Gooi v Forteoh Investments Pty Ltd

[1997] IRCA 275

GENERAL DISTRIBUTION

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 2221 of 1996

B E T W E E N :

REGINA SAU-LAN GOOI
Applicant

A N D

FORTEOH INVESTMENTS PTY LTD
Respondent

Judicial Registrar:      Millane JR
Place:  Melbourne
Date:  25 November 1997

CORRIGENDUM

The following amendments are made to the judgment of Judicial Registrar Millane of 25 September 1997:

1. At page 8, first paragraph, line 8, delete the word “from” and replace it with “of”.

1. At page 11, line 1, delete the word “explanatin” and replace it with “explanation”.

1. At page 15, second paragraph, last line, delete the word “longterm” and replace it with “long term”.

Associate:       ........ ........ ........ ........ .......
Date:              25 November 1997

DECISION NO:275/97

INDUSTRIAL RELATIONS COURT OF AUSTRALIA

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - employer/employee - whether applicant employed by the respondent at date of termination - VALID REASON - whether there was evidence that termination was due to the respondent’s OPERATIONAL REQUIREMENTS - MISCONDUCT and want of skill in the performance of her duties not referred to at termination but relied on at hearing - whether evidence of MISCONDUCT and want of skill provide ex post facto VALID REASON for termination - PROCEDURAL FAIRNESS - whether opportunity given to respond to any allegations relating to CONDUCT or PERFORMANCE - PROHIBITED REASONS - whether the applicant was dismissed because of her “marital status”

Workplace Relations Act 1996 (Cth) ss.170CA, 170DC, 170DE(1), 170DE(2), 170DF(1)(f), 170EA, 170EE(1), 170EE(2), Schedule 10

Victoria v The Commonwealth (1996) 66 IR 392
Hayden v Golden Bowl Sports Centre Pty Ltd (unreported, Industrial Relations Court of Australia, Millane JR, 14 December 1994)
Petera Pty Ltd v EAJ Pty Ltd and Others (1985) 7 FCR 375
North v Television Corporation Ltd (1976) 11 ALR 599
Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371
Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370
Kerr v Jaroma Pty Ltd (1996) 70 IR 469
Thomas v Lynch t/as Belligen Grocery (1996) 71 IR 307
Westen v Union Des Assurances De Paris (unreported, Industrial Relations Court of Australia, Madgwick J, 17 December 1996)

REGINA SAU-LAN GOOI  v  FORTEOH INVESTMENTS PTY LTD
VI 2221 of 1996

Before:  Judicial Registrar Millane
Place:  Melbourne
Date:  25 September 1997

IN THE INDUSTRIAL RELATIONS COURT

OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VI 2221  of   1996

BETWEEN:	REGINA SAU-LAN GOOI APPLICANT
AND:	FORTEOH INVESTMENTS PTY LTD RESPONDENT
JUDICIAL REGISTRAR:		MILLANE
DATE OF ORDER:		25 SEPTEMBER 1997
WHERE MADE:		MELBOURNE

MINUTES OF ORDERS

THE COURT ORDERS THAT:

1. The applicant’s application is dismissed.

AND THE COURT DIRECTS THAT:

1. The District Registrar of the Federal Court of Australia, Victoria District Registry, forward to the Commonwealth Attorney-General a copy of my Reasons for Judgment and the witness evidence and to make available, as may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised to inspect by the Attorney-General or by the Commissioner of Taxation.

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

IN THE INDUSTRIAL RELATIONS COURT

OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

 VI 2221 of 1996

BETWEEN:	REGINA SAU-LAN GOOI APPLICANT
AND:	FORTEOH INVESTMENTS PTY LTD RESPONDENT

JUDICIAL REGISTRAR:	MILLANE
DATE:	25 SEPTEMBER 1997
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

Section 170EA of the Workplace Relations Act 1996 (Cth) (formerly the Industrial Relations Act 1988 (Cth)) (the Act) provides for the making of an application by a person “for a remedy in respect of termination” of his or her employment.  The person in this context is referred to as “the employee”.

This case raises the preliminary question of whether on 1 August 1996, the agreed date of termination, there was a contract and relationship of employment between the applicant and the named respondent, Forteoh Investments Pty Ltd. 

It was common ground that the respondent is an investment company incorporated in March 1987.  The directors of that company were at the relevant time, Vagn Forring, Euan McBain and Richard Gooi.  The majority shareholders were Vagn Forring and his wife, Dorothy Forring, with a small shareholding held by Richard Gooi. 

The respondent is the investment arm of a group of companies generically referred to as the Forteoh Group.  Included in that group of companies is the company Luna Nameplate Industries Pty Ltd (LNI) acquired in 1988 and used as the operating company for the group.  LNI at the relevant time employed a large staff consisting of both management and production staff. 

The respondent contends that at the date of termination the applicant was not employed by the respondent but was in reality employed by the operating company LNI.  That company was paid a management fee by the respondent covering the provision to it of management services by LNI employees, including any services provided by the applicant as LNI’s administration manager. 

If successful on the preliminary issue the applicant alleges that at the date of termination no valid reason was advanced, nor did one exist, for terminating her employment. Further, she claims that insofar as section 170DC requires this, she was denied the opportunity to respond to what her representative, Mr Bailey, characterised as allegations relating to conduct or performance contained in paragraph seven of the respondent’s contentions filed on 3 October 1996. That paragraph reads as follows:

“The Respondent was aware of the reasons why LNI terminated the Applicant and relies on those reasons in the present proceedings.  It believed, and reasonably so, that the employment of the Applicant should not continue because:

(a)       she had been engaged by reason of her personal relationship with Mr Gooi;

(b)       there was an expectation of litigation and ongoing disputation with Mr Gooi;

(c)       the Applicant would not be capable of giving undivided loyalty and support to        her employer following the termination of Mr Gooi;

(d)the applicant would not have the capacity to carry out her work in good faith          and with fidelity;

(e)       if her employment continued, the Applicant would have access to records     which would be relevant to matters in issue; and

(f)the termination would be in the employer’s best interests and operational     requirements.”

This proceeding was first heard over a period of some three days in March 1997, prior to an adjournment for a lengthy period to allow the parties to mediate a settlement of both this proceeding and proceedings in other jurisdictions.  Regrettably the parties were unable to resolve their differences and the hearing of this dispute proceeded for a further fourteen days.

When opening his client’s case on 12 March 1997, the day before the parties sought the adjournment to enable mediation to take place, Mr Bailey informed the Court that, relying on the contentions filed by the respondent, the applicant also alleged a breach of 170DF(1)(f) of the Act because she was dismissed by reason of her “marital status”. It was conceded that the allegation of a breach of section 170DF(1)(f) had not previously been notified to either the Court or the respondent. Mr Bailey’s application to rely on that section of the Act and, in effect, require the respondent to prove that the reason or one of the reasons for the termination was not the applicant’s marital status, was not dealt with on the occasion it was raised because by the following day the parties had agreed to attempt to mediate the claim. When the hearing resumed Mr Bailey’s application was not renewed, nor was there any direct reference to the allegation in the course of the evidence subsequently called until the applicant’s submissions and after both parties closed their respective cases. These circumstances make it inappropriate for the Court to determine the liability if any of the respondent pursuant to this provision of the Act. Had I been required to determine this issue, I should indicate that I am unable to ascertain a proper basis for saying that the reason or a reason for termination was the applicant’s “marital status”. In the context of section 170DF(1)(f), it seems to me that a reference to the employee’s marital status is necessarily a reference to their standing as a single, married or divorced person. The contentions set out above and filed by the respondent are premised on the applicant’s close relationship with Gooi. They are not directed to her marital status. The contentions would have equal force if she were his sister or his mother. This does not mean that I accept that it is appropriate for an employer to rely on a personal or familial relationship as a valid reason for termination. However, if the applicant seeks to raise the spectre of a prohibited reason it is necessary to first consider whether the alleged reason is properly characterised as one falling within those reasons specifically prohibited by the Act.

Apart from its response on the preliminary issue the respondent argues in the alternative that although it gave the applicant no reason for summarily dismissing her on 1 August 1996, there were valid reasons for termination.  These reasons included the operational requirements referred to in paragraph seven of its written contentions set out above.  The contentions contained in that document generally indicate that on the same date as his wife was terminated, Richard Gooi, the managing director of and a shareholder in both the respondent and LNI, was terminated because of conduct and performance issues.

The respondent called no evidence from any person or persons involved in the making of the decision to terminate the applicant’s employment on 1 August 1996.  Because of this it failed to discharge its burden of proof requiring it to establish on the balance of probabilities that its operational requirements provided a valid reason or reasons for termination.  Notwithstanding the absence of any evidence concerning the termination, the respondent also relies on allegations of misconduct and lack of skill in the performance of her duties.  After the termination the respondent engaged an accountant, Sivakumaran Nalliah, to investigate various matters relating to, amongst other things, bookkeeping entries made in the books of the respondent, LNI and other companies within the Forteoh Group.  It now relies on a number of queries and irregularities identified by him to argue that the termination was justified.

