Gorgevski, D. v Bostik (Australia) Pty Ltd
[1991] FCA 570
•18 SEPTEMBER 1991
Re: DIMITRJA GORGEVSKI
And: BOSTIK (AUSTRALIA) PTY LTD
No. V I38 of 1990
FED No. 570
Industrial Law
(1991) 39 IR 229
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
Keely J.(1)
CATCHWORDS
Industrial Law - award - breach - whether termination of employment harsh, unjust or unreasonable - duty of employer to act reasonably - duty of employer to investigate facts - employer's opinion that dismissal mandatory if satisfied that breach of lawful command - breach of implied term of contract - damages - whether employee failed to mitigate loss
Industrial Relations Act 1988 ss. 178 and 356
Polkey v A. E. Dayton Services Ltd. (1987) IRLR 503
Taylor v Parsons Peebles Nei Bruce Peebles Ltd (1981) IRLR 119
Gregory v Philip Morris Ltd. (1988) 80 ALR 455
Shindler v Northern Raincoat Co. Ltd. (1960) 1 WLR 1038
HEARING
MELBOURNE
#DATE 18:9:1991
Solicitor for the Applicant : Messrs. Golopoulos
Shiels and Mangopoulos
Counsel for the Applicant : Mr Justin Bourke
Solicitors for the Respondent : Messrs. Sly and Weigall
Counsel for the Respondent : Mr Nicholas Green
ORDER
The respondent Bostik (Australia) Pty. Ltd. pay a penalty of $700
for its breach of sub-clause 9(b)(vi) of the Manufacturing Grocers Award 1985 in that on 27 August 1990 it terminated the employment of Dimitrja Gorgevski and such termination was harsh, unjust and unreasonable.
The respondent Bostik (Australia) Pty. Ltd. pay the penalty of
$700 to the applicant Dimitrja Gorgevski.
Judgment be entered for the applicant Dimitrja Gorgevski against
the respondent Bostik (Australia) Pty. Ltd. in the sum of $195,000.00 cents.
Leave be reserved to the applicant to have the matter re-listed in
respect of his application for an order for the payment of interest.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
By application filed 21 December 1990 Dimitrja Gorgevski ("the applicant") applied for:
First, a penalty to be imposed upon Bostik (Australia) Pty. Ltd. ("the respondent") under s. 178 of the Industrial Relations Act 1988 ("the Act") for alleged breaches of the Manufacturing Grocers Award 1985 ("the award"); it was alleged that the respondent's dismissal of him ("the dismissal") on 27 August 1990 was harsh, unjust or unreasonable and, further and in the alternative, that the respondent failed to provide him with the notice of the dismissal required by the award.
Second, damages for breach of contract in that the dismissal was harsh, unjust or unreasonable and, further and in the alternative, for breach of contract in failing to provide the applicant with the notice required by the award.
Third, interest under s. 51A of the Federal Court of Australia Act 1976.
Mr Justin Bourke, of counsel, appeared for the applicant and Mr Nicholas Green, of counsel, appeared for the respondent. The hearing occupied 8 sitting days.
FindingsOn the evidence before the court and the admissions made by the respondent on its pleading and by its counsel, I make the following findings:
1. The applicant was at all material times a member of the Federated
Millers' and Manufacturing Grocers' Employees Association of Australasia ("the Union").
The Union was at all material times an organisation registered
under the Act and bound by the award.
The respondent was incorporated at all material times.
The respondent was at all material times engaged in the
manufacture of glues and other products at its premises at Thomastown ("the factory"); many dangerous chemicals, used in the manufacturing process, were stored at the factory. For many years before the dismissal the respondent had rules restricting smoking on site and prohibiting smoking outside allotted areas.
The applicant began working for the respondent in about 1968.
After he left his employment to take a six month holiday in Yugoslavia, the respondent, on or about 15 October 1972, agreed to re-employ him and the applicant agreed to serve the respondent for valuable consideration ("the contract"). The applicant thereafter continued to work for the respondent until his dismissal on 27 August, 1990.
