Daw, William Robert v Flinton Pty Ltd
[1997] FCA 1180
•24 OCTOBER 1997
FEDERAL COURT OF AUSTRALIA
INDUSTRIAL LAW - EMPLOYMENT CONTRACT - EMPLOYMENT RELATIONSHIP - JURISDICTION - whether TERMINATION OF EMPLOYMENT at the initiative of the employer - CONSTRUCTIVE DISMISSAL - CONTRACTUAL ENTITLEMENTS - implied TERM - accrued leave - whether breach of implied duty to maintain trust and confidence - RESIGNATION.
Industrial relations Act 1988 (now Workplace Relations Act 1996) - ss 170EA, 170EA(3), 418 & 430.
Nelson v Scholle Industries (1995) 64 IR 9.
Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200.
Burazin v Blacktown City Guardian (1996) 142 ALR 144.
Carrigan v Darwin City Council (unreported, IRCA No. 101 of 1997, von Dousa J, 20 March 1997)
APESMA V David Graphics Pty Ltd (unreported, IRCA No. 410 of 1995, Wilcox J, 12 July 1995)
Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154.
Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99.
Jackson v Elmerside (unreported, IRCA No. 27 of 1997, RD Farrell JR, 3 February 1997)
Slifka v JW Saunders Pty Ltd (1995) 67 IR 316.
Western Excavating (E.C.C) Ltd v Sharp [1978] 1 QB 761.
Grout v Gunnedah Shire Council (1994) 57 IR 243.
Woods v WM Car Services (Peterborough) Limited [1981] IRLR 347.
Byrne v Australian Airlines Ltd (1995) 61 IR 32.
WILLIAM ROBERT DAW & LINDA DAW -v- FLINTON PTY LTD
DI 1054 & 1055 OF 1996
JUDICIAL REGISTRAR: R.D. FARRELL JR
DATE: 24 OCTOBER 1997
PLACE: PERTH (HEARD IN DARWIN)
GENERAL DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
DI 1054 & 1055 of 1996
BETWEEN: WILLIAM ROBERT DAW
FIRST APPLICANT
LINDA DAW
SECOND APPLICANT
AND: FLINTON PTY LTD
RESPONDENT
JUDICIAL
REGISTRAR:
R.D. FARRELL, J.R.
DATE OF ORDER:
24 OCTOBER 1997
WHERE MADE:
PERTH (HEARD IN DARWIN)
THE COURT ORDERS THAT:
Within 14 days of the date of making these orders the respondent pay to the first applicant the sum of $1,930.00, less any amount payable to the Commissioner of Taxation pursuant to the Income Tax Assessment Act 1936 and actually paid.
Within 14 days of the date of making these orders the respondent pay to the second applicant the sum of $1,930.00, less any amount payable to the Commissioner of Taxation pursuant to the Income Tax Assessment Act 1936 and actually paid.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
GENERAL DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
DI 1054 & 1055 of 1996
BETWEEN:
WILLIAM ROBERT DAW
FIRST APPLICANTLINDA DAW
SECOND APPLICANTAND:
FLINTON PTY LTD
RESPONDENT
JUDICIAL REGISTRAR:
R.D. FARRELL J.R.
DATE:
24 OCTOBER 1997
PLACE:
PERTH (HEARD IN DARWIN)
REASONS FOR DECISION
The applicants, Mr William and Mrs Linda Daw, were employed in November 1988 to open and manage a roadhouse, now known as the Warburton Roadhouse, which was located near an aboriginal community at Warburton. Warburton is in Western Australia near the intersection of the borders of Western Australia, South Australia and the Northern Territory. The roadhouse was built on a bypass road, about a kilometre from the Community, which carried traffic from Western Australia to the Northern Territory.
Mr and Mrs Daw established and managed the roadhouse successfully, increasing its turnover significantly for over seven years until March 1996, when they left their employment in unhappy circumstances.
In May 1996, Mr and Mrs Daw filed this application under Section 170EA of the then Industrial Relations Act 1988, now known as the Workplace Relations Act 1996 (“the Act”). Their application seeks compensation arising from what they contend was the unlawful termination of their employment by the respondent, Flinton Pty Ltd (“Flinton”). Reinstatement was not sought and it was not contended that it was practicable.
At the beginning of the hearing Mr and Mrs Daw added a claim for amounts to which they claimed an entitlement under their contracts with Flinton, which were not paid. Flinton did not oppose the contractual entitlement claims being dealt with as part of this application pursuant to Sections 418 and 430 of the Act.
Flinton did contend that the applications were not filed within 14 days of receipt of written notice of termination, as is required by Section 170EA(3), and that Mr and Mrs Daw therefore require an extension of time within which to bring the claim. With regard to the merits of the unlawful termination claim, Flinton’s primary contention is that Mr and Mrs Daw resigned from their employment, and that there was therefore no termination at the initiative of the employer, so that the relevant provisions of the Act do not apply.
Extension of Time
The only documents brought to the Court’s attention relating to the termination were letters of resignation, and instructions to Flinton’s bookkeeper to make up Mr and Mrs Daw’s termination entitlements.