It is submitted by the respondent that proof of some or all of the matters of misconduct alleged or proof of want of skill and competence, even though those matters were not directly relied on by the respondent at the date of termination, provide valid reasons for summary dismissal.  In making this submission the respondent relies on the Court’s interpretation of the phrase “valid reason” since the High Court handed down its decision in Victoria v The Commonwealth (1996) 66 IR 392 on 4 September 1996. Essentially the respondent argues for an interpretation of section 170DE(1) of the Act different from that contained in my earlier decision in Hayden v Golden Bowl Sports Centre Pty Ltd (unreported, Industrial Relations Court of Australia, Millane JR, 14 December 1994). Contrary to my findings in that decision, it says that a valid reason need not be a contemporaneous reason known to the employer at the date of the termination. In other words, after acquired evidence of misconduct during the period of the employment contract or, indeed, according to the respondent’s reasoning evidence of conduct which may be known to the employer prior to termination but not relied on at the date of termination may, nevertheless, be relied on to justify the termination and provide a valid reason pursuant to section 170DE(1) of the Act, which section provides:.

“170DE(1)     An employer must not terminate an employee’s employment unless there is a valid reason, or valid reasons, connected with the employee’s capacity or conduct or based on the operational requirements of the undertaking, establishment or service.”

Further, the respondent denies any breach of section 170DC of the Act or for that matter any application of that provision to the facts of this case where it is conceded that no reasons were given at termination. It was the applicant’s uncontested case that there were no complaints raised about her conduct or performance prior to being terminated without being offered any reasons why. I am unable to accept Mr Bailey’s submission that paragraph 7 of the respondent’s contentions relate to allegations of conduct or performance which would ordinarily require the respondent to give the applicant an opportunity to respond. The contentions referred to do not deal with past conduct or performance issues vis-a-vis the applicant. They deal with assumptions made by the respondent about the applicant’s ability to perform her job in the future after her husband’s employment was terminated because of his conduct and his performance. Accordingly, I am not satisfied that the requirements of section 170DC apply to cases where no allegations of conduct or performance are given at termination and there is no evidence of a valid reason existing at termination.

THE WITNESSES

The respondent called the following witnesses:

-Sivakumaran Nalliah (Nalliah), a relieving accountant engaged on a casual basis by the respondent since August 1996 to, amongst other things, investigate the accounts of the Forteoh Group of companies.  He was previously employed by LNI as an accountant and its administration manager between April 1992 and December 1993;

-Daryl Anne West (West), who is currently employed by LNI as purchasing officer.  West commenced with LNI in October 1987 and from early 1988 until approximately mid-1991, performed the administration/bookkeeping functions for LNI as its administration manager; and

-Jennifer Choo (Choo), a sales and administration executive with Cut Price Travel Pty Ltd who, in response to the respondent’s subpoena, produced to the Court travel documents relating to the Gooi family travel.

The applicant gave evidence and called the following witnesses:

-Tim Summers (Summers), an account executive, who was an employee of Wessex Chemical Industries Pty Ltd (WCI) until 1990;

-Peter Wills (Wills), a sales representative who was an employee of WCI between 1989 and May 1995.  Wills was WCI’s general manager from February 1991 until October 1994;

-Richard Gooi (Gooi), a chartered accountant, presently unemployed, and the husband of the applicant.  He was employed as the managing director of the Forteoh group of companies from 1987 until his employment was terminated on 1 August 1996; and

-Theng-Swee Tay (Tay), an accountant formerly employed by LNI as its financial controller between November 1993 and July 1996.

When the respondent opened its case in March 1997 it did so on the basis that it proposed to call as witnesses Nalliah, Vagn Forring, his wife Dorothy Forring and Chris Stephens, one of LNI’s accountants.  As I have already noted above, the Forrings at the relevant time were majority shareholders in both the respondent and LNI and Vagn Forring was a director of both companies.  Gooi, the applicant’s husband, held minor shareholdings in each company but had the additional role of managing director of the companies throughout the relevant period.  Euan McBain was named as a director of the relevant companies and is said to be a member of the firm of solicitors acting for the respondent, Garland Hawthorn Brahe.

On the resumption of the hearing some months after the initial hearing dates and the unsuccessful mediation, the respondent’s representative, Mr Lawrence, informed the Court that the Forrings, who have resided in the United Kingdom since approximately 1991, would not be available to give evidence until the latter part of 1997.  He unsuccessfully sought to proceed with the hearing in the time already allocated and to adjourn the balance of the hearing to a date to coincide with their travel arrangements to Australia later in the year.  Because the respondent agreed to proceed with its case first, even though the applicant carried the initial burden of proof, the Forrings lost their opportunity to give evidence.  It was common ground that Vagn Forring was the person who actually told the applicant that her employment was terminated without providing her with any reason or reasons for so doing.  As I have already observed above, the effect of the failure of the respondent to call relevant evidence to establish that its operational requirements provided a valid reason for termination, is that it did not meet its burden of proof on this issue.  The absence of particularly the Forrings as witnesses also means that, generally speaking, where Gooi and his wife assert that they or either of them had the permission and authority of the non-executive proprietors of the company to adopt a particular course of action, this evidence is uncontradicted by the Forrings or for that matter the other director, McBain. 

Significantly the respondent’s case rested almost entirely on the evidence of Nalliah who was employed by LNI as an accountant and administration manager between April 1992 and December 1993 when his employment was terminated by Gooi.  It was suggested to Nalliah in cross-examination that his employment was terminated by Gooi in 1993 due to Nalliah’s poor performance and, because of this event, his evidence in 1997 was tainted by the ill-will he felt towards Gooi.  Nalliah spent a considerable period of time in the witness box, as did Gooi.  I am satisfied that as a witness Nalliah was a witness of truth who conducted his inquiries in 1996 in a professional and ethical manner.  As can be seen from a number of my findings detailed below, the matters he queried as a result of those inquiries warranted investigation, which in turn showed significant irregularities in the books and records of the respondent and LNI associated with the applicant or members of her family and entries made by the applicant allegedly under the instruction of her husband Gooi.

In contrast to Nalliah’s evidence, during the lengthy period Gooi gave his evidence I formed the view that he was not a witness of truth and, in many instances, in relation to transactions connected to his family, provided explanations to the Court which sought to conceal and obfuscate the true nature of the transactions.  It was only when he was pressed on a number of issues that he conceded the true nature of those transactions. 

Whilst Nalliah acknowledged that he was initially upset by the manner in which Gooi dealt with him in 1993 in terminating his employment and subsequently, he says, wrongly accusing him of poor performance, he denied any lingering ill-will; pointing out that as a result of the termination he obtained better employment and has since come to view the incident as a positive change in his working life and for his benefit.

I did not form a favourable impression of the applicant as a witness.  At times she was evasive when required to explain her actions and, in a blatant attempt to avoid any responsibility for her actions as an employee, sought to argue that she was only following instructions from her husband, the managing director.  For example, when she allegedly took leave in lieu of being paid for what she said was substantial overtime worked, it was her evidence that this was done at her husband’s direction.  However, notwithstanding any arrangement between her and the managing director allegedly authorising this conduct, as the administration manager and the person responsible for paying the management salaries she was not thereby relieved from her obligation to maintain complete records of overtime worked, leave accrued and taken and create travel records identifying what part or parts of the travel undertaken by her was undertaken at the expense of and on behalf of any of the companies in the Forteoh Group.  In short her responses to allegations made generally failed to address the substance and the thrust of those allegations.

In contrast to the evidence of Gooi and the applicant, I found Nalliah’s evidence to be consistent and given in a manner which sought to assist the Court to reach proper findings.

Nalliah told the Court that in August 1996 he was retained by the respondent and LNI as a relieving accountant.  At the same time he was asked to carry out investigations into the accounts of these two companies.  Because he was not continuously employed by the Forteoh Group up to August 1996, his evidence was necessarily confined to matters relating to the applicant’s employment by any of the Forteoh Group of companies up to the end of 1993, the existence of any objective evidence of the identity of her employer as at the date of the termination and the results of his investigations, including his expert evidence, and oral and documentary evidence relating to the entries he found in the records of the respondent and the Forteoh Group of companies connected to the payment of monies to or on behalf of Gooi, the applicant and various members of their family.  These entries were said to demonstrate serious and intentional misconduct by the applicant or, at the very least, a lack of skill and competence leading to monetary losses and anomalies in the payments of tax.

West, who was LNI’s administration manager and bookkeeper until mid 1991, gave evidence which was confined to matters to do with the applicant’s employment until approximately 1992, when West transferred to another position and location within LNI, and to the applicant’s income splitting arrangements with her husband in that period.

The applicant called evidence from former employees of LNI and WCI, another Forteoh Group company which ceased its operations in early 1995.  The evidence of these former employees, Summers, Wills and Tay, either failed to advance the applicant’s case or lent weight to the respondent’s assertion that no staff were employed at the relevant time by the respondent.  Their evidence helped to demonstrate that, in all probability, the applicant along with the other management staff were employees of LNI, the operating company and the principal employer in the group from at least 1994. 

