Harris v Callaia-Chapman
[1997] IRCA 266
•12 Sep 1997
DECISION NO:266/97
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - claim of UNLAWFUL TERMINATION - VALID REASON - COMPENSATION - duty to mitigate loss - rejection of offer by employee of practicable REINSTATEMENT
Workplace Relations Act 1996
Sections 170DC; s170DB; s170EE.
The Commonwealth Evidence Act 1995
Wyndham Lodge Nursing Home Inc. v Cecile Ann Reader Full Court, 15 April 1996
British Westinghouse & Manufacturing Co Ltd v Underground Electrical Railway Co of London Ltd [1912] AC 673
Bechara v Gregory Harrison Healey & Co (1996) 65 IR 382
Bechara v Healey, 3rd June 1996 (unreported) the Full Court
Bush v Tompkins Ltd v Greater London Council [1988] 3 All ER 737
Gregory v Phillip Morris (1988) 80 ALR 455
Harris v Calleia-Chapman
NI 2250 of 1996
Before: LOCKE JR
Place: SYDNEY
Date/s of hearing: 31 JANUARY 1997
Date of judgment: 12 SEPTEMBER 1997
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 2250 of 1996
BETWEEN:
Thomas S Harris
Applicant
AND
Calleia-Chapman
Respondent
BEFORE: LOCKE JR
PLACE: SYDNEY
DATE: 12 SEPTEMBER 1997
MINUTES OF ORDERS
THE COURT DECLARES THAT:
The respondent terminated the employment of the applicant in contravention of Section 170DC of the Workplace Relations Act 1996.
ORDERS:
The application for compensation for unlawful termination is dismissed.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 2250 of 1996
BETWEEN:
Thomas S Harris
Applicant
AND
Calleia-Chapman
Respondent
BEFORE: LOCKE JR
PLACE: SYDNEY
DATE: 12 SEPTEMBER 1997
REASONS FOR DECISION
Having been employed by the respondent as an accountant from 16 September 1996, the applicant’s employment allegedly came to an end at the initiative of the employer on 25 September 1996. He avers the termination of his employment was unlawful in that it contravened certain provisions of the Workplace Relations Act (“the Act”) 1996. By application dated 30 September 1996 the applicant seeks remedy for economic loss.
The applicant worked for a large city firm of accountants for a period of two years, he decided to work closer to his home on the Central Coast of New South Wales. In aid of this decision, he responded to an advertisement placed by the respondent in the Central Coast Express Advocate on 7 August 1996 (exhibit “A”). The position which was sought to be filled was that of Chartered Accountant with two to three years professional office experience.
Mr Alexander George Calleia, the principal of the respondent firm interviewed the applicant twice. He was appointed to the position and commenced on 16 September 1996, working from 8.30am to 5.00pm and being renumerated in the sum of $1200.00 per week. This sum was to be split in the following manner:-
$800.00 per week was to be paid directly to the applicant and $400.00 to go to a business conducted by the applicant which traded as Harris Accountancy Services.
Mr Calleia’s evidence was the manner in which these payments were apportioned was selected by the applicant:-
“He asked for his salary to be split as his previous employer had done it.”
The applicant’s version of this circumstance was that Mr Calleia was the instigator of the plan after the applicant said to him:
“... I have a company you structure it how you like.”
On balance, the evidence given by the respondent is preferred.
During the second interview with the principal, according to the applicant he was handed a proposed draft agreement in the form of exhibit “1”. This document was never engrossed for signature. Indeed, it was never mentioned again prior to termination.
Upon his arrival for work on 25 September 1996, the applicant was directed by Mr Calleia not to perform any duties and repair immediately to his office. As soon as possible he obeyed this direction whereupon he was told the employment relationship was not working in that he was not “getting along” with other members of staff. When Mr Harris asked for the particular members of staff to be identified, he was told everyone of them. In contrast with the firm for which he had previously worked, the respondent could be classed as a small business enterprise. Apparently he had performed accountancy services for large corporate clients.
Further comment upon the reason for termination was contained in the following words:-
“... he indicated he wasn’t prepared to risk the accumulation of assets he had in his practice by keeping me on.”
This was reiterated by Mr Calleia when the applicant pleaded that he be given a chance as he had left a stable job. This appears to be the totality of what was said and done on this occasion save for the payment of termination monies, which had already been prepared upon his entry to the office.
Relevantly, the applicant received one week’s payment in the lieu of notice, complying with section 170DB(2) of the Act.
It was common ground that nothing else which was apposite to the matter was expressed on the respondent’s behalf. Thus it is clear that the allegations of conduct or performance were not put to the applicant in a way that he was able to mount a responsive case in reply, either by way of excuse, explanation or mitigation.
In the light of this evidence and that led in relation to exhibit “3”, it is little wonder that the respondent conceded at the hearing to a contravention of section 170DC of the Act.
