Brackenridge v Toyota Motor Corporation Australia Ltd
[1996] IRCA 162
•19 April 1996
DECISION NO: 162/96
CATCHWORDS
INDUSTRIAL LAW - termination of employment - whether contract of employment terminated - whether demotion of employee is termination of employment - meaning of 'termination' within Division 3 Part VIA Industrial Relations Act 1988 (Cth)
INDUSTRIAL LAW - termination of employment - whether employee afforded procedural fairness - whether investigation by employer into alleged conduct adequate - whether there was any bias in the way employer carried out investigation
INDUSTRIAL LAW - termination of employment - whether there was a valid reason for termination - whether termination was harsh, unjust or unreasonable
INDUSTRIAL LAW - termination of employment - remedies for unlawful termination - whether reinstatement impracticable - meaning of 'impracticable' - whether compensation should be awarded - principles to apply in calculating compensation - whether an award of compensation under s 170EE(2) extends to compensation for mental distress
COURTS - associated jurisdiction - claim for damages for breach of employment contract - whether federal and non-federal aspects of claim arise from common substratum of facts - whether court has jurisdiction to deal with non-federal aspect of claim where federal aspect of claim fails - whether jurisdiction to deal with non-federal claim is attracted at the time proceedings were instituted
INDUSTRIAL LAW - employment contract - implied terms - whether implied term of contract that employer has a duty to act fairly and in good faith - whether implied term breached - whether implied term that employer must give reasonable notice to terminate contract - whether implied term breached - damages for breach of implied terms of employment contract - whether damages can be awarded for mental distress
Industrial Relations Act 1988 (Cth):
Federal Court of Australia Act 1976 (Cth) s38
Industrial Relations Reform Act 1993 (Cth)
Racial Discrimination Act 1975 (Cth)
Trade Practices Act 1976 (Cth)
Landsal Pty Ltd (in liq) and Ors v REI Building Society (1993) 41 FCR 421
Addis v Gramophone Co Ltd [1909] AC 485
Grout v Gunnedah Shire Council (1994) 125 ALR 355
Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212
Brookton Holdings No. V v Kara Kar Holdings Pty Ltd [1994] 57 IR 288
Stratton v Illawarra County Council [1979] 2 NSWLR 701
B.P. Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266
Reigate v Union Manufacturing Co [1918] 1 KB 592
Strachan v Liquorland (Australia) Pty Limited (unreported, Moore J, 6 February 1996)
Siagian v Sanel Pty Limited (1994) 1 IRCR 1
Association of Professional Engineers, Scientists and Managers Australia v Skilled Engineering Pty Limited (1991) 1 IRCR 106
Liddell v Lembke (1994) I IRCR 466
Nicolson v Heaven & Earth Gallery Pty Limited (1994) 1 IRCR 199
Byrne v Australian Airlines Ltd (1995) 131 ALR 422
Stack v Coast Securities (No. 9) Pty Limited (1983) 154 CLR 261
Glass & Ors v State of New South Wales (1994) 52 FCR 336
Briginshaw v Briginshaw (1938) 60 CLR 336
Aitken v Construction Mining Timberyard Sawmills and Woodworkers Union of Australia (WA Branch) (unreported, Lee J, 7 August 1995)
Fencott & Ors v Muller & Anor (1983) 152 CLR 570
Elna Australia Pty Limited v International Computers (Australia) Pty Limited (1987) 75 ALR 271
Dorotea Pty Limited v Vancleave Pty Limited (1987) 75 ALR 629
Bostik (Aust) Pty Ltd v Gorgevski (1992) 36 FCR 20
Izdes v L.G. Bennett & Co Pty Limited (unreported, Beazley J 14.9.95)
Hamlin v Great Northern Rly Co (1856) 1 H&N 408 [156] ER 1261 Hobbs v London and South Western Railway Co (1875) 10 LR QB 111
Hadley v Baxendale (1854) 9 Ex 341 (156) ER 145
Bliss v South East Thames Regional Health Authority [1987] ICR 700
Hayes v Dodd [1990] 2 All ER 815
Vorvis v Insurance Corporation of British Columbia [1989] 1 SCR 1085 at 1102; (1989) 58 DLR (4th) 193
Woolworths Limited v Crotty (1942) 66 CLR 603
Cullen v Trappell (1980) 146 CLR 1
Mt Isa Mines Limited v Pusey (1970) 125 CLR 383
NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68
Campbelltown City Council v Mackay (1989) 15 NSWLR 501
LEANNE BRACKENRIDGE v TOYOTA MOTOR CORPORATION AUSTRALIA LTD
No. NI 1218 of 1995
Beazley J
19 April 1996
Sydney
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
) No. NI 1218 of 1995
NEW SOUTH WALES DISTRICT REGISTRY )
)
BETWEEN:LEANNE BRACKENRIDGE
Applicant
AND:TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED
Respondent
CORAM:BEAZLEY J
PLACE: SYDNEY
DATE: 19 April 1996
SHORT 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.
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
) No. NI 1218 of 1995
NEW SOUTH WALES DISTRICT REGISTRY )
)
BETWEEN:LEANNE BRACKENRIDGE
Applicant
AND:TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED
Respondent
CORAM:BEAZLEY J
PLACE: SYDNEY
DATE: 19 April 1996
REASONS FOR JUDGMENT
BEAZLEY J: This is an application under s 170EA of the Industrial Relations Act 1988 (Cth) (the Act) claiming that the applicant's employment with the respondent was terminated and the termination was unlawful under Division 3 of Part VIA of the Act. The applicant also brings a claim in the Court's associated jurisdiction for breach of certain implied terms of the contract of employment.
The applicant seeks, by way of relief, a declaration that the termination of her employment contravened Division 3 of Part VIA of the Act; reinstatement; the sum of $13,900 compensation under Division 3 of Part VIA of the Act; $20,900 for breach of an implied term to give reasonable notice of termination; and general damages for mental distress, hurt, embarrassment and loss of confidence, consequent upon breach of an implied term of good faith. The applicant also claims interest and costs.
Background Facts
The respondent is a major motor vehicle distributor in Australia. It operates three staff canteens in the Sydney Metropolitan area. One at Woolooware Bay, which is a large canteen and also caters for the requirements of 12 function rooms, and canteens at Shell Point and Taren Point.
The applicant was born on 9 April 1967. She obtained her Craftman's Certificate in cooking in March 1987. She commenced employment with the respondent on 30 June 1989 as a chef and was promoted to chef supervisor in or about January 1993. The applicant's employment is governed by the Toyota Australia Vehicle Industry Award 1988.
In January 1995, the applicant became chef supervisor at the Woolooware Bay canteen. She was assisted by two permanent and one casual assistants. At that time, Ms Law was the chef supervisor at the Shell Point canteen.
On 17 January 1995, the applicant was informed that there was to be a change in canteen staffing. A canteen assistant from Woolooware Bay, Dot Fish, was to be moved to the Shell Point canteen. Another canteen assistant, Pamela Dawes, was to be moved to the Woolooware Bay canteen. The applicant said that she was informed by Jacqui Booth, the respondent's catering manager, that the reason for this change was that there had been complaints about Pam Dawes and that Ms Booth did not wish her to be around food. Ms Booth also told the applicant that Ms Booth wanted to give Ms Dawes a break from tension and friction which existed between Ms Dawes and others at the Shell Point canteen. The applicant understood that the staff to whom Ms Booth referred were Kylie Law and Carol Middleton, a general kitchen hand.
The applicant expressed a concern to Ms Booth that, if transferred to the Taren Point canteen, Ms Fish might find herself in the same position as Ms Dawes. Ms Booth responded by stating:
"Well if you don't want Dot to go I will take Sue or Adele instead. Which one is it going to be?"
The reference to Sue and Adele was a reference to two other employees under the applicant's supervision at the Woolooware Bay canteen.
On 18 January 1995, the applicant had discussions with a union representative about the proposed transfer. Later that day, the applicant spoke with Caroline Ruppe, the Employee Relations Co-ordinator at Toyota. Ms Ruppe informed her that, in addition to ensuring that Ms Dawes was not being victimised, there were "financial" reasons for the transfers of Ms Dawes and Ms Fish. The applicant told Ms Ruppe that Ms Booth had not discussed any financial reason for the transfer.
At about 1 pm on 19 January 1995, the applicant spoke to Ms Booth. She told her she had spoken to Caroline Ruppe about the decision to transfer the two employees. She also said:
"I hope I am not going to be paid back for inquiring of Caroline."
Ms Booth replied:
"You know me, Leanne, I'll have to get you back."
The applicant then said that she was concerned about Ms Fish and that she wished to tell Ms Law of her personal view about the matter. Ms Booth responded that that was "fine" as long as it was not done in front of the rest of the staff at a meeting which was to be held that afternoon. Ms Booth said she made the 'pay back' comment jokingly. The applicant did not accept this was the case.
A meeting of canteen staff was held at the Shell Point canteen later that afternoon. There is no doubt that after that meeting, an incident occurred between the applicant and Ms Law. There is also no doubt that immediately after the incident Ms Law was seen to have a cut on and swelling to or near her mouth. Following the incident, the respondent carried out an investigation to ascertain what had happened. Subsequently, the respondent decided to demote the applicant.
As the applicant, Ms Laws and others gave varying accounts of their evidence of the incident between the two women, it is convenient to refer to the evidence of each witness.
Applicant's version
At the conclusion of the staff meeting, at about 4.25 pm, the applicant said she said to Ms Law:
"I am not impressed with Dot having to come over here to work because of the way you've treated Pam. I don't want to see the same thing happen to Dot."
Ms Law responded:
"I am not interested in what you have to say, just get out."
The applicant says that this was said quite aggressively.
Ms Law commenced locking up the canteen. The applicant said she and Ms Law started arguing. After Ms Law had locked one of the cupboards, Ms Law came at her with keys in her hand and swung her arm at her. The applicant said that she put her arms up in front of her face to defend herself. At about this time she noticed Adele Bourne walk back into the canteen. The applicant said that she put her left arm out to try and push Ms Law away, as Ms Law was coming at her. Ms Law dropped the keys at about this point and the applicant said that she backed away. The applicant and Ms Law continued arguing and Ms Law yelled out to the applicant:
"Get out"
about 2 or 3 times. The applicant said that she then left the canteen and drove back to the Woolooware Bay canteen with Adele Bourne.
Shortly after her return to Woolooware Bay, the applicant received a telephone call from Ms Ruppe and at her request attended her office. Ms Ruppe questioned Ms Law about the incident.
Ms Law's version
Ms Law said that as at January 1995, she had only met the applicant two or three times previously at staff meetings. She said that after the staff meeting on this occasion, the applicant said:
"I want to talk to you".
This, she said, was said in a "very aggressive manner". Ms Laws continued the account as follows:
Ms Laws said:
"Well, look, I don't want to talk to you."
The applicant yelled in an angry manner:
"I'll talk to you whether you like it or not. All the casuals hate coming here to Shell Point and working for you. Its all your fault that Dot's been taken away from me and is coming here. Its horrible the way you speak to Pam, you hate her."
Ms Laws said:
"I don't hate Pam, I just have a problem with her work. I don't want to talk about this. Get out."
The applicant said:
"I've been here for 5 years and you've only been here for one, and everything has been in an uproar since you got here. How come you've been trying to cause trouble in the canteen ever since you started here? You've been trying to cause trouble, trying to move people around."