TAXATION ISSUES

A number of taxation issues emerged during the course of the evidence which indicated irregularities in the accounts of a number of the companies.  These irregularities include the arrangements for the payment of tax, whether it was on salary or cash payments to Gooi or fringe benefits received by particularly Gooi and the applicant.  They also involve the proper recording of the expenses and profits and losses of the companies in the Forteoh Group managed by Gooi.  Because of these matters I drew the parties’ attention to the obligation the Court has to protect the revenue of the Commonwealth (see the discussion of this matter by Wilcox J (as he then was) in Petera Pty Ltd v EAJ Pty Ltd and Others (1985) 7 FCR 375). At the completion of the evidence the issues relating to the incidence of tax and the payment of tax in respect to a number of matters remained largely unresolved. However, it was conceded by the applicant and her husband that for the years ending 30 June 1989 to 30 June 1996 inclusive the income paid to him by LNI as managing director was split with the applicant, so that by 30 June 1996 she had received salary payments from LNI of up to $26,159 for each financial year in that period. On the evidence, I am satisfied that none of these payments to the applicant were for services performed by her as an employee of LNI. The money was deducted from Gooi’s salary package and, therefore, represented payment for his services. Between 1 July 1989 and 30 June 1994 the applicant was employed by one of the Forteoh Group of companies, WCI. In this period she received a salary from WCI for the work she performed for that company and for other companies within the group. According to Tay, WCI also had an arrangement in place for the payment of management fees for the services provided by its staff to other entities in the group. Because of this arrangement and her full-time employment by WCI, it is unlikely that the income she received from her husband’s salary entitlement represented payment for work performed by her as an employee of LNI.

At various times it was suggested to the Court by both the applicant and Gooi that for the period between February 1989 and 30 June 1989 she was employed by LNI in its costings area and thereafter she continued to be employed by this entity as well as WCI to 30 June 1994 and from 1 July 1994 by the respondent.  West, who was a credible witness, was LNI’s administration manager and bookkeeper until mid 1991.  Her duties included the LNI payroll.  She originally questioned Gooi about the payment of the salary to the applicant and was informed by Gooi that the salary split was legal.  According to West when she performed administration and bookkeeping functions for LNI, contrary to the evidence given by the applicant and her husband, the applicant performed no administrative or bookkeeping functions for LNI.

The fringe benefits tax issue was the subject of much evidence and argument on both sides.  It is not necessary for me to decide what arrangement, if any, was agreed upon about the benefits payable to employees or directors of any of the companies and the entity or person responsible for meeting any tax payable on these benefits.  Nevertheless, there were numerous occasions referred to throughout the hearing where the payment or proper payment of taxes such as fringe benefits tax was raised.  An instance that comes to mind is the payment, totalling approximately $25,700, to Gooi in the period 1993 and 1994.  A sum he says comprised part of his salary package and could properly be characterised as a fringe benefit for which he says tax was payable through the Vagn Forring loan account in the respondent company.  In respect to the sum of $15,183.11, which was identified as a payment to “Melbourne Water” and debited to Vagn Forring’s loan account in the company under “Repairs and Maintenance” and in respect to the sum of $10,585.29, which was identified as “Transfer - Professional P” and debited to the same account, the evidence confirms that the two amounts were in fact for the purchase of bank cheques.  The first amount was for the payment of a deposit on the purchase by Gooi and the applicant of a property at Cape Schanck and the second amount was for bank cheques for the transfer overseas of funds to a family member.  Whether or not Gooi was entitled, as he said, to draw on his salary in this way and receive benefits as part of his package with any tax on the benefits drawn being paid by the Vagn Forring loan account, is not a question to be determined by me.  As an explanatin it does not address the issue of the characterisation of these payments until they are properly allocated and described in the books.  At the date of termination arguably the applicant had received a benefit in the form of a payment for a deposit on a property in which she had an interest.  The proper characterisation of the payments made and the description of these payments and other payments made within the books of the companies is relevant to the discharge of my duty to protect the revenue of the Commonwealth.  Accordingly, I propose to direct the District Registrar of the Court to forward to the Attorney-General a copy of my Reasons for Judgment and the witness evidence and to make available, as may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised to inspect by the Attorney-General or by the Commissioner of Taxation.

BACKGROUND

In 1986 Vagn Forring inherited substantial monies from his father.  I was told by Gooi and the applicant that Forring had no experience in business.  Gooi is a chartered accountant who in 1986 was the financial controller of another company.  He then enjoyed what he said was a generous salary and benefits package.  Gooi is a nephew of Dorothy Forring’s step-sister.  As can be seen from some of the correspondence the family connection, if nothing else, adds depth to the dispute and may help to explain why Gooi in particular and the applicant as his wife, viewed what Mr Bailey conceded were “loose accounting” and recording practices as acceptable.  It may also explain why they ran particularly the respondent company and LNI in a way which suggests that they were free to use the funds of the companies for a wide range of personal and family expenses without recording those expenses clearly and accurately and without close regard to the amount of these expenses as an offset against any entitlement Gooi may have had for the payment of private expenses as part of his remuneration package.

It was said by Gooi and the applicant that from 1986 Gooi assisted Vagn Forring with, amongst other things, his investments and the development of projects in Australia.  This involved numerous meetings at their home in 1986 and 1987 leading up to the incorporation of the respondent as a holding and investment company in March 1987 and the purchase of LNI as the main trading company.  At all relevant times Gooi was the managing director of these companies.  He and the applicant allege that from at least 1987 they, with the applicant working from home, worked together in the establishment and operation of a number of business entities which subsequently formed part of the Forteoh Group of companies.  On their evidence throughout the entire period up to 1 August 1996 the applicant performed secretarial duties such as typing correspondence at home at night to assist her husband in these matters.  However, it is not asserted that the tasks she performed at home established a relationship of employment between her and any of the companies involved or that she sought and received remuneration in respect to the performance of those tasks.  On one view of the evidence it can be said that from 1986/1987 when her husband was negotiating a future employment package with the Forrings and acquiring shareholdings in companies and businesses funded by Vagn Forring’s inheritance, the applicant was simply assisting her husband in pursuing investment opportunities which would provide him with both a better employment position and package as well as a financial interest in the business entities established with Vagn Forring’s money.  Gooi gave evidence that in 1986 he negotiated an arrangement with Vagn Forring which saw him give up his employment with another company and accept employment with the respondent. 

It appears that there is an outstanding dispute between Gooi and the respondent as to the extent of the remuneration package agreed to from time to time and the amounts paid to or on his behalf during nearly ten years of employment managing companies in the Forteoh Group of companies.  Gooi relies on both oral terms and terms contained in a written contract of employment (Exhibit A1) entered into between Gooi and the respondent in either February 1988 or February 1989.  Regardless of whether the written agreement engaging him for five years as the respondent’s managing director was executed in 1988 or 1989, it is apparent that the remuneration referred to in the written document does not include a reference to many of the benefits Gooi said were promised when he accepted the position with the respondent, which position also required him to perform services for the respondent’s subsidiaries and associated companies without further remuneration “except as otherwise agreed”.

In order to determine the matters relevant to the applicant’s case and despite the invitation by the respondent in its submissions to do so, it is not necessary to make a finding on the extent of the remuneration package agreed to between the respondent and Gooi. 

In respect to the extent of his remuneration package, Gooi told the Court that during his employment on a number of occasions Vagn Forring agreed to variations to the salary and benefits received.  Gooi said that he kept his own written record consisting of a notebook (Exhibit A25) in which he recorded the salary and benefits paid to or on his behalf after the finalisation of the company accounts each year.  The purpose of this private record was that at some stage in the future, possibly when he retired, he intended to settle his remuneration package with Vagn Forring.  Apart from the computer salary records of LNI, this handwritten private record is the only discrete record of the benefits paid to or on behalf of Gooi over nearly ten years of employment.  Anyone examining the records of either LNI or the respondent would find no clear or, as it turns out, accurate record of the private expenditure paid to or on behalf of Gooi by either LNI or the respondent.  Therefore there is no independent means of verifying the payments made irrespective of whether or not Vagn Forring did, as Gooi alleged, authorise the payments made to or on his behalf by each of the companies.  The payments of private expenditure that are recorded are not necessarily recorded in the correct accounts or described in a way that directly identifies them as private expenditure of Gooi.  Moreover, payments made on behalf of the applicant, which she and her husband characterised as business expenses, such as her overseas travel expenses, were not recorded as her business expenses either as an employee of the respondent or LNI or as expenses payable by any of the other entities in the Forteoh Group when she allegedly performed services for those entities whilst travelling overseas.

It was agreed that the firm of accountants, Ernst & Young, were retained by the respondent.  However, their charter was not to do an audit of the accounts of all the companies but to finalise the accounts of the group of companies and query any exceptional items or expenditure.  According to Tay, who finalised the accounts at the end of each year before sending them to Ernst & Young, unless there was something unusual about any of the various entries in each company’s books or there was a noticeable variation in expenditure, neither he nor Ernst & Young were likely to query these entries.  The entry for the payment of a sum of $15,183.11 to “Melbourne Water” referred to above is a good illustration of how benefits, which really represented the private expenditure of Gooi and the applicant, went unchecked unless queried.  In this case Ernst & Young did query the entry (Exhibit R20A).  Notwithstanding this query the adjustments made to the books did not reflect the fact that this sum was a payment to or on Gooi’s behalf for the purchase of bank cheques and not a payment to “Melbourne Water”. 

In the circumstances described to the Court it is difficult to comprehend how anyone could establish by looking at the records of the companies the extent of the remuneration received by Gooi in any financial year up to the date upon which his employment was terminated, much less determine that some of the expenditure the applicant claimed was business related was, in fact, bona fide business expenditure on her part. 

Tay was a witness called to give evidence by the applicant.  As LNI’s financial controller until July 1996, contrary to the evidence given by the applicant, he confirmed that during the relevant period the applicant as part of her duties as administration manager, was responsible for the posting of entries in the books of account of the respondent and was also responsible for the allocation of the Amex expenses charged each month to the credit card Gooi held as an employee.  Insofar as the expenses, business or private, relating to Gooi or members of his family were concerned, the applicant was the person in accounts who posted these amounts with the relevant description in the respondent’s books of account.  Where Gooi’s expenses were entered in LNI’s books after being charged to Gooi’s credit card, the applicant was responsible for allocating those expenses so that the LNI accounts staff posting the expenses in LNI’s books did so in accordance with the instructions given to them by her or Gooi. 

