Carydias v The Greek Orthodox Community - [1997] IRCA 31

DECISION NO:31/97

CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - Claim of unlawful termination - Employer in financial difficulty - Applicant dismissed to reduce expenses - Whether VALID REASON - Failure to consult - Whether termination justified in all the circumstances

CLAIM FOR REPAYMENT of salary - Allegation that applicant overpaid himself - Whether applicant was entitled to the amount because of an increase to his salary package

Workplace Relations Act 1996 (formerly Industrial Relations Act 1988), ss 170DE(1), 170EA, Schedule 10 (Convention Concerning the Termination of Employment at the Initiative of the Employer)

Nettlefold v Kym Smoker Pty Ltd (unreported, IRCA, Lee J, 4 October 1996)
Thomas v Ralph Lynch t/as Bellingen Grocery (unreported, IRCA, Wilcox CJ, 20 December 1996)

CARYDIAS v THE GREEK ORTHODOX COMMUNITY
VI 1786R of 1994

Before:           NORTH J
Place:             MELBOURNE
Date:              20 FEBRUARY 1997

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VI 1786R of 1994

B E T W E E N :

ANASTASIOS CARYDIAS
Applicant

AND

THE GREEK ORTHODOX COMMUNITY
Respondent

MINUTE OF ORDERS

BEFORE:     North J
PLACE:        Melbourne
DATE:          20 February 1997

THE COURT ORDERS THAT:

The application by the applicant for an extension of time to bring the application under s 170EA is granted.
The orders made by Judicial Registrar Staindl on 31 March 1995 are set aside.
The application under s 170EA is dismissed.
The moneys paid into Court by the respondent be paid out to the respondent.
There be judgment for the respondent in the sum of $13,275.

NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VI 1786R of 1994

B E T W E E N :

ANASTASIOS CARYDIAS
Applicant

AND

THE GREEK ORTHODOX COMMUNITY
Respondent

BEFORE:     North J
PLACE:        Melbourne
DATE:          20 February 1997

REASONS FOR JUDGMENT

This is a review of the exercise of power of a Judicial Registrar in respect of the termination of employment of the applicant, Mr Carydias. Mr Carydias was employed by the Greek Orthodox Community of Victoria (the Community), the respondent, as the General Manager. On 27 May 1994, the Community terminated his employment. On 3 October 1994, he filed an application under s 170EA of the Industrial Relations Act 1988 (now called the Workplace Relations Act 1996) (the Act). The application was heard by a Judicial Registrar, who determined that the termination was unlawful, and ordered that the Community pay $8,500 compensation to Mr Carydias. The Community instituted a review of the exercise of power by the Judicial Registrar. This is one of the matters presently before the Court. The Community also claims the repayment of a sum of $13,275 which it alleges Mr Carydias overpaid himself.

EXTENSION OF TIME

Section 170EA(3), as it applied to the termination of employment of Mr Carydias, provided that the application be filed within 14 days of the receipt of written notice of termination. Section 170EA(3)(b) permitted the Court to extend the time for bringing an application. Mr Carydias applied for an extension of time. In this case, Mr Carydias received written notice of termination on 27 May 1994. He filed the application in the Court on 3 October 1994 together with an application for an extension of time.

Between 27 May 1994 and 3 October 1994, the following events occurred. On 6 June 1994, Mr Carydias lodged an unfair dismissal claim with the Employee Relations Commission of Victoria. On 29 June 1994, a prima facie hearing took place in that Commission. On 28 July 1994, a conciliation conference occurred. On 5 and 6 September 1994, Commissioner Stewien heard the application. On 30 September 1994, he decided that the Commission did not have jurisdiction because Mr Carydias’ functions were managerial and, hence, did not fall within the scope of the relevant State award. On 3 October 1994, the present application was filed.

The application for extension of time was heard together with the hearing of the merits of the application as a whole. While the Community did not consent to the extension of time, it did not point to any prejudice to it as a reason for denying the extension of time. It was clear to the Community from the proceedings in the Commission that Mr Carydias was concerned to test the validity of the termination. The extension of time should therefore be granted.

THE ISSUES

Section 170DE(1) provides:

“An employer must not terminate an employee’s employment unless there is a valid reason, or valid reasons, connected with the employee’s capacity or conduct or based on the operational requirements of the undertaking, establishment or service.”

The first issue is whether the Community has established that it had a valid reason for the termination of the employment of Mr Carydias. It contended that the reason was that a major function for which he was employed, namely, to liaise with the National Australia Bank, was no longer required and, due to the financial difficulties of the Community, it needed to reduce expenses and replace Mr Carydias with a less costly employee. Mr Carydias contended that liaising with the National Australia Bank was not a main function of his employment and that the major functions of his employment still remained to be performed after his termination. He submitted that the reasons given by the Community for his termination were not genuine.

The second issue is whether Mr Carydias was entitled to receive the $13,275 which the Community contended he had been overpaid.

The third issue arises if the reasons given by the Community do not constitute a valid reason for termination, and if Mr Carydias received the $13,275 in circumstances amounting to serious misconduct. The issue then is whether the misconduct provides a valid reason for the termination, even though it was not the actual reason for the termination and even though the Community was not aware of the misconduct at the time of the termination.

The final issue is whether, apart from the alleged economic justification, the termination was justified in all the circumstances. In the proceedings before the Judicial Registrar, the Community succeeded in establishing a valid reason under s 170DE(1), but Mr Carydias succeeded under s 170DE(2) on the ground that the circumstances of the termination were harsh. Before the conclusion of this case, the High Court determined that s 170DE(2) was unconstitutional: State of Victoria v Commonwealth of Australia (1996) 138 ALR 129. The question now arises as to whether s 170DE(1) allows the Court to consider whether the termination was justified in all the circumstances and, if so, whether, on the facts of this case, the termination was justified in all the circumstances.

BACKGROUND AND THE REASON FOR TERMINATION OF MR CARYDIAS’ EMPLOYMENT

The Community is an incorporated body which was established in 1897. Its objects are adequately described, for present purposes, by reference to the first object set out in its Memorandum of Association, as follows:
“(a)To bring together the adherents of the Greek Orthodox Denomination in the City of Melbourne and elsewhere for the better propagation, observance, and performance of the religious tenets, teachings, rites, and ceremonies of that denomination and to provide facilities in the City of Melbourne and elsewhere in the State of Victoria for public worship and religious instruction and ceremonies pursuant to the rites of the Greek Orthodox denomination and to establish and facilitate and encourage the establishment of such religious educational and charitable institutions as may conduce to the attainment of the objects of the Community.”

The general management of the affairs of the Community is vested in a committee of 19 people. Under the Articles of Association, elections to the committee are held every two years in November. After the elections held in November 1990, Mr George Fountas became the President of the Community, Mr Elias Rallis became Vice President, and Mr Con Pappas became Treasurer. The committee was divided between those who supported Mr Fountas and those who did not. Mr Antonis Pashos was the Secretary and one of the vocal opponents of Mr Fountas. Although Mr Fountas commanded majority support, there was a substantial minority opposed to him.

The committee members served on an honorary basis. Many had their own business or professional lives to run. For instance, Mr Fountas operates a travel agency in Lonsdale Street, Mr Rallis is a barrister, Mr Pappas runs his own business, and Mr Pashos is a salesman.