Exhibit “C” was a letter written by the respondent’s solicitors, Messrs. Steel Walker to those of the applicant, Messrs. Michael Riley & Co. An enclosure was the Employers Separation Certificate dated 1 October 1996. This document sets out the alleged deficiencies in the applicant’s conduct and performance ex post facto. The applicant responded to the allegations whilst in examination in chief and denied some and explained away others.
Certain evidence was sought to be given by the respondent. Cross examination of the applicant proceeded in the same manner. An objection was taken by Mr Robinson for the applicant that the matters sought to be led and posed were privileged by reason of the fact the matters were said to be “without prejudice”. The claim for privilege was rejected for the reasons adumbrated on 8 May 1997, which are annexed hereto so as to form part of this decision. Additional authorities will be cited on this point at a later stage.
This evidence referred to offers by the respondent to reinstate the applicant, first such office being made on the 30th September 1996 (or earlier), the same day these proceedings were commenced unbeknown to Mr Calleia. On 2 October 1996 yet another offer was made. No response was received from the applicant in relation to these overtures. The respondent’s evidence was the proposal was on the same terms and conditions of employment under which he had worked prior to his termination. His remuneration identical; he was expected to be no more accountable than other members of staff; expectations of conduct or performance were not widened and in relation to his powers to direct staff, they were to continue. However, limits were imposed which had not been defined previously.
According to the applicant he was prepared to accept reinstatement but did not do so as he would not resume his former position, but one radically different. One example proffered was that he would not resume as a senior accountant, a position he claimed he occupied previously. That this was his status was denied by the respondent and I am inclined to accept this evidence on the basis, the initiating process, the application, describes him as a bare accountant; the advertisement states the quest was for a chartered accountant - see:- exhibit “A”; nowhere in his evidence in chief did he describe himself as a senior accountant. I am satisfied that the title of senior accountant was not bestowed upon the applicant by the respondent. It was his perception that this should be his status, coming from a large city firm to one which was a small regional practice. It was obvious he felt himself superior and this may have been the reason why other members of staff resented his views. Generally, it is thought Mr Harris tailored his evidence to fit his perception of what might provide a rationale of events that would uphold his version of what happened.
Despite, Mr Calleia being disadvantaged by the fact that English was not his first language, his evidence had the ring of truth to it. Where conflict exists on matters of substance in the evidence given by Mr Harris and Mr Calleia, I accept that of the latter. Because of this finding, any onus which the applicant would bear would not have been discharged - see Wyndham Lodge Nursing Home Inc. v Cecile Ann Reader Full Court, Wilcox CJ, Ryan and North JJ., 15 April 1996.
Evidence given by the applicant on the question of reinstatement did not assist the Court it was so evasive as not to be cogent. He was not exactly certain when his solicitor communicated the offer of reinstatement to him but when pressed agreed it was “late September”. This evidence was that he did not consider re-employment with the respondent as “he did not trust Mr Calleia”, yet at one point whilst under cross examination in response to a question whether or not, on more than one occasion, his solicitors had told him Mr Calleia had offered reinstatement, he replied:
“My solicitors advice to me was that Mr Calleia had offered a (sic) alternative employment contract not an offer - at no point have they told me that I received an - an offer of reinstatement.
It was the applicant’s impression that having made the offer, the respondent intended to dismiss him after “having gone through the correct procedures of notification, etcetera.”
For those reasons already stated I am satisfied that the offer to reinstate the applicant was made bona fide. I am sustained in that view by the fact the applicant has never sought reinstatement. Other reasons raised by him in evidence were put forth on the basis of his maintaining credence with the Court. Asked what his intentions were in offering reinstatement this is how Mr Calleia expressed it:
“My intentions were for him to work in my practice to look after a group of clients, bearing in mind that he had no experience with small clients, bearing in mind that he had no - that he had no knowledge of those client’s affairs, that he would listen to advice from me or from the other accountant as to what to do in delicate situations and that was the reason why I spelled out in the letter by reference to, which was to myself or to the other accountant, but there was no intention for him to come back to work in any other capacity other than for him to understand what the terms and conditions of the position was and that was why they were put in writing. I did not offer a different job to what was there in the first place. It was the same job going all the way through. Perhaps I was negligent in the first place in not - in not saying to him: because you are not used to this sort of clientele you may have to refer to others for advice when you’re dealing in certain situations . . . I have a very, very busy practice and the last thing I want to do is to disrupt the work flow going through. We were one man short and we had to work extraordinary hours to keep up and we can’t keep up - up to date and that is why the position is still available to him if he wished to take it up and that situation was expressed to him through his solicitors time and time again.”
This evidence was found to be compelling.
On balance, it is my view, the respondent has discharged the onus it bears to satisfy the Court on the balance of probabilities that the terms and conditions proposed a few days after the termination of the applicant’s employment were no less favourable than those which had prevailed previously.
The applicant bears the onus of proving that subsequent upon a contravention of the Act that all steps have reasonably been taken to mitigate any economic loss. This principle was first enunciated by Viscount Haldane L.C. in British Westinghouse & Manufacturing Co Ltd v Underground Electrical Railway Co of London Ltd [1912] AC 673, where at 689 the Lord Chancellor stated:-
“The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach but this first principle is qualified by a second, which imposes on a Plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach and debars him from claiming any part of the damage which is due to his neglect to take such steps.”