The applicant was initially employed by the respondent as a
factory hand but was promoted to the position of a leading hand in about 1980, in which capacity he continued to be employed until the dismissal.
At all material times the applicant's employment with the
respondent was covered by the award and the respondent was bound by the award.
The terms of the award included the following provisions:
(a) an employer shall give to an employee who has served over 5 years continuous service 4 weeks notice in order to terminate his employment (sub-cl. 9(b)(i)(1));
(b) an employee aged more than 45 years of age, who has provided not less than 2 years continuous service, is entitled to an additional one week's notice of the termination of his employment (sub-cl. 9(b)(i)(2));
(c) the periods of notice set out in (a) and (b) above did not apply in the case of a termination of employment for conduct that justified instant dismissal, provided that such termination of employment was not harsh, unjust or unreasonable (sub-cl. 9(b)(i)(5) and sub-cl. 9(b)(vi) and see statement by respondent's counsel - transcript p 409).
The award provisions referred to in (a), (b) and (c) of paragraph
8 of these reasons were implied terms of the contract (conceded by the respondent's counsel - transcript p 409-410).
At the time of the dismissal the applicant was aged more than 45
years and had been continuously employed by the respondent for more than 5 years.
The applicant was born in Yugoslavia on 9 October 1936, was
educated in Yugoslavia to Grade 4 level, migrated to Australia in 1965 and had no special occupational skill or trade.
The history of the respondent's policy re smoking
Between 1972 and 1988 there were signs stating "No Smoking" at
various places in the respondent's factory. On 25 May 1988 the respondent, in a "memorandum issued for distribution to all staff", "reiterated" its smoking restrictions and provided "designated smoking areas". On 20 November 1989 a memorandum, addressed to "all staff", announced a policy of "no smoking" except in "specified areas" and stated that "smoking outside the designated areas will be treated as a very serious breach of safety regulations which can result in instant dismissal".
In late 1989 an employee was found smoking in an area which was
not designated as a smoking area and was "suspended" but not dismissed. Shortly afterwards another employee was also "suspended" but not dismissed for the same conduct. There was no suggestion in the evidence that, in the long history of the respondent, any employee had ever been dismissed for smoking in a prohibited area.
The respondent's policy of March 1990
On or about 19 March 1990 the respondent sent to its supervisors
and leading hands, a notice ("the notice of 19 March 1990") relating to restrictions on smoking signed by W. Boledziuk, its General Manager. That notice read as follows: "Date: 19th March, 1990
To: NOTICE TO ALL STAFF
From: W. Boledziuk
Subject: SITE RESTRICTIONS ON SMOKING
During recent meetings between management and all on-site unions it was agreed that for the safety of all of us that we must continue to operate as a NO SMOKING SITE. The ONLY exception to this rule is that smoking will be allowed within designated Smoking Areas (as agreed with union representatives). These areas are shown on the attached map. To avoid any doubt about these areas, signs have been erected indicating the smoking areas and all open smoking areas have been surrounded by a broad green line. Please note all remaining areas of the site including all roadways, car parks, (including inside of employees' cars), changing rooms and toilets are NO SMOKING AREAS. It has been agreed with all on-site unions that effective from Monday 26th March, 1990 that (sic) ANY employee found to be smoking anywhere on-site other than inside the designated smoking areas will be INSTANTLY DISMISSED. If you have any doubts about the location of the smoking areas or any other aspect of this policy, please contact your supervisor, union or safety representative. With the above in mind, the company management and employee representatives urge each of you to abide by the smoking restrictions outlined in this notice to ensure a safer working environment for all of us.
(Signed)
W. Boledziuk"
That notice was in the English language only, although a large proportion of the respondent's employees did not have English as their first language.
It should be noted, as to the suggestion made in the first and third paragraphs of that notice (and in the evidence of Mr Watts, the respondent's Production Manager - see transcript p 379) that "all on-site unions" agreed to any of the terms of that notice, that there was no evidence before the court of any such agreement by any persons authorised to act on behalf of any of those unions (including the Union of which the applicant was a member).