At the time of Mr Carydias’ employment, the Community had about 5,000 members. Its headquarters were in premises owned by the Community at 168 Lonsdale Street. Part of these premises were leased to tenants. The Community also owned five churches and employed the five priests for these churches. It owned the property on which the Footscray Childcare Centre was conducted, and it provided some administrative support to the Centre. It operated a number of afternoon schools, mostly in premises leased from others, which taught Greek language, history and culture. It also owned a number of halls used for community purposes and about six houses which were leased as investments. It owned a vacant 13-acre site in Bulleen which had previously been a drive-in theatre. It also owned the land on which the Alphington Grammar School was built. Some members of the committee sat on the school council, although Alphington Grammar School was a separate legal entity.

In 1991, the Community was in serious financial difficulty. It had borrowed heavily from the National Australia Bank and was not able to service the loan adequately. As a result, the amount owing had increased to about $8 million by early 1994.

Mr Carydias is now aged 59. Between 1969 and 1979, he worked for the State Bank as a Migrant Promotions Officer. Between 1979 and 1984, he operated his own business as a finance broker in Darwin. Then he became the Operations Manager of the Hellenic Club in Canberra. In January 1988, he commenced his first period of employment with the Community. Mr Fountas was then the Secretary of the Community and came to know Mr Carydias at that time. As part of his work for the Community at this time, Mr Carydias helped obtain a loan for the purchase of Alphington Grammar School. The committee which first employed Mr Carydias was defeated in the November 1988 elections. The new committee did not want to retain Mr Carydias, but honoured his contract of employment, which lasted until about mid 1990.

Mr Fountas and his supporters were elected again to the committee in the November 1990 elections. Mr Fountas asked Mr Carydias to help on the finance subcommittee, as Mr Carydias said, “because they had a lot of problems, a lot of pressure from the National Australia Bank”, and Mr Fountas knew that Mr Carydias had been involved in procuring the loan for Alphington Grammar School.

In October 1991, the office of the Community was staffed by a bookkeeper, Mr Stefanidis, and an office assistant. Mr Carydias was asked by Mr Fountas to come and look after the office one day when the bookkeeper was absent. Mr Carydias continued to help out the Community when it became clear that the bookkeeper was not likely to return in the medium term, due to illness. At this time, the National Australia Bank was putting pressure on the Community to make arrangements to deal with the Community’s increasing indebtedness. The National Australia Bank asked the Community to appoint a person to liaise with it, as part of the process necessary to deal with the outstanding loan. While Mr Carydias was helping out in the absence of Mr Stefanidis, Mr Fountas asked Mr Carydias if he would be interested in the position of General Manager. In his evidence, Mr Carydias explained the circumstances of the enquiry as follows:
“Mr Fountas told me that given the situation that he didn’t know if Mr Stefanidis was coming back now, things have changed. It wasn’t just a matter of a day or a week. He didn’t know, Workcare, and the other girl, and somebody was needed badly in the office and also due to the fact that the bank was pressuring for, you know, for somebody to come and negotiate with them directly since it could not find people to work with the Community, from the committee of management, if I would consider coming back to the Community. .... Anyway, I considered it. I said to him: ‘All right’. And then he said to me: ‘Well, all right, please apply, because I have to make it formal with the committee of management as quick as I can. So - and all this worries off my mind from the side of administration and also the bank also wants to know if somebody’s being put on or what. That’s the instructions I got from them, so they can liaise with him, someone experienced in that sort of thing’.”

Mr Carydias said the reason Mr Fountas asked him to work for the Community was that Mr Fountas knew of Mr Carydias’ ten years’ experience in the State Bank and three and a half years as a finance broker. Mr Pashos, who was called as a witness for Mr Carydias, and who was generally opposed to Mr Fountas in matters concerning the administration of the Community, said that the reason Mr Carydias was employed was because of the absence of the other office staff and:

“after we received many pressures from the bank that we must employ someone so that the bank will have to deal with one person and a person knows a bit of accounting and how the banking system works ....”

On 17 December 1991, the committee resolved to appoint Mr Carydias as General Manager for three months. After the three months, he was retained until he was dismissed on 27 May 1994. His initial salary was $45,000 per year. There is a dispute as to the amount of his later salary and I shall return to that matter in due course. For the present, it is sufficient to note that the salary paid was well in excess of a bookkeeper’s salary. Mr Katos, a chartered accountant employed by Price Waterhouse with 20 years’ experience, including experience in the remuneration of managers, gave evidence that, in 1994, a $47,000 salary would be paid to a manager of a manufacturing company with an annual turnover of $15 million. The actual turnover of the Community (excluding rent from Alphington Grammar School, which was not actually paid) was about half a million dollars. This high salary level confirms that an important reason for the appointment of Mr Carydias was to provide a liaison with the National Australia Bank in the financial crisis which faced the Community.

The evidence is that a considerable part of Mr Carydias’ time and effort was spent on matters relating to the financial difficulties of the Community. He prepared cash flows for the National Australia Bank. He attended meetings with the National Australia Bank and meetings of the committee about the financial crisis. Mr Pashos said that he saw Mr Carydias two or three times a week, sometimes every day, because of “the problem of dealing with the bank”. Mr Catsourakis was a member of the committee and was called as a witness by Mr Carydias. Mr Catsourakis said that, judging from his reports to the committee, Mr Carydias spent “quite a bit” of his time liaising with the National Australia Bank. Mr Carydias also drove officers of the National Australia Bank around suburban Melbourne to inspect the properties of the Community. Some time before April 1993, the National Australia Bank had the Community appoint Coopers & Lybrand to report on the financial position of the Community. Mr Carydias spent considerable time with the accountant from Coopers & Lybrand, explaining the financial affairs of the Community and providing necessary documents. The report of Coopers & Lybrand recommended that the Community sell the Footscray Childcare Centre to release some funds. This was done and Mr Carydias was involved in the process. After the sale of the Footscray Childcare Centre, Mr Carydias was “continuously” attempting to find ways to refinance the loan from the National Australia Bank. Under further pressure from the National Australia Bank, the Community appointed Mr John Perrins of Price Waterhouse as Administrator of the Community from 29 September 1993. Mr Carydias met with Mr Chris Katos, a member of Mr Perrins’ staff, to explain the financial affairs of the Community for the purpose of the administration. At about this time, he was involved in negotiations with a French bank for alternative finance for the Community. The negotiations involved considerable effort because they included a proposal to develop the Bulleen site into an income-producing club. Mr Carydias was involved in the preparation of plans for the building on the site.

During his employment, Mr Carydias also ran the office of the Community with the assistance of an accounts clerk. Mr Carydias was responsible for the payment of salaries of priests, teachers and staff, and the payment of the regular bills and other expenses of the Community. He had to ensure that the properties were maintained and the rents collected. He was also responsible for enquiries from members of the Community.

On the evidence as a whole, I find that one of the main reasons for his employment by the Community was to liaise with the National Australia Bank in respect of the financial crisis facing the community. I further find that, once Mr Carydias was employed by the Community, his work in liaising with the National Australia Bank and his work in attempting to address the financial difficulties of the Community consumed a large part of his working time and were a very significant part of his employment. At some stages in his evidence, Mr Carydias attempted to downplay the importance and extent of these functions. To the extent that he did so, his evidence is inconsistent with the evidence of all the other witnesses who gave evidence on the subject, and it is inconsistent with other parts of his own evidence. I do not accept that part of Mr Carydias’ evidence.

The Administrator ceased administration of the day to day operations of the Community on 17 January 1994 but retained control of the properties of the Community until early June 1994. By 26 May 1994, the Community had arranged for the National Australia Bank to accept $4.75 million in full satisfaction of its debt, which then amounted to about $8 million and the National Bank of Greece had agreed to lend the Community $4.75 million to pay out the National Australia Bank. The government of Greece provided a guarantee to the National Bank of Greece for the loan.