It was not contested that the applicant was at the relevant time in charge of the payment of the management salaries, including the salaries paid to her and Gooi.

With regard to Gooi’s remuneration package the evidence given by the applicant about her knowledge of the amounts involved was contradictory.  On the one hand she asserted very strongly that her husband had not drawn all his salary and all his entitlements to benefits in each of the financial years he worked with the respondent and LNI but, on the other hand, when she posted the private expenses and paid the management salary to him she claimed she had no knowledge either of whether the amounts paid to or on his behalf exceeded the limits of his remuneration package in each year or of whether or not the amounts paid by way of benefits were in fact part of the agreed package.

Throughout the hearing the applicant asserted that when she posted the expenses she believed that Gooi had not received his full share of any remuneration package.  In posting and allocating expenses she said she was following instructions from the managing director, although she did not say that on each occasion that she posted expenses she received direct instructions from Gooi confirming that the expenses were within the limits of his package.  Because she believed he had not been paid his full entitlements in each year and she “guessed” he was keeping his own record but had not seen it herself, she kept allocating the expenses in the expectation that Gooi would reconcile the amounts paid at some date in the future.  This evidence suggests that she understood that the payments made might exceed his entitlement but, nevertheless, would be accounted for when some reconciliation process occurred at some time in the future. 

As a preliminary matter I am not satisfied that the applicant performed her duties in the payment of salaries and the allocation of benefits ignorant of the extent of her husband’s entitlements.  Her professed ignorance is inconsistent with the obvious interest she expressed to the Court in ensuring that her husband obtain a remuneration package comparable to that he had in 1986.  It is also incompatible with the fulfilment of her role as the person paying the management salaries and allocating expenses such as those allocated for management staff to the Vagn Forring loan account because they were to be treated as fringe benefits payable on behalf of the employees in the other companies in the group.  To perform these tasks she needed to have some knowledge of the remuneration paid to the management staff including Gooi.  If indeed she did operate in ignorance of the extent of her husband’s remuneration package, it follows that she was not then satisfying her obligation to her employer to perform her duties with skill and care.  However, the more likely proposition is that the applicant at the relevant time knew and understood the general limits applicable to her husband’s remuneration package, but like her husband, treated the company funds as being available to be applied to a vast range of private expenditure with little regard to the need to account for and adjust that expenditure, at least, within the financial year it was ostensibly paid on his behalf.  The failure to keep an accurate and complete record of that expenditure is consistent with an intention not to account for the expenditure in the short or longterm.

EMPLOYMENT RELATIONSHIP

I have already noted that there was a dispute about whether the applicant was engaged at first by LNI in costings from approximately February 1989 to 30 June 1989.  West’s evidence contradicts the assertion of Gooi and the applicant that she was so engaged.  Because of this and the unsatisfactory nature of the evidence given by Gooi and the applicant on numerous issues where they clearly sought to advance the applicant’s case by offering incorrect explanations for transactions they were involved in, it is unlikely that the applicant was performing any work as an employee of LNI in connection with the payment of a portion of her husband’s income to her up until 30 June 1989 or, indeed, up until she left WCI on or about 30 June 1994.

It was common ground that at least until 30 June 1994, if not October 1994, the applicant was in fact employed by WCI and paid a salary by that company separate to the income splitting arrangement she had with her husband.  The salary paid to her by WCI was for the performance of services for that company as well as for a range of other companies within the Forteoh Group.  She was by then responsible for the posting of the accounts and the bookkeeping for the respondent but at no stage did she or her husband suggest to the Court that she had a relationship of employment with the respondent until after 30 June 1994.  The arrangement whereby she was employed by one company and performed services for a range of companies within the Forteoh Group was consistent with the arrangement applying to other employees including Gooi and Tay.  Tay told the Court that when he commenced his employment with LNI in 1993 under the direction of Gooi, he did the work of other companies in the group such as WCI and the respondent but was paid by his employer LNI.  In respect to the employees performing services for companies in the group other than their employer, Tay pointed to the payment of management fees for their services.

It was common ground supported by the evidence of Wills as WCI’s former general manager that WCI was not performing well and in about 1994 he complained to Gooi and Tay because his company was paying the applicant’s salary when she was devoting a lot of her time to work for other companies in the Forteoh Group. 

The witness statements of Gooi and the applicant tendered in evidence convey the impression that Tay and Wills were involved in discussions with Gooi and possibly the applicant when it was decided that the applicant’s employment would be transferred to the respondent after 30 June 1994.  The evidence of both Tay and Wills makes it clear that their discussions with Gooi about transferring the applicant’s employment from WCI to relieve that company of the cost of her salary, did not involve any discussions with either of these witnesses in which it was indicated to them that the applicant would be transferred to the respondent.  On the contrary, Tay and Wills’ evidence was that they believed the applicant was employed by LNI following the termination of her WCI employment.  According to Tay whilst she was employed by LNI she performed a range of duties for other companies including the respondent’s bookkeeping duties.  As LNI’s financial controller and the person to whom the applicant directly reported for two years, it is extraordinary that he had no knowledge of her alleged employment by the respondent.  He told the Court that at the commencement of each financial year the sum to be allocated to management fees for that year for work performed for other companies in the group was determined in advance.  Logically, to calculate the fees payable, it was necessary to know who was to be treated as an employee of any of the companies in the group and who was to provide services for which a management fee was to be paid.

Both the applicant and Gooi contend that from 1 July 1994 the applicant was an employee of the respondent with her main duties being performed for the respondent as well as performing services for other companies in the Forteoh Group.  Apart from their evidence that the applicant was employed by the respondent from 1 July 1994, they rely on the existence of group certificates for the years ending 30 June 1995 and 30 June 1996 evidencing payments of salary by the respondent to the applicant of $37,221 in 1995 and $37,168 in 1996.  They also rely on the performance of bookkeeping and administrative functions by her for the respondent from July 1994 onwards.  The applicant was responsible for the payment of the management salaries and operated the various computer programs to perform this task.  She agreed that she was the person who created the payroll records in the computer system identifying her as the only employee of the respondent.  Even Gooi whose written contract of employment named the respondent as his employer, was treated and paid as an employee of LNI.  Other than the payroll record, Nalliah informed the Court that he found no further records consistent with the applicant being an employee of the respondent.  On the contrary, he found documents identifying her as an employee of LNI in the relevant period.

In determining whether or not there was in fact a contract of employment entered into and, if there was, whether the contract was nevertheless a genuine arrangement, it is necessary to consider all of the indicators for or against a bona fide relationship of employment.  I have noted the matters which the applicant relies on to demonstrate a relationship of employment.  The indicators against there being a bona fide relationship of employment between the applicant and the respondent include the following items:

1. The only salary received by the applicant for services performed from 1 July 1994, apart from the portion of her husband’s income paid to her by LNI by way of income splitting, was the salary she said she received from the respondent.  According to Tay’s evidence the work performed by the applicant in respect to the respondent’s interests represented a comparatively small portion of the work performed by her in return for the salary paid, remembering that in the years preceding the alleged transfer she performed similar services for the respondent whilst employed by another company, without actually being employed by the respondent and without being paid a salary by it.

1. Although the written contract of employment entered into by Gooi named the respondent as his employer the respondent did not as the investment and holding company employ staff.  The services performed by the applicant as its bookkeeper had previously been performed by her and others whilst being employed by one of the other entities in the Forteoh Group.  This evidence is consistent with a conclusion that the bookkeeping services and the limited accounting services required by the respondent did not justify the employment of full time staff.

1. Exhibit R30 consists of a two page LNI document containing a job summary for the applicant.  That document is dated 1 July 1995 and is signed by Gooi and the applicant.  The job title is that of “Personnel/Administration Manager” and beneath the title the document sets out in some detail the various duties and responsibilities of that position.

1. Exhibit R31 consists of a LNI organisational chart dated 8 January 1995 identifying the applicant as the administration manager reporting to Tay.

1. Exhibit R42 is a LNI Promotion/Change of Classification form dated 26 June 1996 which, according to the applicant and Gooi, was used to record her salary increment commencing from 1 July 1996 because the respondent did not have the appropriate forms to record this event.  Notwithstanding this explanation, there has been no attempt when making this record to identify the respondent as the employer making the salary adjustment.

1. Exhibit R54 is one of the applicant’s business cards identifying her as the Administration Manager of “LNI Inc. Adcal”.  It was agreed that from 1995 LNI acquired the business of Adcal.  The business card was printed by LNI and it is reasonable to assume that at least from 1995 onwards when the applicant used her business cards she was then representing herself as LNI’s administration manager.

1. The applicant was responsible for the payment of all of the management staff’s salaries.  It was agreed that at least the salaries of the applicant, Tay and Gooi, as well as the salaries of the other management staff, were all paid by LNI and LNI charged management fees for services performed by its staff for the other entities in the group.  For instance, Tay as the financial controller was responsible for the accounts of amongst other companies LNI and the respondent.  At the end of each financial year he obtained print-outs of the respondent’s accounts from the applicant to enable him to prepare final accounts for submission to Ernst & Young.  Because he performed a service for the respondent as the financial controller of LNI, the management fees paid by the respondent to LNI covered the provision of his services by LNI as well as the services of other staff. 

