Hayter v St George Bank Pty Limited
[1996] IRCA 409
•23 Jul 1996
DECISION NO: 409/96
CATCHWORDS
INDUSTRIAL LAW - UNLAWFUL TERMINATION - CONDUCT AND PERFORMANCE - ILLNESS - HARSH UNJUST OR UNREASONALBE
Industrial Relations Act 1988 ss 170DE, 170EA
Nicholson -v- Heaven & Earth Gallery Pty Limited (1994) 57 IR 50
Senrarajan and Rangren v Peteron Plastics Pty Limited (unreported IRCA decision no 329/95, 7 Jul 95
Abbott Etherington v Houghton Motors (unreported IRCA decision no 528/95, 28 Sep 96)
Johns v Gunns (1995) 60 IR 258
ELAINE HAYTER -v- ST GEORGE BANK PTY LIMITED
No. NI 4636 of 1995
COURT: MCILWAINE JR
PLACE: SYDNEY
DATE: 23 JULY 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES REGISTRY
No. NI 4636 of 1995
BETWEEN:
Elaine HAYTER
Applicant
AND:
ST GEORGE BANK LTD
Respondent
REASONS FOR JUDGMENT
(Delivered ex tempore - revised from transcript)
23 JULY 1996 MCILWAINE JR
This is an application under section 170EA of the Industrial Relations Act 1988 ("the Act") claiming unlawful termination of employment. The application by Elaine Hayter, (the applicant) was dated 29 November 1995 and filed in the court on 29 November 1995.
I have a certificate dated 31 January 1996 signed by Deputy President Drake of the Australian Industrial Relations Commission indicating as follows:
"In accordance with subsection 170ED(2) of the Industrial Relations Act 1988 the Commission hereby certifies that it has been unable to settle this matter by conciliation."
The parties did not object to this certificate and I find the matter is properly before me.
The respondent to the application is the St George Bank Limited ("St George"). before the hearing commenced, I mentioned to the parties that I had an investment account and possibly a joint account in the name of my wife and myself in "St George".
I also say on reflection that I have had many contacts in my professional life with the St George Building Society the predecessor of "St George". That society, its officers and employees, always impressed me with their keenness to help the home owner/builder and the community generally. In that respect I have no reason to doubt that each of the persons who have given evidence before me, including the applicant and the employees of the respondent all have a similar commitment. No objection was raised to my continuing to hear the case.
At the outset I record that any findings I make in this matter are related to the termination of the employment of Elaine Hayter by the respondent. I have heard no evidence which would enable me to make any finding which reflects in any way on the legal relationship between "St George" paying the funds, the beneficiary's bank, or the Sydney customer involved in the transaction which gave rise to this hearing.
The person who initiated the transaction was located in Sydney, I shall designate with the initials "NC" and the person who received the benefit of the funds in America, I will nominate as "KCK". I will make available to the parties a legend to enable them to identify the persons to whom I have referred. (See annexure "A"). It is necessary to refer in my judgment to that transaction. In my view, the confidentiality between the customer "NC" and "St George" should be preserved.
The application records that the applicant first started to work with "St George" on 1 July 1994 with her last day worked shown as 15 November 1995. There was no objection taken that the applicant was out of time. As a result of the application being filed on 29 November 1995.
This matter proceeded over 5 days of hearings. The hearing commenced with the applicant giving me evidence which can be shortly summarised as follows:
The applicant gave a history that she left England in 1974 and went to New Zealand and started work as a part-time typist, with the ANZ Bank. She then became full-time and worked as a teller and then on ledgers. Here the applicant learnt trade finance and about the system of import and exporting letters of credit, foreign currency and travellers cheques. The applicant left the ANZ Bank as an assistant accountant to move to Australia. The applicant also held qualifications in typing, shorthand and commercial studies. In 1981 the applicant came to Australia and did temporary work. A reference dated 2 June 1993 was tendered as evidence of her having worked for nine years with Indosuez Australia Limited. That document speaks in glowing terms of her competency in typing, shorthand and general secretarial duties. A note is particularly made of her capacity to think ahead and use her initiative. The reference states the applicant spent six months in the corporate loans administration area and had the responsibility for regular receipt and recording of interest, fees and other recoveries from corporate banking clients.
