Daw v Flinton Pty Ltd

[1998] FCA 1072

FEDERAL COURT OF AUSTRALIA

Industrial Law – Review – unlawful termination claim – whether the applicants’ employment terminated at the initiative of the employer or whether they resigned – whether constructive dismissal – whether expression of opinion by employer’s agent that applicants should resign constituted a breach of an implied term not to destroy or seriously damage the relationship of trust and confidence – claims dismissed

Workplace Relations Act 1996 (Cth), s 170EA
Industrial Relations Act 1988 (Cth), s 377, Part VIA

Mohazab v Dick Smith Electronics Pty Ltd (No.2) (1995) 62 IR 200 cited
Burazin v Blacktown City Guardian (1996) 142 ALR 144 cited
Woods v WM Car Services (Peterborough) Limited [1981] IRLR 347 cited
Blaikie v SA Superannuation Board (1995) 65 SASR 85 cited
Carrigan v Darwin City Council (unreported, IRCA No.101 of 1997, von Doussa J, 20 March 1997 cited

Matters No. DI1054 and DI1055 of 1996

LINDA DAW and WILLIAM ROBERT DAW v FLINTON PTY LTD

VON DOUSSA J
DARWIN
14 AUGUST 1998

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY	DI1054  of   1996 DI1055  of   1996

BETWEEN:

LINDA DAW
FIRST APPLICANT

WILLIAM ROBERT DAW
SECOND APPLICANT

AND:

FLINTON PTY LTD
RESPONDENT

JUDGE:

VON DOUSSA J

DATE OF ORDER:

14 AUGUST 1998

WHERE MADE:

DARWIN

THE COURT ORDERS THAT:

1. The claim of each applicant brought under s 170EA of the Workplace Relations Act 1996 (Cth) be dismissed.

2. No order as to costs.

Note:Settlement and entry of orders is dealt with in order 36 of the Federal Court rules.

IN THE FEDERAL COURT OF AUSTRALIA

NORTHERN TERRITORY DISTRICT

REGISTRY

 DI1054 of 1996
DI1055 of 1996

BETWEEN:

LINDA DAW
FIRST APPLICANT

WILLIAM ROBERT DAW
SECOND APPLICANT

AND:

FLINTON PTY LTD
RESPONDENT

JUDGE:	VON DOUSSA J
DATE:	14 AUGUST 1998
PLACE:	DARWIN

REASONS FOR JUDGMENT

This is an application to review the decision of Judicial Registrar R Farrell on an application under s 170EA of the Workplace Relations Act 1996 (Cth), formerly the Industrial Relations Act 1988 (Cth) (“the Act”). The applicants, Mr William and Mrs Linda Daw, were employed between November 1988 and early April 1996 as managers of a roadhouse near an Aboriginal Community at Warburton. The roadhouse was owned by the respondent company which in turn was owned by the Community.

Their employment, to use a neutral term, came to an end on 12 April 1996. Following that, the proceedings in this Court were instituted. Mr and Mrs Daw contended that their employment had been terminated at the initiative of the respondent so as to give this Court jurisdiction to hear and determine the claim under s 170EA for unlawful termination of their employment. An additional claim was made by each of them in the ancillary jurisdiction of the Court for monies alleged to be due in respect of unpaid leave.

The Judicial Registrar heard evidence from three witnesses; Mr and Mrs Daw, and from Mr McLean who was the secretary of the respondent company.

The Judicial Registrar delivered extensive and detailed reasons. He held that the applicants had resigned from their employment and that their employment had not been terminated at the initiative of the respondent. Accordingly, he dismissed the claims under s 170EA. However, he made awards in favour of each applicant for amounts due for unpaid leave. The applicants now seek review of the decision which dismissed their claims under s 170EA. There is no contest that they are entitled to the amounts that were rewarded for unpaid leave.

The issue that arises on the review is whether there was a termination of the applicants’ employment at the initiative of the respondent.

A review under s 377 of the Act is a rehearing de novo. It is the responsibility of the reviewing judge to form an independent view about the facts and an independent view as to the appropriate result. This case has been heard as a review on the evidence received by the Judicial Registrar. No fresh evidence has been put before the Court. This is a practical course to follow as the areas of factual dispute are very limited. However, there were certain areas of dispute which were resolved by the Judicial Registrar upon an acceptance of Mr McLean as a witness to be preferred to the applicants.

