Dragan Marijan v Rail Corporation New South Wales T/A RailCorp
[2012] FWA 5639
•28 SEPTEMBER 2012
Note: An appeal pursuant to s.604 (C2012/5700) was lodged against this decision.
[2012] FWA 5639 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Dragan Marijan
v
Rail Corporation New South Wales T/A RailCorp
(U2011/14880)
SENIOR DEPUTY PRESIDENT HAMBERGER | SYDNEY, 28 SEPTEMBER 2012 |
Alleged unfair dismissal.
[1] The applicant, Mr Dragan Marijan, was dismissed by the respondent, the Rail Corporation of New South (RailCorp) on 15 December 2011. He commenced employment with Rail Services Australia (a predecessor to the respondent) on 22 January 2001 and had been continuously employed by the respondent and its predecessors until his dismissal in 2011. At the time of his dismissal Mr Marijan was employed as the Plant and Equipment Manager at the respondent’s Clyde depot. Procurement was a significant part of the applicant’s responsibilities. The accountabilities attached to his position included:
‘Develop capital acquisition programs, acquisition processes and arranging equipment adaptation, upgrade, redesign and disposal to manage the heavy plant profile and strategy and ensure organisational needs are met.’
[2] The competencies required for his position included:
- ‘Sound knowledge of budgeting, procurement and asset management practices and processes, preferably gained in a heavy industry or similar; and
- Understanding of asset management practices and processes.’
[3] Mr Marijan made an application to FWA for an unfair dismissal remedy on 21 December 2011. The matter was not settled by conciliation and was subsequently referred to me for determination. Hearings were conducted in Sydney on 2 and 3 July 2012. The parties subsequently filed written submissions and a final hearing was held on 20 August 2012. Mr Marijan was represented by Mr M Easton, of counsel, and RailCorp by Ms E Raper, of counsel.
[4] The applicant gave evidence on his own behalf. His wife (Anthea Marijan) also gave a written statement but was not required for cross-examination. The following gave evidence on behalf of the respondent:
- Mr Daren Jay (Senior Investigator),
- Ms Catherine Jeffs (Trainer),
- Mr Ron Devitt (General Manager, Learning and Development),
- Mr Max Croucher (Manager, Asset Scheduling & Production Planning), and
- Ms Sucibekti (Holly) Hartono (Contracts Manager, Panels).
RailCorp's Procurement Policy
[5] Before turning to the circumstances that led to Mr Marijan’s dismissal, it is appropriate to outline some relevant features of RailCorp’s procurement policy.
[6] The stated purpose of RailCorp's procurement policy 1 is:
‘...to ensure that all employees of Rail Corporation New South Wales ("RailCorp") conduct their procurement activities within a framework that will facilitate the achievement of sound commercial decisions combined with high standards of probity.’
[7] Under the heading of ‘sound commercial decisions’ the respondent’s Procurement Manual 2 emphasises that ‘impartial, competitive and transparent procurement processes are an important stepping stone in achieving value for money’.
[8] Under the heading of ‘ensuring probity’ the manual states that:
- Accountability
- Transparency
- Confidentiality
- Management of conflicts of interest
- Honesty.
‘RailCorp employees are expected to behave with a high degree of probity when procuring Goods or Services on behalf of the organisation. The principles that promote probity and maintain the integrity of the procurement process are:-
Probity must be an integral part of the procurement process and not a last minute consideration.’
[9] The manual states that:
- Panel (with prices) - a "standing offer" where listed suppliers have satisfied RailCorp criteria, have agreed to hold prices constant for a period of time and comply with the terms and conditions of the Panel agreement. Orders are placed directly with the required supplier. Contracts come into being at the time of placing the order and include the terms of the Panel agreement. The Panel Administration Instruction states the appropriate supplier selection procedure.
- Panel (without prices) - a list of "pre-qualified" suppliers who have satisfied RailCorp criteria and are committed to comply with the standard agreement modified by the individual order. Prices are obtained by inviting selected quotations/tenders for required Services from the Panel. Contracts come into being at the time of placing the order or awarding the contract. The Panel Administration Instruction states the appropriate supplier selection procedure.
‘A Registered Panel (Panel) is an established group of suppliers who are capable of providing particular Services, subject to prearranged terms and conditions. The Manager, Contracts & Procurement, is responsible for registering and maintaining these Panels.
Panels may be either: -
All RailCorp Panels currently in place are listed on the Intranet (refer Registered Panels). If a Panel is in place and is suitable to deliver the user requirements then that Panel must be used.’
[10] In her written statement 3, Ms Hartono gave evidence that the panel system at RailCorp serves the following purposes:
‘a) It provides for a transparent tendering process by which suppliers provide a bid and compete with other suppliers to gain a place on a panel. This seeks to ensure that RailCorp, as a government entity, spends money fairly by awarding work to the firms best able to meet RailCorp's requirements.
b) It seeks to ensure that suppliers engaged by RailCorp have the necessary skills, qualifications, insurances and financial standing to meet RailCorp's requirements. These issues are evaluated and approved before a firm is appointed to a panel.
c) It seeks to ensure that there are no conflicts of interest as this is reviewed before appointments to a panel.
d) It provides pre-agreed general contractual terms and conditions of engagement.
e) Once established, a panel provides a pre--approved group of firms so that a supplier can be found quickly when a need for services rises.’