A written notice of resignation is not written notice of termination: Nelson v Scholle Industries (1995) 64 IR 9. Nor was the instruction to the book-keeper “received” by Mr and Mrs Daw.
Accordingly, I find that no time limit period was applicable to this application for the purposes of Section 170EA(3).
The Employment History
Mr and Mrs Daw now live in Katherine, in the Northern Territory. Mr Daw is now sixty two years of age, being born in January 1935. He has worked for many decades in the Northern Territory, primarily managing cattle stations and more recently as an adviser to aboriginal communities and enterprises. He met Mrs Daw, who is nine years his junior, thirty five years ago while working in the cattle industry. Since then they have often been employed as a husband and wife team.
Mr and Mrs Daw were invited to apply for the job managing the Warburton Roadhouse after they had narrowly missed out on selection for another position in an aboriginal community. A friend of theirs with connections to the community, Mr Dave Watts, suggested they apply. The job interview took place in Alice Springs in late 1988, and was attended by both Mr and Mrs Daw.
Flinton Pty Ltd was set up for the purpose of running the roadhouse. The roadhouse was to be an enterprise for the benefit of the Warburton aboriginal community (“the Community”), but a separate legal entity was required because, unlike the Community, the roadhouse would have no entitlement to exemption from taxation. Mr Damian McLean, the Community’s Development Adviser since 1986, was also Flinton’s company secretary. Flinton’s directors at the time were Alan Bates and Andrew Lawson, who were senior members of the Community.
The job interview in Alice Springs was not attended by any of Flinton’s three office bearers. Mr and Mrs Daw identify the attendees as Richard Allmart, Peter Rapkins and another man known as “Mark”, whom it appears from other evidence was Mark Tregonning. The latter two were accountants providing financial services to the Community.
Only three witnesses were called in the course of the hearing, namely Mr and Mrs Daw, and Mr McLean for Flinton.
The only evidence of the matters discussed in the interview at Alice Springs is therefore that of Mr and Mrs Daw. They say that the meeting discussed:
their role and duties
their wages - “$700 odd a fortnight” each (according to Mr Daw) .
annual leave - 6 weeks (according to both Mr & Mrs Daw), but with some mention of a need to check with Mr McLean;
isolation leave - 2 weeks after every 12 week period (according to Mrs Daw), or when they could get away (according to Mr Daw). Mr Daw says that he recalls this term because it was what Dave Watts was receiving, and he understood it to be usual for work on isolated communities. (I have adopted the term “isolation leave” for convenience - it was not always so described in the evidence).
Mr Daw says that the accountants, Mr Rapkins and Mr Tregonning, agreed to these terms. It appears that the terms of Mr and Mrs Daw’s employment agreement were never written down.
Mr Daw says that the interviewers said they did not think the roadhouse would last, but he told them he would “give it a go”. Mrs Daw says they agreed to take it on for twelve months and see how they went.
Mr and Mrs Daw then travelled by plane to Warburton to inspect the roadhouse, the construction of which had almost been completed. Mr McLean says they had, by then, “got the job”. Mr Daw says that they were to attend a further interview with Mr McLean and the Community Council, for them to agree to Mr & Mrs Daw getting the job.
Mr and Mrs Daw met Mr McLean at the Warburton airport. Mrs Daw recalls they discussed the wage they were to be paid, but doesn’t recall any discussion of their leave. Mr Daw says there was no discussion of their terms and conditions with Mr McLean. Mr McLean says that one of the bookkeepers in Alice Springs contacted him shortly after Mr and Mrs Daw started work to confirm their pay levels.
Mr Daw recalls there was a meeting at the Community Hall attended by members of the community. Mr Daw did not take part in the meeting, but sat outside until he was called in by the chairperson. He recalls the Community Council asking him to get the roadhouse going. There was no discussion at that meeting of the terms of his employment, as far as he is aware.
The first time Mr Daw saw the name “Flinton Pty Ltd” was when he was given a cheque book.
It was clearly going to be a challenging job. The only accommodation available for them in the short term was a store-room (albeit with free rent and electricity), which they converted into living quarters. There was no telephone at the roadhouse; the nearest telephone was a kilometre away at the Community. Nevertheless, they accepted the position.
Within two weeks Mr and Mrs Daw had begun trading. They went on to establish the road-house as a successful business. They planted shade trees for the caravan park. After about a year, a house was built for them, still rent free. After three years, they were provided with a truck for business use; Mr Daw had used his own vehicle for many business purposes without reimbursement. They worked seven days a week throughout the day; no customer was left without service. They rarely had employees to assist them. Their day to day work involved serving petrol, cooking, cleaning, yard maintenance, gardening, and looking after two motel rooms and two on-site caravans. Mrs Daw kept the roadhouse books and accounts up to date. In a letter to Mr McLean, she described her other duties as including “cook, housekeeper, public relations officer, gardener, adviser, toilet cleaner, secretary etc.”
Mr Daw says they could not always take their leave as it accrued. For example, if a significant Community event were coming up with a lot of people due to arrive, or if something went wrong at the roadhouse, then it would be inconvenient for them to leave. Substitute managers had to be arranged so that the roadhouse could remain open in their absence.