Ms Laws said:
"Leave my canteen, I do not want to hear what you are saying."
Sometime during this exchange, Carol Middleton, a canteen assistant, who was in the vicinity, walked out of the canteen. Ms Law says that the exchange continued, and that the applicant was swearing and yelling at her. Ms Law told the applicant to "get out" on several occasions. Ms Law then said:
"Look, I'm not copping any more of this crap. Get out of here."
Ms Law said that the applicant then swung at her and hit her in the face. Ms Law pushed her back against the whiteboard in the kitchen at which point the applicant held her fists up in front of her saying:
"Come on, have a go."
Ms Law told the applicant to "get out". The applicant did not leave. Ms Law repeated "get out" several times. She said that the applicant then hit her again and scratched her. Ms Law grabbed the applicant's arms and crossed them over and pushed her up against the washing machine. She then said to the applicant:
"I'm going to ring Jacqui."
Ms Law attempted to ring Ms Booth but the phone was engaged. Ms Law continued to tell the applicant to "get out". She said that by this stage, her lip was swollen and she could feel pain from welts on the back of her neck where the applicant had scratched her. She then said to the applicant:
"I'm going to lock you in the canteen if you don't leave"
She said that the applicant still refused to leave and so she started to lock the canteen door. At that point, the applicant did leave. However, Ms Law said that as she was going through the doorway, the applicant pushed the open door onto her. Ms Law said the force of this sent her backwards and she landed on the ground. Ms Law said that as the applicant finally left the canteen, the applicant said:
"Everyone hates you. All you've done is cause trouble since you've been here."
Ms Law recalls that Adele Bourne walked in at some stage during the incident but she cannot recall when and she did not see her clearly.
Ms Law said that as she went to her car, she saw the applicant and Ms Bourne sitting in the applicant's car and that the applicant again yelled:
"Everyone hates you. All you've done is cause trouble since you've been here."
After the applicant drove off, Ms Law said she drove straight to the security guard at the gatehouse. Mr John Raper was on duty at the time and she informed him that she had just been hit by the applicant.
At that point, Ms Middleton drove up and informed Ms Law that she had already contacted Ms Booth, who was on her way over. However, Ms Law still commenced to drive to Taren Point to report the incident to Ms Booth. On the way she met Ms Booth and Caroline Ruppe. She reported that the applicant had just hit her. Ms Law, Ms Booth and Ms Ruppe then returned to Taren Point and Ms Law made a statement about the incident.
Ms Bourne's version
Adele Bourne was a witness to part of the incident. Her evidence was that after the meeting on 19 January 1995 she had walked outside and was waiting for the applicant at the applicant's car. She thought the applicant was taking longer than she expected. She went back to the canteen to find her. She said that as she walked through the door, she saw Ms Law swing her arm at the applicant. She saw the applicant put her arm out towards Ms Law. She also said the two women were arguing. She said that as she came through the swinging doors that go through from the canteen to the kitchen, she saw Ms Law pick up a set of keys from the floor. She also saw her buttoning up her jacket, as the jacket had been ripped open by the applicant, whilst the applicant was defending herself. She saw Ms Law make a telephone call and then saw Ms Law and the applicant walk out through the back door. She said she left through the front door and met the applicant at her car.
Action taken by the respondent
On the afternoon of the incident, Ms Ruppe interviewed Ms Laws, the applicant and Ms Bourne. Ms Ruppe gave a detailed account of the interview she conducted.
Interview with Ms Law on afternoon of 19 January
Ms Ruppe said that she interviewed Ms Law in the presence of Ms Booth. She said Ms Law's account was as follows:
"...after the meeting everyone left. Leanne hung around waiting for everyone to go. By this time Carol Middleton and I had gone back out to the kitchen and Leanne came back and said: 'I want to talk to you'.
I said:'Well, look I don't want to talk to you'.
Carol Middleton then started to leave the scene.
Leanne was yelling at me and telling me how horrible I was to casuals and all this sort of thing. She said how terrible it was that Dot Fish was going to be taken away from her canteen and brought over to my canteen.
Leanne said that she'd been here for 5 years and that I'd only been here for one and everything has been in an uproar since I got here. She also spoke about Pam and how I hate her. I told her I didn't hate Pam - I just had a problem with her work.
She was swearing at me and carrying on and I said: 'Look, I'm not copping any of this crap, just get out of here'.
I think that this made Leanne angry as she was expecting me to just stand there and take it and not say anything but I started to argue back. Anyway, Leanne punched me in the mouth. At this point I grabbed her by the arms and pushed her hard away.
Leanne then said: 'Come on, have a go.'"
As Kylie made the last remark, she held up her hands (with closed fists) in what I considered to be a demonstration of a "boxing" type pose.
..."
Ms Ruppe said that when describing this part of the incident the applicant held her hands up in a boxing type pose. She said Ms Law continued her account as follows:
"I told her again to get out, but she came again and there was (a) bit more of a scuffle and she punched me again.
I went to the telephone and tried to dial Jacquie to tell her what was going on, but the phone was engaged.
We then yelled at each other again and eventually I started locking up the canteen until there was only one door left and I said:
'If you don't get out of here now I am going to lock you in here.'
Leanne then left and went outside to her car. Adele Bourne was in Leanne's car and they sat in the car for a while until I came out and got in my car and then they took off. I went and saw the security guard and reported the incident to him. I was on my way over here to tell Jacquie when I met you two."
I said: "I am going to have to get Leanne over here.""
Ms Law agreed that this a correct statement of what she had told Ms Ruppe.
Interview with applicant on afternoon of 19 January
After interviewing Ms Law, Ms Ruppe contacted the applicant and informed her that Ms Law had alleged that the applicant had assaulted her. She said the applicant responded: "Oh well you should see the scratches on me then." Ms Ruppe requested the applicant to come to see her immediately as she needed to talk to her about the incident. The applicant told her that she intended bringing Adele Bourne with her. Ms Ruppe agreed to this.
Ms Ruppe interviewed the applicant and Ms Bourne later that afternoon. Ms Ruppe said that the applicant made the following statement to her:
"...I was talking to Kylie and she did not like what I was saying and she got really upset and she swung at me."
Ms Ruppe asked her whether Ms Law hit her to which the applicant responded:
"Oh, not really, I don't really know but she must have because I've got these scratches on my arm. "
Mr Ruppe observed a couple of scratches on one of the applicant's arms.
The applicant continued:
"I spoke to Jacqui at lunchtime and said I wanted to speak to Kylie. Jacqui said that if I wanted to talk to Kylie then I should do it in private, not in front of everyone. So after the meeting today I went into the kitchen and told Kylie that no one was impressed with her - the way she treats people. I said I wasn't impressed that Dot had to go because of Pam. Kylie said Pam was OK.
The conversation got a bit heated and I started laughing at Kylie. This made Kylie angry and she took a swing at me. Adele walked in while I had my hands up.
I grabbed Kylie by her shirt and it ripped open."
(The shirt was tendered in evidence. Apparently the snap fasteners near the collar had been pulled open. The shirt itself was not ripped.)
The applicant denied that she hit Ms Law. Ms Ruppe informed the applicant that Ms Law had "a big fat lip". She said that the applicant appeared to be stunned when she was told this. The applicant then said:
"Oh look, I don't believe this. I don't think so, I may have when I grabbed her by the shirt.
Kylie and I continued to have more words after that and Kylie told me to get out. I told her that I wanted to have my say. Then Kylie opened the door and I left."
The applicant did not dispute this account.
Interview with Ms Bourne on afternoon of 19 January
Ms Bourne told Ms Ruppe that she saw the applicant and Ms Law struggle, that she saw Ms Law have a swing at the applicant and the applicant trying to hit Ms Law back. She said that they were abusing each other. Ms Bourne said that she did not see the applicant hit Ms Law.
Further investigation
Ms Ruppe said that after these interviews, she had a further conversation with the applicant in which the applicant asked:
"What's going to happen? I won't get the sack will I."
She said that she informed the applicant that a lot more information had to be gathered before any decision was made "but termination is one of the options".
Ms Ruppe reported the incident to her supervisor, Theresa Smith, the Human Resources Manager. She informed Ms Smith of the steps which she had taken in the investigation to that point. She also commented:
"I saw Kylie just after the incident and she was obviously in a highly distressed state, as well as having a swollen lip. By comparison, when I rang Leanne a little while later she did not seem to be distressed at all - she seemed very calm really. The reactions of both Kylie and Leanne when I was interviewing them, as well as what they said during the interviews, also suggested to me that Leanne may have been at fault."
Ms Smith read Ms Ruppe's notes and said that she considered it was best that the applicant be removed from the workplace completely. She advised Ms Ruppe that at that stage the applicant should be suspended on full pay pending the final outcome of the investigations. The next day, Ms Ruppe conducted a further series of interviews.
Interview with Ms Law on 20 January
On 20 January 1995, Ms Ruppe interviewed Ms Law in the presence of Maggie Buchanan, an AFMEU shop steward. She gave the same version of events as she had given the day before and she also said the applicant had continued to abuse her as they were leaving and after they had left the canteen. Ms Law informed Ms Ruppe that she had spoken to the police about the fight and that she had been to the outpatients section of the local hospital. Ms Ruppe told her that she should see the company doctor that day. Arrangements were made for her to do so and Ms Laws saw Dr Saunders some time later. Dr Saunders reported to the respondent:
"[Ms] Law is complaining of a sore lower left lip and cut lip, tender left jaw, soreness beside her left eye, and scratches to her left upper chest.
...
On examination she is visibly distressed and teary. She has 2 scratches on her upper chest and neck. The first is 8 cms long and runs along her left clavicle. The second is 2 cm long and is on the left side of her mid neck. She had mild swelling along her lip, cheek and left jaw. She has a small laceration on the inner, lower left lip. She is tender along the lateral edge of the orbit or her left eye, with a small 1/2 cm bruise."
Dr Saunders stated that these injuries were consistent with the history given of a scuffle and a hit by a closed fist to the left side of the mouth.
Interview with applicant on 20 January
Ms Ruppe interviewed the applicant on 20 January 1995, in the presence of the shop steward. A stenographer was present and recorded the interview.
The applicant essentially gave the same version as she had given before. She said however she could not recollect if she hit Ms Law or not. She also admitted that she had egged Ms Law on and that she should not have done so. She could not recollect whether Ms Law had hit her. She said that she had not reported the incident as she considered it to be a personal thing and did not think that she had to. Adele Bourne had also counselled her "to just drop it." She also said that Ms Booth may not have realised she was going to speak to Ms Law that afternoon.
Ms Ruppe informed the applicant that the matter was still under investigation but that she believed that with an incident such as this, it would be best if she was suspended from duty with pay whilst the investigation was completed. She directed the applicant to return to the Woolooware Bay canteen and collect her things and leave the premises. She advised her that she would let her know the outcome of the investigations but expected to be in touch with her on the following Monday.
The applicant did not dispute this account.
Interviews with Adele Bourne on 20 January
Adele Bourne was also interviewed in the presence of the shop steward on 20 January 1995. She stated that the applicant "was being smart to Kylie and was egging her on". She then said that Ms Law hit the applicant. She said that the applicant had her arms up protecting herself and that Ms Law hit her on the arm. She said she also observed that Ms Law's lip was red.
