Cynthia Phillipson v Fincar Pty Ltd

[2017] FWC 5431

[2017] FWC 5431

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Cynthia Phillipson
v
Fincar Pty Ltd
(U2017/3861)

SENIOR DEPUTY PRESIDENT HAMBERGER SYDNEY, 19 OCTOBER 2017

Application for an unfair dismissal remedy - applicant dismissed for alleged poor performance and failing to identify potentially fraudulent car loan application.

[1] Ms Cynthia Phillipson (the applicant) has made an application under s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy in relation to the termination of her employment by her former employer, Fincar Pty Ltd (Fincar – the respondent) on 31 March 2017.

The Hearing

[2] This matter was heard on 14 September 2017. At the hearing, Ms Phillipson represented herself. Fincar was represented by Jean Philibossian, General Manager for Fincar.

[3] The applicant gave evidence on her own behalf. Mr Philibossian gave evidence for Fincar.

Background

[4] The applicant commenced employment with the respondent as a full-time Finance Broker on 27 June 2016. She has worked as a Finance Broker, on and off, for about 30 years.

[5] The respondent is the finance arm of Private Fleet Pty Ltd. As at the date of her termination the applicant was paid a salary of $50,000 per annum (plus commission).

[6] The notice of termination given to the applicant indicated that the applicant was dismissed due to ‘the absence of due diligence in qualifying clients’ and her ‘continuous under performance in sales’.

[7] The reference to ‘absence of due diligence’ appears to relate to a motor vehicle finance application for a customer which was handled by the applicant and was subsequently found to be fraudulent.

[8] On the day of the termination the applicant was called into a meeting with Mr Philibossian. He said he had just ‘been humiliated for an hour’. This appears to be a reference to a discussion he had held with Richard Kew, Platform Consolidated Group Director and Sales Manager, who was of the view that the applicant was responsible for not detecting the allegedly fraudulent finance application. Platform Group is the parent organisation of Platinum Finance.

[9] Mr Philibossian told the applicant she was being dismissed and handed her the notice of termination.

Evidence

[10] In the hearing Ms Phillipson described her role as follows:

‘After the motor vehicle sales people sold the car and if there was a finance application then it was handed over to one of the brokers to process to contact the customer and to do as much – give them their options for finance and do as much for them as we could and then submit them through to the finance company; the best chosen finance company, and get them approved to purchase their car’. 1

[11] Ms Phillipson was tasked with checking finance applicants’ payslips (for their income), rates notices (to check if they owned property) and conducting an ASIC company search (to make sure that the company the customer seeking finance purported to work for was in fact a genuine company and a bona fide employer). 2

[12] The application for finance that was later found to be fraudulent was originally submitted by Ms Phillipson on behalf of the customer to ANZ. ANZ declined the application, according to Ms Phillipson on the basis that the customer was a director of her husband’s companies which were in liquidation. The application was then submitted to Macquarie who also declined the application. 3

[13] Ms Phillipson’s colleague Matt McGee then took the applicant’s file and spoke with Mr Kew and allegedly at his suggestion put the application through to Platinum Finance (who would subsequently send it through to Capital Finance – a subsidiary of the Westpac Banking Corporation). 4

[14] The application was rejected by Capital Finance on the basis that Matt McGee was not accredited to submit applications to Capital Finance so the file was moved back to Ms Phillipson and submitted to Platinum Finance.

[15] On Friday 24 March 2017 Platinum Finance advised Mr Philibossian that the application had been flagged as fraudulent by the funder, Capital Finance. All the respondent’s administrative and management staff were told not to engage with the customer.

[16] Ms Phillipson said that the customer rang her at home on the weekend of 25 and 26 March 2017 asking when she would be able to pick up her new car. Ms Phillipson told her that she was not able to pick up her car as her application for finance was being investigated. 5

[17] On Monday 27 March 2017 Ms Phillipson informed the respondent that the customer had contacted her over the weekend 6.

[18] Ms Phillipson was never told the fraudulent nature of the finance application. 7 Indeed Mr Philibossian told the Commission that ‘the funders will never fully divulge what the issue is.’8 However it appears that the customer who had applied for the finance was allegedly a ‘skip’, that is she was in default on repayments on a loan and had subsequently ceased contact with the lender and made herself hard to trace.9

[19] Platinum Finance (and therefore the respondent’s) concern was that there were discrepancies in the customer’s application that should have provided a warning that there might be issues of concern. In particular, the payslip submitted by the customer indicated that she earnt around $200,000 a year. Employers with revenue in excess of $75,000 need to be registered for GST – however an ASIC search indicated that the employer named on the payslip was not registered for GST. According to the applicant this ‘sort of rang bells at that time but when I checked it out there was nothing wrong with it.’ She said she had inquired about why the employer was not registered for GST and was told (presumably by the customer herself) that the employer was a charity and was therefore GST exempt. 10

[20] Mr Philibossian’s evidence (which I accept) is that an ASIC search would have indicated whether the company was indeed a charity and was GST exempt. However ‘[this] was just a company that was not registered for GST’. 11 He had personally seen the ASIC search and this did not say that the company was a charity or was GST exempt.12 The implication is that the applicant accepted the customer’s explanation and failed to undertake the requisite check herself.

[21] Mr Philibossian said that Ms Phillipson should have referred the finance application to someone more senior when she realised that the finance applicant’s purported salary was higher than the amount their employer could have earned in revenue given that the employer was not registered for GST. The ASIC search did not show that the employer was a charity, or that it was GST exempt. That should have rung an alarm bell – especially given the customer had been declined on a couple of previous occasions. ‘So asset backed high income earner, previous credit history, all those things fall into place rather conveniently but when the credit checks are made evidently nobody wants to lend her any money.’ 13

[22] On 30 March 2017, while Ms Phillipson was off sick Richard Kew left a voicemail message for her. On the 31^st of March Ms Phillipson spoke to Mr Kew. Mr Kew told her to ‘take responsibility for the fraudulent deal’ and they argued. 14

[23] A meeting was arranged on the same day (31 March 2017) at the office of Platinum Finance with Mr Kew, Mr Philibossian and Ms Phillipson. The basis of this meeting was to discuss the transaction in detail so that Platinum Finance could report back to Capital Finance. 15

[24] Ms Phillipson gave evidence that at the meeting she was asked if she checked the car finance applicant’s payslips and whether she noticed the high income and that the employer was not registered for GST. She responded that she had checked the ASIC register and the customer’s employer was not registered for GST, being exempt because it was a charity organisation. 16

[25] Mr Philibossian said that at the meeting with Mr Kew he wanted to ‘hose down’ the situation and, in effect, apologise for failing to pick up the discrepancy.

‘Well, the precise opposite happened. Unfortunately Ms Phillipson gave Mr Kew a piece of her mind, and, look, I understand her perhaps defending herself, but the situation was beyond that now.’ 17

[26] Mr Philibossian conceded that Ms Phillipson’s role was high pressure and that her and her colleagues were under pressure to perform and earn income for the company by bringing in applications and getting them approved. 18 In saying that, Mr Philibossian said that Richard Kew indicated that Platinum were no longer prepared to provide their lines of credit to the applicant and with Platinum being a significant provider of credit to Fincar, Fincar had no ‘use for her’.19

[27] When asked what formal procedures Fincar had in place the only document Mr Philibossian was able to refer to was an email concerning the maintenance of a data base. He agreed that Ms Phillipson did not do anything that was inconsistent with the processes described in that email. 20

[28] It appears that Ms Phillipson’s conversation with the customer alerted the latter to the lender’s suspicions. This then jeopardised the lender’s plan to retrieve a vehicle in the possession of the customer. The customer had allegedly defaulted on her repayments in relation to this vehicle and had then ceased all contact with the lender. Mr Philibossian’s evidence was that this event could have severely affected the business relationship between Fincar and Platinum, one in which Fincar relies on. 21

[29] Later when they returned to the Fincar office after the meeting at Platinum Finance Ms Phillipson and Mr Philibossian discussed the meeting. Mr Philibossian submitted that Ms Phillipson ‘held her ground’ when they were discussing the meeting held at Platinum Finance and as a result informed her that she was being dismissed. 22

[30] Mr Philibossian submitted that Ms Phillipson was a poor performer and that ‘at no time in the nine months of her employment had she ever paid for her desk’. 23 Ms Phillipson conceded that she was a poor performer but added that her colleagues were as well.24

[31] As to the reason Ms Phillipson’s performance was never specifically discussed with her (prior to her dismissal), Mr Philibossian conceded that he may have been ‘a bit soft’ and ‘did not like to do the autocratic thing’. 25

[32] On the issue of selling vehicles Mr Philibossian submitted that the offer to the Fincar finance brokers to sell vehicles was done as a means of providing a supplementary income stream and an opportunity to ‘control the sale’ where the broker would ‘[facilitate] the purchase of the vehicle and then conduct the finance application as appropriate’. 26

[33] The content of the dismissal letter referred to ‘underperformance in sales’. 27 Upon querying this Mr Philibossian clarified that that this referred to ‘selling finance and/or vehicles’ and underperformance generally.28 That is that her performance in selling finance was generally poor as well.29

[34] In his evidence, Mr Philibossian clarified that ‘sales’ is in reference to selling finance and/ or vehicles. 30

Consideration

[35] It is not in dispute that Ms Phillipson is a person protected from unfair dismissal. I am satisfied that she is so protected.

[36] Section 385 of the Act provides:

‘385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.’

[37] Section 385(a) of the Act is satisfied. It is not in dispute that Ms Phillipson has been dismissed.

[38] Section 385(c) of the Act does not apply in this case, as Fincar is not a small business.

[39] Section 385(d) of the Act is satisfied. Neither party contended that Ms Phillipson had been made redundant.

[40] I must therefore consider whether Ms Phillipson’s dismissal was harsh, unjust or unreasonable. Section 387 of the Act provides:

‘387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.’

Valid reason: s.387(a)

[41] At hearing the respondent submitted that there was a valid reason for dismissal on the basis that Ms Phillipson did not follow correct procedure in conducting due diligence over the alleged fraudulent application.

[42] Mr Philibossian submitted that Ms Phillipson should have identified that the loan applicant was not employed by a charity (through an ASIC company search) and that on making such a finding, she should have alerted Mr Philibossian as such.

[43] On the basis of the evidence I am satisfied that Ms Phillipson did not perform due diligence in relation to the finance application. While this was a significant error on her part there is no evidence that there had been prior deficiencies in Ms Phillipson’s performance of due diligence, (as opposed to her general poor sales performance). Ms Phillipson was also wrong to have told the customer her application was being investigated after she had been told not to engage with her. Directly disobeying a lawful and reasonable direction such as this should properly be characterised as misconduct rather than poor performance.

[44] There appears to have been a complete absence of formal procedures documenting the way in which the applicant was meant to go about performing her role, which would have contributed to the difficulties that occurred. The respondent might have felt (wrongly as it turned out) that written procedures were unnecessary given the applicant’s experience.

[45] On balance I do not consider that the applicant’s failings constituted a valid reason for dismissal – though they do raise questions as to how long she would have remained in the employ of the respondent. This is something I discuss further below.

Notification of that reason and opportunity to respond: ss.387(b) and (c)

[46] To the extent that her dismissal was related to ‘the absence of due diligence in qualifying clients’ I am satisfied that the applicant was made aware of the specific deficiency in her due diligence at the meetings on 31 March 2017 –even if she was not made aware of the specific nature of the alleged fraud.

[47] I am therefore satisfied that the applicant was notified of the reasons for her dismissal prior to the termination of her employment and she was given an opportunity to respond to those reasons.

Unreasonable refusal of support person: s.387(d)

This was not put in issue, and there was no evidence adduced that Ms Phillipson was unreasonably refused a support person.

Warnings about unsatisfactory performance: s.387(e)

[48] The applicant agreed that her performance was poor, however, added that ‘everybody underperformed’. 31 I am satisfied that Ms Phillipson was performing poorly in her role.