It was said by the applicant that the management fee of $33,362 paid by the respondent, for example, for the year ending 30 June 1995, represented her salary payment and it was not inconsistent with her assertion that she was employed by the respondent that another entity should bear the cost of her salary.  As a preliminary matter I accept that it is open to an employer to enter into some arrangement with a third party whereby that third party actually pays the employee’s salary yet at all times the employee is and is treated as being employed by the named employer.  Neither Gooi nor the applicant gave evidence of any such arrangement or inter-company agreement giving effect to such an arrangement. 

For the year ending 30 June 1995 the salary paid to the applicant by LNI was $37,221, a sum exceeding the management fees paid by the respondent to LNI for that year in circumstances where those fees purportedly covered all the services rendered by LNI’s staff to the respondent.  There is no evidence linking any payments made by the respondent to LNI with any arrangement or agreement to reimburse LNI for the salary payments made to the applicant.

1. The evidence supports a finding that the applicant performed significant duties from 1994 onwards for LNI as an administration manager.  If the applicant is correct in saying that she was employed by the respondent in that period and, leaving aside the income splitting with her husband which gave rise to group certificates raised by her in LNI’s name, there is no entry in the books of either company to reflect a payment or inter-company payment to the respondent for the substantial services performed on behalf of LNI by the applicant as its Personnel/Administration Manager.  For instance, when she travelled overseas with her husband, ostensibly on business and performed services for LNI or other entities such as Bayware and Lencana, her expenses and the notional cost of the services provided are not recorded or shown as being reimbursed to her alleged employer, the respondent.

1. When the applicant gave evidence she adopted the contents of her witness statement tendered to the Court (Exhibit A3).  After being cross-examined on the statement, “I was employed by LNI until I was terminated on 1 August 1996”, the applicant sought to correct this statement claiming that it was a mistake.  Contrary to earlier evidence given by her she also claimed that she was not employed by LNI because the salary paid to her was paid as a result of an income splitting arrangement.  If nothing else, this evidence highlights the inconsistencies in the case brought by the applicant and confirms that she understood that the split income was not income paid for any services performed as an employee of LNI.

The weight of the evidence supports a conclusion that at the relevant time it is more likely than not that the applicant was employed by LNI and not the respondent.  For reasons best understood by her and Gooi she created a payroll record identifying her in name only as an employee of the respondent and raised group certificates.  Otherwise the applicant, her husband and the two companies operated on the basis that she was principally an employee of LNI.  The reason for creating the employment record with the respondent may lay in the historical income splitting arrangement which continued throughout the entire period.  On 1 July 1994 the applicant was already named on the LNI employee payroll and in receipt of a group certificate.  Arguably it suited her and her husband for her to be named in a separate payroll and receive a second group certificate.  From the evidence called I cannot see, so far as the respondent is concerned, any obvious benefit to the respondent in creating the separate payroll entry other than the fact that LNI expended a disproportionately high sum on the payment of the applicant’s salary in circumstances where it was not nominally the employer and at best received a very small sum in return by way of management fees to cover its outlay for the applicant’s services.

Having considered the evidence I am not satisfied that the applicant has discharged the burden she carries of establishing a relationship of employment with the respondent company at the relevant time.  LNI is not a party to this proceeding and because of this the only course open to me is to dismiss the proceeding.

All the issues, including the issues relating to the alleged incidents of misconduct, were argued in some detail before the Court. Inevitably my conclusions about particularly the allegations of serious and wilful misconduct were relevant to my assessment of the plausibility and the credibility of the evidence of the applicant and Gooi generally. Had I not found against the applicant on the threshold issue, I am otherwise satisfied that this is a case where there is cogent evidence of serious and wilful misconduct during the currency of the employment and this is a case where it is not appropriate to make any award of compensation irrespective of whether or not the termination on 1 August 1996 contravened section 170DE(1) of the Act.

THE RESPONDENT’S ALLEGATIONS

The respondent filed particulars of allegations of misconduct pursuant to an order made by the Court on 11 March 1997.  In making its submissions to the Court the respondent grouped the allegations of misconduct under the headings (a) serious and wilful misconduct; (b) the failure to record fringe benefits; (c) other irregular and improper transactions; and (d) other allegations.  For convenience I propose to deal with some of the allegations, bearing in mind that proof alone of the allegations of serious and wilful misconduct would provide a basis for summary dismissal without recourse to the lesser allegations. 

PART A - Allegations of Serious and Wilful Misconduct

Allegation 1
This allegation related to family travel and accommodation expenses for a trip to Cairns in 1995 totalling $3,027.00.  In this instance the applicant provided written instructions to the LNI accounts staff concerning Amex expenses.  These expenses were incurred by the applicant, her husband and their son on a holiday to Cairns and were incorrectly recorded as a business trip taken by Gooi travelling from Melbourne to Kuala Lumpar.  Apart from the instructions given to LNI, the applicant was also responsible for posting the expenses in the respondent’s books.

The applicant claimed that her written instructions and the subsequent posting by her of the expenses in the respondent’s books was an error.  Her explanation for the error was that it probably occurred because she was very busy and was often called away from her desk.  Her explanation was not one of recollection so much as one of reconstruction.  Given the number of steps involved in providing instructions and posting the entries herself, I did not find her response to the allegation of dishonesty a credible explanation.  Apart from concealing the true nature of the expenses paid, the incorrect entry was not discovered when the final accounts for the year ending 1995 were done.  This meant that the respondent included the expenses in its profit and loss accounts as business expenses claiming a tax deduction for the company. 

Gooi’s private record (Exhibit A25) does not disclose the private expenditure for this trip.  Even if the entry was a bona fide error in describing the expenses, the fact that the error passed unnoticed shows how unreliable his private record was and points to the unlikelihood of the employer ever being able to reconcile the payments made to or on behalf of Gooi without a very detailed examination of the records of the group of companies.  Ultimately the failure to properly record the transaction led to a failure to record a fringe benefit receive by Gooi and the applicant during their employment.

Allegations 2A, 2B and 2C
These allegations related to travel undertaken by the Gooi family; namely, Gooi, the applicant and their son in December 1993 and January 1994.  There were travel expenses to London, Paris and Queensland, all paid on Gooi’s company Amex card.  Expenditure in the order of $5,109.81 was shown in the respondent’s travel overseas account as a business expense.  It was conceded that the travel to London was undertaken by Gooi, the applicant and one of their children and part of the expenditure was a holiday trip to Queensland.  The posting of the expenditure was done by the applicant.  She and her husband claimed that in respect to the overseas travel she was travelling on business with her husband and, therefore, their expenditure was properly characterised as business expenditure.  I had some difficulty accepting the truth of the claim that when the applicant made overseas trips in her husband’s company, she was in fact travelling on the business of the Forteoh Group.  This was because I am not satisfied on the evidence that the applicant played a significant role in the management of the companies outside the administrative and bookkeeping duties she undertook in Australia.

If I am incorrect in concluding that her travel was probably not business related and she was travelling on business at the time alleged, then the appropriate entry so far as her travel was concerned would have been to identify her travel expenditure and post that expenditure in the accounts of the companies she says she performed work for, such as LNI, Bayware, Lencana and the respondent.  None of the business travel expenditure in relation to these items and other business travel expenses the applicant claimed on other dates appear against her name as an employee or as a person providing a service to any of the companies in the group for which the relevant company was required to, if it was not the respondent, reimburse the respondent.  Other management staff who travelled on company business, including Gooi, had their expenses identified and, in many cases, had their business travel expenses paid for by the companies for whom the work was performed.  By not recording the business expenses as her own and by recording all the expenses as her husbands, the true nature of the expenses whether they were business or private, vis-a-vis the applicant, was effectively concealed.

The expenses of the child and the Queensland holiday expenses are clearly private expenditure and this is so whether or not doubt exists about the nature of the applicant’s expenditure.  The applicant alleged that the incorrect posting of her son’s expenses was caused by lack of time and those expenses plus the Queensland holiday expenses would all be corrected by Gooi in the settling up process at a later time.  Gooi’s private record (Exhibit A25) makes no direct reference to these private expenses.

I am not satisfied by the explanations given by the applicant for the entries made in relation to the travel expenses queried.  I am persuaded by the evidence that the method of recording the expenditure was consistent with an attempt to conceal the family’s travelling costs.  This action, again, caused consequential losses and irregularities in the company’s accounts and these irregularities were not discovered and corrected at the end of the relevant financial year. 

Allegation 6
This allegation relates to overseas travel expenses in the respondent’s travel overseas account with an entry “Overseas-Malaysia/Singapore $4,990.00”.  The posting indicates that it is a business expense.  In fact, the expense relates to an American Express statement from January 1995 for payment to Cut Price Travel of $4,990.00 for airfares incurred by the applicant’s son, Aaron Gooi. 

The explanation given by the applicant for having allocated that expense from the Amex accounts in the manner in which she did was that she took “an educated guess”.  She also sought to blame LNI’s staff for the incorrect posting, however, it is clear from the evidence of Tay and, indeed Gooi, that the applicant was responsible for instructing the LNI staff on the allocation of these expenses and posting the information in the respondent’s accounts herself. The applicant’s evidence on this matter was contradictory because at one stage she did suggest that she had been instructed by Gooi to debit the overseas account and work the matter out later.  I accept the respondent’s submission that this amount was a significant item of expenditure for travel undertaken by the applicant’s son in the period shortly before the receipt of the Amex account and it is likely that she knew that the sum related to private expenditure when she allocated and posted the item.  Because of the inconsistencies in and the unsatisfactory nature of her evidence, I am persuaded that it is more likely than not that the entry was an intentional concealment of the expenditure resulting in loss to the respondent and irregularities in the Forteoh Group books of account. 