Ms Ruppe re-interviewed Ms Bourne later that same day. Ms Bourne said that she saw fighting when she first walked in but that the two women were not fighting by the time they had actually got into the kitchen. She said she also heard the applicant say to Ms Law:
"Come on have a go".
Ms Ruppe told her that Ms Law had not seen Ms Bourne during the course of the incident. Ms Bourne responded, "She had her back to me so she might not have seen me."
Interviews with Carol Middleton on 20 January and 23 January
Ms Ruppe also interviewed Carol Middleton on 20 January in the presence of the shop steward. Ms Middleton reported that she had heard an argument between the applicant and Ms Law and that she had tried to contact Ms Booth.
Ms Ruppe re-interviewed Ms Middleton on 23 January 1995. On this occasion, Ms Middleton said she heard the applicant say:
"Its all your fault this has happened, you're horrible to Pam. All the casuals hate you and hate coming over here. They say it is horrible the way you speak to Pam".
She did not hear the applicant make any mention of Dot Fish.
Interview with Ms Booth on 20 January
Ms Ruppe also interviewed Jacqui Booth. Ms Booth said she had not anticipated that the applicant would speak to Ms Law after the staff meeting. She conceded that she had said to the applicant that she would "pay her back" for raising the issue of the transfers with her, but had said this jokingly.
Interview with John Raper on 20 January
Ms Ruppe interviewed John Raper, the security guard. He said that when he saw Ms Law on the afternoon of 19 January she was very distressed and had said she'd been "picked on by one of the girls".
Communications with applicant leading up to applicant's demotion
On the afternoon of 23 January 1995, Ms Ruppe telephoned the applicant. She spoke to the applicant's mother and told her that she was ringing to let the applicant know where they were up to in their investigations. She said that she would be forwarding a letter outlining the findings of the investigation and seeking the applicant's response. Shortly after, the applicant's mother telephoned Ms Ruppe and asked whether a decision had been made. Ms Ruppe advised her that a decision would not be made until after the applicant had responded to the letter.
On 24 January 1995, the applicant telephoned Ms Ruppe and asked her what was going on. She was told that a letter would be couriered to her that day. The applicant asked whether she was going to be terminated and whether her years of service counted at all. Ms Ruppe informed her that they did. She also said that she had put in the letter that termination was an option that would be considered. At that point, the applicant said:
"I don't know how Kylie got the injury. Maybe she did it to herself."
On 24 January 1995, the applicant received a letter from the respondent signed by Ms Ruppe. The letter commenced:
"I am writing to you to outline the findings of the investigation into the incident which occurred on 19th January 1995 between yourself and Kylie Law."
After setting out a number of observations which reflected the information obtained in the interviews with the various employees, the letter concluded:
"From the above information the following seems clear:
A.You had made inquiries over the preceding 2 days as to what could be done about the impending staff rotations. You initially made those inquiries with Maggie Buchanan (AFMEU shop stewart) and later with myself. When I gave you my understanding of the reasons, as explained to me by your supervisor (Jacqui Booth) you commented "I knew she would get out of it somehow". You were clearly unhappy with the reasoning given, even after I explained to you the logic behind the decision.
B.You "set up" the situation whereby you confronted Kylie and in fact started the argument.
You advised me in your statement that you had spoken to Jacqui Booth and told her that you were going to speak to Kylie. You implied in those statements that Jacqui gave you some sort of tacit approval to confront Kylie by saying something like "if you want to speak to Kylie, don't do it at the meeting, don't say anything in front of the other staff". Jacqui said that you replied "Oh no I won't do that". However, you said in your statement of 20th January 1995 that Jacqui may not have realised that you were going to speak to Kylie that afternoon.
When Maggie Buchanan and I spoke to Jacqui about the incident, she said that she had no idea you were going to speak to Kylie that afternoon, and if she had any inkling that there was going to be trouble she would never have let it happen. Jacqui said that when she left the meeting there were still a few people standing around chatting, and Kylie had gone back into the kitchen. The situation appeared very normal to her.
C.Kylie Law presented to Jacqui Booth and myself in a very distressed state, with an obvious injury to her mouth which she alleged was caused by an unprovoked assault by you.
Leanne, a very serious allegation has been made against you. This company has a statutory responsibility to provide a safe workplace for its employees. Therefore, incidents of this nature are treated very seriously.
I would like you to respond to these allegations in writing, by midday on Monday, 30th January 1995. When I have your reply, a decision will be made as to what action should be taken. I must advise you that if it is proven that you provoked a fight which caused injury to Kylie Law, then the Company will consider whether you should continue to be employed in your present or any other role."
The applicant's solicitors responded to this by letter dated 30 January 1995. In their response, the solicitors asserted that Ms Law had swung at the applicant and that she had keys in her hand at the time. They said any physical action by the applicant was in self defence. They said the meeting with Ms Law took place "with the express consent" of Ms Booth and that the only limitation Ms Booth had imposed was that the matter not be raised at the staff meeting.
Respondent's decision to demote applicant
On 2 February 1995, the respondent wrote to the applicant's solicitors advising that a decision had been made to demote the applicant to a non-supervisory position. She was informed that her salary would be maintained at her current rate.
On 3 February 1995, the respondent wrote to the applicant directly advising her of the decision to demote her.
The reasons given for the respondent's actions were:
"1. On the basis of the statements that were taken from the staff involved, we are still of the opinion that you engineered the confrontation with Kylie, as a direct response to your displeasure that Dot Fish was being transferred.
You clearly did not accept the decision made by your manager (Jacqui Booth) that the staff rotations were to take place. This refusal to accept your manager's decision is tantamount to insubordination, and this is not the first time you've exhibited such behaviour.
Both of these points demonstrate that you have difficulty maintaining behaviour which is appropriate to someone occupying a supervisory position."
She was advised that her salary would be maintained at her current level but that she would be "red-circled". The respondent's practice of "red circling" meant that although an employee was paid the employee's current salary, as award rates increased, the employee would only receive that award increase applicable to a new (and in this case lower) classification. In so far as this applied to the applicant, it meant that she would be paid at a tradesperson's rate. She would not receive increases applicable to tradespersons but would only receive increases applicable to canteen assistants. Thus whilst her salary would increase over time, it would not increase by the same amount as if she were classified as a tradesperson.
On 6 February 1995, the applicant's solicitors wrote to the respondent, advising that the applicant did not consent to "this unilateral termination of her employment contract." The letter informed the respondent that unless the decision to terminate the applicant's employment was revoked and her employment status confirmed, legal proceedings would ensue. She subsequently brought these proceedings.
On 8 February 1995, Ms Law received a letter from the respondent, under the hand of Caroline Ruppe informing her that a decision had been made to demote the applicant. The letter continued:
"...I must impress upon you how dimly the Corporation views fighting in the workplace. Such action will not be tolerated, nor will any retribution action by either party. Such action would carry with it the threat of dismissal.
The matter is now closed from the Corporation's point of view. If you require clarification on any matter, or further information, please contact me...."
Events since February 1995
Since the date of her demotion, the applicant has been employed by the respondent as a canteen assistant. However, she has been on extended leave of absence since May 1995. The applicant said that her duties as canteen assistant were different from those as chef supervisor. As chef supervisor, he duties included ordering food, liaising with management, including Mrs Booth, Toyota's catering manager; general supervision of canteen assistants; preparation of meals; and being responsible for functions. Her duties as canteen assistant included preparing sandwiches and salads, general canteen counter work and tea runs. There was evidence that there was some overlap in the two jobs. For example, a chef supervisor would sometimes work on the canteen counter and one of the chef supervisors did a tea run. A canteen assistant also did some cooking, although the applicant described that as being of a limited nature.
The applicant married in May 1995 and spent a two week honeymoon in Queensland. She did much of the preparation for her wedding but was greatly assisted by her mother. She came under the care of her general practitioner at the end of January 1995 and was referred to 2 psychiatrists for treatment.
Was the applicant's contract of employment terminated
The first issue raised in the case was whether the demotion of the applicant resulted in a termination of her contract of employment and if so, whether the termination was a termination of employment within the meaning of Division 3 Part VIA of the Act.
Counsel for the applicant submitted that the applicant's demotion brought about such a fundamental change in her contract of employment that it amounted to the termination of her employment as a chef supervisor and her re-employment under a new contract as a canteen assistant. It followed on this submission that the applicant was entitled to bring proceedings under Division 3 of Part VIA of the Act. The respondent submitted that the applicant's contract of employment had been varied, not terminated.
In Stratton v Illawarra County Council [1979] 2 NSWLR 701, Reynolds JA (with whom Moffitt P and Samuels JA agreed) said at 705:
"There have been cases where an employee has been down-graded over his objection, and the question of whether the employer has thereby terminated the contract of employment has depended upon whether a term should be implied that the employer had a right to do so...
For a reclassification to bring about a situation where it works a termination, it must amount to such a breach of contract as asserts an intention no longer to perform the existing contract, and this is so whether a new contract is entered into or not: Marriott v Oxford and District Co-operative Society Limited. (No. 2) [1970] 1 QB 186 at 191, per Denning MR.
If the demotion is not in breach of the contract but pursuant to it, then it operates thereunder and there is no termination and no new contract arises: see per Swinfen Eady M.R. in Meek v Port of London Authority [1918] 2 Ch 96 at 99, 100. To borrow the language of that case, the down grading is by virtue of the old pre-existing contract."
Reynolds JA found that there was a condition of the award which governed the employee's employment which permitted redeployment. In coming to that conclusion, his Honour found that the award constituted a term of the employment. That view that a term of an award is implied into the contract of employment has been overruled by Byrne v Australian Airlines Ltd (1995) 131 ALR 422. Otherwise, however, his Honour's statements of principle to which I have referred are correct.
The same question arose for consideration in Brookton Holdings No. V v Kara Kar Holdings Pty Ltd [1994] 57 IR 288, Young J held at 289 that when:
"...one side to a contract of employment has made it clear that the contract in its existing form is not to continue [and]...the employer puts forward a proposal that the employee will have a changed role"
three possible situations arise. First, the employer may be exercising a right under the contract to redeploy an employee. Secondly, the alteration to the contract may be a permissible variation. Thirdly, the employer may be indicating that the employer is no longer prepared to continue with the contract of employment on the same terms. To determine which position operates in a given situation, it is necessary to ascertain the express or implied terms of the original contract.
In the present case, there was no express term of the contract of employment which permitted demotion. Nor was there any term of the award entitling the respondent to demote the applicant. Counsel for the respondent submitted however that there was an implied term to that effect. In B.P. Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266, the Privy Council stated at 283:
"...for a term to be implied, the following conditions (which may overlap) must be satisfied:
(1)it must be reasonable and equitable;
(2)it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(3)it must be so obvious that "it goes without saying";
(4)it must be capable of clear expression;
(5)it must not contradict any express term of the contract."
Their Lordships pointed out at 283 that:
"the implication of a term rests on the presumed intention of the parties."
There was no evidence directed to the circumstances which might give rise to the implication of such a term into the contract notwithstanding that several employees of the respondent gave evidence as did the applicant herself. However, the following is known of the employment situation. The respondent is a large national motor vehicle distributor. It can be accepted that it employs a large number of employees from management level to unskilled persons. It conducts 3 canteens in the Sydney metropolitan area for its employees. Both permanent and casual employees are employed in the canteens. Within each canteen there were at least 3 levels of employment: chef supervisor, chef and canteen assistant. There is also a canteen manager with overall responsibility for the canteens. Those canteens provide not only canteen facilities for employees but also tea trolley facilities and banquet facilities for management functions and for conferences.