Although this is a rehearing, having not seen and heard the witnesses myself, I have no alternative but to defer to the views of the Judicial Registrar who did have the benefit of seeing and hearing the witnesses.  Accordingly, I accept for present purposes the Judicial Registrar’s findings in disputed areas of fact.  Having said that, I do not think that those areas have more than a remote bearing on the outcome of the review.  The review has been argued by both counsel on the footing that there is no substantial dispute about the facts.

As I have indicated, the reasons given by the Judicial Registrar are detailed.  He has set out the facts and the law that he sought to apply.  Having heard the parties and having had the benefit of reading material parts of the evidence, I am in full agreement with the conclusions reached by the Judicial Registrar.

Mr Young, counsel for the applicants, has presented an interesting and thorough argument.  He said everything that can be said in favour of the applicants’ position.  However, I am of the view that the Judicial Registrar was right in his conclusions.

The salient facts are that the applicants went on holidays in December 1995 and did not return to the roadhouse until 26 February 1996.  It is relevant, in my view, that at an earlier time there had been a conversation after the applicants had returned from another period of leave.  Mr Daw had said to Mr McLean that he was back and ready for another year, and added that: “If the time comes when you think we have run our course, bring it up”.

In January 1996 there was a telephone conversation between Mr McLean and Mr Daw.  Whether one uses the word “resign” or the word “retire”, it is plain that in the course of that conversation, that Mr McLean informed the applicants that he was of the opinion that they should retire on 30 June in the coming year.  There had been a discussion before the applicants left in which they indicated that for one reason and another they felt very tired.  Mr McLean said in evidence that because of their tiredness he was of the opinion that the time had come when they should consider resignation.

When the applicants returned in early March there was a discussion between them and Mr McLean where the applicants made it plain that they were dissatisfied with Mr McLean’s opinion that they should retire on or about 30 June, and that they felt a sense of grievance.

Indeed, in the course of the telephone conversation in January 1996 Mr Daw had said that he did not agree with Mr McLean’s views that the time had come for them to retire, but said something to the effect of: “Well, if that is how you feel, that is how you feel”.

In the course of his examination, Mr McLean gave the following evidence about the discussion in March 1996.  He was asked:

“Do you recall what was said at that meeting and who said what?---At the meeting Bill did most of the talking.  He said are you firing us, and I said no this is not about firing you, it is about the fact that you are telling me very clearly that you are tired, that you are having trouble keeping up with the pace of the job.  This is not about firing you, I am not talking about issues that are to do with your incapacity, your inability or your unwillingness to do things, it is about what you are telling me in terms of your enthusiasm, your capacity to continue doing the job.  Now, you are clearly saying things to me that are saying you know – retirement is either imminent or it is certainly in prospect.

And did he have any response to that?---No, he didn’t address that issue.

What did he say if anything?---That discussion didn’t really go anywhere, because I told him that nothing had changed my view, that he had given the real indications that retirement was indicated.”

Three letters followed which are set out in the evidence.  In the second and third of those letters the applicants in plain terms said that they intended to resign.  In particular, the second letter of 29 March 1996 said, relevantly:

“We have chosen to forward our date of departure due to the underlying tensions that certain members of the community have inflicted upon us and therefore wish to tender our resignations as from today, 29 March 1996, giving you two week’s notice.  We feel that this should give you enough time to find someone to replace us at the Warburton Roadhouse.”

As I understand Mr Young’s argument, he does not dispute that ultimately, in those letters, there was a “resignation” by the applicants.

The Judicial Registrar referred correctly to Mohazab v Dick Smith Electronics Pty Ltd (No.2) (1995) 62 IR 200 at 203, as to the meaning of “termination” in Division 3 of Part VIA of the Act, and held that there must be a termination to the initiative of the employer.

In substance, the Judicial Registrar was of the view that the letters amounted to a real resignation by the applicants and, therefore, that there was not a termination at the initiative of the employer.

Mr Young seeks to overcome the prima facie effect of the letters of resignation by saying that the respondent acted in breach of an implied term in the contracts of employment of the applicants, that the respondent would not without reasonable and proper cause conduct itself in a manner calculated, or likely to destroy, or seriously damage, the relationship of confidence and trust between the employer and the employee.

The Full Court of the Industrial Relations Court of Australia in Burazin v Blacktown City Guardian (1996) 142 ALR 144, held that such a term was to be implied in contracts of employment and in doing so followed, among other authorities, Woods v WM Car Services (Peterborough) Limited [1981] IRLR 347.  I accept that such a clause is to be implied.