Mrs Daw kept a record of the hours each of them worked in the period from 1 July 1989 in Mr Daw’s case, and from 1 January 1990 in her case, until they left. The record is identical for each of them, so I find that it is more probable than not that Mrs Daw’s hours of work for the period from 1 July 1989 to 31 December 1989 is also identical to Mr Daw’s.
Mr Daw says they would have taken some isolation leave in the early years, but only a week at a time, and sometimes less. I am prepared to accept, therefore, that Mr and Mrs Daw would have taken isolation leave in the first two quarters of 1989, before Mrs Daw began keeping records, and I accept Mr Daw’s evidence that it would have been for about a week on each occasion.
The following table is based upon Mrs Daw’s records, supplemented by the findings I have set out above. I have expressed “two weeks and four days” as “2.4”. I have counted Saturdays and Sundays, given Mr and Mrs Daw’s evidence that they worked seven days a week.
It is sometimes unclear from the records what was annual leave and what was isolation leave. My designations as to the nature of the leave does not ultimately affect the quantum of the claim.
Year Isolation Leave (1) Isolation Leave (2) Isolation Leave (3) Annual Leave 1989 ? - ?
(1 week)? - ?
(1 week)19.8. - 30.8.89
1.5 weeks30.11.89 - 31.12.89
4.3 weeks1990 1.4 - 11.4.90
2.0 weeks7.6 - 20.6.90
2.1 weeks16.9. - 1.10.90
2.4 weeks24.11.90 - 22.12.90
4.1 weeks1991 1.4 - 20.4.91
2.6 weeks27.5 - 2.6.91
1.2 weeks28.8 - 12.9.91
2.1 weeks13.11 - 2.12.91
2.6 weeks1992 11.1 - 11.2.92
4.3 weeks10.4 - 21.4.92
1.5 weeks12.7 - 26.7.92
2.1 weeks09.12.92 - 27.01.93
6.4 weeks1993 - 10.7 - 26.7.93
2.3 weeks6.10. - 23.10.93
2.4 weeks01.01.94 - 01.02.94
6.6 weeks1994 - 16.4 - 1.5.94
2.2 weeks8.7 - 25.7.94
2.4 weeks10.11.94 - 28.12.94
4.5 weeks1995 7.4 - 18.4.95
1.5 weeks22.7 - 12.8.95
3.1 weeks- 30.11.95 - 25.02.96
12.4 weeksTotals 12 weeks + 14 weeks + 13.5 weeks
= 39.5 weeks42.1 weeks
It is apparent from the table that Mr and Mrs Daw took a total of 81 weeks and six days of leave in the course of their employment, and I find accordingly.
Mr McLean says that Mrs Daw approached him in 1990 and suggested that a week’s isolation leave per quarter was insufficient, and that two weeks would be more appropriate. I accept that she did so, but rather than seeking to increase their leave entitlement, she may have been referring to their need to be able to take the full two weeks to which they were entitled, rather than the shorter periods they had been able to take up to that time.
In a letter sent to Mr McLean shortly before their employment ended, Mr Daw claimed that they still had “a substantial amount of leave left”. They continued:
For the past seven years Linda and I have worked seven days a week and also made ourselves available for the benefit of the roadhouse to do night call-outs and public holidays, so that travellers and community members alike were never inconvenienced and the Roadhouse’s reputation as reliableity (sic) was enhanced. I would like to bring to your attention that the two week off at the end of every three months doesn’t fully cover the time in lieu for weekend work and public holidays.
There was no evidence that Mr McLean disputed their entitlement to two weeks per quarter isolation leave upon receipt of the letter. Mr McLean says he relied upon his Book-keeper’s calculation of leave owing. He does not positively assert that no leave is owing to them, but leaves it for them to prove it.
Mr Daw acknowledges that, about two years after he was employed, he asked Mr McLean whether he was happy with the job they had done at the roadhouse. He says Mr McLean responded that he was very happy with it. Mr McLean agrees that the Community was happy with the roadhouse’s performance. Mr Daw says he went on to say that if Mr McLean hadn’t been happy with the job they had done in those two years then he would have been prepared to go.
At about that time, Mr Daw approached Mr McLean and asked for a percentage of the roadhouse’s turnover, in recognition of their workload. It was agreed they would receive two and a half percent of the roadhouse’s gross takings. Mrs Daw periodically prepared invoices for the amount claimed. Until 30 June 1992, some of these payments were made to Mr and Mrs Daw’s family company. After that, they were made to Mr and Mrs Daw personally. Mr Daw says they were “in the dark” as to who should tender the invoices.
Mr McLean recalls a conversation with Mr Daw after he had returned from annual leave about two years after the roadhouse opened. Mr Daw said that he was back and ready for another year, and added that “If the time comes when you think we’ve run our course, bring it up.” Mr McLean responded that it would be a long time in the future. Mr Daw denies that this conversation took place.
I accept that this conversation occurred. Mr McLean impressed me with the blunt way in which he gave his evidence. With regard to his evidence of later events, he was forthright about his views and the manner in which he expressed them, where many witnesses might have sought to place a more favourable emphasis on what was said. There was no indication whatsoever that he was tailoring his evidence to suit the respondent’s case. I therefore accept his evidence of this conversation. Mr Daw may well not recall the comment. It may not have been a significant remark to him at the time, given that his retirement may have then seemed comfortably distant.