It was evident to the committee, in May 1994, that although the pressure from the National Australia Bank was gone, there was still a need to reduce the costs of the Community. As succinctly stated in the auditor’s qualification to the 1993/94 accounts of the Community dated 21 October 1994:
“Consideration of the current debt to the National Bank of Greece and the current level of income of the Community raise doubt that the Community will be able to continue as a going concern. In this regard I have not been able to determine whether the use of the going concern basis of accounting is appropriate. If it is not the Community may need to realise significant freehold assets at current market values.”

History has vindicated the auditor’s doubt. The loan repayments are presently being made by the guarantor. Mr Katos gave evidence that he advised Mr Fountas that, following the refinancing, the Community should reduce costs by dispensing with the services of the General Manager. On the subject, he gave this evidence:

“HIS HONOUR: Mr Katos, did you advise the community in the course of the administration about the - about cost-cutting possibilities for the purpose of the time after the refinancing of their debt - of its debt? --- Yes, I did. I didn’t do it on a formal basis, I discussed it with Mr Fountas that my concerns were that given a debt level of $4.7 million, and having an appreciation of the level of income that come in from the churches and from the Alphington Grammar School etcetera, that there had to be some considerable areas of cost-cutting exercises to be undertaken, and also that I felt that there was - their administration set-up was overloaded for what it was really required to do.

Yes? --- So you had a lot of - a lot of functions being created, a lot of expenses being incurred at - when you really stop and think about it, apart from collecting the proceeds in from the churches and the rents and just paying general expenses and your - your priest payroll, it really doesn’t involve - probably a couple of days, or maybe a three days’ maximum book-keeping exercise. But they had a fairly - fairly heavy administrative set-up which if they had continued along that - in that fashion, again they would have defaulted.
And so did you make an informal recommendation about cutting costs? --- I didn’t - I didn’t actually sit down and do a detailed calculation and say, well, this is what my opinion is and this is - I think you should go about it, it was just in - just in pure general discussions because I just felt obligated that - say to them that after my involvement in seeing the cash in-flow and cash out-flows they had to address the position very quickly because otherwise they would just ... (indistinct) ... themselves in the same situation. It was up to then to Mr Fountas to decide whether he wanted to take it any further.
What administrative costs were you referring to in these discussions? --- The general - the general overhead expenses, the general manager’s salary that was being paid at that level, the assistant to a general manager, a secretary within the organisation. You know, it was overloaded with people.
Yes. Have you - you said that your opinion was that $47,000 was an overly generous salary for the work that you saw that Mr Carydias had to do? --- Yes.”

On 26 May 1994, the committee met to approve the conditions of the loan from the National Bank of Greece. Eight members of the committee were present. Six members were necessary to constitute a quorum. Towards the end of the meeting, Mr Rallis moved a motion, the English translation of which reads:
“The position of General Manager of the Greek Orthodox Community of Victoria is made redundant for clearly economic reasons. The decision to apply immediately and the decision to be made known to the current General Manager.”

Mr Rallis gave the following evidence in relation to the discussions leading to the passing of the resolution:

“And would you tell the court please what occurred at that meeting regarding Mr Carydias’ employment” --- Yes, it was decided that the position of general manager to be made redundant because of the financial position that the Greek community was in at the time. It had - a loan had been sought and approved from Greece and there would be certain payments to be made with regards to that loan and it was felt at that meeting that certain cost cutting exercises had to be taken place in order to be able to meet those particular payments. .... As I said discussions took place A, after - well ultimately we did not have any other choice but to accept the conditions that the National Bank were placing with regards to the loan because that ensured A, that the majority of the Greek community’s properties would remain and Greek community as an entity would remain. So, it was really then a discussion on having approved that on how then we could best meet those obligations and what needed to be done in other [sic] to meet that. And, really, at the time our employees or the priests and because of the nature of the organisation, we certainly could not cost cut on the priests. The teachers, there was a service that was really paying for itself.
Teachers, where? --- The Saturday morning school teachers. Alphington Grammar was a stand alone organisation but nevertheless that it was not sort of paying its way fully, but nevertheless it was an investment and you had to continue with it and really the only place that you could do any effective cost cutting was the actual administration staff and the biggest cost to that was Mr Carydias or the position of manager and that is why the discussion ended up with that position being made redundant.
What discussions, if any, was held regarding alternatives for Mr Carydias? --- I recall that part of the discussion was that given that in effect Mr Carydias’ position had changed in so far as the position of Mr Carydias and Alphington Grammar really could not continue because the school had got to the stage where it required its own specific bursar to handle the day to day matters of Alphington. When Mr Carydias was first employed, one of his main duties was to liaise with the National Bank because they were putting pressure and also because of his background to see if we could find alternative financiers for the community. Now because all that had basically ended with the loan from the Greek National Bank, it was felt that that position especially at that salary given the financial circumstances could not be justified.”

Mr Catsourakis attended the meeting. He disagreed with the motion and abstained from voting. He did agree that the discussion concerning the termination of Mr Carydias’ employment was about saving money. The meeting then passed the motion. Some evidence was led that the notice of the meeting was inadequate, but the applicant did not argue that the resolution was ineffective to terminate the employment of Mr Carydias.

On 27 May 1994, Mr Carydias, who was then on holidays, was asked to come to the office of the Community. He saw Mr Fountas and Mr Pappas. Mr Fountas said that he had a difficult task as President to tell him that the committee had decided that, because the loan from the National Bank of Greece was approved, “we have to make .... savings, and being highly paid, you got chopped off”.

On this evidence, I am satisfied that the Community had ongoing financial difficulties after the refinancing of the National Australia Bank loan. It determined to reduce expenses. Mr Carydias’ salary was the largest single administrative expense. A major function for which he had been employed was no longer necessary. For these reasons, the Community determined to terminate his employment.

It was contended by Mr Carydias that the alleged economic reasons for the termination of his employment were a pretence. It was argued that the work Mr Carydias did continued to be done after his dismissal. The Community employed a clerk on a salary of about $25,000 to administer the office of the Community. The supervision of such an employee had been part of Mr Carydias’ role. However, his main functions of bank liaison and financial manager were not performed by the replacement employee.

Mr Pashos was not at the meeting of the committee on 26 May 1994. However, his view was that the Community needed a professional manager and that there was a role for Mr Carydias. Mr Pashos’ view on this subject may reflect his political opposition to Mr Fountas rather than an objective consideration of the merits of the decision of the committee. In my view, given the financial situation of the Community, its decision to dismiss Mr Carydias was “sound, defensible and well founded”: Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371.

The committee meeting on 26 May 1994 was called on short notice. This was not an unusual occurrence at the time. The Community was in a financial crisis and it was frequently necessary for the committee to consider matters urgently. Notice of the 26 May 1994 meeting was given by phone but members were not told that the termination of employment of Mr Carydias would be considered. The applicant contended that the absence of notice of that particular item of business demonstrated that there was no genuine basis for the decision. This argument does not follow. The failure to give notice of a particular item of business does not mean that the decision was made without merit. It is understandable that all desirable procedural steps may not have been taken in the atmosphere of urgency which then existed. The applicant did not argue that the failure to give notice invalidated the decision, but rather that it reflected on its genuineness. In his evidence, Mr Carydias suggested a number of other reasons which he contended were the real reasons for his dismissal. He suggested that he failed to do something which Mr Fountas wanted, that Mr Rallis did not like him, that the only reason the Community was in an admittedly bad financial position was that it did not take the loan from the French bank organised by Mr Carydias and did not develop the club on the Bulleen site. Counsel for Mr Carydias rightly did not pursue these suggested reasons in final submissions. On the evidence, there was no basis for them. Rather, they reflected Mr Carydias’ resentment of the termination of his employment.

