Hanley v Knight Frank (Canberra) Pty Limited

[1996] IRCA 377

DECISION NO:  377/96

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY   AI 1034 of 1996

TONY HANLEY
Applicant

KNIGHT FRANK (CANBERRA) PTY LIMITED
(A.C.N. 008 408 857)
Respondent

Coram:         Judicial Registrar Linkenbagh
Place:            Canberra
Date:            18 July 1996

REASONS FOR JUDGMENT

Delivered ex-tempore and revised from the transcript

This is an application pursuant to the provisions of Section 170EA of the Industrial Relations Act 1988, which was filed in the Australian Industrial Relations Commission on 5 March 1996. The applicant was employed by the respondent from 22 March 1994 to 27 February 1996, in the capacity of a Commercial Property Agency Operative selling commercial real estate in the Australian Capital Territory.

In addition to seeking a remedy arising out of the termination, pursuant to the provisions of Section 170EE, the applicant seeks in his application, commissions due and holiday pay. His claims in respect of those matters, which the Court has jurisdiction to deal with in its accrued jurisdiction, were not fully pleaded, but evidence has been taken before me today in support of those claims. The respondent has come to an agreement with the applicant in relation to the claim for unpaid annual leave and an order will be made in respect of that claim by consent. I propose to deal with the other issues in the orders that I make.

The employment came to an end with the handing of a letter to the applicant, dated 27 February 1996, a copy of which is annexed to the application in the proceedings.  The letter reads:

Subsequent to our previous discussion, it has been resolved that with the operational changes within the business we no longer have a position to accommodate you.  This letter confirms the conclusion of your employment through redundancy, effective today.

The case for the respondent asserts that there was a redundancy because of its operational requirements and that, therefore, there was a valid reason for the termination of the employment. It is my finding that the respondent has failed to discharge the onus placed on it by the provisions of Section 170EDA of the Act in that regard. However, I find that the respondent has satisfied me that there were otherwise valid reasons for the termination of this employment.

The history is that the applicant was employed pursuant to the terms of a contract of employment, which was evidenced in writing during the period of his employment by two contracts signed by him on and by a third contract which was drafted in August of 1995 but never signed by the applicant.  At the time of his termination, the applicant was entitled, pursuant to the terms of that contract, to salary, superannuation, motor vehicle allowance and parking allowance, of a total of $47,385.  He was also entitled to commissions, if the gross commissions earned by him on behalf of his employer exceeded $140,000 in any financial year. 

The applicant's performance appears to have been uneventful until some time during 1995, probably towards the end of 1995.  Mr Marshall, who gave evidence for the respondent, saw the need in December of 1995 and January and February of 1995 to speak to the applicant about various aspects of his performance and conduct.  Those aspects appear to have been more specifically related to Mr Marshall's view that the applicant was not conducting himself as a co-operative member of the workforce in the manner which Mr Marshall desired, and that the applicant failed to communicate with other members of the staff, particularly as to his absences from the office and his punctuality generally. 

Mr Marshall was also concerned with the performance of the applicant at his duties, as measured by the number of sales of real estate and leasing arrangements which the applicant was negotiating.  Mr Marshall's evidence is that in the 1994/5 financial year, the applicant's gross commissions earned on behalf of the company were $28,467 and in 1995/96, the comparable figure was $99,661.  That figure includes commissions which accrued after the date of termination of the employment and before 30 June 1996.

The evidence is that the Real Estate market in Canberra has been in a state which might be described as "downturned" for some time, and in the 1994/95 and 1995/96 financial years, the respondent's Canberra operation ran at a loss.  Towards the end of 1995 the holding Company of the respondent was putting pressure on the Canberra management to cut costs and make its operation more effective.  It was in that climate that Mr Marshall saw fit to speak to the applicant when he did. 

Mr Marshall made handwritten notes of a meeting he had with the applicant on 12 February 1996.  Those notes are exhibit “R” and reflect the attitude which Mr Marshall's oral evidence before me today indicated to me.  Mr Marshall was concerned about the applicant's role in the business and the notes on their face indicate some reluctance on the part of the applicant to engage in the respondent's business operations, as Mr Marshall was encouraging him to do. 

The notes mention that the applicant had no interest in the role of Industrial Manager, which was a role into which Mr Marshall was intending to move him because of the downturn in commercial business. The notes also indicate that the applicant had a preference for remaining in a freelance role, "doing what suited him", and that there were perceived difficulties in the applicant's ability to be part of a team effort, to follow procedures, and to be punctual.

In all of those circumstances, I find that there was a valid reason for the termination of the employment on the part of the employer.  Added to those factors is the evidence before me that prior to the termination of his employment, the applicant was considering changes in his role in any event.  He had discussed with Mr Marshall the possibility of taking up a position, if there were one available, in the company's Sydney operations and he had also, on 22 February 1996, registered a Business Name with the A.C.T. Registrar-General's office, indicating that he was carrying on business in real estate from that date.

Mr Marshall was aware, because of gossip in the industry, that the applicant was looking for premises, from which he apparently intended to conduct a Real Estate business.  It would seem that that information did not play a major part in Mr Marshall's decision to terminate the employment, and certainly the other factors which were influencing Mr Marshall's thinking at the time had existed for a much longer period than the information concerning the possibility that the applicant might be setting up his own Real Estate business.