[11] Ms Hartono continued:
‘6. If a non-panel firm is engaged to perform work, it is very difficult to ensure that the firm has the required insurances, qualifications and financial standing required. It is also difficult to ensure that no conflicts of interest exist.
7. In order to gain a place on a panel, a firm must apply through a tender process.
8. The tender process is time consuming and expensive for tenderers. Firms invest considerable resources in preparing tender documents and participating in the process.
9. To operate effectively, the panel system requires good suppliers to tender for the work. If a non-panel firm is engaged where a panel firm could have been engaged, it undermines the panel system by suggesting it is not necessary to comply with the tender process or panel requirements in order to be engaged by RailCorp. Given the time and expense in tendering, such practices have the potential to discourage good suppliers from bidding for a place within the panel system.’
The Investigation
[12] An investigation into Mr Marijan was instigated following an audit of procurement practices at the Clyde depot during the 2008/09 financial year undertaken by the internal audit branch of RailCorp. 4 This audit identified what it called the "Wollongong Triangle". The “Triangle” allegedly consisted of Mr Marijan, a company called Achieve Maintenance Solutions owned by a RailCorp employee, Mr Tomic, and Railway Asset Maintenance (RAM), owned by Mr Craig Ramstadius and his wife. The report included the following statement:
‘Mr Marijan appears to have a preference for allocating work to friends and not following procurement procedures - i.e. no quotes, purchase orders after invoices, updating invoice information at his discretion, not properly authorising work being performed.’ 5
[13] The investigation, conducted by Mr Jay, into Mr Marijan’s procurement practices was notified to the Independent Commission Against Corruption (ICAC). RailCorp had previously been the subject of a number of ICAC enquiries into corruption arising from procurement practices.
[14] The investigation focused on Mr Marijan’s procurement practices regarding RAM between March 2008 and June 2009. According to Mr Jay’s evidence this was because Mr Marijan had completed Procurement Courses Level 1 and Level 2 by 27 February 2008. These courses are designed to educate participants about RailCorp's procurement practices and inform them of the requirements of complying with RailCorp's procurement policy.
The Investigation Report
[15] The investigation resulted in a report in October 2011. The Executive Summary of the report is as follows:
‘This report concerns the procurement practices of Mr Dragan Marijan, Plant and Equipment Manager, Clyde Depot. Enquiries were commenced following a wide ranging audit of procurement practices at Clyde Depot conducted during the 2008/2009 financial year.
During the audit it was identified that a large percentage of work being allocated by Mr Marijan as either a ‘requesting’ or ‘authorising’ officer, was being awarded to a Wollongong entity known to RailCorp by the names ‘Sovereign Maintenance’ (“Supplier”). Enquiries established that the Supplier had never been a member of an approved RailCorp panel of suppliers. It was identified that much of the work undertaken by the Supplier involved work for which established panels of RailCorp suppliers were in operation. Allegations concerning allocations were put to Mr Marijan in relation to that work only.
Further enquiries identified that the Supplier was legally registered as ‘Sovereign Brick and Paving’ and had been registered with RailCorp under a false trading name and a false Australian Company Number (ACN).
RailCorp Investigations is satisfied, on the balance of probability, that Mr Marijan has breached the RailCorp Code of Conduct and RailCorp Procurement Policy in relation to five allegations raised in respect of his initial registration of "Sovereign Brick and Paving" into RailCorp's MIMS database and his continued engagement of the Supplier to provide services to RailCorp between 18 January 2007 and 30 June 2009.
This report concerns Mr Marijan's suspected collusive relationship with the Supplier and the associated breaches of the RailCorp Code of Conduct including, but not limited to, maladministration and corrupt conduct.’
[16] The report found that five allegations were substantiated. The first two of these allegations were that Mr Marijan failed to adhere to proper procurement procedures which amounted to breaches of the RailCorp Code of Conduct and theRailCorp Procurement Policy. The particulars were that between 1 March 2008 and 30 June 2009, acting either in his capacity as an authorising officer or a requesting officer, Mr Marijan engaged RAM to provide a range of services to RailCorp. In each case a panel existed for the provision of those services but RAM was not a member of the panel. The third allegation was that Mr Marijan failed to act in the best interests of RailCorp which amounted to a breach of the RailCorp Code of Conduct. The particulars were that on 24 January 2007, Mr Marijan facilitated the creation of a new MIMS supplier profile for an entity named ‘Sovereign Maintenance’ for the supply of general maintenance services when established panels of such service providers were already in operation. The fourth and fifth allegations also concerned Mr Marijan failing to act in the best interests of RailCorp amounting to a breach of the RailCorp Code of Conduct. The particulars were that in May 2008, Mr Marijan authorised the allocation of work to RAM in respect of repairs to a fire hose and a downpipe. RAM was not a member of the Plumbing Services panel. The relevant work was sub-contracted by RAM to a member of the Plumbing Services panel, GF James Plumbing. RAM subsequently inflated the cost of work provided to RailCorp by GF James Plumbing.
[17] During his cross-examination, Mr Jay said that the investigation had drawn a distinction between work done by RAM in relation to major plant and equipment and other work. There was no panel for maintenance of major plant and equipment and therefore it would have been unfair to focus on that work. The focus was solely on work for which a panel existed. 6 Mr Jay relied on advice from Ms Hartono about whether work was covered by a panel or not.7
[18] Mr Jay agreed that the investigation had identified some occasions where other employees, including Mr Croucher, had authorised work to be done by RAM prima facie in contravention of the procurement policy 8. He was asked by Mr Easton whether these were serious contraventions of the procurement policy. He said in response:
‘In relation to allocations or authorisations by other people, because we understand that there were occasions when Railway Asset Maintenance was allocated work both by requestors and authorisers, that would in isolation be technically a breach of the procurement policy.... However in the wider context we identified that it was because of the fact that they were a registered - they became a regular supplier at the Clyde depot, it would be unreasonable to describe that - or focus on somebody for breaching policy when they've allocated work to a supplier that has become a fixture within the Clyde depot through allocations that have been overseen by Mr Marijan.’ 9
[19] Mr Jay drew attention to a paragraph in the report in which he said:
‘During the period the supplier was engaged at the Clyde depot a number of other RailCorp staff engaged it for the provision of panel services on the basis that Mr Marijan initially registered the supplier into the RailCorp MIMS database and was personally responsible for authorising 86% of allocations to it. No other staff have been placed under investigation for requesting or allocating work to the supplier. As the supplier had become an established supplier by the time it was engaged by other employees, RailCorp investigations is satisfied that it is unlikely the other employees would have had grounds to suspect the supplier was not an accredited RailCorp panel member at the time it was engaged by them.’ 10
[20] The conclusion of the report was as follows:
- Mr Marijan and Mr Ramstadius lived in the same neighbourhood in Wollongong.
- Mr Ramstadius was engaged to work by Mr Marijan predominantly at the Clyde Depot, approximately 82 kms from his home.
- Mr Marijan was instrumental in creating the Supplier's status as a RailCorp supplier and he then maintained a relationship with Mr Ramstadius during which time allocations were made to the Supplier under the name of ‘Sovereign Brick and Paving’ and then ‘Railway Asset Maintenance’ once the Supplier had changed its business name to better reflect its new found position with RailCorp.
- Mr Marijan has been proven to have held some form of social connection with Mr Ramstadius who had been invited to his surprise 30th birthday party in November 2007.
- The changing of the Supplier’s name from Sovereign Brick and Paving to Railway Asset Maintenance within three weeks of being allocated work by Mr Marijan for the first time, is indicative of the fact that the new working relationship fostered between Mr Marijan and Mr Ramstadius may have already been planned to be a long-term enterprise, and;
- Sequential invoicing by the Supplier demonstrates that there is no evidence to indicate that the entity was providing other services to any other person or entity outside of Mr Marijan's scope of managerial control.
‘Considering all the circumstances of this matter, the investigation finds that Mr Marijan has breached the RailCorp Code of Conduct and RailCorp Procurement Policy concerning his engagement of, and continued association with the Supplier.
It is strongly suspected that a collusive relationship exists between Mr Marijan and Mr and Mrs Ramstadius. This determination is based upon the fact that:
Notwithstanding the foregoing information which is highlighted for contextual purposes, RailCorp Investigations has focused its enquiries relating to five specific breaches of the RailCorp Code of Conduct and/or RailCorp Procurement Policy arising out of alleged maladministration and corruption on the part of Mr Marijan and has found five allegations to be substantiated.’
[21] On 1 November 2011, the respondent wrote to the applicant outlining the findings of the Investigation Report and indicating that its preliminary view was that the appropriate disciplinary outcome was dismissal. It gave the applicant 14 days to provide a response. This was subsequently extended to 30 November 2011.
Mr Marijan’s Response to the Report
[22] Mr Marijan provided a lengthy response to the investigation report in a letter from his lawyer White Barnes Solicitors dated 30 November 2011. In his witness statement to the Tribunal he indicated that he continued to stand by that response 11.
[23] In the letter of 30 November 2011, Mr Marijan did not deny that he engaged RAM to conduct the work referred to in the first two allegations. However he submitted that it was appropriate for RAM to be engaged outside the panel system as they were already carrying out a range of duties for RailCorp. To engage a contractor under the Panel system would not have suited the requirements of RailCorp, hence the engagement of RAM to carry out the work. In relation to the third allegation, Mr Marijan admitted the particulars; however he denied that he did not act in the best interests of RailCorp when he created the MIMS supplier profile. He stated that he had received no training on the procurement process at the time this was carried out. He was overworked and under a great deal of stress due to the shortage of staff in the section. He had just returned to work following the birth of his first child on 14 December 2006. At the time that the supplier profile was created he was not aware and had not been made aware by RailCorp that there was a panel in existence for such work. He did not breach the Code of Conduct or the Procurement Manual. In relation to the fourth allegation he submitted that, as the work was more difficult than a standard general duties type of work it was necessary for RAM to subcontract out the work to a contractor called GF James. RAM would have been required to ensure that GF James had all the relevant documentation and administrative processes in place before the work was commenced. Given RAM's involvement in the job it was entirely reasonable for a charge of $489 to be included in the invoice. The applicant asserted that he was acting in the best interests of RailCorp. In relation to the fifth allegation the applicant said that it was necessary and reasonable for RAM to subcontract the work to GF James. Once again, RAM would have had to ensure that GF James had all the relevant documentation and administrative processes in place before the work was commenced. The job required RAM to plan, organise, execute and clean up after the work carried out by GF James, and ensure that safety requirements were complied with. In these circumstances it was entirely reasonable that RAM included a charge for the work carried out. The applicant was acting in the best interests of RailCorp.