[49] To the extent that her dismissal related to unsatisfactory performance, the applicant was not issued a warning regarding unsatisfactory performance before her dismissal and as such was not given the opportunity to improve her performance.

Size of employer’s enterprise and absence of human resource management expertise: ss.387(f) and (g)

[50] The respondent is not a small business and could reasonably be expected to have followed a proper procedure in effecting the applicant’s dismissal, though it did not appear to have access to dedicated human resource management expertise.

Other relevant matters: s.387(h)

[51] Ms Phillipson submitted that she had been ‘out of work for five months’ and her bank balance had been ‘depleted’. 32 Mr Philibossian submitted that he believed Ms Phillipson had obtained employment since her dismissal, however, did not produce evidence of this.33 I am satisfied that Ms Phillipson has not obtained employment since her dismissal from Fincar. Given Ms Phillipson’s age and limited skill set I am of the view that she would have a greater than average difficulty in obtaining alternate employment.

Was the dismissal harsh, unjust or unreasonable?

[52] Balancing all of the considerations above, I consider that Ms Phillipson’s dismissal was harsh and unreasonable. Fincar’s response to her conduct and performance was disproportionate in the circumstances.

Remedy

[53] Having found that Ms Phillipson was unfairly dismissed, I must consider what remedy to order, if any.

[54] Reinstatement is not sought by the applicant and would be inappropriate. An order for compensation is appropriate in all the circumstances.

[55] I therefore turn to consider compensation. Section 392 of the Act provides:

‘392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.’

Effect on viability of employer’s enterprise: s.392(2)(a)

[56] No evidence was presented that an order of compensation would adversely affect the viability of the employer’s enterprise.

Length of service: s.392(2)(b)

[57] Ms Phillipson was employed by the respondent for 9 months. This is relatively short period of time.

Remuneration if not dismissed: s.392(2)(c)

[58] Ms Phillipson conceded that she was not meeting her sales targets. Furthermore, at the hearing, Mr Philibossian submitted that during the 9 months of her employment she had never ‘paid’ for her desk.

[59] While Mr Philibossian’s evidence at the hearing indicated that Ms Phillipson was not performing in her role, he conceded that she was not the subject of any formal performance management process, however, performance had been verbally discussed.

[60] Ms Phillipson conceded in her submissions that she was unhappy in her role ever since she had been asked to ‘sell cars’.

[61] Taking into account Ms Phillipson’s relatively poor performance and dissatisfaction in her employment I am of the view that had Ms Phillipson not been dismissed, it is likely she would have remained working for Fincar for a further two months.

Efforts to mitigate loss: s.392(2)(d)

[62] I am satisfied that Ms Phillipson has made efforts to find work since her employment with Fincar ceased and as of the date of the hearing had been unsuccessful in securing alternative employment.

Remuneration earned between dismissal and order: s.392(2)(e)

[63] Ms Phillipson has been unsuccessful in securing alternative employment and has thus not received remuneration since her dismissal from Fincar on 31 March 2017.

Amount likely to be earned between order and payment of compensation: s.392(2)(f)

[64] As Ms Phillipson remains unemployed I am satisfied that she would not have earned any remuneration during this period.

Other matters: s.392(2)(g)

[65] I do not consider that there are any other matters relevant to the determination of an amount of compensation.

Misconduct reduces amount: s.392(3)

[66] I have found that it was misconduct for Ms Phillipson to tell the customer that her finance application was being investigated, after she had been told not to ‘engage’ with her. A discount equivalent to two weeks’ pay should be applied to the amount of compensation that I would otherwise order.

Conclusion

[67] Ms Phillipson was unfairly dismissed. I order that Fincar should pay Ms Phillipson compensation of six weeks’ pay less applicable taxation, plus superannuation; less any notice period (if any) paid. An order to this effect will issue concurrently with this decision.

SENIOR DEPUTY PRESIDENT

Appearances:

C Phillipson, the applicant, in person

J Philibossian for Fincar Pty Ltd

Hearing details:

Sydney

2017

September 14

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