As I have said, I am not satisfied that this was a case of a genuine redundancy.  There is no evidence before me of a decision by the respondent that a position be made redundant, nor is there evidence that having determined that a job was to go, the respondent went through any kind of selection process or comparative process between the applicant and the other employees, not even those employees who were involved in the sales and leasing areas of the company, of which there were, according to exhibit “M”, several at the time. 

The evidence is that only the applicant was given attention at the relevant time in relation to termination of employment, and one would have thought that if it were a case of genuine redundancy there would have been some detailed evidence as to why he was chosen in preference to others who were in the same area of the company as himself.  Mr Marshall's evidence was that he was the shortest serving employee out of those in the relevant areas, but that is only one factor to be taken into account.

Even I though I am not satisfied that there was a true redundancy situation, I am able to find that there was a valid reason based on the performance of the applicant of his duties in the workplace which entitled the respondent to terminate the employment, and there is, therefore, a valid reason for the termination of employment within the meaning of Section 170DE(1) of the Act. I have reservations as to whether the respondent has fully complied with its obligations, pursuant to the provisions of Section 170DC of the Act, being its obligation to give the applicant the opportunity to defend himself against the allegations.

The area which I have concern in that regard is to do with the part that the information about the applicant’s setting up his own business played in Mr Marshall's decision.  There is no evidence that those aspects were discussed, nor is there any evidence that the applicant was given any real opportunity to defend himself in the context of being told that his job was about to go.  Certainly, Mr Marshall spoke to him in terms that there would be no job for him unless he improved his performance, but Mr Marshall was not as blunt as perhaps he may have been in making it quite clear to the applicant that his job was on the line.

I therefore, with some reservation, find that the respondent is in breach of Section 170DC of the Act That finding carries little consequence, in view of what I wish to say about whether or not a remedy is, or would be, appropriate in the circumstances of this case. I find that even if the respondent is in breach of the Act, in all the circumstances of the case no remedy is appropriate. I find that reinstatement is impracticable in that, firstly the applicant does not seek reinstatement and also the evidence is that the applicant has set himself up in partnership in a competing Real Estate business. He has given evidence of some uncertainty about whether he wishes to remain in Canberra or move elsewhere and in addition to that there is, of course, the history of the breakdown in his relationship with the respondent.

In all of those circumstances, I think that it could not be said that reinstatement is a real option.  The alternative to reinstatement is compensation.  There is no clear evidence before me of the loss which the applicant has sustained, other than, of course, that he was unemployed for some weeks and it would go without saying, I think, that in setting up a new business his real income would be uncertain for some months.  I must take all of the circumstances of the case into account.  I particularly note that the applicant was making arrangements to conduct his alternate business prior to the decision of the respondent to terminate his employment.

I also bear in mind the evidence which is contained in exhibit “L”, which is a newspaper article published on behalf of the applicant's new firm. In that article the applicant is reported as having said that he started his own business when it became clear that the alternative was a dead end career working for someone else, and that he and his partner wanted a company that would be more personalised, offer a complete service and be more competitive, and they wanted control of their own destinies.

That supports the attitude which I gleaned from the evidence of both the applicant and Mr Marshall, that this employment relationship was doomed to come to an end very much sooner rather than later, and casts a large question mark over the applicant's loyalty and commitment to his contract of employment with the respondent.  In all of those circumstances, I find that no remedy is appropriate in the circumstances of the case. 

The orders then that I make today in these proceedings are:

1. that by consent, the respondent pay the applicant the sum of $877.79 in satisfaction of his claim in respect of unpaid annual leave;

1. that the respondent is in breach of Section 170DC of the Industrial Relations Act 1988, but that in all the circumstances of the case, no order for reinstatement or compensation is appropriate;

THE COURT FINDS that there is no evidence that the applicant is entitled to any payments by the respondent by way of commission earned during the term of the employment.

I certify that this and the preceding 6 pages are a true copy of the Reasons for Judgment of Judicial Registrar Linkenbagh

Associate:      Renee Cauchi

Date:            7 August 1996

The applicant in person

Solicitor for the Respondent:            Mr K Cush
  Allen Allen & Hemsley

Date of hearing:        18 July 1996

CATCHWORDS

INDUSTRIAL LAW  - TERMINATION OF EMPLOYMENT -UNLAWFUL TERMINATION - procedural fairness - valid reason - remedy not appropriate.

Industrial Relations Act 1988, SS 170DC, 170DE(1), 170EA, 170EDA, 170EE.

TONY HANLEY -v- KNIGHT FRANK (CANBERRA) PTY LIMITED (A.C.N. 008 408 857)

No. AI 1034 of 1996

CORAM:     LINKENBAGH J.R.
PLACE:       CANBERRA
DATE:          18 JULY 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY   AI 1034 of 1996

TONY HANLEY
Applicant

KNIGHT FRANK (CANBERRA) PTY LIMITED
(A.C.N. 008 408 857)
Respondent

Coram:         Judicial Registrar Linkenbagh
Place:            Canberra
Date:            18 July 1996

MINUTES OF ORDERS

THE COURT ORDERS THAT:

1. By consent, the respondent pay the applicant the sum of $877.79 in satisfaction of his claim in respect of unpaid annual leave.

1. The respondent is in breach of Section 170DC of the Industrial Relations Act 1988, but that in all the circumstances of the case, no order for reinstatement or compensation is appropriate.

THE COURT FINDS THAT there is no evidence that the applicant is entitled to any payments by the Respondent by way of commissions earned during the term of the employment.

Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules