Borland v First 5 Minutes Pty Limited
[1995] IRCA 369
•16 August 1995
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - MISCONDUCT - Wilful.
Industrial Relations Act 1988
Allen v Tobias (1958) 98 CLR 367
Gooley v Westpac Banking Corporation (unreported 3 April 1995, No. NI 102 of 1994)
North v Television Corporation Ltd (1976) 11 ALR 599
Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285
Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1964] 3 All ER 413
Wessex Dairies Ltd v Smith [1935] 2 KB 80
Hirvac Ltd v Park Royal Scientific Instruments Ltd [1946] Ch 169
Sinclair v Neighbour (1966) 3 All ER 988
BORLAND v FIRST 5 MINUTES PTY LIMITED - No. NI 1203 of 1995
Before: Judicial Registrar WALKER
Place: Sydney
Hearing Dates: 11-12 May 1995
Judgment Date: 16 August 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N0. NI 1203 of 1995
Between: IAIN GEORGE BORLAND
Applicant
And: FIRST 5 MINUTES PTY LIMITED
Respondent
Before: Judicial Registrar WALKER
Place: Sydney
Hearing Dates: 11-12 May 1995
Judgment Date: 16 August 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application be dismissed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N0. NI 1203 of 1995
Between: IAIN GEORGE BORLAND
Applicant
And: FIRST 5 MINUTES PTY LIMITED
Respondent
Before: Judicial Registrar WALKER
Place: Sydney
Hearing Dates: 11- 12 May 1995
Judgment Date: 16 August 1995
REASONS FOR JUDGMENT
The applicant in this matter commenced employment with the respondent in about June 1992 as a probationary trainer and in approximately August 1994 was promoted to the position of senior training consultant. His duties were primarily ensuring the quality control of training modules used by trainers employed by the respondent, in conducting training sessions in fire and emergency procedures and at other times he was required to visit and observe the training sessions being presented by other trainers, and to present training sessions himself.
Prior to his employment with the respondent the applicant had gained extensive experience as a security officer and manager in the security industry, especially in the field of fire and emergency procedures. He holds a Diploma in Occupational Health and Safety Management, an Advanced Certificate in Fire Technology and a Certificate in Occupational Health. He is a fellow of the Security Institute of New South Wales and a graduate member of the Institute of Fire Engineers and is presently studying towards a Diploma in Safety Science at The University of New South Wales.
The applicant’s employment was terminated by the General Manager of First 5 Minutes, Mr Robert Binning on 27 January 1995, two days after a meeting had been held with the applicant concerning allegations made by Mr Colquhoun, the New South Wales Manager. The meeting was held on 25 January 1995, but the applicant had walked out when he became concerned about his legal position. After he left, Mr Binning sent a letter by courier the same day to the applicant, enclosing various documents and a request that the applicant provide any material or explanation. He also indicated that he would remain in Sydney until 3.30 pm that day if the applicant wanted to contact him, however, Mr Binning did not indicate a deadline for the applicant to provide his written reply. Mr Binning’s evidence was that as no reply had been received by 27 January 1995, he acted on the termination.
THE TEMPLE EMANUAL MANUAL
Mr Martin George Nicholl, Director of International Security Personnel (ISP), gave evidence that he had been approached by his Secretary, who attended the Temple Emanual at Chatswood and was asked by her if he knew of someone who could prepare an evacuation report for the Temple. As Mr Nicholl was a member of the Security Institute of New South Wales he approached a fellow member by the name of Patrick Flower to see if he could recommend someone for the job. Mr Flower recommended the applicant as such a person and a meeting was arranged between Mr Nicholl, Mr Flower and the applicant. Mr Nicholl gave evidence that he was under the impression that the applicant was under a sub-contractual arrangement with the respondent. The applicant had given Mr Nicholl two cards, one as a fire safety consultant from the respondent company, First 5 Minutes and his own personal card under the name of Insight Consultants.