The applicant's knowledge of the March 1990 policy
The applicant's language is Macedonian. His English is poor and
he has only a limited capacity to read or write in English. Mrs Baldwyn, the Personnel officer of the respondent, who was a truthful and careful witness, gave evidence as to various memoranda that she had given to the applicant and said that she could "only assume that he didn't have any problems" in reading those memoranda (transcript p 392). That assumption is not inconsistent with the submission by the applicant's counsel that the applicant "could cope with familiar names, familiar tasks, labels, numbers"; his counsel also commented upon the respondent's failure to produce any evidence as to documents written by the applicant in English, i.e. so as to demonstrate that he had a real knowledge of the written word in English.
The applicant saw the notice of 19 March 1990 and knew that it was
about a new "smoking policy" but he was not aware, until after he was found smoking on 27 August 1990, that the notice stated that any employee who smoked on-site, except in a designated smoking area, would "be instantly dismissed". He was not aware, either from that notice or from any other source, before 27 August 1990 that he could be dismissed for smoking in a non-designated area (transcript pp 86 and 120); he was aware that two employees in late 1989 had been suspended - not dismissed - for smoking. It may be added that, if he had been aware at the time that the penalty was instant dismissal, it would have been quite absurd for him to have voluntarily walked alongside Miss Nichterlein (in the way described in her evidence) with a lighted cigarette in his hand when he could have stayed where he was when she first spoke to him - at which place she had not observed that he had a lighted cigarette in his hand, although on her evidence it must have been in his hand at that time.
On 22 March 1990 the respondent called a meeting of its
supervisors and leading hands which was addressed by officers of the respondent in relation to the new policy and the penalty of instant dismissal for smoking in a non-designated area. I accept the applicant's denial that he was present at that meeting. Mr Needham, who was present at the meeting, stated in his affidavit (para 6(c)) that the applicant's "work records indicate he was at work on the day of the meeting and he should have attended" (emphasis added). Approximately 30 persons attended the meeting but no-one gave evidence that the applicant was present. As the respondent regarded the new policy, and the new penalty of mandatory dismissal, as very important matters, it is surprising if no record was kept of the persons who were present, but there is no evidence of any such record.
Whether the contract of employment was varied
The applicant did not expressly or impliedly agree to the contract
being varied by a provision that he would "be instantly dismissed" if he smoked at the factory in a non-smoking area. Such a variation of the contract would not have been consistent with the term of the contract that termination of employment should not be harsh, unjust or unreasonable. Such a variation would also have been inconsistent with the respondent's obligation under sub-clause 9(b)(vi) of the award. The respondent's counsel in his reply (transcript p 613) stated that it was not put by the respondent that the applicant's contract of employment was varied by the notice dated 22 March 1990; he submitted that the instruction not to smoke in a non-smoking area was "a lawful command".
Whether the applicant's act created any hazard
On 27 August 1990 the applicant was smoking in an area outside a
designated smoking area.
From the evidence as a whole, including (1) the respondent's
experience in operating the factory, (2) its earlier policies as to non-smoking and (3) its review, in early 1990, of its "no-smoking" rules leading to its decision, on 15 February 1990, to adopt "certain measures to reinforce the no-smoking policy" by providing for "smoking areas (that) were designated and clearly marked" (Mr Needham's affidavit, paragraph 5), it is inferred that the respondent selected, as smoking areas, those areas in respect of which there would be no hazard if any employee smoked in those areas.
There was evidence (which was not challenged) that "there was no greater hazard created by (the applicant) ... smoking" in the place where he was found smoking than if he had been smoking in the designated smoking area about 7 metres away - see the evidence of Mr Elliott (transcript p 103). That evidence was accepted by the respondent's counsel (transcript p 423). As there was no hazard in an employee smoking in an area designated by the respondent as a smoking area and there was "no greater hazard" in the applicant smoking in the place where he was seen smoking, I find that the applicant's act in smoking in the place where he was seen on 27 August 1990 did not constitute any hazard at all to the safety of the factory or the persons employed there.
