred in three respects: (1) Mrs Blanch knew at least by September 1993 that she was not complying with ATSIC grant conditions. In particular she was transferring moneys between budget allocations without written ATSIC approval, but she continued to certify, as was required on a quarterly basis, to ATSIC that all conditions of the grant had been complied with; (2) there was an agreement reached between non-Aboriginal members of staff at a meeting in August 1993 to provide the Management Committee with "simplified" accounts which would obscure the true picture; (3) Mrs Blanch failed to advise the Management Committee from at least March 1994 that ATSIC funding was threatened and that the reasons for that was the inadequate performance of her responsibilities.
The third matter related to the two ATSIC letters dated 30 December 1993 and 2 March 1994 which had been read to the AGM on 9 September 1994.
In support partly of these allegations, and partly of the further allegation that in any event even if the conduct were not serious misconduct it was conduct that constituted a valid reason based on the inability of Mrs Blanch to fulfil the bookkeeping requirements of her job which justified her dismissal, evidence was led; (a) that on 21 December 1994 ATSIC appointed a Grants Controller to supervise the receipt and expenditure of ATSIC funds by the respondent for reasons said to be due to the conduct of Mrs Blanch before her dismissal; (b) from the auditor Mr Peter Hill of Horwarth Gamble and Partners, Chartered Accountants, as to problems encountered by him in the audit for the year ended 30 June 1994; (c) evidence from Mr Chandra Sharma, an accountant who was appointed by the respondent to assist with its bookkeeping and accounting requirements on 17 July 1994, as to "what was wrong in the place" when he started; and (d) that Mrs Blanch had failed to perform her duty statement function which, it was alleged, required her to attend all meetings of the Management Committee to present financial information.
I propose to deal with each of these matters, but I shall first give my overall conclusions. In my opinion Mrs Blanch was not guilty of serious misconduct in the ways alleged or at all, and that the particular criticisms made of her, or of aspects of the bookkeeping, do not in all the circumstances either individually or together provide a valid reason based on her conduct or performance for her dismissal. On the contrary, she worked under extremely difficult circumstances in an administration that was overtaxed with work and understaffed - both as to the numbers of staff and as to the expertise required for the proper administration of a large and complex operation. There were aspects of the accounting records of the respondent where the quality of the records were open to criticism, and delays occurred in the performance of some bookkeeping functions which would have been carried out more expeditiously by Mrs Blanch had she had the time. But she did not have the time. That these shortcomings existed was known to Mr Auricht and had been advised to the Management Committee through Mr Stuart, although he may not have appreciated the full significance of the reports given to him. Moreover I am satisfied that Mrs Blanch had on numerous occasions made known to Mr Auricht that further staff were required, but budgetary restrictions and the absence of accommodation made this not possible. I have already referred to the increases which had occurred over the years in the size of the respondent's operation. The evidence is to the effect that the undertaking of ATSIC was also increasing in size, complexity and sophistication, and that at times it too was understaffed and therefore unable regularly to visit the respondent, or to give the assistance and advice needed by the respondent's administration. Mr Auricht said that in the 1993-94 year he felt "quite abandoned by [ATSIC]" and that the respondent had "to make do with whatever resources we could dig up ourselves". ATSIC's requirements as to the level of detail required in financial reports was also increasing in complexity which added to the burdens of Mrs Blanch.
By 1994 the responent's operations had grown to the point where a qualified accountant was required. On 17 July 1994 the first qualified accountant, Mr Sharma was appointed, along with an additional qualified bookkeeper. Their services alleviated to a considerable extent the problems that had hitherto existed, so that by 2 September 1994 problems that had earlier existed were well on the way to being overcome, and probably would have been overcome had Mrs Blanch not been dismissed.
At best from the respondent's viewpoint I consider the evidence shows that by reason of the growth of the respondent's operation and the increase in complexity of the accounting requirements, the point had been reached where restructuring of the administration was necessary so that it came under the immediate control of a qualified accountant. Had a planned restructuring been undertaken in mid-1994 decisions might well have been reached that the job filled by Mrs Blanch had become redundant; that her highly paid position should be filled by a qualified accountant; and that the structure of bookkeepers working under the accountant would not warrant the employment of a bookkeeper on her wage. Had this approach to the administrative problems outlined by Mr Auricht been taken, the dismissal of Mrs Blanch may have been justifiable for a valid reason based on the operational requirements of the respondent's undertaking. In this event however, her termination, to be fair, would have required the payment of compensation for her redundancy in accordance with industry standards. However this is not what happened, and the case must be judged according to the events which occurred.
In the presentation of the respondent's case, many criticisms were made of the accounts, and the criticisms were put to Mrs Blanch in the course of her cross-examination. The general nature of these complaints made it difficult to detect the precise errors that it was alleged Mrs Blanch had committed, and this difficulty was heightened by the fact that none of the financial accounts of the respondent were produced in evidence. Numerous criticisms were made that funds had been transferred from one account to another, yet the particular accounts and the transactions involved were not identified. Much of the discourse between counsel and witness was at best hypothetical, and often meaningless because no particular transaction could be identified, and the parties who participated in it were not known. In many instances where a general allegation was put to Mrs Blanch that she had omitted to take some step that she should have taken, I was left with the impression that there could be some quite different explanation for what was said to have occurred.