The applicant’s evidence was that he was going to undertake this work during his Christmas holidays and to complete it during his leisure time at home, however, on 12 January 1995, Mr Colquhoun, the New South Wales Manager of the respondent discovered a manual while attending Dashing Printers, the printers engaged by the respondent. The front page of this manual was entitled, “Fire & Emergency Evacuation Procedures North Shore Temple Emanual, 28 Chatswood Avenue, Chatswood, Prepared by International Security Protection.” Mr Colquhoun considered that this manual, “was practically identical” to a manual he had prepared for the North Shore Synagogue in September of 1994. His evidence was that he was furious and that:
“The synagogue manual was on the floor in my office and I picked it up, compared them very quickly -standing up- and then walked straight into Borland’s office.”
The evidence then was that Mr Colquhoun threw the manual on the applicant’s desk. The applicant admitted that he had prepared the manual for another company but that company was not a competitor of the respondent. The applicant then refused to give the manual back to Mr Colquhoun and subsequently destroyed it. Several pages of the manual were retrieved from the printing office waste paper bin, but the rest were lost and no direct comparison could be made.
In cross examination, Mr Colquhoun resiled from his assertion that the manual was an identical copy of the synagogue manual, but he was sure the applicant’s version was prepared from the respondent’s base and was a derivation of other manuals prepared by the respondent. It was admitted by the applicant that the manual produced by him did contain material photocopied from the respondent’s materials, however, the applicant insisted that the copy found by Mr Colquhoun was only a draft produced to show the Temple Emanual.
Mr Stuart Clark, the document production assistant employed by Dashing Printers filed an affidavit in these proceedings and this document was marked as exhibit 5. Under cross examination it became evident that this affidavit was inaccurate as it indicated the applicant had requested that the manual was to be printed and bound, when in fact only one copy was to be photocopied and bound. From Mr Clark’s evidence it was established that the applicant had requested that the document he had given to Dashing was for binding only and that the applicant had made changes to the original draft. Mr Clark had discovered some of the amended draft pages in the garbage bin and had given these to Mr Colquhoun on the 13 January 1995.
There was no evidence to establish that the cost of binding the manual had been charged to the respondent or that there was ever any more than one copy made of it. There can be no doubt however that the applicant did use some of the respondent’s time and resources in the production of the manual, even though most of the work was carried out in his own time. It was also established that he did receive payment for the production of the completed manual, as was his intention from the beginning.
THE TERMINATION OF EMPLOYMENT
When Mr Colquhoun confronted the applicant with the Temple Emanual manual he said the applicant admitted that he had written it for another company. He then told the applicant that he had signed a Confidentiality Agreement which required him to, “not do this sort of thing.” Mr Colquhoun said that the confidentiality agreement required the applicant to keep company documents, including manuals, confidential, and that any breach of this agreement was a ground for termination without notice at the respondent’s discretion. He said the applicant had replied, “what confidentiality agreement?” and asked to be shown a copy. He then said he told the applicant that it was a condition of his employment that he could not undertake work for companies engaged in business in competition with the respondent and the applicant had replied that the company was not a competitor, but was engaged in a different field of work to the respondent. Mr Colquhoun responded that he did not accept that the company was not a competitor and asked the applicant if he had prepared manuals for competitors on previous occasions, the applicant, he said then refused to answer. Mr Colquhoun did not ask any further questions and then left the applicant’s office.
Mr Colquhoun then contacted Mr Robert Binning, the General Manager of the respondent company and informed him of the incident. Mr Colquhoun told Mr Binning:
“I picked up this document and to my horror here was basically my manual with another organisation’s name on a cover.”
Mr Binning was then transferred to the applicant to hear his side of the incident. The conversation according to Mr Binning is included in his affidavit as annexure “A” and is set out hereunder:
“Mr BINNING: Iain, I have just had a rather disturbing conversation with Brian Colquhoun and would like to hear your side of the story. As I understand it, here is a document at our printers which contains material from First 5 Minutes but which has a cover bearing another organisation’s name and you are connected with this. Is that correct?
IAIN: Well, I was asked to do a favour for a friend and get this printed.
Mr BINNING: But I understand that it contains, indeed plagiarises, the company’s material. Do you understand the term plagiarise?