The applicant's action in smoking on 27 August 1990 was not a
wilful act of misconduct.
On 27 August 1990 Mr Needham, on behalf of the respondent,
initially "suspended" and then dismissed the applicant on the ground that he was guilty of misconduct, because he had been found smoking outside a designated smoking area.
Proceedings in the two Industrial Relations Commissions
On 30 August 1990 the applicant, assisted by his son, Mr Tome
Gorgevski, whose occupation is that of a payroll manager, lodged an application in the Victorian Industrial Relations Commission (Exhibit 6) seeking "reinstatement and/or compensation"; that application did not proceed because the Commission lacked jurisdiction (see transcript p 266).
The Australian Industrial Relations Commission received from the
respondent a notification in respect of the dismissal. A hearing took place before it on two days, on or about 11 October and 19 October 1990 respectively. During that hearing it was stated to the Australian Commission that the applicant wanted compensation and did not want reinstatement. After that statement was made an officer of the Australian Chamber of Manufactures, representing the respondent, said to Mr Needham "... it is all over. Unless he wants to spend a lot of money and go to the Federal Court ..." (transcript p 266).
The possibility of the applicant being re-employed
25. At a date no later than 19 October 1990, and possibly before 11
October 1990, the respondent was no longer prepared to re-employ the applicant in January 1991 - see Mr Needham's evidence (transcript pp 264-267). In this connexion Mr Needham said in evidence (transcript p 236) that "from the time (he) received (the application to the Victorian Industrial Relations Commission, dated 30 August 1990) the need to get that document (Exhibit 8 - referring to the alleged agreement) ... really probably lapsed and so I probably would not have worried if I had never got it".
It was conceded by the applicant's counsel (transcript p 161)
that, at a date no later than 19 October 1990, the applicant had decided that he did not wish to return to his employment with the respondent.
On the morning of the third day of the hearing in this court (7
August 1991) the applicant's counsel stated (transcript p 187): "Mr Gorgevski is prepared to take a job at Bostik doing the same work as in his former position and receiving the normal rate of remuneration for workers in that area; that is, in the production room area. Further to that, in terms of doing the same job, he does not require to be given a job as a leading hand or to be paid the remuneration equivalent to that position. Effectively he is seeking employment as if he was employed, say, as from today or tomorrow. He doesn't seek any special rights or benefits, only that he be given the same type of work, other than the supervisory work, that he has known and knows how to do." The court asked the respondent's counsel to consider, over the luncheon adjournment, whether he wished to say anything as to that matter. After that adjournment counsel asked Mr Needham his attitude to re-employing the applicant at that time. Mr Needham's answers (transcript p 240) were: "The opportunity for that to occur without jeopardising the safety policy has gone; it has gone. (Mr Green) Why do you say that?---Because this case, the fact that Mr Gorgevski's pursuing a settlement, if you like, compensation, against us in court is public knowledge at Bostik, which means that the whole standing of the policy is on the line. And we can't do anything by our own hand which will suggest that we have now backed down on the seriousness of the policy and the implications of it." (sic)
The respondent's investigation of the event
The applicant was a good worker for the respondent, was punctual
and was very rarely absent from work. During the twenty-two years of his employment by the respondent the applicant had never been warned by the respondent for any breach of the respondent's policy relating to smoking at the respondent's factory.
Before "suspending" the applicant Mr Needham sent for him and
conducted what I shall call an "interview" for want of a better term. Mr Needham, Miss Nichterlein, who had seen the applicant smoking, and Mr Watts all gave evidence as to that interview and, even allowing for the passage of time since that date, it must be said that their evidence of what was said at that "interview" was quite unsatisfactory. After considering their evidence and that of the applicant, I find that the applicant did not admit that he knew that the penalty for smoking in a non-smoking area was instant dismissal, that he did not in fact know that that was the penalty and that it came as a shock to him to be told that he had been dismissed.