The first ground of alleged misconduct concerns the transfer of ATSIC funds from an account designated for one purpose to a different account so that the funds were used for another purpose without the prior approval of ATSIC. Undoubtedly such transfers occurred, particularly in relation to a pipeline project in 1993-1994. Mr Auricht explained that these transfers were made from time to time to enable essential or emergency works to be carried out. In the case of the pipeline its completion was urgently required by a number of Outstations; a grant had been approved by ATSIC; CDEP workers had been assigned to the job and materials ordered; a delay then occurred in the payment of the ATSIC funds. The commencement of the work was authorised by sections of the administration unrelated to Mrs Blanch, and then she was presented with the need to find money to meet the commitments which had been entered into. She was instructed by Mr Auricht to "borrow" funds from two surplus accounts until the ATSIC grant came to hand. It appears that there were also transfers for other purposes besides the pipeline. However, none of the transfer transactions were identified, and none of the relevant accounting records were produced in evidence. Insofar as the evidence goes, it seems that each of the transfers came from either the CDEP Community Development account or the ATSIC Housing account. Both these accounts were ones that contained surpluses which had been carried over from other projects in past years and were quite separate from the CDEP Wage account and the Infrastructure account into which current year ATSIC grants were paid. There has never been any suggestion that any moneys went missing, or were used for any purpose other than the long term interests of the respondent and the Aboriginal communities served by it. The problem concerns only the requirement for accounting compliance with the conditions of the grants. The evidence does not establish that any of the transfers were made by Mrs Blanch on her own decision. The underlying expenditures which gave rise to the need for a transfer of funds were incurred by parts of the administration unrelated to Mrs Blanch's activities. The decisions about the transfers were made in conjunction with her superior, Mr Auricht, and the transfers were usually accomplished by drawing a cheque which required at least two signatories. In my opinion the fact that transfers occurred in these circumstances, even if they were made in breach of ATSIC grant conditions, does not constitute a valid reason for the dismissal of Mrs Blanch.
However the allegation of serious misconduct goes beyond the making of the transfers. The serious aspect of the allegation is that, a transfer having been made, it was concealed in quarterly returns to ATSIC made under cover of a declaration signed by Mrs Blanch that the conditions of grant had been fulfilled. However the evidence fails to establish that any declaration of this kind was made. The accounts from which the transfers were made were not the subject of quarterly reports or certificates of condition fulfilment. The quarterly reports related only to the recurrent funding for CDEP wages and infrastructure. There is no evidence that funds were transferred from either of these accounts. The first allegation of serious misconduct has not been established.
The second ground of alleged serious misconduct is based entirely upon the following entry in minutes of a staff meeting held on 23 August 1993. This was just after the Management Committee had been established, and Mr Cuff was endeavouring to implement the new management regime. Those present were Mr Auricht, Mr Keeling (the manager of the CDEP programme) and Mrs Blanch. On page 3 of the minutes, under the heading "Financial Matters" it is recorded:
"Glen (Auricht) queried 'what sort of information should be available to the next Management Committee meeting?'
Alan (Keeling), said 'if we don't have new money through, don't provide any other information than make it a PR exercise with Ingrid (Blanch) explaining how the money flows and how the different accounts operate, with transfer from one account to another'.
Glen asked Ingrid about timing future meetings so that Management Committee...could endorse payments, expenditures etc and get a feel of what is happening. Ingrid said the second week of every month would suit."
It is contended that the second paragraph of this entry indicates that those present participated in a scheme to obscure the true financial picture. This is said to arise in particular from the reference to "a PR exercise". This interpretation of the minute strikes me as far fetched and unlikely. An entirely innocent reading of the paragraph appears to me as far more likely. However, even if the interpretation sought to be placed on the paragraph by counsel for the respondent is a proper construction of the minute, the evidence of both Mr Auricht and Mrs Blanch is that the minutes were kept by Mr Keeling, they were never approved by Mrs Blanch, and that neither of them has any recollection of the expression "a PR exercise" being used. On the contrary their evidence is that Mrs Blanch was insistent on complete honesty and proper disclosure, and would not have been party to any obfuscation. I have no hesitation in accepting that Mrs Blanch was not a party to any scheme of the kind alleged. The second allegation of serious misconduct is totally unfounded.
The third ground of alleged serious misconduct is based on the proposition that Mrs Blanch failed to advise the Management Committee of the two letters of 30 December 1993 and 2 March 1994, and that the threat to future ATSIC funding arose by reason of inadequate performance of her responsibilities.
Mr and Mrs Blanch were on annual holiday from 10 December 1993 to 27 January 1994. Mrs Blanch was not at Hermannsburg when the first of these letters was received. The letter came first by fax under a cover addressed to Messrs Auricht and Stuart, and the letter was then posted direct to Mr Stuart as chairman of the respondent. In my opinion the probability is that Mr Stuart received a copy of the letter at about the time that it was written. The suggestion that the letter did not come to the attention of any member of the Management Committee until just before the AGM on 9 September 1994 is not borne out by the evidence.