IAIN: Yes I do, but I have not completely copied a document.
Mr BINNING: Are you saying you have not copied any of our material?
IAIN: There are a few pages, probably a couple, which have been copied.
Mr BINNING: Are you aware of the Confidentially Agreement you signed with First 5 Minutes?
IAIN: Yes
Mr BINNING: Good because I have that document in front of me now. I consider you are in breach of that document.
IAIN: That’s your opinion.
Mr BINNING: Iain, you are a senior member, indeed an executive of this company. if you wanted to do a favour for a friend or an organisation, using the company’s material, don’t you think you should have asked the branch manager for approval first?
IAIN: Yes, now I have thought about it - I should have.
Mr BINNING: And don’t you think that there should have been some acknowledgment in your document to First 5 Minutes?.
IAIN: Yes
Mr BINNING: What is the name of the organisation on the document cover.
IAIN: Oh, I don’t know, it’s some Hebrew word.
Mr BINNING: Well read it out to me, I’m sure I can get it down.
IAIN: I can’t remember the word.
Mr BINNING: Iain, I know the document is on your desk, just read it to me.
IAIN: I am not prepared to give you that information
Mr BINNING: After further discussion about the seriousness in which the company held this incident, and the advice to Iain Borland that the company would pursue this vigorously through our legal advisers, I asked Iain Borland to send the document or a copy, to me in the overnight bag. This he repeatedly refused to do. Following advice I instructed Brian Colquhoun to suspend Borland on pay, immediately until further notice.”
The applicant in his affidavit said that he told Mr Binning that he had no intention of publishing the material and had therefore not sought permission. He also noted that Mr Binning had not stated his introductory comments to their conversation in the above annexure to his affidavit. Mr Binning he said, had indicated to him that his was in jeopardy and that he would get solicitors involved and take him to court and that he would never work in the industry again and would be black listed. Because of this, the applicant said he was extremely reluctant to say too much during the conversation.
On the 13 January 1995, Mr Binning said he instructed Mr Colquhoun to conduct an investigation into the incident to ascertain the nature of the applicant’s relationship with ISP and the religious organisation he had prepared the manual for. He received the results of Mr Colquhoun’s investigation on 20 January 1995 and on the basis of this information arranged a meeting with the applicant, for the purpose, according to Mr Binning to, “disclose all the documents that we had to Mr Borland and give him the opportunity to reply.” In cross examination, the applicant’s counsel, Mr Reitano put the following proposition to Mr Binning:
“The purpose of the meeting was to provide Mr Borland with documents and facts that you had related to the matter and to give him an opportunity to take the information away and provide a written reply?”
Mr Binning said in reply to this:
“If he wanted to do so, yes.”
Mr Binning’s record of the telephone conversation of 19 January 1995 with the applicant indicates that the purpose of the meeting was to provide the applicant with facts and documents related to the matter and that he would be given the opportunity to take this information away, and he would be required to prepare a written reply. Mr Binning’s note indicates that he also told the applicant that the respondent would pursue this matter vigorously with the best legal advice and that the applicant should think seriously about his position and the costs that he would incur.
The meeting took place on 25 January 1995, with the applicant, Mr Binning and Mr Colquhoun. Mr Binning commenced the meeting by making the following statement:
“I have reason to believe that you have been:
(a) At best using First 5 Minutes Pty Limited material for other purposes certainly not in the interest of First 5 Minutes Pty Limited; and
(b) At worst, operating your own business in competition to First 5 Minutes Pty Limited.
This is a very serious matter and, if correct, could result in your dismissal. I will now take you through these documents, take your time and tell me what you have to say about them.”
Following this statement certain documents were shown to the applicant and he was questioned about them. After the fifth document it appears that the applicant became a bit cautious about the trend of the meeting and indicated that he was going to terminate the meeting as:
“... every word I say could purge me and prejudice my future in the company.”
Having said that, he left the room with the documents 1 to 5 in his hand and Mr Binning called him back and said:
“We will stay here for an hour if you reconsider your decision and wish to ask any questions on the documents or see the other documents.”