The conduct of that "interview" was itself quite inadequate. It
was conducted without the benefit of an interpreter. At a meeting conducted a few days later, the respondent arranged for another Macedonian employee, who spoke Macedonian, to attend "in case (he) was needed to translate for (the applicant)" - see affidavit of Nikolinka Koteski, para 1, which affidavit was part of the material relied upon by the respondent. The respondent's officers apparently had the opinion that the applicant had a better grasp of the English language than he in fact had; even if their opinion had been correct, a reasonable employer would have had an interpreter present at the "interview" on 27 August as a matter of fairness to the applicant, whose employment future was at stake.
Whether the dismissal was unreasonable
I adopt with respect, as being equally applicable to the question whether the termination of the applicant's employment was "unreasonable" within the meaning of sub-clause 9(b)(vi) of the award, the following passage from the reasons for judgment of Lord Bridge in Polkey v A.E. Dayton Services Ltd. (1987) IRLR 503 at 508:
"... in the case of misconduct, the employer will normally not act reasonably unless he investigates the complaint of misconduct fully and fairly and hears whatever the employee wishes to say in his defence or in explanation or mitigation ..."
In my opinion the respondent in its "interview" of the applicant failed to "fully and fairly" investigate the complaint of misconduct". It made no attempt to hear "whatever the (applicant wished) to say in his defence or in explanation or mitigation". The failure of the respondent to conduct any proper investigation may have been due to its opinion that dismissal was mandatory.
The respondent's opinion that it had no discretionMr Needham, in dismissing the applicant, acted in accordance with his opinion that he "didn't have any discretion in the matter, if it was true ... that (the applicant) was smoking in a non-smoking area" (transcript p 227 - see also p 311). During cross-examination Mr Needham said (transcript pp 282 and 284):
"But in applying the policy I only have to ask myself, having laid all that foundation, has the policy been clearly breached? And if it has, it is my duty to follow that. ... (transcript p 284) I am saying that I was not in a position of being able to exercise discretion."
Mr Watts, the respondent's Production Manager, gave evidence that he told Mr Needham before the "interview" with the applicant on the day of the dismissal, that in his view "the policy had been laid down (and Mr Needham had) ... to go through with it" i.e. summarily dismiss the applicant (transcript p 345). The respondent's counsel said (transcript p 438) that the respondent's policy of 19 March 1990, instead of being characterised as rigid, should be understood "as a policy that promotes certainty, it is free of qualifications and its burden is crystal clear. If you do it you are out." At a later stage counsel said (transcript p 457) " ... once the employer ascertained that the policy had been breached, that was it ... It considered that the logic of the policy compelled the conclusion of instant dismissal". On the evidence it is quite clear that the respondent, in dismissing the applicant, failed to take into consideration in any way the applicant's long period of service and his good conduct (doubtless because of its opinion that it had no discretion).
I agree with, and adopt with respect, the following passage from the reasons for judgment of Lord McDonald in Taylor v Parsons Peebles Nei Bruce Peebles Ltd. (1981) IRLR 119 at 120:
"The Tribunal have expressly stated that they were satisfied that the policy of the respondents was that in such circumstances the only possible penalty was dismissal and that this penalty was justly enforced when they dismissed both the appellant and Henderson. So expressed this does not in our view state the proper test. The proper test is not what the policy of the respondents as employers was but what the reaction of a reasonable employer would have been in the circumstances. That reaction would have taken into account the long period of service and good conduct which the appellant was in a position to claim. It is not to the point that the employers' code of disciplinary conduct may or may not contain a provision to the effect that anyone striking a blow would be instantly dismissed. ... We accordingly feel that it is open to us to approach the question of whether or not, having regard to the history of the appellant, a reasonable employer would have dismissed him in the circumstances. Our conclusion is that he would not. This is not to say that the conduct can be condoned but to apply a rigid sanction of automatic dismissal in all circumstances is not in our view what a reasonable employer would have done."
I also agree, with respect, with the opinion of Jenkinson J. in Gregory v Philip Morris Ltd. (1988) 80 ALR 455 at 457 that, in applying the word "unreasonable" in the sub-clause, the question is whether the decision to dismiss was one "which a reasonable person would, in the judgment of the tribunal of fact, have (made) in all the circumstances".