At the time of dismissal, Mr Fountas offered Mr Carydias a cheque for the amounts due upon termination. Mr Carydias disputed the amount of the cheque. Subsequently, the auditor for the Community investigated Mr Carydias’ entitlement. He found that the Community had overpaid Mr Carydias’ salary package by $13,275. Mr Carydias disputed the fact that he had been overpaid. A meeting of the committee was called to allow him to explain his position. This issue generated further controversy in the committee, but the controversy did not relate to the question of the financial desirability of his dismissal. Indeed, it is significant that Mr Carydias did not question the economic justification for the termination at the time of his dismissal, although he did question the amount of his termination entitlement. Thus, I do not accept Mr Carydias’ contention that the subsequent consideration of his disputed overpayment by the committee reflected dissension from the view that there was a valid economic reason for his termination.

THE AMOUNT OF REMUNERATION TO WHICH MR CARYDIAS WAS ENTITLED

The Community seeks repayment of $13,275 which it claims Mr Carydias overpaid himself. The Community must establish this claim to repayment on the balance of probabilities. However, as the claim involves allegations of misconduct against Mr Carydias, it is necessary to approach the standard of proof with the seriousness of the allegations in mind: Briginshaw v Briginshaw (1938) 60 CLR 336.

On 17 December 1991, the committee resolved to appoint Mr Carydias as Manager for three months and to advertise a permanent position at a salary of $45,000. By a letter dated 19 December 1991, Mr Carydias applied for the permanent position. It is common ground that he was appointed to the permanent position on the terms set out in the letter as follows:
“Meantime should the General Committee decide to employ me permanently after the 28/3/92 my renumeration [sic] as a package deal will be totalling the gross sum of 45,420.00 per annum being broken up as follows:
Gross Salary:  $ 35,000
Car parking allowance:  $ 2,040
Rent allowance:  $ 5,980
Exemption of School fees AGS  $ 2,150
>> Greek Saturday School  $   250
  -----------
  $ 45,420”

Mr Carydias said that he discussed the terms of the application with Mr Fountas. Mr Carydias wanted a car to be provided by the Community. Mr Fountas said that the appointment had to go to the committee, and the members would not approve the purchase of a car. Mr Carydias said that Mr Fountas suggested that he could try for a car or running expenses after three months. Mr Fountas denied making this suggestion. Rather, he said, he had told Mr Carydias that the Community could never supply a car because of its financial situation. I accept Mr Fountas’ evidence that he told Mr Carydias that the Community would not provide a car. I also accept Mr Fountas’ evidence that he did not promise that Mr Carydias would be paid his car expenses. Mr Fountas’ evidence is consistent with the financial position of the Community, with the fact that some members of the committee opposed the appointment of a General Manager at all on the grounds of expense, and the fact that there is no mention of the car expenses in Mr Carydias’ letter. I find, on the balance of probabilities, that Mr Fountas said he would raise the matter of car expenses with the committee in the future.

Mr Carydias said that he started pressuring Mr Fountas to pay car expenses in about May 1992. In response, Mr Fountas agreed, so it was alleged, that Mr Carydias should obtain a Mastercard in the name of the Community. Mr Carydias then applied to Tom Braun, the manager of the National Australia Bank branch, who ultimately refused the application because of the Community’s lack of creditworthiness. Mr Fountas then agreed that Mr Carydias should obtain a Mastercard in his own name and that the Community would pay car expenses incurred on the Mastercard. Mr Carydias said he then had an argument with Mr Fountas about getting Mr Fountas to obtain the approval of the committee in relation to Mr Carydias’ car expenses. He said that Mr Fountas told him not to claim for payments on the Mastercard account until the committee had approved.

Mr Fountas denied that he applied for a Mastercard in the name of the Community or authorised Mr Carydias to do so. He said that Mr Carydias did not ask him and he did not agree to Mr Carydias applying for a Mastercard to be used for car expenses and to be paid for by the Community. The first time he saw a Mastercard claim for Mr Carydias was in early 1994, just before Mr Carydias was dismissed. At that time, Mr Carydias told Mr Fountas that the payment for the Mastercard was to come out of his salary. Mr Braun, not surprisingly, had very little recollection of the events. He recalled a “sounding out” for the issue of a Mastercard in the name of the Community, but could not recall whether it was by Mr Fountas or Mr Carydias, and he recalled the issue of a Mastercard in the name of Mr Carydias.

On 16 September 1992, the committee resolved “To increase the salary of the manager, Mr Carydias, to $47,000 without any other associated costs”. The first payment made by the Community of a Mastercard account on behalf of Mr Carydias was made on 21 September 1994. I accept the evidence of Mr Fountas that the payment of the Mastercard account was not authorised by him or the committee. Mr Fountas already had opposition in the committee to the expense of a General Manager. Even on Mr Carydias’ version of events, the payment of car expenses was not to be made until the matter was passed by the committee. The absence of any reference to the payment of car expenses or the payment of a Mastercard account in the committee resolution to increase Mr Carydias’ salary stands against the conclusion that the committee approved such an arrangement.

The September 1992 salary increase was taken by Mr Carydias in the form of Community cheques drawn for payment of his Mastercard account and several other car expenses, such as registration. His monthly salary cheque was not increased after 16 September 1992. However, by 25 January 1993, the Community had paid in excess of $2,000 in payment of Mastercard accounts and other car expenses for Mr Carydias. Further monthly payments of Mastercard accounts for Mr Carydias continued to be made by the Community. Although the cheques were signed by the Community (and I will discuss the significance of this later), the evidence suggests that, after January 1993, the payments were not authorised by the Community.

The apparent overpayment was first raised by me with Mr Carydias during his examination in chief. In response, he said that he had driven Mr Fountas home after the meeting on 16 September 1992 and complained that the $2,000 was not enough to cover his car expenses. He said that Mr Fountas had replied that, as long as the expense was a genuine one, he would have the cheque signed. The timing of this evidence was significant. It was not volunteered at the time Mr Carydias gave evidence about the increase in salary. The evidence was given in an unconvincing manner. In particular, it was not consistent with the evidence that immediately followed in which Mr Carydias showed that he was aware that any increase in his salary package had to be approved by the committee. He said:
“But he kept telling me had the problem to convince his Committee of Management, he understood that I was telling him, he appreciate what I was telling him, that is what he kept telling me, and I believe him, but he had the problem convincing the Committee of Management especially the opposition which always wanted an excuse to sort of start arguing with him and that was true too, there was a lot of times there were arguments there that shouldn’t have been, not from my car working but for other things. I considered there was some truth in what he was saying.”

In cross-examination, Mr Carydias gave several other different explanations of the fact that more than $2,000 had been paid by the Community on Mastercard accounts. At one stage, he said that he was not concerned because his next $2,000 limit was due “the next month, or within a month or two”. At another time, he said that it was of no concern because he knew that the expenses would be covered by extra earnings from work at Alphington Grammar School. And at yet another time he said that, at about the time the limit was reached, “Mr Fountas says to me, alright never mind if it goes over the limit, I’ll cover you.” Mr Carydias appeared to construct the story as he gave evidence. In my view, Mr Carydias’ evidence reflected arrangements which Mr Carydias would have liked, but not arrangements which he discussed with Mr Fountas. I accept the evidence of Mr Fountas that there was no discussion at the time of the September 1992 increase that car expenses would be met by the Community.

In February 1993, the Community sold the Footscray Childcare Centre. Prior to the sale, Mr Carydias had performed some administrative functions for the Centre in his capacity as General Manager of the Community. In essence, he acted as paymaster in having salary cheques drawn and ensuring bills were paid. At about this time also, Mr Carydias began to provide administrative support to Alphington Grammar School. The evidence shows that he spent more time on work for Alphington Grammar School than he had previously spent on work for the Footscray Childcare Centre. It is not disputed that Mr Carydias devoted long hours to his work managing the affairs of the Community and assisting at Alphington Grammar School. He felt strongly that he should be paid more for the extra work he was performing at Alphington Grammar School. On 2 June 1993, he attended a meeting of the Alphington Grammar School council, so that his role at the school could be formalised, and also to report on the financial situation of the school, particularly its cash flow position. The following item of business appears in the minutes:
“Mr Carydias drew the Council’s attention to the need for assistance to the school in terms of bursar and administrative duties. He indicated that at this stage these were being provided through the GCOMV. Mr Carydias indicated that the cost be be [sic] approximately $20,000 pa.”

Mr Carydias accepted that this meeting did not decide that he was to receive any part of the $20,000. Other evidence demonstrated that the $20,000 was to be a book entry to show the extent of the assistance provided by the Community to Alphington Grammar School. A few days after the meeting, Mr Carydias showed Mr Fountas two documents. One was a duty statement for the staff of the administrative department of Alphington Grammar School. The other was a proposal for remuneration, which read as follows:
“A.G.S. Renumeration [sic] for T. Carydias as from 1/7/93
1. Bills for Gas, Telephone and Electricity to be paid by AGS to the maximum of $3,400.00 per annum or $850.00 per quarter of a year.
2. National Australia Mastercard and/or Citibank Ltd Mastercard to be paid by AGS to the maximum of $4,800.00 per annum or $400.00 per month.
3. School Fees for Nicholas Carydias to be paid by AGS (or exempted) 2,150.00 per annum.
Maximum amount allocated for Mr T. Carydias per annum $10,350.00

Plus maximum of 18.5 hours per week to be paid for Book-keeping by George Karaisaridis and Receptionist duties by Koula Karandaglidis totaling [sic] (maximum amount) $9,620.00 per annum.
Total maximum amount $19,970.00 per annum
*School Council at a meeting dated on 3/6/93 authorized for a $20,000.00 budget allocation to cover all salaries and expenses for Administration Department (Accounts), for duties as per attached list.)”

I will return to this event shortly. On 29 June 1993, just before the end of a meeting of the committee, Mr Carydias addressed the members about his work at Alphington Grammar School. The committee resolved to defer consideration of the matter. It was never further considered. None of these facts were in contest. There were, however, a number of alleged intermediate events of central importance which were hotly contested. I will now turn to those events.

Mr Carydias said that, soon after he started working at Alphington Grammar School, he began pressing Mr Fountas to obtain committee approval for the payment of extra remuneration. Mr Fountas agreed that he would be paid for the work, pending committee approval, and began making payments, although the amount of the remuneration had not been agreed. The discussion ranged from $9,000 suggested by Mr Fountas to $15,000 suggested by Mr Carydias.

Mr Carydias said that Mr Fountas asked him to prepare a proposal for his remuneration for work at Alphington Grammar School. In response, in early June, Mr Carydias prepared the proposal which is set out earlier in these reasons. Mr Fountas rejected the idea of paying certain bills for Mr Carydias because the amounts would vary and the remuneration would therefore not be definite. On about 11 June 1993, they then agreed that Mr Carydias would receive $12,000 extra per year, paid at the rate of $1,000 per month, for the work at Alphington Grammar School. The Community would pay that sum by paying an additional $300 per month rent subsidy to Mr Carydias’ landlord, and by paying the balance of $700 per month to Mastercard for car expenses. Mr Carydias said that he was concerned over Mr Fountas’ reluctance to obtain the approval of the committee for this arrangement, so he set out his understanding in a letter dated 11 June 1993. He took the letter to Mr Fountas at his travel agency. As Mr Fountas was busy, he asked Mr Carydias to tell him what the letter said. Mr Carydias did so. Without looking at the letter, Mr Fountas responded angrily and threw it back to Mr Carydias. The letter read:
“Further to our discussions regarding my new duties as Bursar of Alphington Grammar School and after your refusal to have this matter officially passed also by the Committee of Management of the Greek Orthodox Community of Melbourne and Victoria, I take the initiative to list hereunder the main points of our agreement as proposed by you and will ask you please to confirm your acceptance in writing, as to the following:-
1.A sum of $12,000 p.a. will be paid by the G.O.C.M.V. for my services as Bursar of Alphington Grammar School. a) Part of this money will be paid monthly, though [sic] my National Bank Mastercard Account and b) The rent paid directly to the landlord i.e. $523.33 p.c.m will be increased to $823.33 p.c.m. to make up the difference up to $12,000 p.a.
2.A further sum of $8,000 p.a. will be paid to a person who will assist me with my new duties at Alphington Grammar School. However, the new assistant will be paid directly by A.G.S.
3.The extra payments that will be made for the N.A.B. Mastercard and the rent, will be considered added Fringe Benefits and these new payments will be retrospective to April 1993, and as in the past years I shall only be taxed on my Gross Salary Component of $34,320 p.a. and tax on all Fringe Benefits including the new ones, will be the responsibility of the G.O.C.M.V.
4.This new temporary agreement will be in force until a Motor Vehicle is supplied to me by the GOCMV as originally promised, and/or if and when a new full time Bursar is appointed by AGS.

In closing this letter, you have to understand my position Mr Fountas in asking you to confirm in writing your acceptance to the above. I repeat, that personally I believe that the right thing to do, is to have this agreement tabled at the next meeting of the Committee of Management of the GOCMV and have it officially accepted and passed by the majority of committee members. However, due to your insistence that you do not wish to do that because you might not have the numbers to pass such a resolution, I have no alternative but to settle for less, i.e. a letter from you confirming your acceptance as per your chosen arrangement as stipulated in this letter in Items marked Nos. 1 to 4.”

Mr Carydias said that he did not seek an increase in salary at the committee meeting on 29 June 1993. Rather, he reported that his salary had been adjusted to recognise the work he was doing at Alphington Grammar School. Properly interpreted, the minutes, originally in Greek, record that fact. Mr Carydias said that the question of payment for his work at Alphington Grammar School was not raised again at the committee because, after the meeting on 29 June 1993, on the way home in Mr Carydias’ car, Mr Fountas abused him and threatened that, if the matter was raised in the committee again, he would no longer have a job.

Mr Fountas evidence was that the only discussion he had with Mr Carydias about extra remuneration for work at Alphington Grammar School was a few days after the meeting of the Alphington Grammar School council on 2 June 1993. Mr Carydias came to his office and gave him the duty statement and the proposal for extra remuneration. Mr Fountas said that he was upset about the letter because there had never been any previous discussion about payment for work at Alphington Grammar School. He threw it back to Mr Carydias and said “This is not on. We never ever decided that you will get paid from Alphington.” Mr Carydias then left but rang Mr Fountas soon after, threatening that he would resign unless he were paid for his work at Alphington Grammar School. Mr Fountas said that he could do whatever he liked. Mr Fountas said that the matter was next raised at the committee meeting on 29 June 1993. Mr Carydias asked the committee for an increase in his salary for the work at Alphington Grammar School. Mr Fountas is a native Greek speaker and his translation of the minutes indicated that Mr Carydias sought an increase in his salary.

I find that Mr Carydias was not authorised, either by Mr Fountas or by the committee, to be paid $12,000 for work at Alphington Grammar School. Even on his own evidence, the question of his remuneration was deferred to another meeting, and the matter was not raised at any subsequent meeting. Mr Carydias gave evidence that he knew of the terms of clause 28 of the Articles of Association of the Community which, in part, provides:
“The General Committee may appoint and discharge employees of the Community other than the Priests and may fix the wages and salaries to be paid to employees of the Community.”

He gave evidence on many occasions that he knew that the committee had to approve any increase in remuneration. He also gave evidence that Mr Fountas was concerned to ensure that the committee’s approval was obtained, because the opposition minority was very vocal. I do not accept the contention that the committee meeting on 29 June 1993 considered a report that Mr Carydias had already been receiving remuneration for his work at Alphington Grammar School. If that was the subject matter, no purpose was served by deferring discussion. Mr Pashos was a witness called by Mr Carydias. He was the secretary and the minute-taker at the meeting. He is a native Greek speaker. He translated his own minutes as “Mr Carydias asked to reconsider his salary due to the heavy load of work that has come about from his duties at Alphington Grammar ....”

The evidence of Mr Carydias that Mr Fountas agreed to an increase of $12,000 was not credible. It is improbable that Mr Fountas would have agreed to such a large increase when the Community was in such dire financial trouble. It was only two months away from the appointment of an Administrator. A letter from the National Australia Bank dated 14 April 1993 demonstrates the depth of the crisis at this time. In part, it read:
“We refer to previous correspondence and in particular our telephone discussion with Mr Tassos Karydias [sic] of 15/4/93.
Would you please provide a formal update of all relevant issues as discussed with Mr Karydias [sic]. In particular, we require full details of the proposed development at Albion Street, Brunswick and how the Community proposes to raise cash equity of $285,000. Copies of relative correspondence from the Department of Health should be provided. We really must question the ability o the Community to proceed with this!
......
You will recall that, in terms of our letter of 22/1/93 that a deadline of 31/3/93 was set for receipt of $1.0M from asset sales and Lucerne Street properties were to be sold if the Government Grant failed to materialise. Accordingly, the Community is in default again.
We are particularly concerned with the escalation of your debt which is now well in excess of $8.0M and with only $10,000 per month being provided towards interest, this figure is growing by $50,000 per month.
The solvency of the GOC must be under question and the only option may be for the total sale of all property and winding up of the GOC.
......
Please respond urgently to enable us to complete a detailed report to the Bank’s senior management. We will arrange a meeting upon receiving your response.”

Mr Carydias himself said:

“And all of the community, especially the President, was conscious of the fact that they shouldn’t be spending money on employees salaries, on high wages and things like that because the members will, you know, will complain as things were bad already in the Greek Community financially.”

Although Mr Carydias gave this evidence to explain why the $12,000 was to be paid by way of allowance rather than direct salary increase, it does emphasise the existing concern about the expenditure of money by the Community generally. Further, it is most unlikely, from the standpoint of both parties, that Mr Carydias would work at Alphington Grammar School on the understanding that he would be paid but without an amount being fixed in a period that, on one version of the evidence, extended from February to June 1993. However, the most telling piece of evidence against Mr Carydias’ version of events is the content of his proposal for increased remuneration. It allocated $10,350 to Mr Carydias, comprised of payments of gas, telephone and electricity bills to a maximum of $3,400 per year, payment of Mastercard to a maximum of $4,800 per year, and payment or allowance of school fees amounting to $2,150. That means that Mr Carydias was putting a proposal to Mr Fountas that he be paid an additional $10,350. Indeed, the net addition would have been $8,200 because the school fees were already being paid by the Community as part of Mr Carydias’ original package. Further, the proposal was to operate from 1 July 1993. It is not believable that the final agreement between Mr Carydias and Mr Fountas, reached within days of the proposal being presented, involved payment of $12,000, being $3,800 more than Mr Carydias sought in his original proposal, and that it be paid from April rather than July as proposed. I do not accept Mr Carydias’ evidence that Mr Fountas agreed to the payment of $12,000 remuneration for work at Alphington Grammar School. Further, I do not accept that Mr Carydias attempted to show the letter dated 11 June 1993 to Mr Fountas, or that he showed Mr Fountas a further duty statement which included reference to the payment of $12,000. Where the evidence of Mr Fountas and Mr Carydias conflicts on this issue, I prefer the evidence of Mr Fountas.

Between 29 September 1993 and 17 January 1994, the Administrator of the Community was responsible for the payment of staff salaries. Mr Katos supervised the day to day operations of the Community. He did not know Mr Carydias or Mr Fountas beforehand. He was an independent witness. One of his first tasks was to ascertain the salary rates of the staff and determine whether to continue their employment. He relied on Mr Carydias for this purpose. In relation to his own salary, Mr Carydias told Mr Katos that he was employed on a salary package of $47,000 including base salary, rent subsidy, parking and car expenses. Mr Katos felt that the remuneration was excessive for the work performed, but nevertheless retained Mr Carydias’ services and paid him at approximately the level indicated by Mr Carydias. Mr Carydias mentioned the provision of services by the Community to Alphington Grammar School. Mr Katos said that Mr Carydias did not seek or receive payment for that from the Administrator. Mr Carydias, on the other hand, said that he told Mr Katos that he was being paid a package of $59,000 and that Mr Katos agreed to continue payment. Given the independence of Mr Katos, the fact that the amounts paid to Mr Carydias during the period of administration were equivalent to an annual package of approximately $47,000, and the credible way that Mr Katos gave his evidence, I prefer his evidence to the evidence of Mr Carydias on this issue.

Mr Carydias went on holidays on 12 April 1994. He was paid two months holiday pay. It was calculated on a package of $47,000. Mr Carydias said that he accepted the basis of calculation because he had only been entitled to payment for work at Alphington Grammar School after June 1993. Two things may be observed about this evidence. First, even if it was correct that the Alphington Grammar School remuneration was payable from June 1993, the holiday pay entitlement related to the period of employment from 7 January 1992 to 31 December 1993. At least 25% of the holiday pay should have been calculated on a package of $59,000 if Mr Carydias’ version of events was correct. From early in his employment, Mr Carydias had pressed for increased remuneration. It would have been out of character for him not to seek holiday pay for the period from January 1993 to December 1993 at a rate based on a package of $59,000 per year if such a package had been agreed. Otherwise, Mr Carydias would have foregone about $600 for no reason. Once again, the explanation proffered by Mr Carydias depended upon a private discussion with Mr Fountas. He said:

“At what rate? --- It was calculated rate [sic] after discussion with Mr Fountas on that the rate he says to me, ‘Don’t put the $12,000 of Alphington because you weren’t working at Alphington at that time except for six months and we won’t pay for that’ and on our agreement I thought it was fair what he said. It was calculated on my existing rate at that time because it was in arrears, two years in arrears on $47,000.”

Mr Fountas was not asked about this conversation in cross-examination.

This explanation is unconvincing. The holiday pay would not have been for a fair amount if the Alphington Grammar School remuneration had been agreed. In my view, Mr Carydias did not challenge the calculation because there was no agreement to pay him extra for the work at Alphington Grammar School. The other noteworthy aspect of Mr Carydias’ explanation is that it suggested that he was working at Alphington Grammar School for only six months prior to December 1993. This is at odds with other evidence of his to the effect that he started work as early as February 1993 and had agreed in principle that he would be paid. On this basis, there would have been a good claim for holiday pay for most of 1993, to be calculated on the basis of the alleged package of $59,000.