A complete set of the documents was delivered to the applicant by courier on the same day, Wednesday 25 January 1995. On Friday 27 January 1995, Mr Binning decided to terminate the applicant’s employment. In paragraph 35 of his affidavit, marked as exhibit 8, Mr Binning said:
“My decision was made on the grounds that Mr Borland had admitted to breaching the Confidentiality Agreement and his duty of good faith to First 5 Minutes. Further, First 5 Minutes’ investigations had revealed that Mr Borland had engaged in competition with First 5 Minutes by preparing a manual for ISP without First 5 Minutes’ knowledge or consent. Mr Borland had failed to confirm that this was an isolated incident. Mr Borland had shown a lack of honesty and had refused to respond to First 5 Minutes’ allegations of serious misconduct, either at the meeting convened for this purpose on 25 January 1995 or at any time after the meeting.”
THE APPLICANT’S LETTER OF 12 JANUARY 1995
After the applicant was suspended on 12 January 1995, he sent a letter to Mr Colquhoun in an attempt to explain his position. The letter is set out hereunder:
“Dear Mr Colquhoun,
After having had time to gather my thoughts regarding your decision to suspend me from duties until further notice, I feel compelled to write to you forthwith.
Although I consider this to be of a private nature I am very concerned about the allegations in which I have been subjected too. These allegations I consider to be serious and prejudicial in my wishes to remain in the employment of First 5 Minutes.
However I am prepared to provide you with the following information. This information should not be interpreted either in part or in full as to an admission of alleged guilt or impropriety. I was approached by an acquaintance who represents a security consultancy, known as International Security Personnel. He asked me if I could undertake a fire safety survey for a religious organisation. The survey required a full assessment of the property’s fire safety system, assess and recommend methods in reducing the facilities vulnerability to an arson attack and to document other contingencies with methods on minimising their impact.
The survey was undertaken when I was on holidays and has not been completed at this point in time. It would appear some comparison has been drawn with an incompleted draft document that has come into your possession with that of First 5 Minutes material. Much of the material contained in this document related to kindergarten safety, bomb threat material available from the Federal Police and AS3745. I certainly did not intend to compromise any confidentiality. However, because of these accusations and the fact I wish to resolve this matter urgently, I have destroyed the document that you had brought to my attention. If I have erred in any way or caused concern with my alleged actions, then I am deeply regretful.
I can understand your concerns and assure you that I am not employed, contracted to, or connected to anybody else with providing unsolicited material belonging to First 5 Minutes.
I certainly do hope that we can sort this out at this level, as I will be equally determined to pursue any avenue that would be available to me.
Iain Borland.”
It is clear from this letter that the applicant makes no admission that he has breached the Confidentiality Agreement, his duty of good faith or that he had acted in competition with the respondent. It is also clear that he did in fact state that this was an isolated incident.
THE CONFIDENTIALITY AGREEMENT
On the 29 June 1992 the applicant signed a confidentiality agreement in the presence of Mr Colquhoun in the following terms:
“IT IS AGREED AS FOLLOWS:
CONFIDENTIALITY OBLIGATIONS
(a) The employee shall not, either during the continuance of his employment with the company or at any time thereafter, except in the proper course of his duties as an employee of the company, divulge to any person whomsoever and shall use his best endeavours to prevent the publication or disclosure of any trade secret or process or any information concerning the business technology or finance of the company, and/ or its associated or related companies or its or their dealings or affairs which may come to his knowledge in the course of his employment with the company or by any other means whatsoever.
(b) The employee shall not, either during the continuance of his employment with the company or at any time thereafter, except in the proper course of his duties as an employee of the company, give or show to any person any books, records, manuals, written procedures, diagrams, client details, notes or other material belonging to, or pertaining to the company and/or its related companies or its or their dealings or affairs including electronically stored material which may come into his possession in the course of his employment with the company or by any other means whatsoever. Furthermore, the employee undertakes to surrender up all such material to the company forthwith on termination of employment or when requested to do so by an authorised officer of the company.