By the end of 1995, when Mr and Mrs Daw had been at the roadhouse for seven years, the roadhouse had grown into a large and viable business. Mr and Mrs Daw described it in correspondence as “an oasis in the desert”. It was at this time that Mr McLean came to the view that they should consider retirement.
Mr McLean says that in the last couple of months of 1995, Mr Daw was complaining about his workload, and appeared to be finding the work challenging. Mr Daw concedes that he had a difficult period in 1994-1995 when he became sick and tired, due partly to the roadhouse suffering from a plague of fleas.
Mr Daw says that, given his workload “working for three or four months, seven days a week from daylight to dark without a day off”, it was understandable that he would become tired; anybody would. He asserts that it did not affect his performance. He added that the tiredness would leave them as they drove through the gate to begin their leave.
When the time came for Mr and Mrs Daw to take their annual leave at the end of 1995, they decided to take longer than their usual six weeks. Mr Daw says that it was his intention to take eight weeks.(In the event, the Stuart Highway was flooded, and they did not return for twelve weeks).
Mr Daw says that he approached Mr McLean in November 1995, before taking leave, and explained that he was tired, that his role at the roadhouse was a hard job, and that his holiday break that year would be longer because he needed to take a lengthy break to recover. He says he didn’t state a specific length of time, and believes he told Mr McLean that they had additional leave due to them. He recalls Mr McLean agreeing that they take extra leave, commenting that it was a “quiet period”. Mr McLean’s impression was that, rather than asking, Mr Daw was telling them that he was going and would come back at a time of his choosing.
It was arranged that Mr Kevin and Mrs Cindy Black, who came from Alice Springs and were at that time in the area and available for casual work, would relieve Mr and Mrs Daw while they were on leave.
After Mr and Mrs Daw had gone on leave, a written complaint concerning Mrs Daw’s service at the Warburton Roadhouse was referred to Mr McLean. It was from a member of the staff of the Warakurna Community School, and was countersigned by 24 other members of the staff and members of the Warakurna community.
The letter read as follows:
“We are writing to you to lay a complaint about the disgusting service we received from the lady at the Warburton Roadhouse (we believe her name is Linda). On the 12th of November 1995 our school headed off to Perth for our school camp, we took 35 children. We fuelled up at the Warburton Roadhouse and we also took the children to use the toilets, as a result of this we did this (sic) we were yelled at by some off (sic) the staff at the roadhouse for letting our children use these toilets, we personally saw to it that the toilets were not left in a mess. On the 24th of November we were returning to Warakurna and once again fuelled up in Warburton, only this time we were refused access to the toilets and were told we would have to take “them” somewhere else to go to the toilet. This woman then proceeded to explain to one of my colleagues that she wouldn’t let us use the toilet because last time we had left it in a mess, now I know this to be not true and have two witnesses to back me up as we inspected them to make sure they were not left in a mess.
We had stopped at many Roadhouses going to and from Perth, we were welcomed to use the toilets at all of these places. I am sure you can imagine how embarrassing it was for me to have to tell the children that they are not able to use the toilets in their own lands. We found it very distressing having to tell the children why they could not use these toilets. I have stopped at Warburton many times before and I have always been welcomed to use the toilets, it would seem to me that the Roadhouse is stepping on fine ground if they are deciding what sort of people can and can’t use these toilets and believe this could be a case for the anti discrimination board.
We would like a response on this matter, we feel that an apology is in order and stern action should be taken to see that this does not occur again. we have sent a copy of this letter to Damien McLean as we feel that this is an urgent and most serious matter that needs to be rectified. We look forward to hearing from you.”
Mr McLean replied to the letter, explaining that the managers of the roadhouse were away and that the matter would be raised with them on their return. He says that the allegation that Mrs Daw had behaved in a racist manner was inconsistent with his experience with her, but that he did think her alleged behaviour was indicative of an “irascibility” and of a lack of enthusiasm for customers, which he interpreted as signs of tiredness.
Mr McLean felt he had responsibilities to Flinton. He says he believed that Mr Daw’s retirement was inevitable at some stage in the next six months. He therefore came to the view that it was appropriate for Mr Daw to resign at the end of the financial year, because the business could not afford to wait for him to “fall over”, given the difficulty of finding a replacement at short notice. Mr Daw should therefore retire before that happened. While he did not specifically address Mrs Daw’s position, I think it was reasonable for him to assume that, if Mr Daw decided to retire, it was very likely that Mrs Daw would choose to retire too.
In January 1996, while Mr and Mrs Daw were still on leave, Mr McLean telephoned their house in Katherine to speak with them. Mr Daw answered. He asked how the roadhouse was doing.
Mr Daw says that Mr McLean said he wanted them both to retire at the end of June. Mr McLean agrees that he “strongly suggested” that Mr Daw consider a date around 30 June 1996 to retire.