In my opinion the respondent's dismissal of the applicant was unreasonable and was a breach of sub-clause 9(b)(vi) of the award.
The significance of the occupational health and safety committeeBoth Mr Needham (transcript p 203) and Mr Watts (transcript pp 379-380) stated that the respondent's policy, as it appeared in the notice dated 19 March 1990 (see para 14 above), followed discussions in which employees of the respondent, who were members of the occupational health and safety committee at the factory, voted for the policy to include the penalty of instant dismissal for a breach of the policy. There was no evidence that those employee members of that committee had any authority to agree, on the applicant's behalf, to any alteration of the terms of his contract of employment; nor to agree to anything on behalf of any of the unions. More importantly, neither they nor any union which was a party to the award had any authority to agree to a policy that was inconsistent with sub-clause 9(b)(vi) of the award.
The respondent could have applied to the Australian Industrial Relations Commission before 19 March 1990 for a variation of the award, giving it the express right under the award to summarily dismiss every employee for any breach of the smoking policy irrespective of (a) the employee's long service, (b) his reputation as a good worker, (c) the absence of any previous misconduct by him and (d) the probability that the employee would be unable to obtain any employment elsewhere. I am not expressing any opinion as to whether such an application for variation of the award would have had any prospects of success.
Whether the dismissal was harsh or unjustMr Green, on behalf of the respondent, submitted that the dismissal was not "harsh or unjust" within the meaning of clause 9(b)(vi) of the award in the circumstances. Amongst other matters he relied upon (1) the views expressed by the employee members of the occupational health and safety committee that there should be a policy of instant dismissal for any breach of the smoking policy. He submitted (transcript 448) that that was "of great relevance to whether the dismissal was harsh, unjust or unreasonable". The significance of that committee has been discussed under the previous sub-heading; (2) the presence of dangerous chemicals at the respondent's factory cp para 20 of the these reasons; (3) "the setting of the employment and what it was that led to the policy being brought into being and why it was that the policy came into force" (transcript p 459) including the history of the alterations, in May 1988, November 1989 and March 1990, to the respondent's policy; and (4) the applicant's receipt of the memorandum dated 19 March 1990 setting out the new policy.
In support of this submission Mr Green relied upon the following passage in the reasons for judgment of Jenkinson J. in Gregory at 462:-
"In that sub-clause the words "harsh" and "unjust", like the word "unreasonable", are in my opinion descriptive of the employer's decision to terminate the employment. It is not enough that the termination causes the employee to suffer injustice, or that the termination may be considered harsh in its effects on the employee. ... it might ... have been possible to conclude that the termination had caused injustice to the appellant because he had suffered the loss of desirable employment without any fault on his part, and to conclude that that injustice had been obvious to the respondent when the employment was terminated. But, in my opinion, that would not necessarily involve the conclusion that the termination had constituted a breach of cl 6(d)(vi). The contracted, idiomatic expression of the prohibition which the sub-clause contains is perhaps open to several constructions. It is in my opinion not to be supposed that the draftsman of the sub-clause was intending to impose on the employer an obligation to abstain from terminating his employees' employment whenever the termination would operate harshly on the employee, or would subject the employee to injustice, without regard to the identity of the person on whom lay moral responsibility for bringing about that harsh effect or that injustice. It is in my opinion only a termination which it is harsh of the employer to impose, as well as being harsh in its effect on the employee, that contravenes the sub-clause. And it is only a termination which it is unjust of the employer to impose, as well as working injustice to the employee, that effects such a contravention."
After reflecting on that passage, and the submissions by both counsel upon it, I have reached the conclusion that it is not necessary that a court, in order to find that sub-clause 9(b)(vi) of the award has been breached, must be satisfied of two matters i.e. (1) that the dismissal was "harsh" or "unjust" in its effect upon the employee and (2) that it was harsh or unjust of the employer to dismiss the employee. In my respectful opinion the court has to decide one question, not two questions. It must decide whether the decision - viewed objectively - was harsh or unjust. The court must, of course, consider all the circumstances which are relevant to the employer's decision to dismiss the employee and its effect upon the employee. However, having considered all those matters, the court's duty is to decide the one question - was the termination, in all the circumstances, "harsh" or "unjust".