When the nature of a large business is considered, with large numbers of employees performing different duties, involving different skills and different levels of skills, with numerous circumstances arising in the employment situation, including disciplinary matters, I am of the opinion that a term enabling the employer to alter the terms of employment including the downgrading of the terms and conditions of employment, satisfies the requirements of an implied term.
It follows from what I have said that the change of the applicant's terms and conditions of employment was pursuant to contract. Accordingly, I am of the opinion that her contract of employment with the respondent was not terminated when she was demoted. It is not necessary, therefore, to decide whether the contract was varied. I should state, I do not consider that the respondent has established that there was a variation.
Was there a termination of employment within the meaning of Division 3 of Part VIA?
If I am wrong and there was no such implied term of the contract of employment, so that the applicant's contract of employment as a chef supervisor was terminated, the question arises whether she is entitled to apply for a remedy "in respect of termination... of her employment" under s 170EA of the Act.
In Strachan v Liquorland (Australia) Pty Limited (unreported, Moore J, 6 February 1996), Moore J considered the question whether demotion constitutes "termination" within the meaning of Division 3 Part VIA. In that case, the employer had decided that, having regard to the employee's performance, he should be transferred from his position as an area manager to that of store manager. The employee was told of this at a meeting at which he was handed a letter confirming "our offer of appointment as store manager", and setting out the terms and conditions of employment. Immediately following the meeting, the employee was transferred to the new position. However, he requested time to consider the offer and was given two weeks leave. He subsequently entered into negotiations with the respondent about the salary offered in the new position. Shortly afterwards he took up the position of store manager "without protest at that time". Moore J found (at 7) that the employee "accepted the offer as he felt he had no choice but to accept it". In particular, the employee did not wish to jeopardise 15 years service with the company by resigning at his own initiative as he was shortly due for long service leave. Subsequently, the employee instituted proceedings under s 170EA of the Act.
Moore J, in deciding whether there was a termination of the employee's employment when the employee was offered and accepted that new position as store manager, stated at 10:
"The jurisdiction of the Court conferred by Division 3 of Part VIA of the Act is to hear and determine applications concerning the termination of an employee's employment. The expression "termination of employment" is not defined in the Act. However, s 170CB requires expressions in Division 3 of Part VIA to be given the same meaning as they have in 1982 Convention concerning Termination of Employment at the Initiative of the Employer (the Convention)" and the Recommendation concerning Termination of Employment at the Initiative of the Employer (the Recommendation). The Convention and Recommendation are Schedules 10 and 11 of the Act respectively. Both define "termination" and "termination of employment" as meaning termination of employment at the initiative of the employer."
Moore J referred to the conflicting decisions of Wilcox CJ in Siagian v Sanel Pty Limited (1994) 1 IRCR 1 and Gray J in Association of Professional Engineers, Scientists and Managers Australia v Skilled Engineering Pty Limited (1991) 1 IRCR 106. In Siagian, Wilcox CJ held at 19 that "termination of employment" in Division 3 Part VIA:
"[included] any act that brings to an end the employer-employee relationship, whether or not the act, or any acceptance of it, also brings to an end the contract of employment."
Moore J considered that this conclusion tended to support the view that where the relationship of the employer and employee endured the events such as occurred in Strachan, there had been no termination of employment.
Gray J in APESMA took a different approach. His Honour stated at 116 that:
"The legislative intention is to permit applications under s 170EA of the Industrial Relations Act if an employer has done some act terminating or purporting to terminate the employment, irrespective of whether the act is effective to bring about the termination without some further act on the part of the employee."
Moore J at 11-12 observed that according to Gray J:
"There is either a subsisting contract of employment, and thus employment, or there is not. It would appear to follow from this approach that if an act of the employer led to a termination of the contract of employment, and thus the employment, in circumstances where a new contract was entered into, that act could constitute "a termination" for the purposes of Division 3".
Moore J then reviewed the provisions of the Convention and the Recommendation. It is not necessary to set out his deliberation of their terms. He held at 14-15 that they provided:
"[A] relatively clear indication of the intended scope of these international instruments in their entirety. They concern the loss of employment by an employee. They are not intended to relate to the demotion of an employee who remains in employment with the same employer. There is nothing in the Act that I can discern which suggests the expressions should have some other meaning in the Act, and in section 170EA in particular, notwithstanding the provisions of section 170CB."
I consider that Moore J's construction of the phrase "termination of...the employment" within Division 3 of Part VIA is correct. In this case, even if the contract of employment was terminated, the applicant's employment with the respondent has continued. Accordingly, I am of the opinion that the applicant is not entitled to apply to the Court under Division 3 of Part VIA of the Act and to that extent her application should be dismissed.
However, it is appropriate that I consider whether or not the applicant would have been entitled to a remedy under that Part had there been a termination of her employment within the meaning of s 170EA.
Unlawful termination
The applicant contended that the termination of her employment was in breach of Division 3 Part VIA for two reasons. First, she had not been afforded procedural fairness as required by s 170DE of the Act. Secondly, there was no valid reason for the termination or alternatively, if there was a valid reason, the termination was harsh, unjust or unreasonable.
Procedural Fairness
Section 170DC provides:
"An employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless:
(a)the employee has been given the opportunity to defend himself or herself against the allegations made; or
(b)the employer could not reasonably be expected to give the employee that opportunity."
In Liddell v Lembke (1994) 1 IRCR 466, Wilcox CJ and Keely J noted at 471:
"Section 170DC provides that an employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless the employee has been given the opportunity to defend himself or herself against the allegations made or the employer could not reasonably be expected to give the employee that opportunity. It will be seen that the section introduces the concept of procedural fairness into statutory employment law. Employees, other than excluded employees, now have a legal right to be treated fairly. If an employee is denied procedural fairness, it will generally be unlawful to dismiss him or her, even for serious misconduct or significant deficiencies."
Wilcox CJ further considered the operation of the rule in Nicolson v Heaven & Earth Gallery Pty Limited (1994) 1 IRCR 199 at 209 as follows:
"[Section 170DC(a)] does not require any particular formality. But this does not mean that it is unimportant or capable of perfunctory satisfaction...The relevant principle is that a person should not exercise legal power over another, or to that person's disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case. The principle is well established in public administrative law...The employee is to be given the opportunity to defend himself or herself 'against the allegations made; that is the particular allegations of misconduct or poor performance that are putting the employee's job at risk."
In the present case, the reasons for the applicant's demotion (which I am treating as a termination for the purposes of this portion of my reasons) were contained in the letter to her dated 3 February 1995. Two specific matters were relied upon and are set out earlier in these reasons. One related to the confrontation with Ms Law. The letter informed her that the respondent was of the opinion that the applicant had engineered that confrontation. The second matter related to the applicant's alleged insubordination. That allegation contained two components. First, it was asserted that the applicant had not accepted the decision made by Jackie Booth in relation to the staff rotations. It said that this refusal was tantamount to insubordination. Secondly, it was then alleged that this was not the first time that the applicant had exhibited such behaviour. It was stated that "both these points" (that is, engineering the confrontation and the insubordination) demonstrated that the applicant had difficulty maintaining appropriate behaviour for a person in a supervisory position.
Counsel for the applicant alleged that the respondent breached s 170DC because it did not conduct a reasonable investigation nor did it put all the allegations of conduct to the applicant or her solicitors.
I have set out in some detail the investigation which was carried out in relation to the incident. Counsel for the applicant submitted that the investigation was inadequate as Ms Ruppe had assumed that the applicant had instigated the fight and that she made that assumption at an early stage of the investigation. Counsel for the applicant submitted that the fact she had a preconceived view was supported by the following matters. First, the fact that Ms Ruppe referred Ms Law to Toyota's doctor for a report (not treatment), whereas the applicant was not referred to the doctor for a similar report even though Ms Ruppe concedes that she observed the applicant had scratches on her arm. Secondly, that a stenographer, was present during the interview with the applicant on 20 January 1995 and that this had been arranged because Ms Ruppe considered that the applicant was facing serious allegations. A stenographer was not present to record the interview of Ms Law. Thirdly, the investigation was being carried out on behalf of Ms Law. There was no suggestion or thought by Ms Ruppe that Ms Law could have instigated the fight despite the applicant's evidence and that of Adele Bourne. Fourthly, the questioning of staff was short. Finally the applicant was suspended from duty whilst the investigation continued whereas Ms Law was permitted to continue to perform her duties as a chef supervisor.
Counsel for the respondent submitted that the evidence clearly indicated that Ms Ruppe had a legitimate basis for making an assumption, at an early stage in the investigation, that the applicant had confronted Ms Law. Ms Ruppe was aware, before the commencement of the investigation, that the applicant was dissatisfied with Ms Fisher's transfer. The applicant had sought Ms Law out after the staff meeting. Ms Law was injured in the confrontation and she was very distressed. Ms Ruppe considered that the applicant appeared calm. There is to be added to these matters the fact that even on the applicant's version, the applicant had admitted that when she told Ms Law "no one was impressed with her" she had started to laugh at Ms Law and this had made Ms Law angry. It was submitted that it was untenable to suggest that it was unreasonable for an employer, through the appropriate management personnel, to make an assumption about work place conduct where there was a rational and legitimate basis for that assumption.
Before determining whether there was any bias in the way the investigation was carried out including any pre-conceived view of fault, it is appropriate to refer to some further evidence. In her affidavit, Ms Ruppe had stated that, on the morning of 20 January 1995 she reported to Ms Smith that:
"at this stage, the evidence seems to point to [the applicant] having instigated the fight, but of course I haven't finished my investigations yet."
In cross examination, Ms Ruppe was questioned extensively as to what she meant by "instigated the fight". Her evidence was that she had meant that the applicant had instigated, not the physical aspects of the fight but "the whole incident", "the confrontation". She further explained:
"I had no evidence to say that she'd thrown the first punch, but what I did believe was that Leanne was the person who had created the situation where a fight occurred."
In my opinion, it is not inappropriate for a person, during the course of an investigation, to form a preliminary view as Ms Ruppe did, and to so advise her superior. Ms Ruppe clearly stated that further investigations still had to be carried out. Ms Ruppe carried out further investigations. It was submitted that the fact that Ms Ruppe arranged a stenographer to be present in the applicant's further interview demonstrated her bias. I do not agree. I consider Ms Ruppe was being no more than very cautious when she arranged for the stenographer although it may have given a better appearance of fairness if Ms Ruppe had acted consistently in all interviews. However, there was nothing in the questioning of any of the employees which demonstrated that Ms Ruppe was trying to do anything but elicit the full story. There was nothing to indicate she did this inappropriately. No decision was made in relation to the matter until the applicant was given an opportunity to fully respond to the series of allegations which the respondent formulated after the interviews were completed. Accordingly, I do not consider that the respondent breached its obligations to afford the applicant procedural fairness on this basis.