Significance of the signed cheques

The ultimate answer which Mr Carydias gave to the suggestion that he was not entitled to a package of $59,000 was that the Community had paid him on this basis and had done so knowing of his entitlement. He relied on this fact to argue the defences of estoppel, ostensible authority and informal assent against the claim for repayment. I now consider the question of whether the Community made the relevant payments knowing them to be part of the alleged $59,000 package.

For his entire employment, Mr Carydias received a salary cheque in the same amount every fortnight. Further, the Community paid his car parking expenses by cheques drawn monthly. It paid school fees on his behalf yearly. From January 1992 until May 1993, it paid Mr Carydias’ landlord a monthly cheque of $523.33. Apart from the period of administration, it paid a monthly cheque of $823.33 to Mr Carydias’ landlord from 29 June 1993. From 21 September 1992, it paid Mr Carydias’ Mastercard monthly account, usually amounting to $400‑$500. The alleged overpayment arose in the payments of the increase of $300 per month in rent subsidy after May 1993, and the payment of Mastercard expenses beyond the amount of the salary increase passed on 16 September 1992.

Each of the rent subsidy cheques and the Mastercard payment cheques were signed by two signatories. Usually the signatories were two of the following people - Mr Fountas, Mr Rallis, Mr Pappas or Mr Pashos. The first three gave evidence on the procedure for signing cheques for regular salary payments. Their evidence was that the cheques were presented to them in bundles. Each bundle contained up to 40 cheques, including cheques for the salaries of the teachers, the priests and other staff of the Community. The cheques were usually signed at the committee meetings. The rent and Mastercard payments were normally made on the same day as the salary payments. I infer that the cheques for rent and Mastercard payments were placed in the bundle with the salary cheques as part of the same procedure for signing. Each of the signatories testified that they did not notice the increase in rent subsidy, nor did they realise until at least early 1994 that the Community was making payments for Mr Carydias through Mastercard. Mr Pappas was the Treasurer but, in 1992 and 1993, he had personal financial problems which kept him away from the Community for much of the time. He gave initial approval for the payment of cheques, often over the phone. He gave less attention to the salary cheques than cheques in payment of other accounts because the salary payments were regular and expected. He described the situation and his reliance on Mr Carydias as follows:
“I didn’t much give any attention for wages because wages was ... (indistinct) ... thing we have to sign, just say bring the wages up, most I bring up the wages of the Greek Community and the wages of the schools would be about 40 cheques I have to sign because was wages and I trust him and I didn’t have to give much attention on the wages thing.”

Mr Pappas was an elderly man. It was evident from his testimony that he relied heavily on Mr Carydias. The signatories, often not including Mr Pappas, relied on his initial approval of the payment. Mr Fountas also said, in relation to the signing of cheques:

“I trusted Mr Carydias and I was very, very busy at the time and I rely on the sincerity or the honesty or the collaboration [sic] of my colleagues there; that are staff and that are committee members. I have an enormous pressure from the bank.”

Again speaking of Mr Carydias’ role in the drawing of cheques, Mr Rallis said:

“Generally I would accept when he presented me something, as I said, I had full trust in Mr Carydias’ abilities and his working relationship.
Yes, okay? --- I didn’t question anything but I did ask him - I recall asking Tasios, ‘Are these cheques correct?’ and after he assured me they would be, I would sign them, but I do recall asking him whether they were correct.”

The circumstances placed Mr Carydias in a position of trust. The officers of the Community were under great pressure from the National Australia Bank. Their attention to the financial crisis took up much time and concentration. The Treasurer was preoccupied with his own financial difficulties. Mr Carydias was well known to the committee members. He was active in the Greek community and responsible for the running of the Community’s office. He prepared or supervised the preparation of the cheques for payment of salaries. The signatories to the cheques had confidence in Mr Carydias and they trusted him. They acted in a voluntary capacity and had their own business concerns and occupations. Although they should have been more careful when signing the Community’s cheques, and Mr Fountas, in particular, acknowledged this, it is not surprising that they relied on Mr Carydias to properly and accurately prepare the cheques for signing. In the circumstances, their signing of the increased rent subsidy cheques and the Mastercard payment cheques did not signify that they acknowledged that Mr Carydias was entitled to a package of $59,000. Rather, it reflected their trust and confidence in, and reliance upon, Mr Carydias.

Mr Carydias pointed to a number of other facts which he contended showed that the Community was aware that his package amounted to $59,000 and how it was made up. First, he said that he provided a copy of his Mastercard statement each time he sought approval for payment from the Treasurer. I accept the evidence of Mr Pappas that he was not aware until February 1994 that the Community had paid a Mastercard account on behalf of Mr Carydias. This was probably because he often approved the payment by phone and would not have seen the Mastercard statement on such occasions. On other occasions, he would have approved the Mastercard account payment along with a bundle of salary cheques, without paying sufficient attention or without appreciating the difference. After approval by the Treasurer, there was no need for the statement to accompany the cheque. The signatories who gave evidence did not receive the Mastercard statements.

Mr Carydias also relied upon events during the period of administration. The Administrator queried the December Mastercard account for $965.79. Mr Carydias gave evidence that he told Mr Katos that the account was for repairs as well as petrol and that Mr Katos should speak to Mr Fountas. He said that the next thing was that the cheque was paid. Mr Carydias assumed from these events that Mr Fountas had approved the payment. Neither Mr Katos nor Mr Fountas was asked whether they had had this conversation. I am not satisfied that it occurred. Mr Katos said that his assistant spoke to Mr Carydias about the issue. His assistant reported that Mr Carydias had said that the expenses were part of his package. His administration of the day to day operations of the Community was nearly over and he was concerned primarily that the amount of the expenses did not exceed the annual limit, which he thought was about $3,000 within a package of $47,000. The only other Mastercard payments made by the Administrator were $103.35 for October 1993 and $439.59 for November 1993, a total of $542.94. This incident does not indicate an acceptance by Mr Katos of the agreement alleged by Mr Carydias, whereby the Community was to pay Mr Carydias car expenses in the sum of $2,000 arising from the September 1992 increase and an extra $700 per month, or $8,400 per year, arising from the alleged increase of work done at Alphington Grammar School, a total of $10,400 per year.

The Community paid Mr Carydias’ rent subsidy at the increased rate on 25 April 1994, when he was on holidays. He argued that this demonstrated that the Community was aware of and approved the higher rate, and thereby recognised the agreement he alleged he had reached with Mr Fountas. However, the evidence does not indicate how the payment came to be made. It was made within a fortnight of Mr Carydias’ departure on leave. It may have been arranged by him before he left. There may have been a system by which regular payments were made automatically. The fact of payment in Mr Carydias’ absence alone does not establish that he had no part in the payment and that the Community officers made the payment in conformity with the agreement alleged by Mr Carydias.