According to Mr Daw, when he asked if there was a reason why they should retire, Mr McLean responded that “they” had a five year plan, and that they would not like to lose Mr and Mrs Black while they were in the area. In a letter to Mr McLean written about two months after the conversation, Mr Daw recalled that:
“Your reason at the time was that Kevin and Cindy Black were doing such a good job that you did not want to lose them if they found other employment.”
Mr McLean agrees that he mentioned that there were other people who could do the job, and that the Blacks, for example, were quite competent. He denies that there was any reference to a five year development plan. He says Flinton was not part of any such five year plan.
Given the way Mr McLean spoke, Mr Daw says he had the feeling that they were being sacked. He recalls telling Mr McLean it was unfair, and pointing out their loyalty to him.
Mr McLean recalls Mr Daw responding that he didn’t feel Mr McLean’s view was right, but that if that was how Mr McLean felt, that’s how he felt. Mr Daw disputes that he gave any indication that he was retiring, but concedes he didn’t say he wouldn’t.
Mr McLean says that Mr Daw agreed to work until 30 June 1997. Mr Daw says he told Mr McLean they would go back to Warburton and try and sort it out.
Mrs Daw says that Mr Daw told her about the telephone conversation after it concluded. He told her that Mr McLean had said that they were to retire at the end of June 1996. She says they felt very hurt and upset.
The two accounts of the conversation are largely consistent, differing only in emphasis. The inconsistencies in the evidence concerning the alleged reference to a “five year plan” is puzzling. It recurs later in the evidence. I accept that Mr and Mrs Daw were seeking to give honest and accurate evidence. Their insistence that this subject was raised in discussions with Mr McLean cannot plausibly be explained by misapprehension or failure of memory. I therefore accept that such a plan was raised at some stage in some context. Mr McLean’s comments leave open the possibility that there was a five year plan, perhaps relating to the Community, but not relevant to Flinton. It is possible that Mr McLean made reference to some such plan in his discussions with Mr and Mrs Daw, but on the evidence before me I cannot find that Mr McLean’s course of action was motivated by such a plan.
The other, more subtle inconsistency, concerns Mr Daw’s response during the telephone conversation to the request. His evidence suggests that he was keeping his options open, as to whether to retire or not. On balance, I do not accept that that is so. While Mr Daw was hurt and felt aggrieved by Mr McLean’s request, he did not refuse it. Mr McLean’s evidence that Mr Daw replied “If that’s how you feel, then that’s how you feel” is consistent with the tenor of Mr Daw’s testimony and their subsequent conduct. He did not want to work there if he didn’t feel wanted. I am satisfied that when Mr and Mrs Daw returned to Warburton, it was with the intention of working only to the proposed date of retirement.
Mrs Daw says that it had previously been their intention to work at the roadhouse together for as long as they could work - that is, until they retired. Mr Daw agrees he would have liked to have worked there until he retired, given that they had put so much into the roadhouse. Mr Daw denies that he was considering retirement prior to Mr McLean’s telephone call. Mrs Daw doesn’t recall Mr Daw indicating that work at the roadhouse was onerous. Nor had he suggested that he was thinking of retiring.
I accept that any weariness felt by Mr and Mrs Daw may not have been so great as to prompt them to consider retirement. It may well be that Mr McLean’s assessment as to the likelihood of their retirement in the near future was misjudged. There was nothing preventing them from telling him so.
In due course, Mr and Mrs Daw returned from Katherine to Warburton, recommencing work at on 26 February 1997. They took steps to set up a meeting with Mr McLean, but did not meet him for some weeks. The reason for the delay is not apparent to me on the evidence.
On 22nd March 1996, they wrote to Mr McLean in the following terms:
“Dear Mr McLean,
I write regarding your phone call while Linda and I were on holidays in Katherine February 1996 when you asked us to resign at the end of June 1996....
My reason for this letter is that people will ask why were told to retire. Is it because we cannot perform the tasks that you require of us? or do you have other valid reasons? that I would like you to state officially.
I would like you to know that Linda and I have worked very hard and conscientiously with regard to all customers, yourself and the community for the past seven and a half years. We have at all times given our fullest support and loyalty to yourself and the community.
Since our arrival back to Warburton from annual leave, Linda and I have felt an enormous pressure both mentally and physically because of the underlying hostilities and tensions which your comments seems to have caused. These underlying tensions and hostilities have come mainly from some staff members and visiting council employee’s. I would like to stress that the Aboriginal people have been very supportive towards us....
Your comments regarding this letter would be appreciated so that we can start making plans for moving on.
Yours sincerely
(signed)”(My emphasis)
Mr McLean believes he did not see this letter until after they had met.
Eventually, in about late March, Mr McLean met with Mr and Mrs Daw at their home, over a cup of tea. Mr McLean recalls that Mr Daw did most of the talking. Mrs Daw has little recollection of the meeting. She says she found it upsetting.
Mr Daw confirms the impression given by the letter that the purpose of the meeting was to determine the reason for Mr McLean’s request that they retire. Mr Daw asked for reasons in writing. Mr McLean responded that he couldn’t do that. He agrees he refused to write a letter terminating Mr Daw’s employment, because in his view Mr Daw’s employment was not being terminated.