Counsel for the applicant submitted, alternatively, that one of the reasons given by the respondent to the applicant for her termination was that she had exhibited behaviour which was tantamount to insubordination on previous occasions. It was submitted that this was not raised in the letter dated 24 January 1995 which set out the allegations against the applicant. I have set out earlier in these reasons the relevant portions of that letter. I agree that there is no reference to any previous conduct other than that related to this incident. In the letter advising the applicant of her demotion, the respondent stated that for both the reasons given, which included insubordination on previous occasions, the applicant was considered unsuitable for supervisory duties. It is clear therefore that the alleged previous insubordination was a basis for the respondent's action. The applicant was entitled to be informed of that allegation and given an opportunity to defend it. Accordingly I consider that, had the section been applicable, it was breached by the respondent.
Valid reason for the termination
Section 170DE provides:
"(1)An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employees capacity or conduct...
(2)A reason is not valid if, having regard to the employee's capacity and conduct...the termination is harsh, unjust or unreasonable."
The employer bears the onus of establishing that there was a valid reason for the termination. If that onus is discharged, the employee bears the onus of proving that the termination was harsh, unjust or unreasonable: s 170EDA.
Counsel for the applicant submitted that as the termination of the applicant's employment arose out of, amongst other matters, serious allegations that she had physically assaulted Ms Law, the Court should keep in mind the statement of Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 368 where his Honour said:
"[I]t is impossible to be reasonably satisfied of the truth of the allegation without the exercise of caution and unless the proofs survive a careful scrutiny and appear precise and not loose and inexact. Further, circumstantial evidence cannot satisfy a sound judgment of a state of facts if it is susceptible of some other not improbable explanation...".
Counsel for the applicant submitted that Toyota had failed to discharge its onus to establish that there was a valid reason for the termination, namely one that was:
"sound, defensible or well founded: Senathirajah Selvachandran v Peterson Plastics Pty Limited (unreported), Northrop J, 7 July 1995; Burazin v Blacktown City Guardian Pty Limited (unreported) Madgwick J, 15 December 1995".
Counsel for the applicant relied on a number of factors. First, Ms Ruppe admitted that, even at the time of giving her evidence, she did not know who started the physical fight. Secondly, there was no evidence before the court of conduct prior to the events of January 1995 of insubordination by the applicant. This was never raised with her previously nor was she cross examined on the issue by counsel for the respondent. Thirdly, there was no compelling evidence before the court that the applicant engineered the confrontation with Ms Law. The only evidence, other than from the applicant and Ms Law about the physical confrontation was from Adele Bourne, who saw Ms Law strike the applicant. I should state here that this submission does not fully reflect Ms Bourne's evidence. The only occasion Ms Bourne said she saw Ms Law strike the applicant was in her first interview on 20 January. Her statement on 19 January was that Ms Law swung at the applicant. She gave the same version in cross examination. Fourthly, although the applicant did not agree with Ms Booth that Ms Fish should be transferred to the Shell Point canteen and that Ms Dawes be transferred to the Woolooware Bay canteen, the applicant was concerned, amongst other reasons, about Ms Dawes' transfer to her canteen because she was aware of hygiene problem involving Ms Dawes. The applicant had raised her concerns with her union delegate and was advised to contact Ms Ruppe. Ms Booth was aware that the applicant was going to discuss her concerns about the cross transfers with Ms Law. Further, Ms Law admitted that Ms Booth had warned her, that someone would be telephoning her about the transfers. Finally, it was not a valid reason to terminate the employment of a senior employee merely because that employee questioned a management decision. It was submitted that the applicant's conduct in raising her concerns about the transfer of staff was proper and in accordance with the dispute settlement procedure contained in the award.
Counsel for the respondent submitted that the evidence was clear that the applicant did not accept the decision to transfer Ms Fish and Ms Dawes. However, that decision was Ms Booth's to make. The reasons for the transfer were rational and reasonable and the applicant was informed of them at least by Ms Ruppe, if not also by Ms Booth. So far as the evidence revealed, neither employee complained about the transfers. Notwithstanding this, the applicant "felt strongly about the matter" and thereafter acted inappropriately. Further, he submitted that the evidence disclosed that the applicant "engineered the confrontation" and the confrontation led to the assault and that it was the applicant who threw the punch or punches. It was submitted that such an assault in the working environment was a "very serious offence on the part of the applicant".
In my opinion, the respondent has satisfied the onus that there was a valid reason for the termination. From the information the respondent had obtained in its investigation, the applicant had confronted Ms Law in an inappropriate way. I am of the opinion that the evidence establishes that the applicant acted aggressively. Her admitted comments to Ms Law were of an aggressive nature including her invitation to Ms Law's remark to "have a go". She admitted that she had "egged [Ms Law] on and had laughed at Ms Law, which provoked her". The issue about which the applicant confronted Ms Law related to a staff matter and in particular to a proposed staff rotation. The particular matter about which she confronted her was Ms Law's relationship with Ms Dawes. This was not a matter which concerned the applicant whatever the applicant's personal views on the matter.
In any event, there was no evidence that the relationship was as the applicant believed it to be. Nor was it appropriate that the applicant confront Ms Law about the staff rotation. Ms Law had not made the decision to rotate the staff. At the time the applicant confronted Ms Law, she had been made aware by Ms Ruppe (if she had not already been made aware by Ms Booth) that there were financial reasons for the decision to rotate staff. In my opinion, the applicant's behaviour was so inappropriate that it provided a valid reason for termination. In coming to this view, it has not been necessary to determine who "threw the first punch". However, if it was necessary to do so, I would have found that it was more likely that the applicant commenced the physical encounter between the two women. Accordingly, if there was a termination, it would have been lawful unless the applicant could have established that the termination was harsh, unjust or unreasonable.
Was the termination harsh, unjust or unreasonable
In Bostik (Aust) Pty Ltd v Gorgevski (1992) 36 FCR 20, Sheppard and Heerey JJ stated at 28 that the words "harsh, unjust, unreasonable" were:
"...ordinary non-technical words which are intended to apply to an infinite variety of situations where employment is terminated. We do not think any redefinition or paraphrase of the expression is desirable. We agree with the learned trial judge's view that a court must decide whether the decision of the employer to dismiss was, viewed objectively, harsh, unjust or unreasonable. Relevant to this are the circumstances which led to the decision to dismiss and also the effect of that decision on the employer. Any harsh effect on the individual employee is clearly relevant but of course not conclusive. Other matters have to be considered such as the gravity of the employee's misconduct."
It is not easy to deal with this issue in the present case, as one has to look at the matter somewhat artificially. This is because the respondent did not "sack" the applicant. It gave her lesser duties because by her conduct on this occasion, she exhibited inappropriate behaviour for an employee in a supervisory position. That was a reasonable view for the respondent to take and its action was a reasonable response to the situation. The applicant's conduct was inappropriate for a person in her position. It warranted strong disciplinary action. As I have said demotion was appropriate. That is so even if it had the effect of bringing the contract to an end. In my opinion, the termination of the contract of employment (on the assumption that there was a termination) was not harsh unjust or unreasonable.
It follows that even had there been a termination of employment within s 170EA, the applicant would not have been entitled to a remedy. However, sitting as I am at first instance, it is necessary to consider what remedy the applicant would have been entitled to had she proved the termination was unlawful.
Remedies
Section 170EE of the Act provides the remedies which are available where it has been established that there has been an unlawful termination under the Act. Section 170EE provides:
"(1)In respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee the Court may make the following orders:
(a)an order requiring the employer to reinstate the employee by:
(i)reappointing the employee to the position in which the employee was employed immediately before the termination; or
(ii)appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination; and
(b)if the Court makes an order under paragraph (a):
(i)any order that it thinks necessary to maintain the continuity of the employee's employment; and
(ii)an order requiring the employer to pay to the employee the remuneration lost by the employee because of the termination.
(2)If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate."
The applicant sought reinstatement. In Liddell v Lembke, Wilcox CJ and Keely J stated at 487:
"Plainly, it was Parliament's intention that the primary remedy for unlawful termination should be reinstatement and that compensation should be available only where this was impracticable.
The precise meaning of "impracticable" in this context should be left to another day; the question is one of general importance and it was not fully argued in this case. But, although "impracticable" does not mean "impossible", it means more than "inconvenient" or "difficult". The imposition of such a stringent limitation on the court's power to award compensation, rather than order reinstatement, is inconsistent with the notion that Parliament intended the Court to have an open discretion whether to intervene at all."
Gray J, in a separate judgment, took a much wider view. He stated at 494-5:
"Pursuant to s 170EE(2), the remedy of compensation is available only "If the Court thinks...that the reinstatement of the employee is impracticable...".
...
Reinstatement is therefore required if it can be done. If the employer is still employing or able to employ someone to perform the same or similar tasks, then reinstatement will be practicable."
Wilcox CJ further considered the circumstances in which reinstatement might be "impracticable" in Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199. His Honour stated at 210:
"It is important to note that Parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word 'impracticable' requires and permits the Court to take into account all the circumstances of the case, relating to both the employer and the employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer's business, it may be "impracticable" to order reinstatement, notwithstanding that the job remains available."
Counsel for the applicant submitted that the evidence supported the practicability of reinstatement in this case. The applicant herself was willing to work with her colleagues. Ms Law gave evidence that she would have no difficulty if the applicant was reinstated as chef supervisor at the Woolooware Bay canteen. Ms Booth also said that she would be able to work with the applicant. However, she added that it would be difficult for the applicant to return to the Woolooware Bay canteen with the staff that worked there at this time. She said there would have to be staff changes if the applicant was reinstated to her position at that canteen. She said that employees from that canteen had come to her to say it was very stressful working with the applicant. She nominated two employees who had made that comment. Neither of those employees gave evidence.
Ms Middleton however said that if the applicant was reinstated at the Woolooware Bay canteen, she would have no objection provided she was not required to work with her. She said that if she was directed to work with the applicant, she would resign. It will be recalled that Ms Middleton had previous differences with the applicant. She denied however that her view as to what would happen if she was required to work with the applicant in the future was due to those former experiences. She said that it was because of this incident, which again, it will be remembered, was one in which Ms Middleton was not directly involved.
Ms Smith objected to the applicant's reinstatement. She stated that in her opinion the applicant had not demonstrated her capacity to accept the responsibilities that go with the position of chef supervisor. She said that the position of chef supervisor:
"...is a supervisory role. It has supervisory responsibilities, and the reason that we demoted Leanne at the time was because she showed an incapacity to accept her supervisor's direction and an inappropriate way of showing her displeasure with those decisions.
...For those reasons, the supervisory role at this point in time, I don't see that anything has changed."
Ms Smith said that if the court ordered reinstatement, she would accept that decision. However, the reasons which Ms Smith advanced as to why reinstatement was impracticable are not relevant to the question whether reinstatement is an available remedy under the Act.
Reinstatement is not practicable where the personal relationship between the employer and employee, or between an applicant and other employees has broken down. This will be particularly so in a small organisation: see Izdes v L.G. Bennett & Co Pty Limited (unreported, Beazley J 14.9.95). In the present case, there was evidence that three other employees said they would not be able to work with the applicant. Other employees, including Ms Law, and Ms Bourne, who is currently employed in the applicant's position, said they could work with the applicant.
If the applicant is reinstated, then, having regard to the evidence that some employees may not wish to work with her, there may to be some changes to the canteen staffing arrangements. However, as is known from this case, staffing rearrangements are, from time to time, made by the respondent. I do not consider that in this case there has been such a breakdown in the employment relationship and with other employees that reinstatement is impracticable. Accordingly, had the applicant been entitled to a remedy, I would have ordered her reinstatement.