[24] In the letter the applicant denied that he had breached the RailCorp Code of Conduct as he had always acted in the best interests of RailCorp and had maintained and promoted high levels of acceptable behaviour. He was not guilty of any conflict of interest and had not used his authority and delegation in an inappropriate and biased way. He had not failed to properly and diligently discharge his supervisory responsibilities. In fact he had acted above and beyond the call of duty accepting responsibility for those persons whose positions had remained vacant for a considerable period of time. He had not engaged in corrupt conduct. He did not gain from the engagement of RAM nor was there any personal relationship apart from a professional working relationship. His actions could not constitute maladministration as he had not failed to comply with tendering processes by engaging RAM outside of the panel system as the Procurement Policy provided circumstances where this was acceptable. He saved time and money by engaging RAM rather than by engaging a range of entities from a number of panels. In this manner his actions could not be said to have been inefficient or involve a waste of money or resources.
[25] In the letter Mr Marijan asserted that he had not breached the Procurement Policy as much of the work RAM conducted related to heavy plant which did not have a panel established at the relevant time. Further, the wording of the Procurement Policy did not make it mandatory to use a supplier on the panel in all circumstances. Chapter 4.2.7 stated that "If a Panel is in place, and suitable to deliver the user requirements then it must be used". In the alternative, any breach of the Procurement Policy by Mr Marijan was a technical breach brought about by his work circumstances. It was not deliberate or intentional and did not result in any gain by Mr Marijan or loss to RailCorp. If it was a breach at all it was a breach at the very low end of the scale and was not serious enough to warrant a penalty of termination.
[26] The letter included the following:
‘His engagement of RAM for work in circumstances where they were not on the panel for some of the work was done inadvertently and without Mr Marijan consciously deciding to go outside the panel. As previously stated above, due to his high workload and stress he simply did not turn his mind to the issue at all. This is further evidenced by the fact that RAM already had a working relationship with RailCorp before Mr Marijan commenced in the position of Plant Equipment Manager.
Mr Marijan has continued to work in his position during the lengthy period of the investigation (which is over 12 months). It cannot be argued that RailCorp has lost the confidence in Mr Marijan's ability to conduct himself as an employee in his current role as he has continued without suspension in that role.’
Reasons for the dismissal
[27] The reasons for Mr Marijan’s dismissal were set out in a letter dated 12 December 2011. The letter indicated that a series of allegations had been substantiated. These allegations were that he had failed to adhere to proper procurement procedures which amounted to breaches of the RailCorp Code of Conduct and the RailCorp ProcurementPolicy; and that he had failed to act in the best interests of RailCorp which amounted to a breach of the RailCorp Code of Conduct. The particulars of the breaches in summary included that between 1 March 2008 and 30 June 2009, acting in his capacity as an authorising officer, he had engaged Railway Asset Maintenance (RAM) to provide a range of services even though RAM was not a member of the relevant panel; that on 24 January 2007 he facilitated the creation of a new MIMS supplier profile for an entity named ‘Sovereign Maintenance’ for the supply of general maintenance services even though established panels of such service providers were already in operation; and that on or around 23 May 2008 he authorised the allocation of work to RAM which subsequently subcontracted the work to a panel member and charged RailCorp an inflated price.
Mr Marijan's Evidence to the Tribunal
[28] In his statement to the tribunal 12, Mr Marijan said that he commenced in the position of Plant Services Manager at the Clyde depot under Mr Kevin Kurtz, the then Plant Equipment Manager, on 12 April 2005. He said that it was in this position that he had his first exposure to the respondent’s procurement process. Mr Kurtz was, in his words, an ‘old style’ manager who, while he gave him directions about carrying out his job, did not provide him with much guidance or training in the overall processes relevant to his position.
[29] The applicant's evidence was that in commencing in the position of Plant Services Manager he had had no specialised training in relation to mechanisms or procedures for procurement. He conducted himself in the same manner as that modelled by Mr Kurtz. Up until approximately August 2006 the respondent had no panels in place for the use of contractors by the respondent (with one exception). If the work was estimated to be less than $5000 in value he engaged a contractor directly to carry out the work. If the work was estimated to exceed $5000 he consulted with Mr Kurtz in relation to the engagement of contractor.
[30] In January 2007 Mr Kurtz retired and no one was appointed to his position. In December 2006 the applicant applied, unsuccessfully, for the position of Plant Equipment Manager. After being informed that he lacked the necessary asset management training and experience for the position, he commenced studying, on a part-time basis, for the Master of Asset Management at the University of Wollongong.
[31] In December 2007 he applied again for the position of Plant and Equipment Manager and, in February 2008, was appointed to that position. According to the applicant, no one had been in the position of Plant and Equipment Manager between January 2007 and February 2008. As such, aspects of the duties required in that position were carried out by the applicant, as assigned to him by the Tracks Works Manager. Once he commenced in the position of Plant and Equipment Manager no one was appointed to his former position of Plant Services Manager until February 2009. The appointed person resigned after seven weeks in the position which was not filled again until April 2010.
[32] According to the applicant's written statement on 25 February 2008 he attended a training course entitled "Procurement Awareness Level 1". He said that at the time of that training he was not provided with a copy of the respondent’s Procurement Policy. It did not form part of the material provided to him at the time of the training. The training session consisted of discussion of the course outline, not the respondent’s Procurement Policy.