TERMINATION
(a) The employee’s employment with the company may be terminated forthwith by the company at the company’s absolute discretion and without prior notice. If the employee shall, at any time, be proven guilty of any misconduct or neglect in the discharge of his obligations pursuant to clause 1 of this agreement.
(b) Upon termination of the employee’s contract of employment pursuant to paragraph (a) of this clause, the employee shall immediately resign from his position with the company without claim for any compensation by way of a severance or redundancy entitlement and the employee’s conduct shall be construed as being wilful breach of his duties as an employee, for the purpose of any superannuation scheme of which the employee is a member.”
WAS THERE A BREACH OF THE CONFIDENTIALITY AGREEMENT?
The applicant admitted that he had used some of the respondent’s material in the preparation of the manual for the Temple Emanual and the pages found at the printers bear this out. He also said that it was his intention to produce this copy purely for the purpose of displaying it as an example of what he was to prepare at some future date for the Temple. In paragraph 19 of the applicant’s affidavit (exhibit 2), he explained that given his involvement in the security industry and his membership of various professional organisations, he was well aware of the strong criticism and reprobation that plagiarism of such kind would attract both from clients, as well as those professional organisations of which he was a member. He stated further that he was aware that if he published someone else’s work as his own he would destroy his creditability in the field of fire and emergency services. Despite this the applicant unfortunately destroyed the evidence.
The respondent submitted that in such circumstances the Court should apply the principle set out by the High Court in Allen v Tobias (1958) 98 CLR 367, where Dixon CJ, McTiernan and Williams JJ said at (375):
“In the first place to presume the fact against the defendant seems but a proper application to the circumstances of the principle omnia praesumuntur contra spoliatorem... No statement of the principle could be more apposite than that of Sir Arthur Channell delivering the opinion of the Privy Council in The Ophelia: “If anyone by a deliberate act destroys a document which, according to what its contents may have been, would have told strongly either for him or against him, the strongest possible presumption arises that if it had been produced it would have told against him; and even if the document is destroyed by his own act, but under the circumstances in which the intention to destroy evidence may fairly be considered rebutted, still he has to suffer. He is in the position that he is without the corroboration which might have been expected in his case.”
There was in this case, however, evidence from Mr Colquhoun that the manual produced by the applicant was not an exact copy of his synagogue manual, although it was, he said, based on the format used by the respondent. Of course the reality is that the applicant did not publish this manual and later prepared a more extensive version for the Temple Emanual which he supplied at a later date, a copy of which is annexed to his affidavit and marked as annexures “G” and “H.”
It was asserted by the applicant’s counsel that the manuals produced by the respondent did not amount to material that could be regarded as confidential in any event. To support this proposition he noted the comments of Chief Justice Wilcox in Gooley v Westpac Banking Corporation (unreported 3 April 1995, No. NI 102 of 1994) where His Honour adopted with approval the test as to confidentiality adopted by Lord Greens MR in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1964] 3 All ER 413 at 415 that a document which is in the public domain cannot be confidential. The applicant argued, that the manual, even though not having been publicly released, was readily available and the information it contained was not such that its public release would be likely to cause any damage to the respondent.
The applicant in his affidavit at paragraph 9 denies the contention by Mr Colquhoun that the manuals of the respondent are distinguishable from those produced and sold by its competitors. Mr Colquhoun in paragraph 5 of his affidavit (exhibit 6) maintains that the respondent’s manuals are distinguishable because of unique features, such as:
“(a) not length; (b) drafted in plain English avoiding technical jargon; (c) designed for ease of use; and (d) designed to be accessible to and easily understood by ordinary employees of the respondent clients.”
The applicant submitted that this assertion is incorrect and that there are a range of manuals produced by the competitors of the respondent which in various respects would satisfy the “unique features” identified. I must say that I agree with the applicant’s proposition as I can speak from the experience of observing fire and emergency manuals in various buildings I have been resident in over a period of time. The Court itself has such a manual drafted in similar terms and the Australian Standard AS3745, which is prepared by the Committee of Emergency and Evacuation Procedures produces a document which is a blueprint for the preparation of such manuals. The very nature of these manuals must by necessity remove them from the class of confidential information. They are for general distribution to occupants of buildings to facilitate their survival in the case of an emergency.