If I am wrong on this point, it is necessary to determine if the applicant should be paid compensation in lieu of reinstatement pursuant to s 170EE(2).
Compensation for loss of salary due to "red circling"
I have already referred to the practice of red-circling. The applicant has lost substantial monies as a result of this practice being applied to her. In my opinion, she would have been entitled to that loss up to the limit of compensation imposed by the Act. Had the applicant been entitled to this remedy, I would have required the parties to bring in short minutes of order as to the amount the applicant was entitled to.
Compensation for mental distress
Counsel for the applicant submitted that the court has jurisdiction under s 170EE(2) to award compensation for mental distress. In Aitken v Construction Mining Timberyard Sawmills and Woodworkers Union of Australia (WA Branch) (unreported, Lee J, 7 August 1995) Lee J stated at 19-21:
"The compensation to be ordered to be paid under s 170EE(2) is such amount as the Court thinks appropriate subject to the limit set in ss 170EE(3). It is a statutory remedy for which no assessment criteria are prescribed, other than a requirement in s 170EE(3) that the Court have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment.
In assessing the compensation that is appropriate, the Court will have regard to what is reasonable in the circumstances and will look at what would have been likely to occur had the Act not been contravened (see Nicolson v Heaven & Earth Gallery Pty Ltd (1984) 126 ALR 233 at 246 per Wilcox CJ). The Court will consider the detriment occasioned to the employee by the employers's contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences. Division 3 of the Act provides the context in which s 170EE is to be construed. It includes provisions intended to protect the dignity of an employee, in particular, s.170EA provides an employee with a right to seek redress in respect of a breach of the Act and s.170EE provides the entitlement to receive compensation as the remedy for such a breach, characteristics of a statutory tort. Therefore, in some cases principles relevant to the assessment of damages in tort may provide assistance to assessing the compensation to be paid under s 170EE(2). That is to say it may be appropriate to include in the measure of compensation to be paid pursuant to s 170EE(2) a sum sufficient to compensate an employee for mental distress or injured feelings caused by a harsh, unjust or unreasonable termination of employment (see Whelan v Waitaki Meats Ltd [1991] 2 NZLR 74, 90).
If guidance is sought from the measure of damages applied in contract for the breach of an employment contract by wrongful dissmissal, damages may be awarded for the breach of the implied term that the employer will not so breach the contract to cause vexation, mental distress, disappointment or frustration to the employee where such an adverse consequence for the employee may be said to have been within the reasonable contemplation of the employer and the employee. (See: Cox v. Philips Industries Limited [1976] 1 WLR 638; Whelan v Waitaki Meats Ltd; See also: Heywood v. Wellers [1976] QD 440; Watts v. Morrow [1991] 1 WLR 1421 per Bingham LJ at 1445; Baltic Shipping Company v. Dillon (1993) 176 CLR 344 per Mason CJ. at 361-364).
It is also appropriate to keep in mind that the purpose of the Act in providing for compensation to be paid to an employee for an employer's failure to abide by the terms of the Act is not only to redress a wrong done to an employee but, in the public interest, to instil greater awareness of, and adherence to, the provisions of the Act. A measure of compensation which addresses the consequences caused by conduct that has breached the Act assists to meet that purpose."
With respect to Lee J, I do not agree that damages for mental distress are available under s 170EE. This is clear from the structure of the section. In the case where the court determines that reinstatement is practicable, s 170EE(1) specifies the whole of the available remedy. That remedy is confined to reinstatement in the manner specified in subs (1)(a) and specified in subs (1)(b). Those orders are: such order as is necessary to maintain the continuity of the employee's employment and an order requiring the employer to pay the remuneration which has been lost from the time of termination to the date of reinstatement.
It is only if the court considers that reinstatement is impracticable that compensation is payable: s 170EE(2). The amount of compensation is calculated in accordance with s 170EE(3). The reference point in the calculation of compensation is "the remuneration that the employee would have received or would have been likely to receive, had there been no termination". Paragraphs (a) and (b) of subs 3 together with subs 4 provide a limit on the amount of compensation which might be payable. If "compensation" in subs (2) was wide enough to encompass damages for mental distress it would mean an applicant's entitlement to such compensation would be dependant upon the Court's determination as to whether reinstatement was practicable, notwithstanding that the mental distress would have been suffered in any event. In my opinion, s 170EE is directed to compensation for the loss of financial or monetary aspects of the employment. It does not encompass other forms of compensation which may be available in respect of other causes of action.
Claim for damages in the court's associated jurisdiction
Under s 412, the court has jurisdiction with respect to matters arising under the Act in relation to which:
"(a) applications may be made to it under the Act;
(b) actions may be brought in it under this Act".
Counsel for the applicant submitted that the applicant was entitled to claim damages for breach of contract in the court's accrued jurisdiction. He relied upon s 430(1) of the Act, which provides:
"So far as the Constitution permits, jurisdiction is conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the court is invoked."
Section 430(1) is in the same terms as s 32(1) of the Federal Court of Australia Act 1976 (Cth). It will be observed that s 430 uses the language of matters that are "associated" with matters within the court's jurisdiction, and not "accrued jurisdiction". The language of accrued or attached jurisdiction has been used in the sense used by Barwick CJ in Philip Morris Incorporated & Anor v Adam P. Brown Male Fashions Pty Limited (1981) 148 CLR 457, where his Honour CJ stated at 475:
"It is settled doctrine in Australia that when a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter. This accrued federal jurisdiction is not limited to matters incidental to that aspect of the matter which has in the first place attracted federal jurisdiction. It extends...to the resolution of the whole matter between the parties. This accrued jurisdiction carries with it the authority to make such remedial orders as are necessary or convenient for or in consequence of that resolution. For this purpose, the court exercising federal jurisdiction may enforce rights which derive from a non-federal source. This exercise of this jurisdiction, which for want of a better term I shall call "accrued" jurisdiction, is discretionary and not mandatory, though it will be obligatory to exercise the federal jurisdiction which has been attracted in relation to the matter."
In Fencott & Ors v Muller & Anor (1983) 152 CLR 570, Mason, Murphy, Brennan and Deane JJ stated at 606:
"...though the facts upon which a non-federal claim arises do not wholly coincide with the facts upon which a federal claim arises, it is nevertheless possible that both may be aspects of a single matter arising under a federal law."
In Stack v Coast Securities (No. 9) Pty Limited (1983) 154 CLR 261, Mason CJ, Brennan and Deane JJ confirmed at 291 that:
"The unanimous decision in Moorgate demonstrated that the content of "matter" in section 76(ii) extends to non-federal aspects of the justiciable controversy between the parties when both aspects, federal and non-federal, rest upon a common substratum of facts."
In O'Neill v Wrattan (1986) 65 ALR 451, Jackson J observed at 458-9 that in Philip Morris differing views had been taken of the scope of s 32. See Stack v Coast Securities at 292:
"it seems clear enough that s 32(1) is effective to confer on the court jurisdiction in matters of Federal jurisdiction not otherwise specifically conferred on the court, provided that the "association" required by s 32 exists."
The "necessary association" generally applied is that there be a common substratum of facts: Moorgate Tobacco Co Ltd v Philip Morris (1980) 145 CLR 457.
In the present case, the matter arises out of the change in the applicant's employment status with the respondent. The applicant has contended that in the circumstances her contract was terminated and that termination was a termination of employment within the meaning of s 170 EA. In my opinion, there is the necessary substratum of facts to enable the applicant to bring the claim for breach of contract.
Counsel for the respondent submitted however, that if the applicant was not entitled to a remedy because there was no termination of employment within the meaning of s 170 EA there was no jurisdiction in the court to deal with the contract claim.
In Burgundy Royale Pty Limited & Ors v Westpac Banking Corporation & Ors (1987) 18 FCR 212, the Full Court of the Federal Court said at 219:
"The Court's jurisdiction is to determine each of the claims which together constitute a federal "matter". That jurisdiction cannot be limited, as the argument of the second and third respondents would suggest, to the determination only of those claims, federal or attached, which are successfully maintained. On the contrary, the jurisdiction is to entertain, and determine, all claims constituting a "matter", whatever their ultimate fate. Any other approach would involve the extremely inconvenient result that the existence or absence of jurisdiction to deal with a particular claim would depend upon the substantive result of that claim."
In Burgundy Royale Pty Limited, the Court held that the Trade Practices Act 1976 (Cth) did not bind the second and third respondents, the Northern Territory and the Territory Loans Management Corporation respectively. The question then arose whether the Federal Court still had jurisdiction to determine the common law claims made against all respondents. It had been accepted by the second and third respondents that there were facts common to the claims brought against them under the Trade Practices Act and at common law. The Court acknowledged that having determined that those respondents were not bound by the Act, there would be no further trial of the issues brought under the Act. The Court continued however at 219:
"But it does not follow that the Court ever lacked jurisdiction to deal with such claims....In principle, the position is no different than it would have been if the claims under the Act had proceeded to trial and had been dismissed on the merits. In that situation, it could not seriously be suggested that the dismissal of the claims under the Act had the effect of depriving the Court of jurisdiction to deal with any attached non-federal claim.
The position may have been different if the claims under the Act had been "colourable" in the sense that they were made for the improper purpose of "fabricating" jurisdiction...There is no room for such a suggestion here. The applicants' case that the second and third respondents were bound by the Act cannot be said to have been unarguable; and we think it was pursued bona fide."
In Elna Australia Pty Limited v International Computers (Australia) Pty Limited (1987) 75 ALR 271, Gummow J observed that Federal jurisdiction is attracted upon institution of proceedings. He stated that once Federal jurisdiction was attracted it was not lost because the claim which attracted jurisdiction in the first place could not be substantiated. This was so, even where a defendant pleaded a limitation point which, if made good, might defeat the claim which initially attracted the Federal jurisdiction.
That issue was considered by the Full Court of the Federal Court in Dorotea Pty Limited v Vancleave Pty Limited (1987) 75 ALR 629. In that case, Northrop, Jackson and Gummow JJ stated at 632:
"Upon the institution of the proceedings in the court, the court acquired jurisdiction to deal with, and was the only court having jurisdiction to deal with, the whole of the matter being the controversy between the parties: Bargal Pty Ltd v Force (1983) 49 ALR 193; 154 CLR 261 at 298. The court does not lose jurisdiction over the claims in the accrued jurisdiction because the plea of a time limitation may mean that the applicant will fail on the issue which attracted federal jurisdiction: Carter v Egg and Egg Pulp Marketing Board (Vic) (1942) 66 CLR 557; Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 33 ALR 465; 148 CLR 457 at 474; McMahon v Smith (1986) 69 ALR 527 at 531-2."
In Glass & Ors v State of New South Wales (1994) 52 FCR 336, Sheppard J had to consider whether the Court had jurisdiction to deal with a claim in which declarations were sought that certain state legislation was, in its application to aboriginal people, discriminatory on the ground of race and inconsistent with the Racial Discrimination Act 1975 (Cth). The applicants claimed that the court's jurisdiction derived from the Racial Discrimination Act and the court's associated jurisdiction. Sheppard J referred to the nature of the court's associated jurisdiction as decided by the High Court in Fencott v Muller and Stack v Coast Securities. His Honour stated at 339:
"The effect of the authorities is that this Court will have accrued or attached jurisdiction to deal with a non-federal claim if it has before it a federal claim and, connected with that claim is a non-federal claim the resolution of which depends upon facts and circumstances identical with or closely connected with or common to those in question in the federal claim. Sometimes it is said that the two claims, federal and non-federal, must have a common substratum of fact. Unless those conditions exist, the Court will not have accrued jurisdiction."
