Gurran v Tarbook Pty Ltd

[1996] IRCA 453

DECISION NO: 453/96

CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - whether altercation SERIOUS MISCONDUCT  -  SUMMARY DISMISSAL  -  no VALID REASON  -  no PROCEDURAL FAIRNESS  - decision to terminate made before counselling

Industrial Relations Act 1988 ss 170DB, 170DE

North -v- Television Corporation Ltd (1976) 11 ALR 599
Senathirajah Selvachandran -v- Peteron Plastics Pty Ltd (1995) 62 IR 371
Bostik (Australia) Pty Ltd -v- Gorgevski (No 1) (1992) 41 IR 452
May -v- Lilyvale Hotel Pty Ltd (NI95/1963R unreported decision of 1 December 1995)

NEIL PATRICK MCLAY -v- TRALTEF PTY LTD

No. NI 4276 of 1995

Before:  WALKER JR
Place:  SYDNEY
Date of hearing:     19 APRIL 1996
Date of judgment:   25 SEPTEMBER 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES REGISTRY

No. NI 4276 of 1995

BETWEEN

NEIL PATRICK MCLAY
Applicant

AND

TRALTEF PTY LTD
Respondent        

BEFORE:     WALKER JR
PLACE:       SYDNEY
DATE:          25 SEPTEMBER 1996

REASONS FOR DECISION

The applicant, Neil Patrick McLay, has been employed in the hotel industry for about twenty years, the last six of which were spent as the Manager of the North Richmond Hotel.  When he commenced his employment with the North Richmond hotel he moved his family into the premises and his wife was also employed running the bottle shop.  Ten months prior to his termination the applicant’s wife resigned her position after an argument with Mrs Diane Sinclair, the general manager of the hotel and Mrs Sinclair gave evidence that after his wife left the hotel and took the children back to Windsor the applicant became:

“....very aggressive, argumentative and more sarcastic than his normal manner.”

Despite this change in his behaviour Mrs Sinclair gave the following evidence as to the applicant’s work performance:

“......Neil and I got on extremely well and he did a wonderful job for me and - and we got on well and ran the pub extremely well. The one problem was his gambling.”

The applicant is a large man and he gave evidence that he has played grade rugby league with Western Suburbs, no doubt in the front row, and that he was called “tree” by his friends.

When the applicant commenced his employment at the North Richmond hotel one of the witnesses, Mr Michael Tuckwell, gave evidence that the hotel could be described as a “bloodbath”.  The applicant described it as a rough pub, frequented by bike gangs and Mrs Sinclair agreed that it was a very rough pub and that the applicant was responsible for cleaning it up.  She agreed that it was no longer a difficult place to drink in and that you could now safely bring your wife or a female partner to a night out without concern.  When it was put to Mrs Sinclair that the applicant had been involved in physical incidents where he had to throw people out, she replied that she could recall one incident; however, it was enough for the applicant to just talk to them.  It was the applicant’s evidence that he had been involved in fights and altercations during his employment in order to eject people and that he had never been “chipped” for the way he had handled these problem by his employer.

The Hawkesbury Race Day incident

On the 18 October 1995 the hotel arranged a function at the Hawkesbury Race Club and sponsored a race in the North Richmond Gold Cup.  The applicant and Mrs Sinclair attended the meeting along with 20 of the hotel’s invited guests and were conveyed in a special bus to the venue.  At the end of the day the group returned in the bus to the hotel at about 7.00 pm to continue the function.

It was the applicant’s evidence that when he returned to the hotel he was fairly intoxicated; he said his sobriety, when measured on a scale of 1 to 10, would have been about a 7.  Mrs Sinclair gave evidence that:

“He was quite a bit drunk, but I’ve seen Neil drink a lot more and still remain standing........ .....As far as I was concerned, he was perfectly normal.”

During the next hour or so the applicant continued to talk to the various groups of people in the hotel and continued to drink. From Mrs Sinclair’s evidence this appears to be the applicant’s normal behaviour in such a situation and although the applicant was entertaining the hotel’s clients it is unclear whether he was actually working.

Mr Esposito arrived at the hotel at about 8.30 pm.  He had not attended the Hawkesbury race meeting and had not been drinking before he arrived at the hotel. He said in his evidence that he had known the applicant for some time and the applicant was aware that he was a Manly rugby league supporter.  When he arrived he said the applicant had then introduced him to a friend of his who was also a Manly supporter and a conversation about football took place.  The applicant he said would walk past from time to time and have a word with them.  The applicant he said called him a “poof” on several occasions when he walked passed and after that he approached the applicant and said to him that he should not speak to him like that and the applicant had replied:

“You are, you’re nothing but a scum of a human being”

Mr Esposito said he then followed the applicant into the pool room and said to him,

“Listen, Neil I want to have a word with  you.”

The applicant he said replied, “sure” and started walking outside.

Mrs Sinclair in her evidence said that she was behind the bar when Mr Esposito came into the hotel and ordered a beer.  She said as soon as he arrived the applicant yelled out across the bar to him:

“‘You and your poofter Manly mates-’ Neil was heckling Tony ‘You
             and your Manly mates, and Manly couldn’t win on a dark night!’ Just
            basically detrimental to the football team more than anything.”

It was the applicant’s evidence that Mr Esposito had challenged him about the football and that as a result they both had a go at each other and that this went on for some time and Mr Esposito finally said:

“‘...well I’ve had enough of this. Get outside and we’ll sort it out there.’ I said, ‘Tony don’t be silly’. I said, ‘Just forget about it...’ Tony pushed me; he said, ‘Come on, let’s get outside.’ So I said, ‘Alright, if that’s what you want to do.’  We started walking through the lounge and we got near the pool table there and Tony seemed to have bumped me, and I swung a punch at him. We grappled.”

Mr Michael Charles Tuckwell was called as a witness and gave evidence that he was a friend of the applicant as well as Mrs Sinclair.  He was a participant in the racing outing and was the person who intervened in the altercation between the applicant and Mr Esposito.  Mr Tuckwell described the incident as a scuffle rather than a fight. He said he just got between them and it was all over fairly quickly.

There was no real injury sustained by Mr Esposito or property damage to the hotel and no charges were laid by Mr Esposito or the applicant.  According to Mrs Sinclair the incident was over in 30 or 40 seconds, and I am inclined to believe that if the applicant had genuinely attempted to hit Mr Esposito then there is a very real chance that Mr Esposito would have been seriously injured.  Of course that was not the case.  I am also inclined towards the belief that it was Mr Esposito who was the main protagonist in the tussle rather than the applicant.  Mr Esposito in his evidence admits that he was aware that the applicant was drunk. When he was asked, “Why did you want to speak to the applicant?”, Mr Esposito said:

“Because he was insulting me in front of people, and he’s done it all the time.  And I just didn’t want to take that, especially because he was drunk too; I wasn’t.”

Added to this is his evidence that he was under the impression that by asking the applicant outside they would only be going to talk.  Mr Esposito must be incredibly naive if he believed that after a heated exchange between himself and an obviously drunk man, that to offer that man outside would result in a mere discussion between the two.  This suggestion is just plainly absurd in the circumstances.

As to whether Mr Esposito hit the applicant first or whether the applicant was bumped or pushed by someone else remains unknown.  Mr Esposito denies that he hit the applicant from behind; however, I am not satisfied that the applicant reacted without some provocation while still inside the hotel.

The reason for termination

The following day Mrs Sinclair terminated the applicant’s employment.  She said in her evidence that she had telephoned the AHA and was told that it was a summary dismissal case, and that she had then made the decision to terminate before she spoke to him that day.  Her version of the termination is as follows:

“He said, ‘Good morning how are you?’ And I said, ‘Not very happy. We need to talk.  I said, ‘Come into the office.’ We went in and I said, ‘This has got to stop.’ I said, ‘I’ve had your aggression, your sarcasm.’ I said, ‘I will not tolerate you hitting a customer.’  I said, ‘It’s just the final straw - the last straw.’ He had his hands between his knees and his head hung and he said, ‘I agree with you.’  He said, ‘You know the pressures I’ve been under from her.’  He said, ‘I don’t know what the answer is.’  I said, ‘Have you got - is there anything you can say? Is there any way we can talk about it?’  He said, ‘It’s not going to work while I’m here because she won’t - she hates the place...’ I said, ‘Well, I’ve got no alternative but to let you go’ or I don’t think I used the word ‘sack’...”

When asked if there was any discussion about money missing or social club and football club monies, Mrs Sinclair replied, no.  Mrs Sinclair said in cross- examination that the reason for termination was the applicant’s poor attitude and the incident with Mr Esposito was the final straw.  When asked if the applicant had given any explanation for his poor attitude, Mrs Sinclair replied:

“His wife, his problems with his wife.”

When counsel for the applicant put to Mrs Sinclair that the applicant had been working at solving that problem, Mrs Sinclair said, “Yes.”

By way of explanation as to the prior problems concerning the applicant’s attitude Mrs Sinclair gave evidence about three incidents.  The first of these she said concerned his aggressive and sarcastic manner towards a group of fruit pickers, the second was that he had been rude to a fencing contractor by the name of Gary Turner, and the third was a complaint by a bank manager Mr Phil Tuckerman about the applicant’s attitude.  None of these people were called as witnesses and there was no real explanation by the respondent as to the circumstances surrounding the allegations.  There was also no evidence that the applicant had been warned that any further behaviour of this sort would result in his dismissal.  Mrs Sinclair agreed with counsel for the applicant that she could have warned the applicant but did not do so.

A warning with regard to this behaviour is particularly important in such a case as this where the respondent had in the past relied heavily on the fact that the applicant treated certain customers in an aggressive and threatening way.  I am quite sure that had the bikie gangs that originally frequented the North Richmond hotel some years before complained to Mrs Sinclair that the applicant was being sarcastic or aggressive, she would have secretly laughed to herself.  The applicant would have probably  received a commendation or a bonus for this action in the circumstances.  It is therefore ironic that he should at some later stage be dismissed from his position for displaying the same behaviour.  If Mrs Sinclair was genuinely concerned about this behaviour she was required to warn the applicant that if he persisted  he would be dismissed.

The applicant gave the following version of the termination:

“She said, ‘I don’t want you here any more.’ I said, ‘Well, what’s brought this on?’ She said, ‘Well after last night, that was it.’ And I said, ‘Well, we will sit down and discuss it’ and then she went on further to say that there’d been the football club who I was running a raffle for or with, in conjunction with, at the hotel; she said they had found money short in the raffle funds... and she said there’s been money missing out of the till...”

Mrs Sinclair denies that this was discussed at the time of termination and that the  reason the applicant was dismissed was because of his attitude and the altercation with Mr Esposito.

Was the conduct serious misconduct pursuant to s 170DB(1) (b)?

Wilcox CJ referred with approval to a passage from the judgment from Smithers and Evatt JJ in North -v- Television Corporation Ltd (1976) 11 ALR 599 concerning the application of an award provision which permitted dismissal without a payment in lieu of notice for misconduct. Their Honours said in that case:

“It is of assistance to consider the expression ‘misconduct’ by reference to subject matter to which it is related and the context in which it appears.  The subject matter is a termination by one party against the will of another of a continuing contract of employment on the ground of breach of one of the terms of the contract. And the context is such as to indicate that certain breaches of a non-serious nature, some of which would be within the connotation of misconduct, are not regarded as grounds for termination. In such a situation it is reasonable to interpret the expression ‘misconduct’ as referring to 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.

This situation would arise if there were conduct inconsistent with the fulfilment of the express or implied conditions of service. It is conduct of that kind which will justify dismissal at common law....

For the purpose of the application of the common law principles to the facts of this case the remarks of the Master of the Rolls in Laws v London Chronicle (Indicator Newspaper) Ltd [1954] 2 All ER 285 at 287 and 289, are in point.  He said:

‘To my mind the proper conclusion to be drawn from the passages which I have and the cases to which we were referred is that, since a contract of service is but an example of contracts in general, so that the general law of contract will be applicable, it follows that, if summary dismissal is claimed to be justifiable the question must be whether the conduct complained of is such as to show the servant or have disregarded the essential conditions of the contract of service...

I do, however, think (following the passage which I have already cited) that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and for that reason, therefore, I think that one finds in the passages which I have read that the disobedience must at least have the quality that it is “wilful”; it does (in other words) connote a deliberate flouting of the essential contractual conditions.’”

It could be said that in the present case one of the conditions of employment was that the applicant was required to be a person of an aggressive nature in order to tame the patrons of an establishment frequented by dangerous bikie gangs.  There is certainly evidence to suggest that this was the case in the past and that the applicant in fact carried out those duties very effectively.  It is also of general understanding that the duties of a bar manager are such that he will of necessity be the subject of criticism by the patrons of the hotel.  I am sure that the bikie gangs did not appreciate the applicant’s sarcasm and aggressive nature and I am sure Mrs Sinclair would not have counselled the applicant about his behaviour if they had complained to her about their treatment.

Taking into account all the circumstances surrounding the scuffle with Mr Esposito and the prior incidents and the lack of warning as to possible dismissal and taking into account the applicant’s long and reliable service to the respondent, I find that the conduct of the applicant was not serious misconduct that warranted summary dismissal. The dismissal was certainly disproportionate to the gravity of the conduct and as there was no payment in lieu of notice, is therefore in breach of s 170DB.

Was the termination for a valid reason?