Finally, Mr Carydias drew attention to the letter dated 1 June 1994 from the Community to him, which set out the calculation of the amount owing to him on termination. It allowed for holiday pay, pay in lieu of notice, and severance pay calculated at $903.84 per week, which is equivalent to $47,000 per year. In addition, it allowed $255 for “Petrol allowance 1 month”. Mr Carydias contended that the provision for petrol allowance demonstrated that the Community had agreed to payment of the $12,000 additional remuneration for work at Alphington Grammar School. This followed, he said, because the amount unspent of the $2,000 increase dating from September 1992, and the $700 per month for car expenses arising from the Alphington Grammar School remuneration agreement commencing in April 1993, was about $400. The provision for petrol allowance was to take account of that balance. I do not accept this contention. The $255 representing the petrol allowance is not the same amount as the balance of $400 suggested as being due to Mr Carydias. Further, the reference in the letter to “1 month” suggests that the payment was for an amount of an allowance calculated at a regular rate for a period of a month at a time, while the argument of Mr Carydias was that the payment was for the balance of an annual allowance. Finally, the description of the allowance as petrol allowance does not adequately describe the nature of the allowance as asserted by Mr Carydias, namely, an allowance to meet general car expenses. In any event, I accept the explanation by Mr Fountas that the item was inserted by mistake. Indeed, the terms of the letter support the case of the Community. The calculations of holiday pay in lieu of notice, severance pay and back pay are all based on a salary of $47,000. In fact, at least in the case of the payments made in relation to backpay, Mr Carydias has been allowed more than his entitlement. The calculation should have been based, not on the total value of his package, but on the salary element alone because, during his employment , the Community paid the other items of the package, such as rent subsidy and car parking. The amount involved is not significant but the error does confirm the contents of the letter were not produced with particular care.

It follows from the facts I have found that there is no basis for the defences of Mr Carydias based on estoppel, ostensible authority, or informal assent. The Community is entitled to succeed in its claim for repayment of the moneys overpaid. There was no dispute that the amount of such overpayment was $13,275.

Following the discovery of the overpayments, Mr Carydias was charged with criminal offences arising from the payments. He was acquitted on all charges. The findings I have made do not mean that Mr Carydias was guilty of any criminal offence. Neither do they mean that he was wrongly acquitted. The criminal charges had to be proved beyond a reasonable doubt. That standard does not apply to the civil claim made by the Community. Furthermore, the issues and the evidence relevant to the charges in the criminal proceedings would have been different from the evidence and issues in relevant to the civil claim before this Court.

WAS THE TERMINATION OTHERWISE JUSTIFIED?

The Judicial Registrar held that the Community had a valid reason for terminating the employment of Mr Carydias under s 170DE(1) but that the termination was harsh under s 170DE(2). When this review commenced, the applicant relied, in part, on s 170DE(2) to allege that the termination of employment was harsh, unjust and unreasonable. Before the hearing of the case concluded, the High Court determined that s 170DE(2) was unconstitutional: State of Victoria v Commonwealth of Australia (1996) 138 ALR 129. Thus, in final submissions, the applicant relied exclusively on s 170DE(1), as he was bound to do.

Section 170DE(1) implements Article 4 of the Convention Concerning Termination of Employment at the Initiative of the Employer, which provides:
“The employment of a worker shall not be terminated unless there is a valid reason tor such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service.”

It may be argued that, in the context of the Convention, the expression “valid reason” is used to express the concept of a termination which is justified in all the circumstances: see Nettlefold v Kym Smoker Pty Ltd (unreported, IRCA, Lee J, 4 October 1996); and Thomas v Ralph Lynch t/as Bellingen Grocery (unreported, IRCA, Wilcox CJ, 20 December 1996). On such an argument, a termination which was procedurally unfair, or failed to take account of the personal circumstances of the employee, would not be justified and, hence, would not be for a valid reason. This argument was not raised in this case. In final submissions, the parties accepted that the only question which arose under s 170DE(1) was whether the Community had established an economic justification for the termination. In these circumstances, I would not determine the legal argument on the scope of the expression “valid reason” without further submissions. In any event, the argument would not avail the applicant in the present case because, even if it was open, in my view, the evidence establishes that the termination of employment of Mr Carydias was justified in all the circumstances.

While I do not doubt that Mr Carydias was hurt by the termination of his employment, his real criticism of the Community relates to the allegations of overpayments which were made after the termination. Apart from questioning the financial justification for the dismissal, the case for Mr Carydias lacked any substantial criticism of the circumstances in which it occurred. It was only when the Court directly asked Mr Carydias whether he thought the circumstances were harsh, unjust or unreasonable that he said that he should have been consulted earlier and may have agreed to continue working for a reduced salary. In my view, the failure to consult Mr Carydias was not harsh, unjust or unreasonable in the circumstances of this case. The need to consult is not a rigid requirement. The extent to which it is required, how it is to be satisfied, and even whether it is required at all, depend on the circumstances of the case. In the present case, Mr Carydias was engaged partly in response to the financial crisis facing the Community. He was centrally concerned with the steps which the Community took to overcome the crisis. He probably knew more about the financial affairs of the Community than any other member of the Community. When Mr Fountas initially approached him to take the position, one of his immediate responses was “Look, George, all right. Maybe I’ll consider it, but the Community can’t afford me”.

The financial affairs of the Community were no better in May 1994. Mr Carydias knew that, even after the refinancing, the Community would struggle financially. He knew that his remuneration was a large cost to the Community. He knew that his responsibility for liaising with the National Australia Bank was over. When he went on holidays in April 1994, he asked Mr Fountas whether this was a prelude to being dismissed. Such rumours had circulated in the Greek Community and press. By this time, the offer of a loan from the National Bank of Greece was public. In my view, Mr Carydias was alert to the likelihood of the termination of his employment by this time. Given that the Community is a very small organisation, and given Mr Carydias’ central position in its administration, there was no need for the Community to spell out this likelihood. On 27 May 1994, when Mr Fountas told Mr Carydias of the decision to dismiss, Mr Fountas was sympathetic to Mr Carydias and Mr Carydias took him to be so. The financial position of the Community made it impracticable to continue Mr Carydias’ employment. There was no point in discussing further employment at a reduced salary. I have observed Mr Carydias in the witness box and, taken together with the evidence of his efforts throughout his employment to obtain increased remuneration, I am satisfied that he would not have continued at a reduced salary and that it was unnecessary for the Community to raise this possibility with him. It is significant that he did not quarrel with the reason given for the dismissal on 27 May 1996, nor did he complain about the way in which it had been effected. In my view, the termination was justified in all the circumstances.

CAN THE COMMUNITY RELY ON A REASON FOR TERMINATION WHICH IT DISCOVERED AFTER THE TERMINATION?

The Community contended that, even if it was not justified in dismissing Mr Carydias on economic grounds, it was entitled to rely on Mr Carydias’ misconduct in making the overpayments, which it discovered after the termination, as a justification for the termination. Having come to the view that the termination was for a valid reason based on the economic position of the Community, it is unnecessary to deal with this question.

CONCLUSION

It follows from these reasons that I will make orders that the application by Mr Carydias for an extension of time to bring the application under s 170EA be granted, that the orders made by the Judicial Registrar be set aside, that the application under s 170EA be dismissed, and that the moneys paid into Court be paid out to the Community. It also follows that there will be judgment in the sum of $13,275 for the Community on its claim. In relation to the sum of $13,275, I note that, after the dismissal, the Community wrote to Mr Carydias on 1 June 1994, alleging the overpayment of $13,275 but, at the same time, acknowledging his entitlement to $9,313.75 by way of amounts due on termination, and seeking payment of the balance of $2,174. I expect that payment of that balance by Mr Carydias would satisfy the judgment against him and discharge the Community from liability for payment of the items which made up the amount of $9,313.75.

I certify that this and the preceding
fortytwo (42) pages are a true copy of the reasons
for judgment of his Honour Justice North.

Associate:
Dated: 20 February 1997

APPEARANCES

Counsel appearing for the applicant: Barry Fox
Solicitors for the applicant: M. Barbayannis & Co

Counsel appearing for the respondent: B. Lacy
Solicitors for the respondent: Wilson Potter Nicholson

Dates of hearing: 16-19 June, 16-18 December 1996
Date of judgment: 20 February 1997