His Honour at 339 considered therefore that the first question was:
"whether there is pending in this Court any claim which the Court has jurisdiction to hear as a consequence of jurisdiction having been conferred upon it by a law of the Commonwealth."
His Honour concluded at 339-40that:
"There is no application pending in the Court seeking release under any provision of the Racial Discrimination Act".
The only claim before the Court was for declaratory relief in relation to the validity of the New South Wales legislation. There was nothing therefore to which the jurisdiction to do with the non-federal claims was able to be attached.
In the present case, the applicant sought relief under Division 3 of Part VIA of the Act. I have found that there was no termination of employment within the meaning of that Part so as to entitle the applicant to a remedy under s 170EE. There is, as yet, no Full Court decision on whether a demotion as occurred here constitutes a termination of employment within the meaning of the Act. In coming to my conclusion, I have accepted as correct the judgment of Moore J in Strachan. However, there is another judgment in the Court which might support a contrary view: see APESMA v Skilled Engineering per Gray J. I do not consider that the claim under s 170EA of the Act was colourable: see Burgundy Royale.
Claim in contract
The applicant alleged that there were two implied terms of the contract of employment, one relating to notice and one relating to good faith. I will deal with each separately.
Implied term as to notice
In her amended statement of claim, the applicant pleaded:
"...that the employment should be determinable only bey reasonable notice. Reasonable notice in the circumstances is nine (9) months having regard to:-
(a)The seniority, responsibility of the position and the experience of the Applicant.
(b)The Applicant was at the time of her employment paid a salary package which comprised a salary of $27,800 gross per annum.
(c)The Applicant was 32 years of age at the date of termination of her employment having been born on 9 april 1962.
(d)The difficulty for the Applicant to obtain a position on similar terms and conditions as she had with the Respondent as Chef Supervisor."
In the absence of an express term as to the notice which is to be given upon termination, there is usually an implied term that reasonable notice will be given: NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68 per Gleeson CJ and Handley JA at 74. In the present case, there was no express term relating to notice. However, the applicant's employment was governed by the Toyota Australia Vehicle Industry Award 1988. Clause 5(c) of the Award provided for the periods of notice which the employer was to give upon termination. As has already been observed, terms of an award are not implied into the contract of employment. However, the award still governs the employment to the extent that the express terms of the employment do not make some greater or more beneficial provision. As Brennan CJ, Dawson and Toohey JJ said in Byrne v Australian Airlines Ltd (1995) 131 ALR 422 at 426-7:
" The award regulates what would otherwise be governed by the contract. But [the award provision is] imported as a statutory right...The importation of the statutory right into the employment relationship does not change the character of the right. As Latham CJ points out in his judgment in Amalgamated Collieries of WA Limited v True (1938) 59 CLR 417 at 423, the legal relations between the parties are in that situation determined in part by the contract and in part by the award.
...
In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award (See Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284) and, as we have said, the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations."
Their Honours further stated at 428-9:
"...a term of an award derives its force, not from agreement between the parties, but from statute. That being so, if a contract of employment is made in reliance upon a provision of an award, it is not a reliance which requires the provision to be made a term of the contract because it already has statutory force."
It follows that where an Award governs a particular aspect of employment, there is no room for the implication of a term relating to precisely the same subject matter. Accordingly, I reject the submission that there was an implied term as alleged.
If I am wrong, and there was such an implied term the question would arise as to what, in the circumstances was a reasonable period of employment. The applicant's case was that reasonable notice in the present case was 9 months.
The determination of what is reasonable must be determined at the time the notice of termination is given: Cray v Tynan Motors Pty Ltd and Ors (1992) 41 IR 173 at 175. A number of factors are relevant to the determination. Relevantly, they include: the type of employment; the level at which a person is employed; the importance of the position; the amount of salary; the length of the employment; the professional standing of the employee; the employee's qualification and experience; and the degree of job mobility.
The applicant's employment was of a skilled and supervisory nature. As at January 1995, she had been employed by the respondent for approximately 5 1/2 years. She had been in the position of chef supervisor for a period of approximately 2 years. However, the applicant was relatively young (approximately 28 at the time of the incident) and her job was mobile. Had it not been for the terms of the award, I would have considered that a reasonable of termination would have been 1 month.
Implied term of good faith
The applicant pleaded that:
"...it was an implied term of the contract of employment between the Respondent and the Applicant that the Respondent would in its dealings with the Applicant act fairly and in good faith and would not without reasonable and proper cause conduct itself in a manner calculated or likely to destroy the relationship of confidence and trust between the Respondent and the Applicant and also to cause the Applicant to suffer mental distress."
The applicant pleaded breach of that term and consequent damages as follows:
"...The Applicant claims damages for breach of the implied term of her contract of employment which obliged the Respondent to deal fairly and in good faith with the Applicant. The breach by the Respondent of that implied term caused the Applicant both during the course of her employment and at the termination of her employment and subsequent to her termination mental distress, hurt and embarrassment and loss of confidence."
However, in his submissions, counsel did not address the basis upon which such a term should be implied. In Bliss v South East Thames Regional Health Authority it was held that there was an implied term that an employer not conduct itself in a manner likely to destroy the relationship with employees. The implication of such a term might be considered to be the reverse obligation of good faith which an employee has to an employer. Save as to the reference to mental distress, I prepared to assume for present purposes that there was an implied term as alleged by the applicant.
Assuming that there was an implied term, I do not consider that the term has been breached by the respondent. I have set out in detail the investigations which the respondent undertook in relation to the incident between Ms Law and the applicant. I have stated my view that those investigations were proper and appropriately carried out. I have also expressed my view that the respondent's action after having conducted the investigation was reasonabe. The respondent's conduct did not amount to a breach of such an implied term. No other evidence was referred to which might otherwise have established breach.
However, it is necessary to consider the position should I be wrong about the matter. Historically, the law had set its face against the award of damages for distress or injured feelings occasioned by a breach of contract. See Hamlin v Great Northern Rly Co (1856) 1 H&N 408 [156] ER 1261; Hobbs v London and South Western Rly Co (1875) LR 10 QB 111. Over time, a series of exceptions to that general rule emerged. However, one area where the general rule continued to be applied was in respect of claims for wrongful dismissal. In Addis v Gramophone Co Ltd [1909] AC 488, the House of Lords held that damages for wrongful dismissal did not include damages for injured feelings.
In Baltic Shipping Co v Dillon (1993) 176 CLR 344, the High Court was required to consider whether damages for disappointment and distress occasioned by a breach of contract (not an employment contract) were recoverable. Mason CJ noted that whilst the general rule was that such damages were not recoverable, the scope of the exceptions had been expanded to the extent that the authority of the general rule was somewhat uncertain. Mason CJ at 362-3 specified the exceptions to the rule as follows:
damages for breach of promise of marriage;
where the breach of contract causes physical injury to the plaintiff;
(iii)where a plaintiff has suffered physical inconvenience from the breach of contract;
where a plaintiff has suffered physical inconvenience and the mental suffering is directly related to that physical inconvenience;
where the very object of the contract has been to provide pleasure, relaxation, or freedom from molestation.
Mason CJ observed that the approach which had been taken in the more recent English decisions permitting recovery for mental distress was based on the rule in Hadley v Baxendale (1854) 9 Ex 341 (156) ER 145. That is, that damages were recoverable if it was within the contemplation of the parties that breach would have given rise to vexation, distress or disappointment. His Honour observed, however, that the cases revealed a number of other bases for allowing such a claim. There was reference in the cases to the concept of reasonable foreseeability. His Honour considered that that test did not provide a satisfactory explanation for the approach adopted in the recent cases in England where, it was clear that the courts had emphasised that such damages would only be allowed in limited circumstances: see Watts v Morrow [1991] 1 WLR 1445.
His Honour concluded that the general rule should continue to apply. He stated at 365:
"...As a matter of ordinary experience, it is evident that, while the innocent party to a contract will generally be disappointed if the defendant does not perform the contract, the innocent party's disappointment and distress are seldom so significant as to attract an award of damages on that score. For that reason, if for no other, it is preferable to adopt the rule that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide, enjoyment, relaxation or freedom from molestation."
Brennan, Deane, Dawson and Gaudron JJ (Brennan and Gaudron JJ in separate judgments, Deane and Dawson in a joint judgment) accepted that the case before the Court fell within the exceptions to the general rule.
McHugh J considered that it was difficult to resist the conclusion that the basis for the general rule was a fear that to allow damages for disappointment or distress, consequent upon the breach of a contract would inflate damages awards. His Honour then reviewed the authorities. He observed, at 400-401 that recent English cases had "decisively rejected the view that the contemplation of the parties is the basis upon which damages for distress or disappointment are awarded for breach of contract."
His Honour referred to Bliss v South East Thames Regional Health Authority [1987] ICR 700 where the Court of Appeal rejected the notion that damages for distress could be recovered for breach of contract of employment. Bliss was approved by the Court of Appeal in Hayes v Dodd [1990] 2 All ER 815.
His Honour then referred to the Australian decisions, noting that Australian Courts had paid little attention to the developments in England concerning the award of damages for distress arising from breach of contract.
His Honour next observed that in Canada, the Supreme Court has taken a view contrary to that taken by the English Court of Appeal in Bliss. In Vorvis v Insurance Corporation of British Columbia [1989] 1 SCR 1085 at 1102; (1989) 58 DLR (4th) 193 at 204, Wilson J (with whom L'Heureux-Dube concurred) held at 204, that such damages were recoverable where parties should reasonably have foreseen that mental suffering would be consequential breach. His Honour then noted that in New Zealand, "the demise of the Addis rule seems imminent". Thus, in Whelan v Waitaki Meats Limited [1991] 2 NZLR 74, damages for mental distress were available for breach of an employment contract. His Honour then stated at 404-405:
"If the matter were free from authority, the object of an award of damages for breach of contract and the principles of causation and remoteness would require the conclusion that damage for disappointment or distress, resulting from breach of contract, was compensable if it was within the reasonable contemplation of the parties when the contract was made.
...
It is still open to this Court to declare that damages for distress and disappointment in contract cases are not subject to any special rules. However, I do not think that the step should be taken in this case."
His Honour referred to the various exceptions to the rule. He said that as damages for personal injury are recoverable in an action for breach of contract: see Woolworths Limited v Crotty (1942) 66 CLR 603; Cullen v Trappell (1980) 146 CLR 1 and as psychiatric illness constituted personal injury: see Mt Isa Mines Limited v Pusey (1970) 125 CLR 383, damages for mental distress associated with a psychiatric illness or physical injury must also be recoverable in an action for breach of contract.
If breach of contract were established in this case, then provided the applicant suffered a psychiatric illness as a consequence of the breach, the matter would fall within one of the accepted exceptions to the general rule. It is thus necessary to review the medical evidence to determine whether the applicant sustained an "injury".
Medical evidence
The applicant's now husband, Daniel Meehan, said that during the first week after the 19 January 1995, the applicant was tearful. He became so concerned for her wellbeing that he took her to a medical centre as her general practitioner, Dr Licari, was unavailable. He also made arrangements for her to see Dr Licari because he was concerned about her mental state. He said that he had never seen the applicant in such a depressed state.
Dr Licari's evidence
The applicant consulted Dr Licari, general practitioner, on 23 January 1995. Dr Licari reported that she presented in a "very distraught, tearful and very agitated state". At that time, she was taking Murelax, three times a day which had been prescribed for her by a doctor at a medical centre which she had attended the previous day.
The applicant gave a history of the events which had occurred during the course of her employment the previous week. Her version remained essentially the same as she had given to Ms Ruppe. However, she reported to the doctor that Ms Law had assaulted her with a handful of keys and that the applicant had raised her arms in defence and a scuffle ensued.
The applicant saw Dr Licari on 7 March about an unrelated matter. However, she told him that she was finding it extemely difficult to continue to work.
The applicant again consulted Dr Licari on 1 June 1995, reporting that she was no longer able to cope at work because a most stressful situation had developed. She reported that after returning to work from her honeymoon, she was subjected to a number of official reprimands. She alleged that the reports which gave rise to these reprimands were untrue. She was again taking Murelax and reported that she was becoming extremely tearful and had a lot of depression, with sleep disturbance. Apparently, she became so distraught during the course of this consultation that Dr Licari terminated it. Dr Licari prescribed Zoloft 50 mg (an antidepressant) and was to review her the following day.
The applicant returned for a consultation on 2 June 1995. She reported that she had slept well and did not have side effects from the prescribed medication. Dr Licari thought that she would benefit from professional counselling for her depression and stress related anxiety. A follow up consultation was arranged for the following week.
On 8 June 1995, the applicant reported to Dr Licari that she was feeling a lot better but had bouts of severe agitation whenever she thought about going back to work. On this occasion, Dr Licari sought details of her work situation. The applicant advised him that she had been demoted, that her duties were restricted to making sandwiches, cleaning kitchens, washing up and doing the tea run. She said that on the tea run she was exposed to staff that she had known for 5 1/2 years who questioned her about why she was doing that job. She said comments which were made to her made her feel embarrassed, humiliated and to feel "a lot of degradation". Dr Licari observed that when discussing these things she became agitated and distressed and so the consultation was again terminated. Dr Licari asked her to make an appointment to see a specialist and suggested that she continue to take Zoloft. She was certified unfit for work.
Dr Licari saw the applicant on 23 June 1995. Dr Licari again certified her unfit for work.
On 1 July 1995, the applicant reported to Dr Licari that she felt threatened by the thought of having to go back to work and she appeared agitated and tremulous. She thought she had lost confidence and was also concerned about the pending court case. She was again certified unfit for work. Dr Licari again saw the applicant on 27 July 1995 and again observed that at the mention of returning to work, she became anxious, tearful and distressed.
Dr Licari was of the opinion that the applicant was suffering from a major depression and chronic anxiety state resulting directly from the incident at work on 19 January 1995. He considered her prognosis poor and believed that she would need prolonged psychiatric treatment to desensitise her as well as to treat her depression. He had serious doubts as to whether she could be rehabilitated into the same workplace. He reported that she was at that time extremely sensitive, particularly to any form of criticism. She had low self esteem and her confidence had been significantly undermined. He did not consider her to be fit for employment at that time. He considered that, whether she would become employable, depended upon her response to treatment.
In cross examination, Dr Licari described the applicant as a "normally a very capable and functioning sort of person." He said that at times after the accident she had presented as "quite depressed". Dr Licari also gave evidence of an incident on 8 August 1995 when the applicant's mother had brought her to the surgery as she was concerned she might do damage to herself. On that occasion, she had taken a knife to her throat and had small abrasions on her neck.
Dr Fukui's evidence
The applicant consulted Dr Fukui, psychiatrist on 30 June and 24 July 1995. Dr Fukui considered that the applicant described typical symptoms of Major Depression, characterised by depressed mood, feeling flat, tearfulness, loss of interest and motivation, loss of confidence, irritability and tension. She had sleep disturbance with initial insomnia and early morning wakening. She said she had a weight loss of 12 kg in the first 6 weeks following the work incident. She said she had unbearable feelings about the thought of returning to work. Dr Fukui reported that her symptoms were responding to anti-depressant therapy and that the applicant had said she was feeling improved.
On 24 July 1995, Dr Fukui found the applicant much more settled with further improvement of her symptoms. She had ceased taking medication a few days earlier and did not wish to take further medication. Dr Fukui did not consider that the applicant's condition was caused by an incident in which the applicant was involved when her niece sustained an injury in a tobogganing accident, although her reaction to it may have been exacerbated by her mental condition at the time.
Dr Fukui described the applicant as having a "depressive disorder" which emerged against the background of traumatic work experiences. Dr Fukui stated that:
"in addition to the significant psychological injuries sustained, there had been other interferences with her life, in particular in her friendships and the loss of her position at work. However, her condition appeared to be stable and it was expected that her condition would improve once the legal proceedings were settled."
Dr Fukui also considered that the applicant would not make full recovery whilst she remained with her present employer due to the hostile work environment and the strained relationship with her colleagues.
Dr Giuffrida's evidence
On 28 September 1995, the applicant saw Dr Giuffrida, psychiatrist, at the request of Dr Licari. Dr Giuffrida was of the opinion that the applicant showed very significant generalised anxiety symptoms and depressive phenomena persisting from the time of the work incident to the present time. He considered that her symptoms had intensified with time. He considered that she was suffering from an Adjustment Disorder with Anxiety and Depressed Mood. He considered that the likely cause of her condition was her reaction to the incidents and events at work. He considered that a significant impediment to her rehabilitation was the applicant's perception that the situation giving rise to the distress remains unresolved. He recommended psycho-therapy as the most appropriate form of ongoing treatment. He considered that her prognosis was positive if the situation could be resolved and she could return to a work situation commensurate with her knowledge, skill and experience.
In cross examination, Dr Giuffrida said he had arrived at his diagnosis of from the applicant's history and his mental state examination. He said that in the mental state examination that some of the applicant's responses were delayed or she was non-responsive. On the occasions, she had difficulty comprehending simple questions. This response was a relevant factor in his diagnosis. He did not consider she was feigning. Dr Guiffrida gave evidence that an adjustment disorder was a psychiatric condition and that the applicant had suffered an injury.
Dr Giuffrida described the difference between his diagnosis and a major depression as follows:
"HER HONOUR: Is one worse than the other, doctor?‑‑‑Your Honour, the distinction is an attempt by the authors of DSM4 to make some distinction between those forms of depression and anxiety that occur spontaneously and as against those that occur in response to crisis situations or traumatic situations. So another form would be to call it post-traumatic stress disorder because the symptomatology is in a sense partly in common, but that would be an extreme diagnosis to make. To make a diagnosis of a major depressive episode in major depressive disorder, always implies that it is a form of depression that occurs spontaneously. In other words, in the form of a recurrent depressive or manic depressive. It implies a kind of endogenous or biological basis to it. Whereas adjustment disorder is some attempt to attribute it to specific incidents that might have given rise to it.
DSM4 [is] [t]he diagnostic and statistical manual of the American Psychiatric Association which is now the most universal nomenclature of psychiatric disorders,..."
Dr Guiffrida also explained that Dr Licari's diagnosis of reactive depression was outdated. He said:
"I understand that Dr Licari gave a diagnosis reactive depression. Twenty years ago and more, the standard nomenclature was to divide these into endogenous as opposed to reactive forms of depression but that distinction really has not stood up to the test of time and it is better to describe the depressions in terms of the actual form that you find them and DSM4 describes it basically as a collection of symptoms of pervasive depression but particularly the impairment of cognitive function and drive and motivation and so on. The adjustment disorder with depressed mood, is not necessarily different. It can have all of the same symptoms. It is merely attributing them to a particular incident or series of incidents. Usually on the basis that there is a temporal association."
Dr Guiffrida did not consider it inconsistent with her condition that she was able to prepare for her wedding and go on a honeymoon on the Barrier Reef where she undertook a number of activities. However, it would diminish the severity of her condition.
Dr Skinner's evidence
The applicant was seen by Dr Skinner, psychiatrist at the request of the respondent's solicitors on 2 November 1995. Dr Skinner considered that the applicant was not suffering from any psychiatric illness or emotional disorder. She believed however that she was suffering from emotional distress, although she did not think that her symptoms or impairment in social or occupational functioning was beyond the normal and acceptable reaction to the situation in which she found herself. She did not think that she could satisfactorily be rehabilitated to her previous work situation nor would she recover from her emotional state until there had been some resolution of the matter. She did not think that further psychiatric treatment was likely to prove beneficial other than to offer support and considered that her emotional symptoms should settle if there was a satisfactory resolution of the proceedings.
It appears that Dr Skinner was not given a full history of the applicant's symptoms over time. She agreed that if a patient presented with symptoms of weight loss, followed by a significant increase in weight, headaches, anxiety, feeling tense, agitated and upset, who had suicidal thoughts, lost enthusiasm for work, lost confidence and faith in other people, further investigation was called for.
She agreed with Dr Guiffida that Major Depression and an Adjustment Disorder were both psychiatric disorders. She said major depression was quite a serious psychiatric disorder.
She said that sleep disturbance, especially early morning waking and tremulousness could be signs of depression. If other symptoms were present such as not eating well, being constipated and continued crying, the combination of symptoms might indicate a depression.
I am of the view that Dr Guiffrida's diagnosis should be accepted. Although he made one error in his history taking relating to the degree of responsibility the applicant had at work, he said that did not effect his diagnosis. A psychiatric diagnosis is essentially dependant upon a full history, together with a mental state investigation. I consider that Dr Skinner's diagnosis suffers from her not having a complete history of symptoms which the applicant had suffered over the previous months. I have not accepted the diagnosis of Dr Fukui. In this regard, I consider that the explanation of a Major Depression and Adjustment Disorder given by Dr Guiffrida, and agreed with by Dr Skinner, was expertly based and should be accepted. However, I otherwise accept Dr Fukui's recording of the history given and her assessment of the applicant's reactions. Likewise, I accept Dr Licari's to the same extent. This is significant as much of the evidence of the applicant's symptoms came from Dr Licari's reports and evidence and Dr Fukui's report.
It follows from what I have said that if the contract of employment was terminated and if that termination was wrongful, the applicant would fall within the category of exceptions to the general rule that damages are not available for mental distress consequent upon breach of contract.
In Campbelltown City Council v Mackay (1989) 15 NSWLR 501, Samuels JA held that damages for distress associated with a psychiatric illness flowing from a tortious act need not be modest. The same approach is appropriate in the case of breach of contract.
In my opinion, if the applicant was otherwise entitled to damages, I would award her damages for physical damage, psychiatric illness and mental distress in total sum of $25,000.
However, as I have determined that the applicant has not established a breach of any implied term of the contract, her claim fails. Accordingly, I dismiss the application.
I certify that this and the preceding 76 pages
are a true copy of the Reasons for Judgment
of the Honourable Justice Beazley.
Associate:
Dated: 19 April 1996
APPEARANCES
Counsel for the Applicant: A. Moses
Solicitors for the Applicant: Messrs Watson & Watson
Counsel for the Respondent: J. Fernon
Solicitors for the Respondent: Messrs Freehills Hollingdale & Page
Dates of hearing: 16, 17, 23 November 1995, 4 March 1996
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