Consideration as to the meaning of valid reason was given by Northrop J in Senathirajah Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 on the 7 July 1995. His Honour said in that judgment:

“Subsection 170DE(1) refers to a ‘valid reason, or valid reasons’, but the Act does not give 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 subsection 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 subsection 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 provision must ‘be applied in a practical, commonsense way to ensure that’ the employer and the employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd, 5 May 1995, unreported, when considering the construction and application of s.170DC.”

In the circumstances of the present case I am satisfied that the Respondent has failed to establish, that having regard to the applicant’s capacity and conduct there was a valid reason for termination.  In applying Northrop J’s meaning to the adjective “valid”, i.e.  sound, defensible or well founded, the respondent would in the circumstances of this case need to satisfy the Court that the dismissal was of a kind that justified summary termination and this certainly was not the case.  Despite Mrs Sinclair’s evidence that she observed the incident involving Mr Esposito I am satisfied that she could not have been certain that the incident was not provoked by Mr Esposito or for that matter that Mr Esposito did not push or punch the applicant first.  This incident, after all occurred in a hotel bar in the evening after a big day at the races.  Although Mrs Sinclair did not say how much she had to drink during the day it is clear from her evidence that she had been working hard that evening and therefore must have been quite tired after such a long day.

The applicant and Mrs Sinclair gave different versions as to what was said at the termination of the applicant’s employment on the 19 October 1995.  Having considered Mrs Sinclair’s evidence I am satisfied that she had decided to terminate the applicant’s employment before she had met with him that morning.  She said that she had telephoned the AHA and was given advice that she could summarily dismiss the applicant. When then asked in cross-examination if she had already decided to sack him, Mrs Sinclair replied, “Yes.” She then attempted to qualify this answer with the proviso, which she had decided, “unless he gave me an adequate explanation.”  The applicant said Mrs Sinclair had said to him that she did not want him there any more because of what had happened the night before and because of money missing from the football raffle.  He said that she had then asked him if he had anything to say and he replied, “No, you have obviously made up your mind.”

In Bostik -v- Gorgevski the Full Court expressly agreed with Keely J’s decision at first instance concerning this type of action and adopted the following remarks:

“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        of  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 applicant 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 employer’s 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 the circumstances is not in our view what a reasonable employer would have done.’”

In the present case I am  satisfied that there was no valid reason for the termination of the applicants employment. I am also convinced that the procedure adopted by Mrs Sinclair at the point of termination was unsatisfactory because she had decided to terminate the applicant’s employment prior to her discussion with him that morning and failed to afford him the  right to defend himself.

Remedy

Reinstatement is not practical in the circumstances and an award of compensation is the remedy sought. In assessing compensation I am mindful of the fact that the applicant has not been paid a sum of $7000.00 owed for annual leave and would have been entitled to an amount of $4000.00 pursuant to s.170DB. I also understand that the applicant received the sum of $424.00 per month by way of a car allowance, which would make his yearly gross earnings around $56,088.00. I have also noted that the applicant has been working as a builder’s labourer since 9 November 1995 and receives $429.40 gross per week.

In assessing compensation the applicant has referred me to a decision of the Chief Justice in May -v- Lilyvale Hotel Pty Ltd (NI95/1963R unreported decision of 1 December 1995).  In accordance with that decision I am satisfied that the applicant’s loss of remuneration is in excess of the statutory limit.  However, the applicant agreed that he intends to seek employment in the hotel industry and I am sure that in the near future he will again re-enter this field rather than remain as a builder’s labourer.  His credentials as a hotel manager are good and he has an obvious wealth of experience in this area and should have good prospects for the future.  In all the circumstances I therefore find that the appropriate amount of compensation should be the sum of $18,000.00 and I do so order.       

I certify that this and the preceding fifteen (15) pages
are a true copy of the reasons for decision of Judicial
Registrar Walker.

Associate:      

Date:   25 September 1996    

APPEARANCES

Counsel for the applicant:     Mr M. Kimber
Solicitors for the applicant:     Abbott Tout

Counsel for the respondent:    Mr A. Rogers

Date of hearing:        19 April 1996
Date of judgment:     25 September 1996

IN THE INDUSTRIAL RELATIONS COURT

OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY

No. NI 4276 of 1995

BETWEEN

NEIL PATRICK MCLAY
Applicant

AND

TRALTEF PTY LTD
Respondent

BEFORE:     WALKER JR
PLACE:       SYDNEY
DATE:          25 SEPTEMBER 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The respondent pay compensation to the applicant in the sum of $18,000.00.

Note:   Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.