Allegation 7
This allegation relates to overseas travel expenses for March 1995 which included a sum of $4,248.00 debited to the respondent and posted to its travel overseas account accompanied by the description “CD & RG Malaysia $4248.00”.  The description given indicates that the expenditure was for travel undertaken by Gooi and another employee ostensibly on business.

It is now apparent that the abovementioned expenditure was, in fact, Gooi’s parents’ travel expenses and, from the written posting instructions contained in Exhibit R7, it is clear that in respect to the Amex account the applicant wrote down a larger item of travel expenses of $8,869.00 and separated the item of $4,248.00 from this group.  What appears to have followed is that this lastmentioned amount was posted incorrectly in the respondent’s books.  Again there was some suggestion by the applicant that the wrong entry may have come about because of narrative supplied to her by the LNI staff. 

I accept the respondent’s submission that there was no credible explanation provided by the applicant for this very significant posting error and that it is probable that the posting was made with an intention of disguising what was clearly private family expenditure as business expenditure.  As with the other expenditure recorded in this manner, losses flowed to the respondent and irregularities remained in its books because of the postings. 

Allegation 18
This allegation relates to the payment of accounts rendered by Ernst & Young to the applicant and her husband for the preparation of their income tax returns and the preparation of income tax returns for a business in which her husband has an interest, Fyshwick Pharmacy, for amounts totalling $1,400.00.  These expenses were paid by the respondent and entered into the books of the respondent by the applicant as accountancy expenses.

Essentially the applicant’s explanation for the payment of these expenses in this way comes down to a concession that she really made no inquiries to satisfy herself that these expenses were the company’s expenses before she posted them.  I found her explanation unsatisfactory and I accept the respondent’s submission that it is more probable than not that she intentionally recorded this private expenditure as business expenditure again leading to irregularities in the company’s books and loss of profit. 

There is no evidence to show that these payments were detected at the end of the 1995 financial year.  Gooi’s private record (Exhibit A25) does contain an allowance for $1,500.00 for Ernst & Young.  However, I do not accept his evidence that the private record made by him was a contemporaneous record made at the end of each financial year when the books of the companies were completed.  Apart from the fact that the record allegedly made as a running record over some years contains numerous omissions relating to significant private expenditure, Gooi gave evidence that, for instance, the $25,700.00 item for bank cheques in the financial year 1993 to 1994 was an item that he took from a document prepared by Nalliah in this proceeding (Table A to Exhibit R32) in approximately April 1997.  The inference I draw from this evidence is that the record, if it existed beforehand, was, when this proceeding commenced, an incomplete record and was added to after the proceeding commenced.  Gooi told the Court that he has not retained any primary documentation relied on by him to make his record.  His private record consists of estimates of Amex expenses and so called rounded-off sums.  The inference I draw from the disposal of the primary material and the imprecise nature of the record is that it is an incomplete record.  Accordingly, where his private record is relied upon I am not satisfied that it provides evidence of an intention to account for substantial private expenditure paid to or on behalf of Gooi, the applicant and members of their family; nor does it allow me to infer that the wrong entries made in the Forteoh Group books of account by or in accordance with instructions given by the applicant were innocent accounting errors.

Allegation 20B
I have already referred to an entry in the respondent’s books of account for the payment of bank cheques described as “Transfer and Professional Charges P $10,585.29”.  I accept the respondent’s submission that the entry in the respondent’s books of account is misleading. 

By way of explanation it was initially asserted by the applicant that a deposit of $10,000.00 was paid into the respondent’s bank account to cover a transfer of funds to Gooi’s brother overseas.  When Nalliah gave his evidence in relation to this matter and when the applicant gave her evidence it was still not clear what the true nature of this transaction was. Bearing in mind that Nalliah had only limited and incomplete records available to him from which he was trying to identify the nature of the transaction, Nalliah’s view was that the $10,000.00 deposit in the books of account was in some way linked to an entry to do with a company named Edale in England, which company was a supplier of machinery to LNI.  When giving their evidence Gooi and the applicant rejected Nalliah’s explanation of the transaction.  During the course of the hearing records were obtained from the Westpac Banking Corporation and it was only after these records were produced to the Court that the applicant and Gooi accepted that the entry in the books in relation to Edale was not correct.

What is now evident is that the drawing of the monies and the transaction described related to private expenditure of Gooi and bank cheques forwarded overseas on his behalf.  Those bank cheques were part of the entry I have already referred to and described as “bank cheques $27,500.00” in Exhibit A25 for the financial year ending 1994.  The misdescription of the transaction, the description of an Edale transaction which has no apparent connection with the monies paid and the failure to record these bank cheque payments as part of Gooi’s private expenditure, whether it was in the books of the respondent or his own alleged private record, Exhibit A25, meant that there was little prospect of this transaction being linked to Gooi without considerable investigation being undertaken and a request for bank records. 

I am satisfied that there was no innocent or reasonable excuse offered for what took place and it is more probable than not that this was an intentional act designed to conceal the transaction, just as the “Melbourne Water” description I referred to earlier in my reasons for judgment misdescribed the other bank cheque transactions paid on behalf of Gooi. 

Allegation 24
One of the reasons the hearing of this proceeding consumed a considerable amount of Court time was that the initial explanations given by Gooi and the applicant for a number of transactions, which were the subject of the allegations of misconduct, were misleading.  This allegation illustrates this point and also indicates that Gooi and the applicant were both prepared to deliberately make  entries in the respondent’s books to conceal the true nature of payments they said represented gratuities paid to concerns in Malaysia in order to pursue, particularly, Lencana’s business interests in Malaysia.

The transaction involved the closure of one of the respondent’s bank accounts with BNP with a written direction sent by Gooi to BNP to transfer the sum of $15,837.46 to the joint account of HE and RS Gooi.  The holders of that account were the applicant and Gooi’s father.  A fictitious entry was made in the Forring loan account by the applicant for the sum of $14,901.69 described as “transfer to DF a/c”.  On the face of it that description suggests that the monies were transferred to Doris Forring’s account.  When she initially gave evidence, the applicant repeatedly asserted that the payment was made to Doris Forring’s account.  She also claimed that she knew nothing of this transaction until after her employment was terminated.  In cross-examination she did, nevertheless, concede that there was “talk about having to pay people”.  However, in this matter the applicant was contradicted by her husband who told the Court that he informed the applicant of the funds transfer and its purpose.

I accept the respondent’s submission that it is more probable than not that the applicant knew what the purpose of the transfer of funds was, remembering also that she was a joint holder of the account into which these funds were paid allegedly as a refund for monies expended by her father-in-law in Malaysia for Lencana. 

PART B - The failure to record fringe benefits

It was conceded by the respondent in this case that it was not open to the Court to determine whether the use of Vagn Forring’s loan account in the respondent company to pay fringe benefits to or on behalf of Gooi was an appropriate or agreed way of dealing with those benefits.  However, on behalf of the respondent it was submitted that as the person responsible both for making and recording the bookkeeping entries in the respondent’s books and paying Gooi’s salary, the applicant “... was obliged to record and account for the benefits received by Mr Gooi and to take some action to prevent or restrict the taking of excess benefits.” 

Putting to one side the relationship that exists between the applicant and Gooi, in her position as the person responsible for the management staff payroll and the posting of expenses in the Vagn Forring loan account, which included fringe benefits paid to Gooi and presumably other management staff, the applicant was obliged to perform the task with due care and skill.  I have already expressed the view that in order to pay the salaries and allocate the benefits it was necessary for the applicant to acquaint herself with the extent of the remuneration packages payable.  The applicant’s failure to do so would, at the very least, demonstrate a want of skill and care in the performance of her duties.

On numerous occasions the applicant told the Court that as the bookkeeper she was only following instructions and posted the accounts according to her husband’s instructions.  In saying this I understood her to be referring to instructions received from Gooi in relation to some transactions from time to time, not to a specific instruction on each occasion she did a posting telling her where and how to allocate and post the expense.  Her evidence on what instructions she had, if any, was vague and contradictory.  I gained the impression that when she was challenged on many matters, she simply offered the first response that came to mind or actively sought to respond in a way she thought might provide a credible explanation. 

On any view of the evidence there was a failure to properly record the benefits paid to or on behalf of Gooi; not to mention some of the applicant’s own business and private expenditure.  However, there is no proper evidentiary basis for saying that the private expenditure paid to or on behalf of Gooi exceeded his remuneration entitlements in any of the years worked during the time the applicant was responsible for recording the benefits.  In these circumstances, the criticism of her conduct is necessarily confined to her failure to conduct herself in a manner which ensured that the benefits she allocated and paid, whether they were to or on behalf of Gooi or other management staff, were within the designated remuneration packages. 

A further submission made by the respondent was that in respect to the payment of the fringe benefits to Gooi, the applicant and her husband acted in concert to obtain benefits at the expense of the respondent “... without any or any sufficient regard to Mr Gooi’s entitlement to receive those benefits.”  I am not satisfied that there is clear evidence establishing that Gooi and the applicant acted in concert in the sense that they actively and intentionally conspired with one another to obtain additional benefits.  They certainly worked closely with one another in relation to matters to do with the setting up and the management of the various companies.  Both adopted the attitude that they worked very hard for the interests of the group of companies and were therefore entitled to receive the benefits taken without any close analysis of the basis upon which those benefits accrued.  The applicant’s view was that her husband had not received everything he was entitled to and therefore any expenditure paid, regardless of what it was paid for, was part of his entitlement.  If it so happened that she was wrong in allocating or posting that expenditure in the books of the company, then in her view this did not matter because she believed, without offering grounds for that belief, that he was always owed more than he was paid and any discrepancy would eventually be picked up either by the external accountants or when a reconciliation took place with Vagn Forring, if it ever did. 

It was not directly put to either the applicant or her husband that their actions were part of a conspiracy to obtain the benefits which were incorrectly allocated or recorded.  Accordingly, there is no proper basis for concluding that they acted in concert even though it is clear from my earlier findings that I am satisfied that the applicant actively concealed some of the expenditure paid through the allocations and entries she made or omitted to make.

An alternative submission made by the respondent is that the applicant failed to exercise reasonable skill and attention in the performance of her duties and this amounted to misconduct.  A persistent failure to allocate and post expenditure with due regard to the accuracy of the allocations and postings and the effect of the omissions, certainly could amount to conduct which, in keeping with the principles referred to in North v Television Corporation Ltd (1976) 11 ALR 599 at pages 608-9, was conduct “... so seriously in breach of the contract that by standards of fairness and justice the employer should not be bound to continue the employment”.  The applicant’s rather casual approach to her bookkeeping tasks, at the very least, reflects poorly on her competence.  More than once she dismissed any criticism of the procedure she adopted by saying that the mistakes, if they were mistakes, could be corrected later.  On the evidence there was no proper basis for her making this assertion.

The respondent alleges that without a proper and verifiable record of the benefits paid to or on behalf of Gooi there was no way of ascertaining whether or not certain payments were made by the respondent on his behalf.  For example, allegations 5B, 11 and 12 all relate to private travel and insurance expenditure for Gooi, the applicant and members of their family in 1995 and 1996.  There is evidence that substantial sums relating to this private expenditure were paid by the respondent or a company in the Forteoh Group but the expenses were not actually allocated by the date of the termination.  The leaving of these expenses in suspense accounts for long periods where the expenses were clearly private expenses that would ordinarily be treated as fringe benefits paid to or on behalf of Gooi or, indeed, the applicant whose employer was directly funding the holidays she took, shows poor bookkeeping practice and an indifference to the need to separately account for private expenditure with company monies as soon as possible.  A related issue is that arguably where the private expenditure on travel was for the applicant’s expenses and this expenditure remained unallocated in a suspense account for lengthy periods, it should be treated as a benefit paid on behalf of the applicant until such time as it was allocated as a benefit paid against Gooi’s remuneration package.  The effect of the failure to post and allocate this expenditure is that, for instance, with the P & O cruise referred to in allegation 11, the amounts charged for this in September 1995 were in part expenses paid on her behalf until they were allocated otherwise.

The failure to have any clear method for recording all the expenditure, particularly the private expenditure, a lot of which related to substantial sums for family travel expenses, does reflect adversely on the applicant’s skill in performing her bookkeeping functions.

PART C - Other irregular and improper transactions

This category covered some ten of the twenty-eight allegations relied on by the respondent.  The distinction drawn by the respondent in relation to these allegations is that they are not alleged to relate to serious and wilful acts of misconduct. 

Allegation 9
This allegation concerns a cheque drawn and signed by the applicant in favour of Gooi in May 1993.  At the time this was done the applicant was WCI’s bookkeeper and the $15,000.00 transaction covered by the cheque was not accurately recorded in WCI books, nor was it recorded as an amount paid to Gooi to be offset against his remuneration entitlements.  The amount was not, therefore, correctly recorded in the book allegedly kept by Gooi as his private record (Exhibit A25).  Whilst I accept the respondent’s submission that the applicant had a duty to record the true nature of the payment, which she says she believed had been cleared by Vagn Forring, her employer at the relevant time was WCI not the respondent.  The relevance of this evidence is that it demonstrates a course of conduct and a longstanding attitude inimical to the proper discharge of her bookkeeping duties to her successive employers. 

Allegation 10
This allegation refers to the payment by the respondent of Gooi’s tax.  The respondent argues that this item is not properly characterised as a fringe benefit.  It also complains that the item was not properly identified in the respondent’s books as a payment made on Gooi’s behalf.  

I am not able to conclude on the evidence and without more detailed submissions that the payment was not properly a payment of a fringe benefit; although it does appear to be an unusual item for payment by an employer as a fringe benefit when by doing so it attracts a further tax on the tax payable by the employee.  What this payment highlights is the way in which Gooi and the applicant regularly used the company funds to fund their own personal expenditure.  Gooi’s uncontradicted evidence in relation to any of the matters challenged was that he was authorised to draw the funds and apply them in this way.  In these circumstances, the only issue for the Court to determine is whether the failure to identify the payment in a way which distinguished it as made on Gooi’s behalf was improper.  I am satisfied that the entry made by the applicant failed to properly identify the payments and, having regard to the applicant’s conduct in relation to the making of other entries, it is likely that in making this entry she sought to disguise the payment or, at the very least, was careless in this matter because it was of no concern to her that there be a clear and accurate record of the payments made to or on behalf of her husband. 

Allegation 20(a)
This relates to the “Melbourne Water” entry made in the Repairs and Maintenance section of the respondent’s books.  It was accepted by the applicant and Gooi that this related to a drawing for Gooi and not the payment of a repairs and maintenance business expense.  As I have already noted, even though Ernst & Young queried this entry and some correction was made to the record, the correction still did not reflect the true nature of payment being a private payment for and on behalf of Gooi.  It was submitted by the respondent that on the evidence the Court should conclude that the applicant “knowingly made an incorrect entry”.  It is not clear to me why the respondent has segregated this allegation from the allegations made in the category of serious and wilful misconduct if it seeks a finding that the applicant made the original entry knowing it to be wrong.  I was not satisfied with her evidence on this, as on many other matters, and it is likely that because of her conduct in relation to other entries, that she did make this entry knowing it to be wrong in circumstances where it related to a substantial payment of monies on behalf of herself and her husband to cover the deposit on the joint purchase by them of property at Cape Schanck.  Because of the applicant’s interest in the property it is arguable that until such time as the expenditure was described correctly and allocated to Gooi in part it remains expenditure paid on behalf of the applicant who had no entitlement to such a payment by her employer.

Allegation 22
This allegation relates to a number of funds transfers, which the applicant and Gooi alleged were transferred to Doris Forring.  Apart from demonstrating a failure on the part of the applicant to properly record these transactions and record them in such a way that they were identifiable as transactions relating to her husband’s interests, it is arguable that, for instance, as with the payment of $14,901.69 (see Allegation 24), the payment of $5,020.00 on 8 August 1994 was a payment in favour of a member of the applicant’s family, in this case her son.  The amount of $5,020.00 involved a telegraphic transfer to Aaron Gooi, yet the record failed to accurately disclose this, nor did the applicant and Gooi make it clear in their evidence that they accepted that this was so. 

Allegation 25
It was acknowledged that at various times the applicant received cash payments for the sale of scrap metal belonging to LNI.  These amounts she said were passed on to Gooi who alleged that they were spent on purchasing staff amenities and other company related matters.  What is relevant here is that the applicant as the bookkeeper failed to keep a proper record of the monies received and their disbursement.  The applicant claimed that she had no knowledge of the purposes to which the payments were allegedly applied.  However, it is her failure to properly deal with funds belonging to one of the companies she regularly performed work for in the Forteoh Group by recording their receipt or, at the very least, notifying the LNI accounts staff that the funds were received on behalf of LNI.  I infer from her behaviour in this matter that she knew and understood that the receipt and application of the cash payments were not matters of record.

Allegations 27 and 5C
I have previously referred to the applicant’s failure to properly record the leave she took whether it related to the performance of business on behalf of entities in the group other than the respondent or whether it related to time she said she and other employees, presumably LNI employees, were encouraged to take in lieu of overtime worked.

I accept the force and logic of the respondent’s submission made concerning the leave taken and that is that there was a failure by the applicant, as the administration manager and the person responsible for paying the management salaries, to accurately record this leave.  In the absence of any proper records the appropriate inference to draw is that when the applicant went overseas or travelled away from her workplace she was using her own leave entitlements unless she made or arranged for the making of a record indicating to the contrary.  I am satisfied that in this case a persistent failure to properly identify and record the leave taken provides evidence of misconduct or at the very minimum gross incompetence.

VALID REASON

Had the allegations of misconduct and want of skill and care in the performance of her duties been given as reasons for termination, my findings indicate a proper basis for concluding that the termination was justified.  Nevertheless, in this case there is the rather unusual circumstance of the applicant having been terminated without any reasons being given to her at the relevant time.  The absence of evidence from the respondent about the circumstances giving rise to the termination means that there is no evidentiary basis for concluding that the applicant’s conduct or her lack of skill and care in the performance of her duties was not known or not capable of being ascertained prior to termination.