The covering fax read:
"1. I AM ATTACHING A LETTER WHICH I WILL SEND IN THE POST TOO. I HAVE RECOMMENDED THAT THE FUNDS FOR OPERATIONAL GRANT AND CDEP BE RELEASED, HOWEVER, THE QFS ARE NOT SATISFACTORY AND THAT IN ITSELF CONSTITUTES A BREACH AND USUALLY AFFECTS RELEASE OF FUNDS. THEREFORE, IT IS IMPERATIVE THAT YOU TREAT THE ENCLOSED LETTER WITH THE UTMOST ATTENTION AND WE HAVE A MEETING AS SUGGESTED IN THE LETTER AS SOON AS POSSIBLE IN THE NEW YEAR.
AS YOU ARE AWARE, I CANNOT RELEASE ANY FUNDS FOR CDEP CAPITAL UNTIL I HAVE A REQUEST AND STATED PURPOSE FROM YOU FOR THESE FUNDS AND, OF COURSE, QUOTES FOR ANY ITEMS OVER $2,000. PLEASE CHECK THE BUDGET LIST I AM ENCLOSING AND FORWARD A LETTER CONCERNING THE CAPITAL. THERE HAVE BEEN SURPLUS CARRY OVERS IN CAPITAL IN PREVIOUS YEARS WHICH YOU HAVE PUT DOWN TO LATE RELEASES. THIS WILL BE AN UNACCEPTABLE REASON THIS YEAR AS YOU HAVE MORE THAN ADEQUATE TIME IN WHICH TO GET QUOTES, REQUEST RELEASE AND PURCHASE CAPITAL EQUIPMENT. IT IS EXPECTED THAT GRANTEE ORGANISATIONS CAN EXPEND THE CAPITAL FUNDS WITHIN THREE MONTHS OF RECEIPT. PLEASE ATTEND TO THIS MATTER ASAP.
(Sgd) ELIZABETH LOGAN"
It seems that the fax, as well as the letter was read to the AGM. Paragraph 2 of the fax concerns a matter quite unrelated to any responsibility of Mrs Blanch, and was later attended to by another member of the administration who had responsibility for obtaining quotations for CDEP capital items.
The letter referred to in the first paragraph of the fax reads:
"Dear Mr Stuart
I refer to the recently recieved (sic) Quarterly Financial Statements covering Tjuwanpa CDEP and Operational grants. I received both June quarters and September quarters at the same time, both sets of which were overdue. I might add that GFS's from Tjuwanpa are often overdue.
I have now had a chance to check the statements and have found them unsatisfactory. I have referred them to our finance officer for his opinion of the statements.
In the meantime, I have recommended a release of both CDEP and Operational grants for the next quarter. However, I must stress that this is NOT usual practice to release funds when there is a breach of conditions. Late receipt of Quarterly Financial Statements, which are then unsatisfactory, constitutes a BREACH of conditions. It is therefore imperitive (sic) that we resolve this matter as soon as possible so that future funds releases are not withheld.
I am suggesting a meeting be held early in the new year at Tjuwanpa attended by yourself and any other core members of your Council, your Manager, Glen Auricht, the CDEP Co-ordinator, Alan Keeling and your Bookkeeper, Ingrid Blanch. I will attend with our Finance Officer, Rob Ruttico and possibly, Les O'Brien. Could you please contact me with a proposed date. In the meantime, I will liaise with Rob Ruttico and get a list of the points that are unsatisfactory in the QFS's for your attention and for discussion at the meeting.
I look forward to an early reply concerning this important matter.
Yours sincerely
(Sgd) Elizabeth Logan"
Mrs Blanch has no recollection of seeing this letter, although it was probably included in a substantial bundle of correspondence left on her desk by Mr Auricht which she went through on her return from holiday. Whether or not she saw the letter, she did attend a meeting with ATSIC representatives at the respondent's premises on 3 February 1994. It is unclear whether Mr Stuart was at that meeting, although, even if he were away at the time, it is most improbable that he did not receive a report about it from Mr Auricht. The only evidence about the meeting is from Mrs Blanch and I accept her evidence. She says the meeting concerned the quarterly financial statements. Miss Logan and the other ATSIC representative asked if the format of the quarterly statements could be changed to make them easier to read. ATSIC wanted a particular form used. In the past the information returned by the respondent had been taken from its computer, and did not use line headings that corresponded with those used by ATSIC. The respondent had installed new computer software in September 1993 which included a "report manager". Mrs Blanch arranged for Horwarth and Horwarth Computer Service (S.A.) Pty Ltd, of Adelaide to implement that part of the software package so that the requirements of ATSIC could be met. This was done within two weeks, and the new format required by ATSIC was used for the quarter ended 31 March 1994. An officer of ATSIC informed Mrs Blanch that the new format was "fine, that is what we wanted".