[33] The applicant's evidence is that during 2008 there was an enormous amount of turmoil in the depot at Clyde with a number of employees resigning, which made for a challenging work environment. According to a later audit report, during the year 2008 to 2009, there were up to 16 vacant positions out of a headcount of 46 for the section. In December 2008, a restructure resulted in the Plant and Equipment Manager overseeing both the Minor Plant and Equipment and Train Operations Sections in addition to overseeing Major Plant and Equipment.
[34] According to the applicant's written statement, Mr Craig Ramstadius, from an entity called Railway Asset Maintenance (RAM) had originally commenced dealings with the respondent in November 2006 when he was engaged by Mr Kurtz to carry out some preliminary demolition and cleanup work at the Clyde depot, through an entity called Achieve Maintenance Solutions. The expenditure approved by Mr Kurtz for this work was around $40,000. As far as he was aware the engagement of Achieve Maintenance Solutions was carried out in accordance with RailCorp's then Procurement Guidelines.
[35] According to the applicant's written statement, following the completion of this work, it was evident that there were additional ‘odd jobs’ required to be performed around the depot which had been performed by a former employee who had been on sick leave and had then retired and were therefore no longer being done. The Costing & Administration Clerk, Mr Humphries, and two Plant Supervisors, Mr Psaras and Mr Rutherford, all highly recommended Mr Ramstadius's work. On his return from leave for the birth of his first child in January 2007, the applicant engaged RAM to carry out some works around the depot.
[36] According to the applicant's statement:
‘36. Mr Steve Naumovski, a contractor from ARTIFLEX, was engaged by Mr Croucher to act as the Project Manager of the Clyde Construction Heavy Plant and Maintenance office and amenities at the time. Mr Naumovski attended the Clyde Depot in approximately February 2007 and saw that RAM were already performing work for the Respondent at the depot under Stages 1 and 2 of the Construction Project. He decided to use RAM to do various tasks due to their skills and experience. Mr Naumovski, as a contractor, could not raise orders in the Respondent’s Ellipse program so I was asked to raise the orders.
37. At the time of engagement the work to be done by RAM for Mr Naumovski was estimated to be less than $5000 so, under the procurement rules in place at the time, it was not necessary for anything other than one quote to be obtained. However, as the work progressed additional duties arose which were carried out by RAM. To my knowledge there were no panels at the time. I have since found out that a panel arrangement was introduced in August 2006 and it was communicated in April 2007 however I, at no stage, ever received any information or training about this panel system prior to the training course I attended in February 2008....
38. When RAM was engaged in approximately January 2007 I did not complete the Respondent's MIMS Supplier Details form which is required for such engagement. The paperwork was completed by Mr Humphries, the Costing & Administration Clerk. I signed the documentation but did not have any further involvement in that documentation. At the time that I signed the documentation I had only been back at work for a few days having returned from the birth of my first child.... As is evident from this document the majority of hand writing on that document is not mine. I completed the supervisor, Signature and Nature of Item details but no other details. At the time once the document was signed, it would have had to go to the Respondent's Purchasing Division to be entered into the MIMS (Ellipse) system in order for the Supplier to be given a Supplier Number. If anything was incorrect on that form it should have been flagged at that step of the Respondent's process.’
[37] In his written statement, Mr Marijan said that he engaged RAM to carry out duties for the respondent due to its high level of competency and ability. He said that the engagement resulted in costs savings measures for the respondent. ‘In order to comply strictly with the procurement requirements I would have needed to engage a number of entities to carry out the variety of work performed by RAM. This would most certainly have resulted in additional costs to the Respondent’. He continued:
‘41. At the time that RAM was engaged by me to do work at the Clyde Depot there was no panel which covered the work to be performed by them. The Respondent really needed a “Multipurpose" Panel which would allow an entity to conduct work across a range of panels. Clearly, the type of small jobs being done by RAM would not be done by larger contracting companies which were on other panels.’
[38] During his cross-examination Mr Marijan conceded that he did not check off on the plumbing work that was subject to allegations 4 and 5 13. His initial evidence was that he was not fully aware of the work that was undertaken by RAM, nor was he aware that the work had been subcontracted out to GF James. All he got was the RAM invoice. He had never received the GF James invoices, nor did RAM tell him that they had subcontracted the work.14 However when he was taken to the relevant invoices by Ms Raper he agreed that on both occasions on the invoice he had been alerted to the fact that it was GF Plumbing that was doing the work.15 He also agreed that he was aware at the time that GF Plumbing was an approved panel supplier.16 He conceded that this was something that he should have picked up.17
[39] The exchange continued:
‘PN434
You accept that what you have before you is - you accept, don't you, that in terms of the documentation that was before you at the time you signed these off, that there was nothing to suggest that RAM themselves had undertaken work?---No.
...
PN436
So there was no justification on their part for inflating the cost of the work?
--- Correct.
PN437
You accept, don't you, that given your position as sign off, that ultimately you have to accept responsibility where there’s a failure of this kind?---Yes.
PN438
Now, I think you said before - I just want to clarify your evidence-you were relying on other people to go and see what the work was that was being performed. Is that right?---Yes.
PN439
So with respect to this particular plumbing work in allegations 4 and 5, you yourself can't say what work was performed?---I just know there was some jet blasting and there were some cutting of pipes.’