For these reasons I find that the applicant was not in breach of the Confidentiality Agreement signed on 29 June 1992.
CONDUCT INCONSISTENT WITH EXPRESS OR IMPLIED CONDITION OF SERVICE?
The applicant’s counsel maintained that there was no agreement in the applicant’s contract of employment that restricted the applicant from performing outside work. He argued that there were also part-time employees working with the respondent who held other jobs, although, from the evidence it would appear that these people were firemen and not office workers.
The applicant’s contract of employment was constituted by a written document which is annexure “B” to his affidavit, is set out as follows:
“APPOINTMENT OF TRAINING CONSULTANT
JUNE 1992
The terms of the appointment to the position of Fire Safety Consultant with First 5 Minutes Pty Limited, are as follows:
Date of commencement: 29.6.92.
Salary (reviewed annually) : $32,000 per annum.
Vehicle allowance: $7,000 per annum.
Hours of duty: 8 hours/day between 7.30 am and 5.00 pm (flexible).”
And the confidentiality agreement signed by the applicant on 29 June 1992, annexed to Mr Binning’s affidavit, the relevant parts of which are set out above, under the heading “Confidentiality Agreement.”
The applicant’s counsel noted that these documents set out the formal details which were to apply but they did not appear, by any means to comprehensively cover the terms and conditions of employment and that no evidence was led that any oral terms and conditions of employment were agreed. The respondent on the other hand argues that the applicant’s conduct has breached an implied, rather that an express condition of service and that that breach amounted to “serious misconduct,” and that is “conduct which was in itself of a nature which caused a fundamental breakdown in the relationship” between the parties: Gooley v Westpac Banking Corporation (3 April 1995 per Wilcox CJ at p.18).
The misconduct of the applicant amounted to engaging in work of the same nature as his employer with a potential customer of the employer for profit at the expense of the employer. To justify termination in the manner in which it was carried out concerning this applicant, the misconduct must be of the type of “serious misconduct” as was examined by the Chief Justice in Gooley’s case mentioned above. The Chief Justice said in that case that:
“The question whether Mr Gooley was guilty of serious misconduct requires an examination, not only of his actions, but also of his mental processes relative to them... conduct which was in itself of a nature which caused a fundamental breakdown in the relationship as an employer to an employee. This meaning is consistent with what fell from Smithers and Evatt JJ in North v Television Corporation Ltd (1976) 11 ALR 599... At 608-609 their Honours said:
“It is of assistance to consider the expression “misconduct” by reference to subject matter to which it is related and the context in which it appears. The subject matter is the termination by one party against the will of another of a continuing contract of employment on the ground of breach of one of the terms of the contract. And the context is such as to indicate that certain breaches of a non-serious nature, some of which would be within the connotation of misconduct, are not regarded as grounds for termination. In such a situation it is reasonable to interpret the expression “misconduct” as referring to conduct so seriously in breach of the contract that by standards of fairness and justice the employer should not be bound to continue the employment.”
This situation would arise if there were conduct inconsistent with the fulfilment of the express or implied conditions of service. It is conduct of that kind which will justify dismissal at common law...
For purposes of this application of the common law principles to the facts of this case, the remarks of the Master of the Rolls in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 at 287, are in point. He said:
“To my mind the proper conclusion to be drawn from the passage which I have cited and the cases to which we were referred is that, since a contract of service is but an example of contracts in general, so that the general law of contract will be applicable, it follows that, if summary dismissal is claimed to be justifiable, the question must be whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service...”
I do, however, think (following the passages which I have already cited) that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and for that reason, therefore, I think that one finds in the passages which I have read that the disobedience must at least have the quality that it is “wilful”; it does (in other words) connote a deliberate flouting of the essential contractual conditions.”