I should add that I agree, with respect, with Jenkinson J. that it is not sufficient for an applicant for a penalty to show simply that "the termination would operate harshly on the employee". The gravity of the employee's misconduct may be such (e.g. if an employee, on being severely reprimanded by his foreman savagely assaulted the foreman with an iron bar) that the termination could not be fairly described as "harsh" or "unjust"; that would be so even if the effects of the termination upon the employee and his family had been catastrophic e.g. if he had a large number of dependent children and the evidence showed that the employer knew that he would be unable to obtain employment elsewhere.
Mr Green also placed considerable reliance upon the statement, in the joint reasons for judgment of Wilcox and Ryan JJ. in Gregory (at 471), that the clause "is intended to operate in a practical way in a commercial and industrial environment". I agree, with respect, with that statement and have applied it in forming my opinion in the present case. However, in my view it does not assist the respondent in the circumstances of this case.
In the light of all the circumstances disclosed by the evidence, I am satisfied that the respondent's dismissal of the applicant was both harsh and unjust - as well as being unreasonable for the reasons given earlier. The dismissal was a breach of sub-clause 9(b)(vi) of the award.
Amount of PenaltyThe maximum penalty under s. 178 of the Act is $1,000. In all the circumstances of this case, many of which have been referred to in these reasons, and the fact that it has not been shown that the respondent has previously breached an award under the Act, in my opinion a penalty of $700 is appropriate and it should be paid to the applicant under s. 356 of the Act.
Breach of contractIt was an implied term of the contract of employment that termination of employment by an employer should not be harsh, unjust or unreasonable - see paragraph 9 above. It follows that the respondent's dismissal of the applicant was a breach of that contract.
In the light of my opinion that the dismissal was a breach of sub-clause 9(b)(vi) of the award and was a breach of the applicant's contract of employment, it has not been necessary to consider the alternative ways in which the matters were pleaded in the amended statement of claim.
Mitigation of DamagesThe respondent's amended defence, filed on the first day of the hearing, contended that the applicant had failed to mitigate his loss. It gave the following particulars:
"(a) The applicant has failed to seek or obtain any suitable alternative employment.
(b) On 30 August 1990 Colin Needham of the respondent offered the applicant employment commencing in January 1991 except if the respondent was in dire straits. The applicant agreed to accept this employment but on 31 August 1990 repudiated the agreement."
As to (a) I accept all of the evidence given by the applicant in relation to his attempts to obtain alternative employment. I also accept the evidence of Mr Marr (transcript pp 108-111), the Regional Manager of the Preston Office of the Department of Employment Eduction and Training, who was not cross-examined by the respondent. On the evidence the respondent's contention under particular (a) cannot be upheld.
Particular (b) must be considered in the light of the findings made in paragraphs 25, 26 and 27 above as to the possibility of the applicant being re-employed by the respondent. The evidence shows that on 30 or 31 August 1990, after discussions between the respondent, Mr Parker (the Secretary of the Union) and the applicant, Mr Needham on behalf of the respondent said words to the effect that, subject to the economic situation of the company, the applicant would be considered for re-employment following the 1990-91 annual closedown. In my opinion that statement was not a firm offer by the respondent to re-employ the applicant. There was no evidence of any other statement by any of the respondent's officers which constituted an unconditional offer to re-employ the applicant. For example, Mr Watts, the respondent's Production Manager, in his evidence, speaking of the alleged "agreement" to re-employ the applicant, said "I mean in normal circumstances we would look at re-employing Jimmy (the applicant) again".
If, contrary to my opinion, any offer to re-employ the applicant was made by the respondent, on the evidence it was not accepted by the applicant. The applicant and the respondent did not enter into any agreement under which the respondent would re-employ him in the New Year of 1991.