Mr Young then advances his argument to the next stage by submitting there was a breach of the clause in the present case, because the employer failed to give the applicants the support they were entitled to receive in the circumstances, and failed at any stage to enter into bona fide negotiations with them about the way in which their retirement was to occur, if indeed it were to occur.  Reference was made to the decision of Olsson J in Blaikie v SA Superannuation Board (1995) 65 SASR 85 at 107.

The final step in Mr Young’s argument is that the breach of the implied term amounts to a fundamental breach constituting a repudiation of the contract, such that the applicants are entitled to treat their employment as having been constructively terminated. A constructive dismissal, in turn, amounts to a termination at the initiative of the employer for the purposes of the Act. Such a view was taken by me in the case of Carrigan v Darwin City Council (unreported, IRCA No.101 of 1997, von Doussa J, 20 March 1997).

That argument succeeds or fails on the factual issue whether in all the circumstances, there has been conduct on the part of the respondent which amounted to a breach of the implied term.  To use an expression from the judgment of Justice Browne-Wilkinson in Woods v WM Car Services (Peterborough) Limited: was the employer’s conduct such that the employees could not be expected to put up with it?  Mr Young’s argument is that such a breach occurred because, both in the conversation in January 1996 and in the subsequent conversation in March 1996, the applicants made it plain that they were unhappy with the decision and they had a grievance about it.  Moreover, the letters that followed in March made it plain that they were dissatisfied with the view that they should retire on 30 June 1996 because they had given long and faithful service to the respondent and (as the evidence shows) they had built up the roadhouse to be a very successful business.

That is an appealing argument, but I am unable to agree on the facts that a breach of the implied term has been established.  In my view, an employer is entitled to raise with an employee that employee’s future.  If there is reason to think that the employee may be tired or has reached a point where retirement would be a sensible course, the employer by raising the issue with the employee does not act in breach of the implied term, so long as the employer raises the question with an open mind and is prepared to discuss the issue.  On the other hand, if the matter were raised in a way that was intended to coerce the employee into retirement and really left the employee with no alternative, then that could amount to a breach.

In the present case, there is a specific finding which, in my view, is in accordance with the evidence, that there was no course of conduct adopted by Mr McLean intended or likely to coerce the applicants into resigning.  Having raised the issue, the evidence does not deny that Mr McLean was prepared to discuss the future had the applicants sought to enter into such a discussion.  That they did not do.  They were dissatisfied with the respondent’s position, but they tacitly accepted that they should resign.

Had they said that they wanted to work on further, the position may have been different, but nowhere in the evidence is it suggested by them that they did other than tacitly accept the position put forward by the employer.  Indeed, in one of the discussions, the retirement date of 30 June was mentioned and agreed to by them.  As there was a tacit acceptance of the position put forward by the employer, although not one accepted with any pleasure by the applicants, I do not think that the respondent was then required to embark upon further “negotiation”, to adopt the expression used in the argument.

Ultimately, whether there has been a breach of the implied term is a question of fact.  In this case, I agree with the view taken by the Judicial Registrar that there was no breach of the implied term.  The Judicial Registrar put the matter very plainly and clearly when he posed the relevant question in colloquial terms, namely, “Did Mr and Mrs Daw jump or were they pushed?”  He then addressed that question recognising that the employer had taken a very firm position that retirement on 30 June 1996 would be appropriate.  There is a specific finding, as I have said, that there was no deliberate attempt on the part of the respondent to coerce Mr and Mrs Daw into accepting that position.

They could have said that they did not accept the employer’s position.  Had they said that they did not accept it, then the occasion for further negotiation would have arisen and perhaps the occasion to discuss dismissal might have arisen, but as it was, that topic simply did not arise.  Whilst I have sympathy for the position of the applicants, who obviously have put a lot of their lives into building up a very successful business to the advantage of the respondent and the Community, in my opinion, the facts leave no alternative but to confirm the decision that was made by the Judicial Registrar.

The applications under s 170EA must be dismissed.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice von Doussa

Associate:

Dated:            14 August 1998

Counsel for the Applicant:	Mr A Young
Solicitor for the Applicant:	Withnall Maley & Co.
Counsel for the Respondent:	Mr M Spargo
Solicitor for the Respondent:	Cridlands
Date of Hearing:	14 August 1998
Date of Judgment:	14 August 1998