There can be no doubt in the present case that there was an implied contractual duty for the applicant to act in good faith to the respondent and the question to be answered therefore is; did the applicant’s conduct amount to “wilful” disregard of the implied condition to act in good faith, notwithstanding, that the incident appeared to be an isolated breach?
BREACH OF DUTY OF GOOD FAITH
The applicant admitted that he was doing work for another company and that this work, the preparation of a fire safety manual was the same as that of the respondent. In paragraph 23 of his affidavit he states:
“... I recall that I made it very clear to Mr Nicholls in my conversation with him that I was not completing this task on behalf of First 5 Minutes, but was so doing under my own business name of Insight Consultants. I gave Mr Nicholls my First 5 Minutes business card so that he would be able to contact me.”
It is also clear that the applicant was in a senior position, even though he doubted that he was an executive employee. He was in fact the second most senior person in the New South Wales Branch and gave evidence in his affidavit at paragraph 2 that:
“I was responsible for the project management of high profile clients of First 5 Minutes, such as the Australian Broadcasting Commission and the Sydney Opera House.”
This places the applicant into a more onerous position as to his duty to act in good faith and added to this is the fact that he is an experienced man in the security field, a person who must of necessity be aware that what he did was to place himself in opposition with his employer and that by doing so he was securing a potential client of his employer and thereby breaching his duty to act in good faith. When he was confronted by Mr Colquhoun he denied that he was being paid for the preparation of the manual, however, in his affidavit at paragraph 18 he admits that he lied but he did so because, he:
“... feared for my job and my livelihood and considered that if I said that I was not being paid for the work the matter would be taken no further.”
His behaviour concerning the incident only suggests that his conduct must amount to that of being “wilful” misconduct which was in itself of a nature which caused a fundamental breakdown in the relationship of employer and employee and breaches the duty to act in good faith. Added to this was his remarkable answer to the question as to whether he had carried out any other work during his employment with the respondent other than teaching at TAFE. His answer was:
“I honestly can’t recall...”
This answer is even more amazing considering the applicant had been asked to consider the question overnight. As counsel for the respondent said in his submissions:
“Human experience indicates such an answer is utterly unbelievable.”
Mr Justice Kearney sitting in the Equity Division of the Supreme Court of New South Wales afforded relief to an employer where he found that two employees had during their employment breached their contractual duty of good faith, and applied Wessex Dairies Ltd v Smith [1935] 2 KB 80 and Hirvac Ltd v Park Royal Scientific Instruments Ltd [1946] Ch 169. In the case of Hirvac Ltd v Park Royal Scientific Instruments Ltd, the English Court of Appeal considered a similar situation. Hirvac Ltd manufactured midget valves for hearing aids with workers skilled in this field. The defendants, Park Royal Scientific Instruments Ltd subsequently commenced in competition with Hirvac and some of Hirvac’s employees had been employed by the defendant in their spare time and outside their usual working hours. The Court of Appeal held that the obligation to act in good faith existed whilst the employment contract existed and would extend to situations which occurred even in an employee’s spare time. Different considerations would of course apply to manual workers as there was less risk that the use of their labour would prove harmful to their initial employer. However, the situation is different in the case of more skilled workers.
The applicant’s behaviour in this case puts him in a position where taking into account the circumstances surrounding the incident with the Temple Emanual manual he has breached his implied duty to act in good faith. This conduct can be classed in the category of wilful misconduct, justifying summary dismissal and was conduct of the type in Sinclair v Neighbour (1966) 3 All ER 988, where the Court found that although the conduct was not dishonest, it was:
“... of such a grave and weighty character as to undermine the relationship of confidence which should exist between master and servant.”
For these reasons I must dismiss the application.
I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment of Judicial Registrar Walker.
Associate: Kerry Harrison
______________
Date signed: 16 August 1995
Appearances
Counsel for the applicant: Mr R. Reitano
Counsel for the respondent: Mr M. Christie
Solicitor for the respondent: Mr. J. Garland, Freehill Hollingdale & Page
Date of Hearing : 11-12 May 1995
Date of Judgment: 16 August 1995
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