Mr Daw asked Mr McLean, “Are you firing us?” Mr Daw says Mr McLean responded “No, I am not firing you”, but repeated that the company wanted them to retire at the end of the financial year.
Mr McLean says he responded that the request was based upon what Mr Daw himself had been saying in the past about his enthusiasm and his capacity to do the job.
Mr Daw concedes that he didn’t assert to Mr McLean that he was ready to continue in the job. He never said he wanted to stay on. He says there was no point. It wouldn’t have worked in a small community.
Again Mrs Daw recalls Mr McLean making repeated reference to the “five year plan”, which she did not regard as a reason. Mr Daw’s recollection is similar. Mr McLean denies this.
Mr McLean says that nothing was said in the course of the meeting to change his view that Mr and Mrs Daw’s retirement was appropriate. He understood that they were not happy that he had requested that they retire, but at no stage did Mr Daw suggest to him that circumstances had changed. He believes they agreed to retire, and says that they could have replied if they had wanted to.
About two days after their meeting, Mr McLean showed Mr and Mrs Daw a copy of the letter of the complaint from the Warakurna Community. Mrs Daw recalls that Mr McLean told them that it was the reason for his request that they retire. Mr Daw says Mr McLean said it was one of the reasons.
Mrs Daw says that she explained that the reason the toilet block could not be used was that it was blocked up, would not flush and was overflowing. She says she had notified the Community of the problem some time before. Mr Daw was away at the time.
I accept that the complaint was one of the reasons for Mr McLean’s request, in that Mr McLean interpreted it as evidence of tiredness on Mrs Daw’s part. Mr McLean accepts Mrs Daw’s explanation, and Flinton does not seek to rely on the complaint for other than that limited purpose.
As is indicated in Mr and Mrs Daw’s first letter, word had apparently spread around the community that they were leaving the roadhouse. Mrs Daw says they hadn’t told anyone of Mr McLean’s request that they leave. I accept that Mr McLean interpreted Mr Daw’s response during their telephone conversation as agreement to retire, and it was appropriate that he advise others of that development.
Mr and Mrs Daw had enquiries from curious employees of the Community as to why they were leaving. Mrs Daw characterised some of them as “sly remarks”. They both recall one customer, an employee at the Community called Hank Morton, making comment to the effect of: “I heard you got the sack. Have you been diddling the till?” Mrs Daw says she would respond to say that they were wrong, but they would just laugh and walk out.
There was no evidence that officers of the employer played any role in instigating the behaviour and comments of the community employees complained of by Mr and Mrs Daw.
Mrs Daw says that they decided to leave. They felt they couldn’t continue because it “just got too much”. Mr Daw believes that if they had stopped there any longer it would have caused a separation in their marriage, and that leaving the best thing was to go.
On 29th March 1996, Mr and Mrs Daw communicated their feelings to Mr McLean and the Community by letter in the following terms:
“Dear Sir, Directors & Council Members,
I write regarding our conversation on our retirement as suggested by Mr McLean at the end of June 1996.
We would like to expedite this as soon as possible due to our lack of confidence in the Roadhouse administration, Working Directors and Council Members.
Before we leave we would like to request that an independent audit be done by a recognised accounting company, who could fly out on our normal airline service and possibly return on the following days flight, to cut costs to a minimum. I would like to have this done as soon as possible to safeguard ourselves and the Roadhouse’s reputation.
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, 29th March 1996, giving you two weeks notice. we feel that this should give you enough time to find someone to replace us at the Warburton Roadhouse.
Yours faithfully,
(signed)
Mr McLean notified Flinton’s book-keeper on 4 April 1996 of Mr & Mrs Daw’s intention to give two weeks notice, and arranged for their entitlements to be prepared.
On 8 April 1996 they sent a further letter to Mr McLean (wrongly dated 8 March 1996) in the following terms:
“Dear Mr McLean, Directors & Council Members,
We write regarding the lack of communication between you and I since we have formally resigned, you have not replied to the request of getting an audit done in our presence before we leave.
We would like you to inform us of the incoming Managers/caretakers so that we can advise them on [various roadhouse procedures].
We would like to remind you again that our departure date is the 12th March 1996 and would like you to view this letter seriously, as we would not like to see all our hard work in establishing this Roadhouse go to waste.
Linda and I am awaiting your reply.
Yours sincerely
(signed)”
Mr McLean visited Mr and Mrs Daw at the roadhouse on the day of their departure, 12 April 1996, and thanked them for the good work they had done there.
Whether There was a Termination at the Initiative of the Employer.
“Termination” for the purposes of Division 3 of Part VIA of the Act means “termination at the initiative of the employer”: Mohazab v Dick Smith Electronics Pty Ltd (No 2.) (1995) 62 IR 200 at 203.
Mr and Mrs Daw contend that Mr McLean’s conduct, on behalf of Flinton, in asking for Mr and Mrs Daw’s resignation amounted to a termination at the initiative of the employer.
Mr McLean’s conduct was, they say, conduct likely to damage and destroy the relationship of confidence and trust between the parties as employer and employee.
They cite two decisions of the Industrial Relations Court of Australia dealing with this legislation which recognise an implied term in contracts of employment that the employer should not conduct itself in a manner that was likely to damage or destroy the relationship of confidence and trust between the parties as employer and employee: namely Burazin v Blacktown City Guardian (1996) 142 ALR 144 and Carrigan v Darwin City Council (unreported, IRCA No. 101 of 1997, von Dousa J, 20 March 1997).
There are now several authoritative statements as to how the courts should determine whether there has been a “termination at the initiative of the employer” for the purposes of the Act.
The most authoritative is Mohazab v Dick Smith Electronics Pty Ltd (No 2.), a decision of the Full Court of the Industrial Relations Court. It concerned an employee given an ultimatum: resign or the police will be called in. The Court held that there had been a termination at the initiative of the employer.
While disavowing an intention to formulate an “exhaustive description” of what is termination at the initiative of the employer, the Court held, at 205-206, that:
“...an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.”
In APESMA v David Graphics Pty Ltd (unreported, IRCA No. 410 of 1995, Wilcox CJ, 12 July 1995), cited with approval by the Court in Mohazab, Wilcox CJ notes at p 5:
“I agree with the proposition that termination may involve more than one action. But I think it is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment.”
In Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154 at 160, Moore J held:
“...it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect.”
Division 3 of Part VIA of the Act is concerned with termination of the employment relationship, rather than termination of the employment contract: Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99. The Full Court observed in Mohazab at 207 that:
“...it cannot be assumed that decisions concerning other legislative formulations or cases concerning constructive dismissal are to be applied without qualification when considering the provisions of Division 3...”
I have previously observed that, where the employment relationship could have continued, arguments founded on contractual concepts of repudiatory breach are of little assistance: Jackson v Elmerside (unreported, IRCA No. 27 of 1997, RD Farrell JR, 3 February 1997) at pages 17 - 18.
However, in cases such as the present one, where termination of the employment contract brought with it termination of the employment relationship, it is arguable that a contractual analysis might provide some assistance.
In Slifka v JW Saunders Pty Ltd (1995) 67 IR 316 at 318-9, North J considered the English case of Western Excavating (E.C.C.) Ltd v Sharp [1978] 1QB 761, which adopted the contractual test of repudiatory breach leading to constructive dismissal for the purposes of definition of “unfair dismissal” within the relevant industrial legislation in the United Kingdom. He noted that the case was not of much assistance in interpreting the Act. In particular, he opined that section 170EA of the Act may apply where the contract of employment was terminated by the employee as a result of conduct of the employer which fell short of evincing an intention not to be bound by the contract of employment.
In Grout v Gunnedah Shire Council (1994) 57 IR 243, the respondent contended that the applicant, by his conduct, had repudiated his contract of employment, so that the respondent’s decision to accept the repudiation and to terminate the employment did not constitute a termination at the initiative of the employer. Moore J, at 257, refers to contract cases where the courts have held that repudiation of a contract is a serious matter, not to be lightly found or inferred, and that it requires conduct amounting to an absolute refusal to perform the contract”, and finds that the applicant’s conduct did not constitute such an absolute refusal. While Moore J’s decision was reversed on appeal, his reasoning on this issue was not disturbed.
In Burazin v Blacktown City Guardian Pty Ltd, the Full Court of the Industrial Relations Court observed that there was ample English authority for the implication into employment contracts of a term that the employer 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 employee.
In Carrigan v Darwin City Council, a recent decision of the Industrial Relations Court of Australia, von Dousa J cited and expressly applied the following principles articulated by Brown-Wilson J in Woods v WM Car Services (Peterborough) Limited [1981] IRLR 347 at paragraph 17, which were upheld by the English Court of Appeal ([1982] IRC 693):
“In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee... To constitute a breach of this implied term, it is not necessary to show that the employer intended any repudiation of the contract: the Tribunal’s function is to look at the employer’s conduct as a whole and determine whether it is such that it’s effect, judged reasonable and sensibly, is such that the employee cannot be expected to put up with it... The conduct of the parties has to be looked at as a whole and its cumulative impact assessed...”
Having cited Mohazab, von Dousa J went on to state that, in his view, it is in accordance with the approach of the Full Court to hold that the termination of an employee’ employment was at the initiative of the employer for the purposes of the Act if there has been a constructive dismissal arising from the breach of the implied term as to trust and confidence.
Turning then to the circumstances of Mr and Mrs Daw’s case, who really terminated the employment? To adopt the terminology of North J in Slifka, did Mr & Mrs Daw jump or were they pushed?
I accept that Mr McLean came to the view, based upon his observation of Mr and Mrs Daw and upon Mr Daw’s own complaints, that they were likely to retire in the near future.
He wanted to plan for that eventuality. The location and nature of the roadhouse business was such that he could not easily organise a suitable replacement at short notice. He therefore told them of his preference that they retire on a predetermined date, namely the end of that financial year. He concedes that he “strongly suggested” they do so.
As I interpret Mr Daw’s evidence, the mere expression of this preference led to the inevitable termination of the employment relationship. As his counsel put it, Mr Daw is a proud man. He felt humiliated. He did not want to work where he felt he wasn’t wanted. As he said during the telephone call, “If that’s how you feel, then that’s how you feel”.