When I handed down my reasons for allowing evidence of after acquired information to be called in Hayden’s case, section 170EE, the Act’s remedy provision had not been amended to include the phrases italicised in the sub-sections set out below (see the Industrial Relations and other Legislation Amendment No. 168, 1995):

170EE(1)       In respect of a contravention of a provision of this Division (other than section 170DB and 170DD) constituted by the termination of employment of an employee, the Court may, if the Court considers it appropriate in all the circumstances of the case, make the following orders:

(a)       an order requiring the employer to reinstate the employee by:

(i)        reappointing the employee to the position in which the employee was   employed immediately before the termination; or

(ii)       appointing the employee to another position on terms and conditions no                less favourable than those on which the employee was employed   immediately before the termination; and

(b)       if the Court makes an order under paragraph (a):

(i)        any order that it thinks necessary to maintain the continuity of the   employee’s employment; and

(ii)       an order requiring the employer to pay to the employee the   remuneration lost by the employee because of the termination.

170EE(2)       If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD)constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may, if the Court considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate.

If it was not understood to be the case before the abovementioned amendments were enacted then subsequently it is clearly the case that the Court has a wide discretion to grant or not to grant the remedies provided for and that discretion is properly exercised by looking at all the circumstances of the case before the Court. 

In Hayden’s case I ruled that the employer was entitled to call evidence concerning the employee’s misconduct during his employment, which evidence it had allegedly acquired after the termination. In reaching that conclusion it was my view then, as it is now, that section 170DE(1) of the Act requires that a valid reason exists and is in the contemplation of the employer at termination.

The decisions of the Court since the High Court handed down its decision in Victoria v The Commonwealth declaring section 170DE(2) of the Act invalid, do not alter my understanding of section 170DE(1); namely, that the tense and language used prohibit an employer from terminating an employee’s employment unless there is a valid reason.

In Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, Justice Northrop offered the following interpretation of the phrase “valid reason”:

“Section 170DE(1) refers to "a valid reason, or valid reasons", but the Act does not give a meaning to those phrases or the adjective "valid".  A reference to dictionaries shows that the word "valid" has a number of different meanings depending on the context in which it is used.  In the Shorter Oxford Dictionary, the relevant meaning given is:  "2.  Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible:  Effective, having some force, pertinency, or value."  In the Macquarie Dictionary the relevant meaning is "sound, just, or well founded; a valid reason."

In its context in s 170DE(1), the adjective "valid" should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee's capacity or conduct or based upon the operational requirements of the employer's business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must "be applied in a practical, commonsense way to ensure that" the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, when considering the construction and application of s 170DC.”

His Honour’s comments, which pre-date the High Court ruling, have been generally adopted. Nevertheless, whilst still relying on Justice Northrop’s interpretation of that phrase, following the High Court decision the Court has reflected further on the requirements of that phrase by reference to, amongst other things, the Termination of Employment Convention (see Schedule 10). For instance, in his decision in Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370, Justice Lee expressed the view (at page 371) that it was arguable that the phrase imposed a requirement that “... in all the circumstances a termination of employment at the initiative of an employer not be unjust or unfair”. 

Subsequently in his decision in Kerr v Jaroma Pty Ltd (1996) 70 IR 469, Justice Marshall described a valid reason (at page 476) as “... one which is defensible or justifiable on an objective analysis of the relevant facts”.

Chief Justice Wilcox in his decision in Thomas v Lynch t/as Belligen Grocery (1996) 71 IR 307, identified one of the purposes of the unlawful termination provisions as being “... to improve the way employers treat their employees”.  His Honour’s understanding of the view expressed by Justice Lee above is “... that the validity of the employer’s reason cannot be divorced from its effect on the employee.  It is not enough that there is a reason for the termination that is defensible from the employer’s point of view.  The reason must be one that makes the termination ”justified”, after taking into account the effect of the termination on the employee.”

Justice Madgwick in his decision in Westen v Union Des Assurances De Paris (unreported, Industrial Relations Court of Australia, Madgwick J, 17 December 1996) made the following pertinent observations:

“... the Australian parliament deliberately opted for a broad and general term, “valid reason”, and thereby left the policy implications of this to be spelled out by the relevant courts.

It follows that relevant Australian courts have a policy choice.  The choice ought to be, in my opinion, to treat the values inherent in the judgment of whether a reason for termination is valid as being those values which best accord with the court’s conception of broadly Australian community standards.  The standard that commanded very broad respect, at least in all respectable quarters, in the public debate of the last couple of years, is that of the “fair go all round”. In a triumph of the demotic, that phrase and that concept have indeed now been enshrined in statute: see the new s 170CA of the Act. Such a standard in my view necessarily involves an examination of the merits of the reasons for termination. It also involves what, from its inception, all judges of this Court have insisted upon: that the relevant legal provisions be applied, in Wilcox CJ’s works, in a practical, commonsense way, in order to ensure that both parties to the employment contract really do receive a “fair go”.”

All of the decisions I have cited above make reference to the Convention recalling that the object of the Termination of Employment provisions of the Act as spelt out by section 170CA is to “... give effect, or give further effect, to:
           (a)       the Termination of Employment Convention; and

(b)       the Termination of Employment Recommendation, 1982, which the General           Conference of the International Labour Organisation adopted on 22 June 1982           and is also known as Recommendation No. 166, and a copy of the English text          of which is set out in Schedule 11.”

Division A of Part II of the Convention sets out under the title “JUSTIFICATION FOR TERMINATION” Article 4 which says:

“The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service.”

Division C under the title “PROCEDURE OF APPEAL AGAINST TERMINATION” contains the following relevant Articles:

Article 8

1         A worker who considers that his employment has been unjustifiably terminated shall be entitled to appeal against that termination to an impartial body, such as a court, labour tribunal, arbitration committee or arbitrator.

2...

Article 9

1         The bodies referred to in Article 8 of this Convention shall be empowered to examine the reasons given for the termination and the other circumstances relating to the case and to render a decision on whether the termination was justified.

2...

3         In cases of termination stated to be for reasons based on the operational requirements of the undertaking, establishment or service, the bodies referred to in Article 8 of this Convention shall be empowered to determine whether the termination was indeed for these reasons, but the extent to which they shall also be empowered to decide whether these reasons are sufficient to justify that termination shall be determined by the methods of implementation referred to in Article 1 of this Convention.

Article 10

If the bodies referred to in Article 8 of this Convention find that termination is unjustified and if they are not empowered or do not find it practicable, in accordance with national law and practice, to declare the termination invalid and/or order or propose reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate.”

The decisions I have referred to all consider the validity of reasons offered and existing at termination; that is to say, contemporaneous reasons connected with conduct or capacity or based on the operational requirements of the employer.  My broad understanding of the effect of these decisions is that the reason given at termination and relied on must be one that is justified by reference to its defensibility from the point of view of both employer and employee.

I am not satisfied that the decisions I have cited and the relevant parts of the Convention are to be taken to enlarge the meaning in section 170DE(1) of the phrase “valid reason” to include reasons not given or relied on either because they were not known beforehand or because they did not form part of the decision to terminate at the time that decision was implemented. 

The interpretation I endorse is certainly consistent with one of the purposes of the unlawful termination provisions identified by Chief Justice Wilcox; that is to say, to improve the way employers treat employees.  In Hayden’s case I pointed to the anomalies that could arise if, after termination, an employer, having terminated an employee by reason of the employee’s race, a reason prohibited by section 170DF(1)(f) of the Act, could then argue that it had a valid reason because it subsequently discovered that the employee was guilty of theft from it prior to termination. In Hayden’s case I adopted the view that such a discovery would not assist the employer in discharging its initial onus of proving the existence of a valid reason at termination but would be relevant to determining the relief granted to the employee complaining about the unlawful termination based on the employee’s race. The amendments to section 170EE(1) and (2) of the Act are such that evidence of other misconduct, within the knowledge of or not known by the employer prior to termination, may be relevant to the remedy granted and may, therefore, leave an employee with a pyrrhic outcome. Of course, evidence that an employer was aware of certain misconduct before termination and chose not to rely on that conduct at termination may raise a question of waiver. This is just another circumstance to be considered on a case by case basis if it arises.

The enactment of section 170DE(1) and section 170EE(1) and (2) gives effect to the Convention and, in particular, the matters I have referred to in the Articles set out above. Those matters are all directed to ensuring that there is a defensible reason for termination and in examining the reasons given for termination it is clear that the Courts do consider “the other circumstances relating to the case” (see Article 9.1) for the purpose of deciding whether the termination was justified. Where reasons are relied on subsequent to termination and those reasons had they been relied on at termination would have justified the termination, section 170EE(1) and (2) provides an opportunity for the Court to consider those reasons when determining the appropriateness of granting a remedy.

Accordingly, I am not satisfied on the evidence called by the respondent that it has established a valid reason or reasons for termination connected with the conduct or capacity issues relied on subsequent to the termination.  Notwithstanding this finding, apart from the usual declaratory order, I would not consider the payment of any compensation appropriate because I am satisfied that there is strong evidence of misconduct or, at the very least, want of skill and care in the performance of the applicant’s duties over some period of time associated with losses to the respondent and potential further losses; for example, by reason of her failure to properly record benefits for the payment of fringe benefits taxes. 

I certify that this and the preceding thirty-nine (39) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar Millane.

Associate:

Dated:            25 September 1997

Counsel for the Applicant:	MR J. BAILEY
Solicitor for the Applicant:	OAKLEY THOMPSON & CO
Counsel for the Respondent:	MR B. LAWRENCE
Solicitor for the Respondent:	GARLAND HAWTHORN BRAHE
Date of Hearing:	11, 12 & 13 MARCH 1997, 10, 11, 12, 13, 16, 17, 18, 19 & 20 JUNE 1997, 19, 20, 21, 25, 26 & 29 AUGUST 1997
Date of Judgment:	25 September 1997