[40] During cross-examination, Mr Marijan conceded that in the period between April 2005 and January 2008 he knew that there were panels in operation and that prior to engaging an external supplier, he had an obligation to check if the work was covered by a panel and if so to use the panel. 18
[41] Mr Marijan was taken to the MIMS supplier details form which he approved for the purpose of the supplier known as Sovereign Maintenance (a trading name of RAM) 19. The requesting officer’s name was A Humphries. Mr Marijan signed the form as the supervisor. In a note at the bottom of the form the following was included: "Supervisor to ensure Supply Agreement is not in place for the product being requested from this supplier". The following exchange took place:
‘PN536
You accept, don't you, that it was necessary before you signed off on approving them to become a supplier that you first checked that there was a panel in operation that covered the work they were performing?---In this particular case, it was due to the fact that it was the ability that he had to do maintenance work as well. It was just the ability that he could actually perform a mechanical function, and he was able to do-take off parts and put parts back onto a machine.
PN537
THE SENIOR DEPUTY PRESIDENT: Sorry. How was that answering the question? Could you just repeat the question?
PN538
MS RAPER: Certainly, your Honour. So you accept, don't you, that the point in time where you were reviewing this form in terms of them becoming a supplier, that you knew at that time that you had an obligation to ensure whether they fall within a panel?---Yes.
PN539
You accept, don't you, that you didn't do that at that time?---Yes, because I'd just come back from holidays.
PN540
You accept, don't you, that that was in breach of RailCorp policy by doing that?---Yes.
PN541
It's the case, isn't it, that... you understood at the time that you were signing off on this form that the work that he was to be performing was in the form of general maintenance work? Do you accept that?---Yes.
PN542
You accept now that a general maintenance services panel existed at that time?---General services one?
PN543
General maintenance services-that a panel for general maintenance services existed at that time?---Yes.
PN544
... you accept, don't you, that now, having hindsight, that what you should have done was check whether a panel existed and gone to the approved panel members first before signing off the supplier for this work?---Yes.’
[42] Mr Marijan went on to agree that there were numerous panel members who perform work over different panels 20 and that instead of going to RAM he could have gone to one of the existing panel members who performed work over a number of panels.21
[43] Mr Marijan was asked who came up with the idea of giving the work to Mr Ramstadius. 22 His response was that "a couple of the guys" saw him doing some work, mentioned him to Mr Marijan...
‘... and I sort of said, “Okay. We’ll bring some diversity to the suppliers that we've currently got." ’ 23
[44] Mr Marijan conceded that it was ultimately his job, not Mr Humphries’, to ensure that RailCorp's policies and procedures were being followed. 24 He also conceded that with respect to the supplier details form he was really in effect the requesting officer.25
[45] Ms Raper asked the applicant:
‘PN582
... It would be incorrect, wouldn't it... to describe what you were doing in terms of the creation of this MIMS supplier details as merely signing off on it?---That’s all I basically did.
PN583
But you in effect, though, were the person who was engaging, weren't you?
PN584
... Yes and no, because some of the other supervisors were going to engage Humphries Services (sic).
PN585
Yes. But you accept, don't you, that you, in your position, had an obligation to comply with the RailCorp procurement policy?---Yes.
PN586
And that it was your job to identify if there were breaches?---I just - okay. Yes.
PN587
And that if you thought that there had been - that some of the supervisors - and I assume by supervisors there, the people that you were responsible for - if they were doing things that were wrong in terms of the operation of the policy, as I understood your evidence earlier, it was your job to reprimand them, wasn't it?---Yes.’
[46] Ms Raper put to the applicant that he had attended procurement awareness level 1 training starting on 19 June 2007. He did not dispute that he attended this training. 26 However he said he had no recollection of the training.27 He said that as he had not received a certificate there was an assumption that he did not pass so he went again in February 2008. He acknowledged however that in 2007 he was aware that he had to use a panel if there was one available for the work that was being conducted28 and that he had been told about the existence of the panels on the intranet.29 He also accepted that as a manager he could have found out who to talk to about the panel system if he needed to.30
[47] Mr Marijan acknowledged that he would have known about the capacity to gain a certificate of exemption from the procurement guidelines in 2007. 31 Indeed he applied for an exemption around mid-2007.32 Ms Raper put to him that there was an avenue open in terms of applying for a certificate of exemption with respect to RAM. While he accepted this33, Mr Marijan said:
‘It just doesn't apply to RAM. It also applies for FluidTech, also from DP Dowsett, Eugene Haines or MC Engineering. It applies for them. Why didn't they have a certificate of exemption for any of those people, exactly like RAM.’ 34
[48] Mr Marijan conceded that work done by RAM such as grass cutting, cleaning up the sides of the tracks, repairing the roof of somewhere in the yard, graffiti removal, and plumbing, was not heavy plant work. 35 He agreed that the other suppliers he had referred to were primarily involved in the repair and maintenance of heavy plant, for which no panel existed at the time, though one was later established.36
[49] Mr Marijan accepted that as part of the training he undertook in February 2008 he was told how he needed to check the RailCorp intranet for existing panels, and to use someone from an existing panel if one was in place. 37 Indeed one of the exercises he undertook as part of his training was to go to the appropriate panels on the RailCorp intranet in relation to specific kinds of procurement.38
[50] Mr Marijan accepted that in most cases where Mr Humphries was the requesting officer he was in reality simply doing the paperwork and that it was in fact Mr Marijan who was requesting the work. 39
[51] When it was put to Mr Marijan that with the benefit of hindsight the manner in which he requested and authorised the engagement of RAM gave an unfair advantage to RAM over other panel members he responded:
‘At the time I probably didn't reflect on it too much due to the fact of the workload that I had. Now I've been away from the place for six months. Don't forget all those positions that were vacant were filled, and you get time to reflect, okay? And then you do sit there and honestly look at the decisions you made and some of the decisions you went forward with and, you know, look - and sometimes now, you know, you step away and you sort of say to yourself, "Well maybe I could have done it different and looked at it differently".’ 40
Mr Croucher’s evidence
[52] Mr Croucher gave oral evidence that when he first became aware of the investigation into Mr Marijan’s conduct, in early August 2009, he put in place an arrangement where he became the approving officer for all requisitions that came through plant and equipment. 41
[53] Mr Croucher was asked about two occasions when he was the authorising officer for an invoice for work from RAM. He said that he did not check off the invoice at the end of the work. 42 At that point in time, he did not have any knowledge of RAM at all.43 He did not take any steps to check if RAM was on a panel.44 He was asked whether he had followed the procurement processes when he authorised the two jobs. His response was:
‘Well, Bob Hamill, being the requesting officer, starts the process for the requisition, and I was the delegated officer who does the delegation. So my assumption is that Bob Hamill has followed the procurement process. At that stage, I had no belief that RAM wasn't on the panel.’ 45
[54] Mr Croucher agreed that during 2008 and 2009 Mr Marijan's work area was chronically understaffed. 46
[55] Mr Croucher was asked a series of questions about the procurement arrangements for heavy plant and equipment prior to the establishment of a panel based on the recommendations of an audit completed in December 2009. His response was that if there was no panel covering the work in question ‘you could go off panel’. 47 Following the audit report an exemption was put in place on an interim basis for heavy plant and equipment pending the establishment of a panel because ‘it was a grey area’.48
The Applicant’s Closing Submissions
[56] Mr Easton, on behalf of the applicant, did not deny that Mr Marijan had breached RailCorp’s procurement policy. However he submitted that while he was dismissed for breaching the policy, there was ample evidence that that the respondent in the same period ignored, forgave or tolerated the same conduct by others. This included other managers with comparable or higher seniority.
[57] The termination was based on Mr Jay’s Investigation Report. That report contained ‘additional information’ which the respondent now said was irrelevant. This ‘additional information’ included ‘scandalous, defamatory and unfounded suspicions (as opposed to information)’. In reality, these either illegitimately contributed to the applicant's dismissal, or ‘so contaminated the termination process that the Applicant could not possibly have received a “fair go all round”’. 49
[58] Mr Easton submitted that the respondent’s policy was unclear and inconsistently applied. Not all contraventions of the respondent's policy were so serious as to warrant dismissal. The contraventions on the part of the applicant did not, on any proper assessment, damage or compromise the applicant's ongoing employment. The respondent knew of the allegations prior to 2009. The breaches were of a technical nature relating to one contractor. Despite being aware of the breach in relation to this contractor the respondent continued to allow the applicant to engage the contractor, and in July 2009 the applicant's direct manager authorised an exemption for the contractor. The existence of the technical breaches did not cause the respondent any concern about the applicant's procurement practices vis-a-vis any other contractor. The applicant, despite these contraventions, continued to oversee tens of millions of dollars of procurement without incident.
[59] Mr Easton submitted that there is no impediment to the applicant returning to his employment and seeks his reinstatement with an order for lost remuneration.
Consideration
[60] Section 396 of the Fair Work Act 2009 requires that FWA must decide certain matters before considering the merits of the application. I find that the application was made within the period required in subsection 394(2), that the applicant was protected from unfair dismissal, that the Small Business Fair Dismissal Code has no application, and that the application did not concern a case of genuine redundancy. The issue before me is accordingly whether Mr Marijan’s dismissal was harsh, unjust or unreasonable. In considering whether I am satisfied that the dismissal was harsh, unjust or unreasonable I am required by s.387 of the Act to 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 FWA considers relevant.’
Was there a valid reason for the dismissal?
[61] In determining whether there was a valid reason for a dismissal, the role of the tribunal is to assess whether the reason for the termination is defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason. 50
[62] Mr Marijan has accepted that he breached RailCorp’s procurement policy. Based on the concessions he made during cross cross-examination, I am satisfied that he was well aware of the need to comply with RailCorp's policy with regard to supplier panels. He knew how to find information about supplier panels on the RailCorp intranet, yet he continued to engage RAM to do work that was covered by a panel, even though he knew RAM was not a member of a panel. In particular, he should not have signed off on RAM as a supplier on the MIMS Supplier form (and as a consequence entered RAM on to the system). He did this even though he could have applied for a certificate of exemption, or where he could have engaged someone who was on the panel. This conduct was in clear breach of the policy. The applicant did not breach the policy once or twice but repeatedly.
[63] By the time of the applicant’s final submissions, his main argument was that the breaches were ‘technical’ in nature, and that other employees, including managers, breached the policy but were not disciplined.
[64] It is important to appreciate the purpose of RailCorp’s procurement policy. It has a number of objectives, including preventing the risk of corruption and ensuring transparency and accountability in the expenditure of public money. It is also designed to achieve value for money, inter alia by ensuring that contracts are awarded in a competitive manner. As Ms Hartono explained, to operate effectively the panel system requires good suppliers to tender for the work. If a non-panel firm is engaged where a panel firm could have been engaged it undermines the panel system by suggesting it is not necessary to comply with the tender process or panel requirements in order to be engaged by RailCorp. Given the time and expense in tendering, such practices have the potential to discourage good suppliers from bidding for a place within the panel system.