If, contrary to my opinion, there was any agreement as to the re- employment of the applicant, it was an agreement between the respondent and the Union; in this connexion the respondent's counsel in his opening address (transcript pp 196-197) described the agreement as one "between Bostik and the Union with respect to Mr Gorgevski".
Mr Needham made it clear in his evidence that if any offer was made it was made as a proposed "settlement" of the problem and was advanced on the understanding that it could only be accepted if the applicant was not going to pursue any rights he had to sue the respondent in respect of his dismissal. Mr Needham described that "understanding" as "a natural assumption". He also said: "I had the feeling that we thought we had an agreement, but they had gone ahead with the case (the application to the Victorian Commission, dated 30 August 1990), which indicates that we haven't got an agreement" (transcript p 301).
As to the question of an employer requiring a dismissed employee to relinquish his right to sue, Mr Bourke, on behalf of the applicant, referred the court to the following passage in the reasons for judgment in Shindler v Northern Raincoat Co. Ltd. (1960) 1 WLR 1038 at 1049 where Diplock J., dealing with an employer's contention that a plaintiff had failed to mitigate his damages, said:
"Therefore, the only offer which was before him at that moment was an offer of employment on the terms that he should not act on such legal rights as he had for damages for breach of contract against the defendants. It seems to me that it was not reasonable to ask him, or to require him, to accept such an offer. That matter is self evident."
If, contrary to my opinion, there was an agreement between the applicant and the respondent, I am unable to accept the respondent's contention that that agreement was repudiated by the applicant by his action in serving upon the respondent a copy of an application lodged by him in the Victorian Industrial Relations Commission on 30 August 1990; it was common ground (transcript p 414) that the law required that any such application be lodged within 4 days of the dismissal. The respondent's contention under particular (b) above cannot be upheld.
I am unable to uphold the submission of the respondent's counsel that any loss or damage was entirely or almost entirely of the applicant's own making (transcript p 466). In my opinion the applicant did not fail to mitigate his loss.
Calculation of damagesThe applicant's counsel addressed as to the basis for the various items in the particulars of loss and damage. He relied upon the reasons for judgment in Wheeler v Philip Morris Ltd. (1989) 97 ALR 282 at 312-313 in which Gray J. analysed the authorities relating to the calculation of the loss suffered by an employee as a result of his dismissal in breach of a contractual term that the termination of his employment should not be harsh, unjust or unreasonable. No submission was advanced by the respondent by way of challenge to that analysis. Nor was any challenge made to any of the figures set out in the applicant's particulars of loss and damage in their final amended form, as lodged on 15 August 1991. That document incorporated certain amendments to the applicant's particulars in their previous form which amendments followed upon discussions between counsel for both parties as to the matters in the applicant's particulars. The respondent's counsel said on 13 August 1991 (transcript p 466) that if he wished to put any submissions as to "the principles relating to damages and the application of those principles (in this case)" he would do so in his reply. No such submissions were put in his reply.
Having considered the figures put forward by the applicant's counsel, I have come to the conclusion that the applicant's claim for an award of damages totalling $219,150.00 must be reduced by reference to two matters. The first matter is that the applicant's allowance of a 20% reduction for the vicissitudes of life is too low in my opinion. On the evidence before the court it is difficult to assess what the reduction should be e.g. whether it should be 25% or 30%. The second matter is that the applicant's figures do not appear to make any allowance for the fact that he received $15,150 from the Superannuation Fund when dismissed, aged nearly 54 years, whereas had he remained in the respondent's employment, he would not have received his payment from that Fund until he attained the age of 66 years. Making the best assessment that I can on the evidence before the court - which did not include medical evidence as to the applicant's state of health - I have decided to award a total figure of $195,000 for damages.
Interest
As set out earlier in these reasons, the application claimed interest under s. 51A of the Federal Court of Australia Act 1976. In answer to a question from the court as to that part of the application, the applicant's counsel said (transcript p 447) "... it would be interest on the past component, being the lost superannuation entitlement. The first part of $20,250 and interest on the past loss of income of $23,900." As no further submissions were made on that matter, the right to the applicant to pursue that matter, if the parties are unable to reach agreement, is reserved.
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