On the evidence the proper conclusion about the communication of 30 December 1993 is that it related in part to an area of the respondent's operation unconnected with Mrs Blanch, and, insofar as it concerned quarterly reports, the responsibility of Mrs Blanch, the problem had been rectified some months before. Moreover, the problem at the time related to the changing requirements of ATSIC, not incompetence on the part of Mrs Blanch.
The faxed letter of 2 March 1994 read:
"AS ADVISED TO YOU BY PO. LOGAN ON A NUMBER OF OCCASIONS WE CANNOT RELEASE FUNDS TO YOUR ORGANISATION AS YOU ARE IN BREACH OF TERM AND CONDITIONS. (1) ANNUAL AUDIT LAST DAY FOR SUBMISSION WAS 31ST DECEMBER 1993. IT IS NOW 2ND MARCH 1994. WE STILL DO NOT HAVE YOUR AUDIT.
IF YOUR AUDITOR IS INCAPABLE OF COMPLYING WITH YOUR REQUIREMENTS THEN YOUR ORGANISATION SHOULD PLACE YOUR BUSINESS WITH A MORE COMPETENT FIRM. THE PROBLEM IS ONE YOUR ORGANISATION MUST SOLVE. IF THE AUDITOR IS HAVING PROBLEMS RECONCILING FIGURES SUPPLIED BY YOUR ORGANISATION THEN YOU NEED TO HAVE A GOOD HARD LOOK AT THE QUALITY OF YOUR ON SITE ACCOUNTING STAFF AND MAKE CHANGES WHERE NECESSARY OR INSTITUTE TRAINING PROGRAMS.
UNDER THE PRESENT SITUATION THE LOSERS ARE THE OUT STATION CLIENTS YOUR ORGANISATION IS FUNDED BY THIS BODY TO SERVICE.
(Sgd.) K TAYLOR"
It is undoubtedly the case that the audited accounts for the year ended 30 June 1993 were not submitted to ATSIC by 31 December 1993. They were not signed off by the auditors until 10 March 1994. The text of the communication from ATSIC suggests that it was understood at the time that the delay was due not to Mrs Blanch but to the auditors. No evidence was led from the auditor for the year ended 30 June 1993 as to the reasons for the delay. Again, the only evidence on the topic is from Mrs Blanch which I have no hesitation in accepting. Her evidence about the preparation of the annual accounts for the year ended 30 June 1993 is that she initially had difficulties immediately after the completion of the financial year in providing the auditors with all the information they needed as she suffered a nervous breakdown through overwork. However after her return to work the information was supplied to the auditor, and before she left on her annual holidays on 10 December 1993 the auditor told her that the accounts would be audited and returned to the respondent before the end of December so that the ATSIC requirements could be met. When she returned to work at the end of January 1994 she found that the accounts had not been prepared. She telephoned the auditor who informed her that he had been delayed.
When the audited accounts were submitted to ATSIC, a number of matters of concern arose. For example, as Mrs Blanch pointed out at an early stage, the accounts included in the statement of income and expenditure an income of $15,238 for "foreign currency exchanges". There had been no such transactions, and none was disclosed in the accounts submitted to the auditors. On the evidence, this was entirely an auditor mistake. Further, insofar as it is possible to form an opinion from the vague evidence that was given on the topic, it seems that there were a number of questions relating to the treatment given to various assets by the auditors. The auditors' approach to that aspect of the accounts was not agreed to by Mr Auricht whose responsibility it was to maintain the asset register. The evidence does not link in any satisfactory way any of the matters of concern raised in the audited accounts with Mrs Blanch.
The evidence does not establish that the failure to comply with the 31 December 1993 date for submission of the audited reports to ATSIC was due to a failure by Mrs Blanch to perform her duties. The ATSIC letter of 2 March 1994 by its terms provided no evidence of misconduct by Mrs Blanch. Had enquiry been made as to the underlying reasons for the delay in submitting the audited accounts, it would have revealed that the responsibility did not lie with Mrs Blanch. The failure to meet the ATSIC deadline provided no valid reason for the dismissal of Mrs Blanch.
The third ground of alleged misconduct is not established.
I turn now to the ATSIC letter of 21 December 1994 which advised the respondent that a Grants' Controller had been appointed. The letter advised that the appointment had occurred because of the following breaches of grant conditions by the respondent, namely:
• non receipt of the 1993/94 audit
•non receipt of monthly financial reports for September and October 1994
•unauthorised transfer of $90,000 into the Works Division Account
•unauthorised transfer of $20,000 from the ATSIC Housing Account
The appointment of the Grants' Controller occurred more than three months after Mrs Blanch was dismissed. However it is contended that evidence of the appointment, and the reasons for it, provide an ex post facto justification for the dismissal: see Byrne v Australian Airlines Limited (1995) 131 ALR 422 at 434 and 462-463.