[65] Was Mr Marijan treated differently from other employees? There is limited evidence of other employees breaching the procurement policy. Mr Marijan in his initial response to RailCorp tried to pin much of the blame for the use of RAM on Mr Humphries as the ‘requesting officer’. However, under cross examination he grudgingly conceded that Mr Humphries was effectively doing the paper work at his own behest. In effect Mr Marijan was both the requester and the approver. Other employees who authorised the use of RAM’s services did so on the basis of their inclusion the MIMS system - something that had been in effect by Mr Marijan. This clearly distinguishes their conduct from that of Mr Marijan.
[66] Mr Easton referred to a number of suppliers used by Mr Marijan’s Division that he said were doing ‘off panel work’ by which he meant ‘work that is captured by a panel and these suppliers aren’t members of the panel. 51.’ However this interpretation of the facts is not supported by the evidence. It was not a case of other employees requesting and approving work by non-panel approved suppliers for panel work. There was at the time no panel in place for heavy plant and equipment suppliers. In contrast to RAM, the fact that these suppliers were being used was not in breach of the policy.
[67] The applicant said that when he engaged RAM as a supplier he was simply maintaining arrangements that had been in place under Mr Kurtz. However that is misleading. His own evidence (at paragraph 29 of his statement) was that as far as he was aware the engagement of Mr Ramstadius, through Achieve Maintenance Solutions, was carried out in accordance with the respondent’s procurement guidelines. It was Mr Marijan who approved the entry of RAM on to the system which gave the appearance that they were in effect an approved supplier.
[68] It was suggested by Mr Easton that it was unfair to dismiss the applicant as the respondent had in effect condoned Mr Marijan’s conduct. It is unfortunate that the investigation into Mr Marijan’s misconduct took so long. However the respondent did act fairly promptly once it had received the results of the investigation in November 2011. Moreover, once his supervisor was aware of the concerns about Mr Marijan’s relationship with RAM, the use of RAM was suspended and the approval process was altered so that Mr Marijan could no longer approve suppliers without going through Mr Croucher. This does not indicate that Mr Marijan’s conduct was condoned. Rather he continued to work for the respondent while the matter was being investigated.
[69] I am satisfied that the applicant was guilty of serious breaches of RailCorp’s procurement policy. These constitute a valid reason for his dismissal.
Was the applicant notified of the reasons for his dismissal?
[70] The respondent wrote to the applicant on 1 November clearly setting out the allegations against him. It is clear that the respondent initially suspected the applicant of a collusive (that is, a corrupt) relationship with Mr Ramstadius. That was not supported by the investigation (or by any evidence before this tribunal). It is unfortunate that the Investigation Report itself was not clearer on this point. However it is equally clear given their absence from the letter of 1 November 2011 that these original suspicions were not part of the reasons for Mr Marijan’s dismissal.
Was the applicant given an opportunity to respond to the reasons for his dismissal?
[71] The applicant was given two weeks (subsequently extended to four weeks) to respond to the allegations against him.
Any other relevant considerations
[72] The applicant was able to have legal representation to assist him in dealing with the respondent’s allegations, and it was not suggested that he was refused the ability to have a ‘support person’ present at any relevant meetings. I do not consider any of the factors outlined in s.387 (e) – (g) as having any relevance to this case. Mr Marijan was not dismissed for poor performance but for misconduct. The respondent is a large organisation and adopted procedures consistent with its size, and it had access to dedicated human resource management specialists.
[73] I have had regard to the serious impact that his dismissal has had on Mr Marijan and his personal circumstances. However this must be weighed against the reasonable expectation the respondent has that its employees - especially senior employees such as Mr Marijan - will comply with its procurement policy. It should also be able to expect that this tribunal will support appropriate disciplinary action when there are serious breaches of that policy. The procurement policy is critical in preventing corruption and maladministration - as well as ensuring that public funds are spent in the most efficient and effective manner. I am concerned that it was not until his cross examination that the applicant showed any recognition that his conduct had been wrong.
Conclusion
[74] Mr Marijan’s dismissal was not harsh, unjust or unreasonable. His application is dismissed.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr E Easton (Counsel) and Ms T Neilson (Solicitor) for the Applicant
Ms E Raper (Counsel) and Ms S Nicita (Solicitor) for the Respondent
Hearing details:
2012
Sydney
2 July
3 July
20 August
1 Annexure A to Exhibit R10
2 Annexures D and E to Exhibit R10
3 Exhibit R10
4 PN1096
5 Attachment to Exhibit R3
6 PN1126-1138
7 PN1155
8 PN1262
9 PN1241-2
10 PN1278
11 Paragraph 3, Exhibit M2
12 Exhibit M2
13 PN398
14 PN402
15 PN407-10
16 PN410
17 PN433
18 PN489-491
19 Tab 33 Exhibit R3
20 PN545
21 PN547
22 PN554
23 PN561
24 PN575
25 PN576
26 PN594
27 PN661
28 PN618
29 PN620
30 PN623
31 PN625-629
32 PN643
33 PN668
34 PN659
35 PN754-761
36 PN762-767
37 PN810, 846
38 PN827
39 PN922-3
40 PN991
41 PN1394
42 PN1937
43 PN1939
44 PN1940
45 PN1945
46 PN1961
47 PN2019-2022
48 PN2042
49 Applicant’s Closing Submissions page 2
50 Rode v Burwood Mitsubishi [Print R4471] at [19]
51 PN2416-8
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