The first letter to Mr McLean seeks his reasons for requesting that they retire, but does not propose any alternative course. Indeed it ends with the proposition that they will “start making plans for moving on”. Mr and Mrs Daw never expressed the wish to remain working beyond the proposed retirement date, let alone trying to persuade Mr McLean to agree that it was desirable that they do so.
When asked at the time, Mr McLean expressly denied that he was terminating their employment. He reminded instead Mr Daw instead of his own past complaints of tiredness. There was no ultimatum. There was no course of conduct intended or likely to coerce them into resigning.
Mr McLean was clearly pleased by Mr and Mrs Daw’s acceptance of his suggestion that they retire. He has explained his reasons why. It might be said to have intended to achieve that result. I accept that there were ways he could have made the result less likely. For example, he could have merely asked Mr and Mrs Daw whether they had any plans for retirement, rather than recommending that they adopt one. He could have expressly asked them on becoming aware of their unhappiness whether they would prefer to continue.
However, Mr and Mrs Daw’s decision to retire was, in my view, essentially voluntary. While Mr McLean expressed the desire that they jump, he didn’t push them. It was a real and reasonable option for Mr and Mrs Daw to choose to decline Mr McLean’s suggestion. The mere making of the suggestion was not in my view conduct that Mr and Mrs Daw “could not be expected to put up with”.
I find therefore that Mr and Mrs Daw’s employment was not terminated at the initiative of the employer. Their claim under Section 170EA will therefore be dismissed.
Claim for Contractual Entitlements
I turn to consider Mr and Mrs Daw’s claim for unpaid contractual entitlements. The dismissal of their primary claim under the Act does not prevent the Court from going on to determine their contractual claim: Grout v Gunnedah Shire Council (1994) 57 IR 243 at 267-270.
The first claim was to a return airfare to Adelaide valued at $750.00, to which Mr Daw expressed an entitlement in the course of his evidence. A chronology filed by Flinton acknowledges that it was a term of Mr and Mrs Daw’s employment that they receive an airfare from Warburton to Adelaide or to Perth each year. There was, however, no evidence as to the extent to which that entitlement was used. I find, therefore, that the applicants have not satisfied their onus of proof in relation to that claim.
They also claim that they were each expressly entitled under their oral contracts of employment to 6 weeks annual leave per year, plus a further 6 weeks “isolation leave” per year, to be taken quarterly. They therefore claim to have accrued 12 weeks leave per year. Given that they were each employed for seven years and five months, they would each have earned 86 weeks’ leave, being 42 weeks of annual leave and 44 weeks of isolation leave.
The respondent’s chronology acknowledges an entitlement to 5 weeks annual leave per annum, and to one week’s isolation leave per quarter, not accumulating; ie 8 weeks leave per year.
I accept Mr and Mrs Daw’s account of the events at their interview, given that it has not been contradicted. I am satisfied that the accountants representing Flinton at the interview had ostensible, if not actual, authority to agree the terms of employment with regard to leave. To the extent that the accountants purported to make the entitlement to annual leave conditional on Mr McLean’s consent, the fact that Mr and Mrs Daw were permitted to commence work without anything further being said is indicative that such consent was not withheld.
Accordingly, I accept that Mr and Mrs Daw were entitled to 6 weeks annual leave per year and to 6 weeks isolation leave per year (to be taken quarterly) from the commencement of their employment.
Mr and Mrs Daw claim that 10 weeks of their accrued leave was not taken. It appears an earlier claim that 12 weeks were due has been revised. In the event, I have found that they each took 81 weeks and 6 days of leave. It follows that 4 weeks and one day’s leave was not taken.
Mr and Mrs Daw further contend that it was an implied term of their contract that any leave not used by them would accrue.
In Byrne v Australian Airlines Ltd (1995) 61 IR 32 at 36-7, the majority of the High Court approved the proposition that, in cases such as this where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term if the implication of the term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case.
In my view the ability to accrue leave in the circumstances of this employment was necessary for the reasonable or effective operation of Mr and Mrs Daw’s employment contract. The arrangement of leave presented logistical difficulties. It was often to Flinton’s benefit that Mr and Mrs Daw have flexibility as to when leave was taken. The later conduct of the parties indicates that great flexibility was in fact used. Accordingly I accept that the term suggested by the applicants should properly be implied into their contracts.
Mr and Mrs Daw each claim damages of an amount equal to the money value of their untaken accrued leave. The parties advised that they agreed that the money value of a week’s leave was $466.00.
I will therefore allow the claim for each of them in the amount of $1930.
Finally, Mr and Mrs Daw also claim costs. I cannot see any basis upon which costs could be awarded in the circumstances of this case, given the nature of these proceedings. Costs will not be awarded.
I certify that this and the preceding twenty two (22) pages are a true copy of the Reasons for Decision of RD Farrell JR.
Associate:
Date: 24 October 1997
APPEARANCES
Counsel for the Applicant: Mr A. Young
Solicitors for the Applicant: Withnall Cavanagh Maley
Counsel for the Respondent: Mr M. Spargo
Solicitors for the Respondent: Cridlands
Dates of Hearing: 30 April and 1 May 1997
Date of Judgment: 24 October 1997
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