The 1993-1994 audited accounts, under revised ATSIC guidelines, were due to be submitted by 30 September 1994. In the first half of 1994 Mrs Blanch was working under extreme pressure. Administrative staff numbers were inadequate to enable the bookkeeping requirements of the respondent to be fulfilled in a timely manner. In June 1994 the pressures upon her were such that she felt compelled to go over the head of her manager, Mr Auricht, and speak to an ATSIC representative to stress the need for additional staff and funding. On 17 July 1994 Mr Sharma was appointed. This was the first appointment of a qualified accountant. Hitherto all the accounting functions had been supervised by Mrs Blanch who was a very experienced bookkeeper, but not an accountant. At about the same time another experienced bookkeeper was also appointed. The new staff were assigned to perform accounting functions necessary to complete the accounts to 30 June 1993 so that they would be audited on time. Audit work was conducted by the auditors at the respondent's offices during August 1994 when a number of requisitions were made. Mrs Blanch says that when she left on holidays on 2 September 1994 the accounting work for the year ended 30 June 1994 was virtually complete. The only matters outstanding were the completion of the reconciliation of the Works Division bank account for the month of June 1994, and the completion of reconciliations of the debtors and creditors ledgers. These matters were left in Mr Sharma's hands to complete, and there was the expectation on Mrs Blanch's behalf that the deadline would be met. As events turned out it was not, and, as disclosed by Mr Hill's evidence, he doubted from the outset whether the auditors could meet the deadline. It is not possible on the evidence to form any reliable view as to the reasons for the delay in meeting the deadline. Such as it is, the evidence suggests that the fault lay with the auditors rather than with the accounting staff of the respondent. It is not necessary to explore the reason for the delay further. It is sufficient to find on the evidence, which I do, that the delay was not due to any fault on the part of Mrs Blanch which could constitute a valid reason for her dismissal. It is true that by reason of the pressures that had been upon her that the accounting functions were behind at 30 June 1994, but with the appointment of two additional staff members the preparation of the accounts was back on track by the time Mrs Blanch left. If delays thereafter were caused within the respondent's administration, they were not of her making.
The second breach relied on by ATSIC was the non receipt of monthly financial reports for September and October 1994. These were reports that fell for preparation after Mrs Blanch had been dismissed. Mr Sharma acknowledged that the presentation of those reports was his responsibility. He says they were delayed as the computer had not been "rolled over" to complete the 30 June 1994 records. Until this was done subsequent accounts could not be prepared. The outstanding accounts for September and October were lodged with ATSIC within a day or two of the letter of 21 December 1994. Again, the evidence gives no satisfactory explanation why the computer had not been "rolled over" at an earlier date. Apparently this process was held up initially by the need to complete the reconciliation of all bank accounts, and the reconciliation of the Works Division account for the month of June was still in progress (although almost complete) when Mrs Blanch went on holidays. This was one of the tasks assigned to Mr Sharma to complete. If he were required to conduct a more extensive reconciliation than just for the month of June, the evidence discloses no reason why he should not have completed it to enable the annual accounts to 30 June 1994, and subsequent monthly accounts, to be printed off by the end of September 1994. Again this is not a matter for which Mrs Blanch carries the responsibility.
The remaining two breaches relied upon relate to unauthorised transfers of grant moneys of $90,000 into the Works Division account and $20,000 from the ATSIC housing account. The evidence does not disclose the transactions said to constitute these breaches. Mrs Blanch guessed that the transfers could relate to the pipeline, although the total amount sounded too high. Without access to the financial records she could throw no further light on the topic. Mr Hill was also unable to do so. Mr Auricht thought that the amount of $90,000 referred to the purchase price of a grader which in error was paid through the wrong account, requiring a subsequent adjustment in the books, and that the amount of $20,000 related to a payment of $20,000 to the Works Division for the use of equipment which had been employed in a project. The transaction was processed as a transfer whereas it should have been processed as a payment on an invoice. Errors of this kind were often the product of the employment of trainee clerical workers in the administration. If Mr Auricht were correct about the reasons for these alleged "transfers", the errors appear to have been of a minor technical nature, and whilst appropriately identified as errors by ATSIC, were not matters of any substance. For reasons already given the evidence fails to establish any valid reason for the dismissal of Mrs Blanch relating to the transactions which resulted in the alleged unauthorised transfers.
I turn next to the evidence of Mr Hill. Following the completion of the audit for the year ended 30 June 1994 a management letter dated 29 March 1995 was submitted by Mr Hill to the respondent identifying matters in the financial records of the respondent which required attention. Mr Hill was asked to nominate which of the matters raised in that letter were "problems for which the bookkeeper Ms I Blanch had responsibility". The first that he identified was the matter of bank reconciliations. When Mr Hill visited the respondent's offices in August 1994 a reconciliation to 30 June 1994 for the Works Division had not been completed. That matter has already been discussed. It was one of the tasks assigned to Mr Sharma to complete. Mr Hill did not see evidence on the bank statements to indicate that bank reconciliations had been regularly performed throughout the year. Mrs Blanch acknowledged that there may not have been evidence of reconciliations regularly attached to the statements relating to the various accounts, but I accept her evidence that appropriate reconciliations of the accounts, other than for the Works Division, were performed in a timely way. In the case of the Works Division the accounts had been reconciled to the end of September 1993 to enable the installation of the new computer software at that time, and had also been reconciled to the end of February 1994. That reconciliations for succeeding months had not been completed at the end of each month is a symptom of the staff shortages that existed until the appointment of Mr Sharma and the additional bookkeeper. As Mr Hill stressed in his evidence, the absence of the reconciliation did not indicate the existence of error in the accounts. At no stage was any substantial error suggested. The complaint simply was that the reconciliation exercise had not been performed sooner than it was.
Mr Hill noted that the general ledger balance for the ATSIC Housing division differed by $48,206 from the reconciled bank balance. He was unable to say how this difference may have occurred. On their consideration of the accounts the auditors were satisfied that the bank balance was correct. Mr Hill assumed that there must have been a posting error of some sort. If the explanation were a posting error, it would be the product of the engagement of trainee clerical staff to perform posting functions. The posting was not done by Mrs Blanch.
Mr Hill noted in the management letter that no stock valuation report was provided to the auditors to support the inventory figure in the accounts, and this led to a qualification of the audit. Mr Hill said that the valuation may well have been done, and then lost. His complaint simply was that it was not shown to the auditors. Mrs Blanch gave evidence that the valuation had been done, and was on the top of her filing cabinet when she left on holiday. Moreover she explained that a valuation of the kind required by Mr Hill could have been obtained from the computer.
Mr Hill was critical of the fixed asset register, a topic to which reference has already been made. The asset register was maintained by Mr Auricht, not by Mrs Blanch, and moreover the concerns about the asset register, insofar as the evidence gives a limited understanding of what those concerns were, appear to relate to a disagreement between Mr Auricht and the auditors on the one hand, and the auditors and ATSIC on the other hand as to the appropriate accounting treatment for various assets. Mr Hill said that he did not agree with the stance taken by ATSIC about the appropriate treatment of some of the assets. These disputes were matters that did not involve Mrs Blanch.
The final matter identified by Mr Hill as one over which Mrs Blanch had responsibility was the account keeping for the Works Division. Mr Hill noted that the account keeping for the Division was not always maintained at a satisfactory level throughout the year. The shortcomings related to monthly bank reconciliations, fuel reconciliations, and the absence of final stock reports. These matters have already been covered. The Works Division bank accounts were reconciled on a number of occasions during the year, but fell behind by reason of staff shortages at 30 June 1994, a matter that was rectified early in July by the appointment of further staff. The fuel reconciliation difficulties related to the daily sales sheets already discussed. The problem there related to the difficulties in the field of having people record purchases and fuel use - matters quite outside the control of Mrs Blanch. It seems that the final stock reports had been prepared in a form that would have been satisfactory to the auditors but were not brought to their attention. Had Mrs Blanch not been dismissed this particular criticism would probably not have arisen.
Evidence was also led about a number of other points of concern raised by the auditor, but these were not identified by Mr Hill as matters falling within the responsibility of Mrs Blanch, and the evidence led on them either alone or in conjunction with the other evidence does not establish any valid reason for the dismissal of Mrs Blanch.
Next, the respondent relied on the evidence of Mr Sharma, and in particular on a list of the matters which he considered to be "wrong in the place" when he started. Mr Auricht considered that a number of the criticisms made by Mr Sharma, who was only an employee of the respondent for six months, reflected a lack of understanding by him of the nature and complexity of the respondent's operation. With that criticism I agree. It is notable that Mr Sharma raises as matters of concern, for example, the lack of reconciliations of several accounts and ledgers, yet fails to note that these were tasks that he was assigned to perform, and did perform without undue difficulty, upon his appointment.
When Mr Sharma's criticisms are considered in light of the other evidence, in my opinion they do not identify any additional matter of concern not already discussed, and provide no additional evidence that could support a finding that a valid reason existed for the termination of Mrs Blanch's employment relating to her conduct or performance.
The points raised by Mr Sharma are as follows:
•Works Division bank reconciliations were not done for the 12 months ended 30 June 1994. This is not strictly correct. A number of the reconciliations had been done, and the completion of the reconciliations was one of the tasks assigned to Mr Sharma to complete.
•Mr Sharma complained there was no record of transfers between accounts showing loans to and from various departments. He said it took several days to establish these transfers. Mr Sharma, when giving evidence, was at the same disadvantage as the Court, namely that none of the financial records of the respondent were available to him. In particular, whatever record Mr Sharma prepared of these transfers, was not produced. When asked for further details he said that he experienced difficulties tracking the transfers as in some instances there was a debit or credit on one account but no corresponding entry on the other account to or from which the transfer was made. This evidence is contrary to that of Mr Hill who said that overall the accounts balanced, and contrary to the evidence of Mrs Blanch. I accept that Mr Sharma had difficulty identifying all the transfers, but I do not accept that there were not appropriate entries in the ledgers which identified them. Absent any financial records to show the nature of this apparent problem, no conclusions adverse to Mrs Blanch can be drawn.
•Mr Sharma complained that an entry for motor vehicle expenses was made in the annual accounts without any basis. This was not a "bookkeeper" criticism made by Mr Hill. There is no suggestion that the expense item was inappropriate and Mr Auricht thought it to be correct. Insofar as the evidence lends any weight to the suggestion that there was some shortcoming in the relevant records, it appears that the shortcoming was in the recording of expense items in the workshop.
•Mr Sharma complained that trial balances were not in line with actual reports submitted to ATSIC, and that the auditors' accounts submitted to ATSIC did not agree with the balance sheets. He said that adjustments dating back to the 1990/1991 accounts were not done in the trial balance. Insofar as it is possible in the absence of the financial records to make any sense of the evidence on this topic it appears that it relates to the disagreements that existed between Mr Auricht and the auditors, and the auditors and ATSIC, over the treatment of assets.
•Mr Sharma criticised subsidiary creditors and debtors ledgers. In part discrepancies to which he refers appear to have been a quirk of the new computer software. He complains of a lack of monthly reconciliations, but as with the complaint about the Works Division reconciliations, his comments are not wholly correct and in any event relate to a matter that he was asked to attend to. He complains that debts had not been followed up; this complaint reflects a failure to understand the cultural difficulties that would confront members of the respondent's staff if strenuous attempts were made to get in the book debts.
•Mr Sharma offered a criticism about the "Members Trust" which he said owed more than there was available in the bank account. He added that he had no time to establish the cause of this. This criticism appears to be another instance of him not having an adequate understanding of the background of the account. The evidence fails to disclose any irregularity in the Members Trust.
•Mr Sharma complains that "all grants in special projects including ATSIC grants have been spent without much consideration to the actual budget. Special project grants have been overspent..." This is an unwarranted generalisation which again reflects an absence of a proper understanding of the respondent's operation by Mr Sharma. It seems that difficulties were encountered in the field in allocating expenses involved in overlapping projects. Mrs Blanch did not agree with this criticism, and the evidence fails to establish any shortcoming on her part.
•Complaint is made that grant moneys of $15,000 were banked in the wrong account. Apparently a clerical error did occur in the banking of a cheque for this amount. Again no documents were produced relating to the transaction, and the evidence fails to disclose why or by whom the error occurred, and whether it should have been identified sooner than it was.
•Criticism was made about the daily sales sheets for fuel supplies. This matter has already been discussed.
•Mr Sharma was critical of a discrepancy which he identified between sales and the cost of purchases through vending machines. The reason for this discrepancy again is unclear, but it may reflect a failure by people to comply with an honour system which operated in relation to one of the food and drink outlets. The evidence does not identify any bookkeeping error.
•Mr Sharma said that there was no evidence that tax reconciliations for either group or PPS tax were done at the end of each he month. In evidence he acknowledged that the reconciliations may have been done, but he could find no paperwork. Mrs Blanch offered the explanation that the reconciliations were done by the computer, and I accept that explanation.
•Mr Sharma complained that there were several bags of money lying around the office on the first day he attended work which he was required to put in a safe. It is surprising that this is offered as a criticism. It reflects a lack of understanding of the respondent's operation. The bags of money were the takings from telephones and coin operated machines brought into the office to be counted by the staff and banked. Mr Sharma complained that "most of the bags just disappeared within weeks", a hardly surprising event as the money was banked.
•Finally Mr Sharma offered some generalised criticisms of the bookkeepers' general knowledge and ability. I do not accept those criticisms. Again they reflect a lack of understanding of the operation, and of the stresses and staff shortages that prevailed before Mr Sharma arrived. He added the further observation that "I could see that the previous bookkeeper was playing a guessing game when it came to submitting final accounts to ATSIC". When asked about this observation Mr Sharma said that he noted that ATSIC was raising matters about the accounts dating back to 1992-1993, and it was then mid-1994. He thought the accounts should have been sorted out in the meantime. "I thought for that to happen, some people - people in the system - didn't have much knowledge as to how to do the accounting work. So that's what I said. That was the reason why I said that." Insofar as the evidence discloses the nature of the matters outstanding in relation to the earlier accounts, it identifies the treatment of assets, the matter about which there had been dispute between Mr Auricht and the auditors, and the auditors and ATSIC. The accounts for the 1992/93 year had been audited, and matters of concern arose thereafter. The evidence fails to disclose any link between these matters and the performance by Mrs Blanch of her duties and responsibilities.
Finally, there is the complaint that Mrs Blanch, in breach of her duty statement, did not attend all meetings of the Management Committee to present financial information. Although there is no satisfactory evidence that the duty statement contained in Mr Cuff's draft report was adopted and promulgated, Mrs Blanch was prepared to accept, generally, that it listed her duties. Relevantly, the duty statement reads:
"Under the direction of the Business Manager (Glen Auricht)
...
* Attend all meetings of the Governing Committee to present financial details in accordance with the Tjuwanpa Outstation Resource Centre (Aboriginal Corporation) Constitution. Ref. clauses 16(1), 16(2), 16(3)."
The case for the respondent failed to have regard to the opening words of the duty statement: "Under the direction of the Business Manager..."
The evidence makes it plain that Mrs Blanch acted in the ways which she did relevant to this complaint under the direction of Mr Auricht. Mrs Blanch attended the first Management Committee Meeting. Thereafter, before each meeting she asked Mr Auricht if she were required at the meeting, and was informed that she was not.
As and when financial information was required, Mr Auricht asked Mrs Blanch to supply it to him. It is clear that she must have done so on many occasions, in the form of printouts from the computer. Possibly these were not fully understood by Mr Auricht and the Management Committee, but Mrs Blanch was not requested by the Business Manager to attend the meetings to give further explanation. The evidence suggests that there may have been occasions where, because of other work, financial information was not supplied, at least at the time when it was first requested. But if this were so - and no particular instance was identified by the respondent's case - Mr Auricht offered no criticism of the conduct or peformance of Mrs Blanch in failing to provide the information, nor do I think any criticism can fairly be levelled at her as she was doing her utmost to perform her role.
In my opinion the evidence fails to disclose any valid reason relating to Mrs Blanch's conduct or performance for her dismissal. The evidence fails dismally to establish any serious misconduct that would justify her summary dismissal, or a refusal to pay her long service leave entitlements.
Mrs Blanch was dismissed in contravention of s.170DE(1) of the Act. She is entitled to a remedy under s.170EE. As reinstatement is impracticable, compensation is the appropriate remedy.
Mrs Blanch is some 10 years younger than her husband, and her prospects of employment elsewhere, generally speaking, are significantly better. Mrs Blanch registered at the CES in Port Lincoln in October 1994. She obtained four weeks casual work in Ceduna in early January 1995 working as a project officer for an Aboriginal organisation, although her wages were significantly less than the rate she received with the respondent. When the casual work came to an end she was offered further employment with ATSIC at Ceduna for a three to six month period, but declined that work as she did not wish to commute week by week from Venus Bay to Ceduna.
As a matter of practical reality Mr Blanch was forced into early retirement by his dismissal, and he and Mrs Blanch have elected to live in a geographically remote place, chosen by them as one where they wished to spend their retirement. Their retirement has come somewhat earlier than anticipated. When Mrs Blanch declined the offer of work in Ceduna, in effect she opted out of the work force to join her husband in retirement. By doing so she has given up the attempt to mitigate her loss, at least to the extent of the earnings that she could have received in other employment. This is a consideration which leads me to conclude that the compensation to be awarded to Mrs Blanch should be less than the jurisdictional maximum.
Another consideration which leads me to the same conclusion is that the employment of Mrs Blanch with the respondent may have been terminated in a lawful way within a few months of her actual dismissal. As I have already noted, the need had arisen in the respondent's administration for the appointment of a fully qualified accountant, and that appointment could have led to a restructuring which made Mrs Blanch's position redundant. Had that occurred no doubt she would have been eligible for a substantial redundancy package, but she would then have found herself in much the same position as she is in now.
I fix the compensation payable to Mrs Blanch in respect of the contravention of s.170DE(1) at $15,000.
A claim for overtime payments was pleaded. However I do not consider the entitlement has been made out. There was some discussion in January 1994 between Mr Auricht and Mrs Blanch about overtime, and I accept that she kept records of the overtime hours that she worked thereafter. However I am not satisfied that there was a firm agreement that for every overtime hour she would receive an additional payment. Rather, I think the hours were recorded so that some additional payment in the nature of a bonus could be justified in addition to the agreed salary. As events turned out, in August 1994 Mrs Blanch asked Mr Auricht if she could receive $1,000 in lieu of overtime, and this amount was paid to her by cheque dated 15 August 1994. In my opinion this request and payment settled the issue of overtime, and no additional entitlement has been established.
As with Mr Blanch, if the dismissal notice is taken to operate as from 12 September 1994 Mrs Blanch received exactly her entitlement to annual holidays, and no further adjustment on that account is necessary. Mrs Blanch is however entitled to an additional payment equal to three days remuneration to provide payment for the notice period required by s.170DB, namely $510.
In the event that the Court determined that Mrs Blanch was entitled to a payment under the Long Service Leave Act, it was agreed that the amount due to her would be $9,390.
Mrs Blanch is entitled to judgment for $24,900, gross before tax.
At trial neither counsel made any submissions about the possible incidence of taxation upon the amounts claimed by the applicants, or as to the form which any judgment in favour of the applicants should take to reflect the obligation of the respondent to deduct tax from payments due to the applicants on account of long service leave or "eligible termination payments" as defined in s.27A(1) of the Income Tax Assessment Act 1936. The orders now made are intended to permit the respondent to fulfil its obligations, but in case some issue arises as to the terms of the order, the parties shall have liberty to apply.
I certify that this and the
preceding pages are a true
copy of the Reasons for
Judgment of Justice von DoussaAssociate:
Dated:
Counsel for the applicants : Mr M Spargo
Solicitors for the applicants : Caroline Scicluna
Counsel for the respondent : Ms S Gearin
Solicitors for the respondent : Dittons
Dates of hearing : 26 February to 1 March 1996
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