A decision of this Court adopts this view. Madgwick J. in Bechara v Gregory Harrison Healey & Co (1996) 65 IR 382 at 389 found as follows:-
“In a practical sense, I think there is a duty upon an employee whose services have been terminated to mitigate the loss for which he or she seeks compensation pursuant to s170EE(2) of the Act.”
In that case an offer was made within two days of the termination which was held to be in good faith, not impracticable for the applicant to have accepted the offer or negotiated an acceptable variation of the offer.
Having found that the instant offer was bona fide, the question arises whether or not it was impracticable for the applicant to accept the offer or negotiate an acceptable variation of the offer.
To my mind there was no logical or defensible objective reason why the applicant could not have accepted the offer, which he stated in his evidence he was prepared to do. By way of excuse, he alleged the one made diminished the position. This perception was against the weight of the evidence. The only probative fact before the Court, in relation to the earliest overtures, was that nothing was received in reply or even in the form of a counter offer. The applicant’s mind was made up whether reinstatement was impracticable or otherwise.
In Bechara v Healey, 3rd June 1996 (unreported) the Full Court (von Doussa, Marshall and North JJ) held as follows:-
“That evidence justifies the conclusions reached by His Honour that there was an offer made. The precise terms of the offer were not then spelt out but it is plain that she was to return as a employee on terms, at least, not less favourable than had hitherto been in place. Significantly, the cross examination indicates that the appellants reason for rejecting the offer of re-employment was not vagueness or ambiguity of its terms but a decision on her part, not in any circumstances, go back to work as she had made a decision to go into practice on her own account.”
Finding, as the Full Court did in Bechara (supra) that it was not because of the terms of the offer made had any uncertainty about it, that the decision was made on Mr Harris’ part, not to go back to work in any circumstances, I am satisfied by not accepting the offer of re-employment the applicant failed to mitigate his loss.
Further, the primary remedy under the Act is reinstatement, where, as here, this was offered in good faith but a few days after the unlawful termination by Mr Calleia, and, as I see it, was not impracticable for Mr Harris to have accepted it or have negotiated an acceptable variation, it is not appropriate that the discretion vested in the Court under section 170EE(2) should be exercised. Thus, no order for compensation will be made.
Privilege
Already my reasons for decision given on a previous occasion form part of this judgment. Because this matter was argued with passion on the applicant’s behalf, further consideration of the claim of privilege in respect of the “without prejudice” correspondence was deemed necessary. I have not been compelled to change my view as a result of this reflection.
It is clear on the evidence that within days of his dismissal the applicant was aware that he could return to his former workplace. The leading of this evidence was objected to by Mr Robinson. The objection was overruled. The general rule is that communications between parties which are generally aimed at settlement whether oral or in writing cannot be put into evidence without consent of both parties in the event of those negotiations for settlement being unsuccessful: see Bush v Tompkins Ltd v Greater London Council [1988] 3 All ER 737. It is accepted that even though a document is headed “without prejudice” it does not necessarily mean it falls within the ambit of the privilege arising as a result of the rule. This is illustrated in the decision of Gregory v Phillip Morris (1988) 80 ALR 455, where an applicant had been expelled from a trade union and under a local agreement relating to employment membership of a union was a condition of employment. When the employer learned of the expulsion, he terminated the applicant’s employment, writing a letter to the applicant marked “without prejudice”. This communication indicated to the applicant that he would be re-employed were the expulsion lifted. The Full Court of the Federal Court of Australia held that this letter was not privileged and therefore clearly admissible. What fell from Wilcox (as he then was) and Ryan JJ. illustrates the point:-
“The letter was not delivered in an attempt to settle an existing dispute but to indicate the company’s attitude to future re-employment. It would appear that the letter was marked with the words “without prejudice” not because of a desire to render it inadmissible in evidence but out of the wish to prevent the offer which it contained giving rise to a binding legal obligation. In otherwords, the marking was a result of confusion between two distinct legal concepts; admissibility and the intention to create legal relations.”
Mr Walker, for the respondent, submitted that the written offer of re-employment made by Mr Calleia is an exception to the general rule and that this view is fortified by a reading of the Commonwealth Evidence Act 1995 - section 131. As the offer was genuine and merely stated the respondent’s attitude to future employment. Factual parallel between this case and Gregory (supra) can not entirely be drawn. However, it is thought the same legal principle applies.
In relation, therefore to Mr Robinson’s submissions to the contrary, then regrettably I must disagree.
I certify that this and the preceding 13 pages
are a true copy of the reasons for decision of
Judicial Registrar Locke.
Associate: A. Cooney
Dated: 12 September 1997
APPEARANCES
Counsel appearing for the applicant: Mark Robinson Counsel appearing for the respondent: J Walker Dates of hearing: 31 January 1997
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