In 1985 the applicant was given a new position to establish the procedures for and manage the trade finance department dealing with the opening and negotiation of trade import and export letters of credit. It is recorded that
"Her technical banking knowledge of this activity stemmed from her experience prior to joining Indosuez Australia and was enhanced through specific training arranged within Banque Indosuez' overseas offices. In this function, Elaine Hayter successfully built up with the clients and the banks serviced a reputation for attention to detail and reliability in their trade finances needs."
Indeed, the next paragraph of the reference was relied on by counsel for the respondent in his cross-examination to demonstrate that the applicant had not lived up to the standard outlined in the reference as follows:
"Importantly, she demonstrated good team leadership as the head of a small unit within the bank and an ability to make sound judgments on when and how to involve senior management in matters of risk exposure, solving problems and marketing and trade finance activity."
(My underlining and bold lettering)
This line of cross examination ignores the 'solving problem' capacity which I find was her intention in this case.
In May 1993 the applicant was retrenched. From there she went to the Monte Paschi Australia Limited in Janaury 1994. Eventually the applicant started work at St George Bank on level 11, Market Street Sydney. Contrary to her application, the applicant testified that she first started work on a temporary basis with the respondent in around May 1994. During this period, the applicant worked on a temporary basis in domestic operations for 5 or 6 weeks and then transferred into FX Trading. In July 1994 her evidence was to the effect that she became more of a permanent employee although it was not until October 1994 that her permanency was confirmed. Here the applicant first worked with Miss Sue Bennett in the domestic operations. "St George" took over the Barclays Retail Bank and the applicant started work in the FX department, or foreign exchange, trading. The applicant became permanently appointed to the Foreign Exchange Trading Department as Assistant Manager (Operations) in October 1994. The testimony of the applicant was uncontested in relation to her experience in the SWIFT system. SWIFT being an electronic banking system transferring funds between banks on an international basis.
Her prior work history and her uncontested reliable contribution to the operations of "St George" in the FX Department, demonstrated that the applicant has at all times applied herself to her duties with the bank. Moreover, the applicant has frequently been encouraged by her superiors to act on her own initiative in developing the bank's business in foreign exchange. As well, Ms Bennett in her testimony disclosed that the bank had, only in relatively recent times, obtained the foreign exchange licence. I think Mr Barker put it a bit earlier than either Ms Bennett or Ms Hayter gave me in their testimony. In any event, I am satisfied from the history of the development of "St George", that the bank was new to many of these banking services.
During the course of her employment a dispute arose within the organisation in relation to a Mr Paul Smith ("Mr Smith"). Mr Smith had the responsibility for ensuring that reconciliation were completed swiftly for any payments that were made overseas with the accounts held in Australia. From time to time apparently Mr Smith sought the intervention of the applicant to assist in correcting these transactions and recovering funds.
I am satisfied that the applicant was given a specific instruction by Mr Barker based on a correct internal auditing principle that there was a possible conflict of interest in her being involved in those recovery actions. The conflict would be more apparent when her own department may have been responsible for inputting the error. Mr Barker told the applicant to "butt out" of reconciliations and to leave it to Ms Bennett. I am satisfied that during the course of these discussions, Mr Barker was made aware by the applicant that the reconciliations were not being kept up to date by Mr Smith. Unfortunately, Ms Hayter did not take Mr Barker at his words and further refrain from assisting Mr Smith.
Thereafter, the arrangement made between Ms Bennett and Mr Barker for the supervision of Mr Smith was not clearly defined, as it should have been, given the information which had been passed on to Mr Barker by the applicant. The evidence suggests that there were only irregular meetings on these issues and that things were done on an "ad hoc" basis.
There was a physical movement of the offices in November 1994. Some staff under the supervision of the applicant had moved down a floor and this created supervision difficulties. Frequently this type of physical separation imposes management problems, especially where a line supervisor is separated from staff under their direct control. The applicant was obliged to work between the 11th and 12th floors. There is no doubt this provided a difficulty for the applicant in maintaining control of the persons under her immediate supervision. Ms Bennett's criticism of the applicant spending too much time in one area supports this view.
The applicant also gave evidence that there had been previous errors of the nature of what I am about to describe happened in relation to the transaction which has caused her application to come before the court. This was in relation to a Baht transaction. In exhibit 5 there is a note of this transaction which the applicant gave as an illustration where the intervention by her successfully recovered or retrieved the wrongly paid amount. (See Annexure "B").
I think I have said enough about the evidence of the applicant. I had a good opportunity of seeing her in the witness box and, with the exception of one matter which I will return to, found her evidence to be convincing.
The transaction that brought this to a head was commenced in a branch of "St George" which is recorded in a document headed, "Requisition for Overseas Payment". This "Requisition" form was used to transfer funds from Australia to a bank overseas (See Annexure "C"). The requisition, in my view, is similar to a cheque and if a careful examination of that document is made there are disclosed a number of errors which occurred long before the applicant became involved in the transaction.
The first error occurred as a result of the abandonment of the time honoured, and no doubt time consuming, but safe banking practice, of requiring the drawer of funds to write the amount drawn in words and then to repeat the same amount in figures. This enables an immediate comparison to be made. Only recently in my own bank, an error of that nature was drawn to my attention in relation to a personal cheque which I presented. I conclude that this is the first major error made in dealing with this transaction and the responsibility, on the evidence before me, does not lie with Ms Hayter.
In any event, the amount is set out under item "32A" (See Annexure "B") under three headings:
"Value Date",
"Currency",
"Amount"
I am referring to item 32A as recorded on the left hand side of the requisition rather that on the right hand side: "Bank Use Only" section, which was intended to be filled in either by the customer or a bank officer on behalf of the customer. It appears to me that the requisition was filled in completely by a bank officer with the exception that the customer's signature, that is, NC was appended to the bottom of the document above the words:
"Note" this form is to be signed in accordance with customer's authority held or identification of non-customer will be required."
I take this view because of the apparent similarities between the amount in figures on the left hand side of the requisition and those in the right hand side under the heading "Bank Use Only". It may be that there are other parts of the document which were written in different handwriting, however, that is not material in my view for present purposes.
In any event, item 32A was filled in under the heading:
"Currency" :
"USD", (meaning United States dollars);"Amount in Figures":
This figure is quite clear, "8225-07"
Then on the other side under the heading:
"Bank Use Only"
(again against item 32A): "Value Date" is written as follows:
"19.10.05", (it may be that the downward stroke of the 9 has not been included but it is not apparent on the copy document that is in evidence before me)(exhibit 7).
Then the letters "USD" are written, presumably meant to be located under "Currency". However the form is badly designed as there is insufficient room for this purpose. Then the "Amount" and, I make a further observation at this point, that the space allowed for those figures is obviously insufficient because in this case the dates and the initials and the final amount are not written under the respective places that have been set out for them on the form. But in any event it is quite clear to me that the figure that is written there is as follows:
"822507" (and then there is a clear dot (.) at the end; eg 822507.)
So, there was thus, on the face of the form, no clear way of checking the discrepancy.
The second error thus occurred in the preparation of the requisition by a bank officer because it seems to me in the absence of evidence to the contrary, that both section of item 32A on the form were completed in the same handwriting. I immediately concede that I have not had the benefit of examining the original document. Both parties agreed that the original was unavailable for the hearing.
My observations are based only on the photocopy, exhibit 7.
The original document may make the numbers clearer if, for example, a different pen was used, a different shade of colour might be distinguished, or alternatively a coloured pen might have been used under the "Bank Use Only" form. The colour would not show up on a black and white photocopier. The "dot" may have been a spot on the glass of the photocopier. However, both parties have not sought to raise this as a problem in these hearings because of the unavailability of the original document. In any event, the persons working on the transaction in the Foreign Exchange Department were supposed to work from a facsimile document with all the dangers that entails.
Notwithstanding these reservations, I find that the figures shown under the column "Bank Use Only" in item 32A would be read by even trained bank staff to give a date 19 October 1995 and an amount of $822,507 (eight hundred and twenty-two thousand, five hundred and seven dollars). There are two distinct errors in the recording of the information in the "Bank Use Only", that is, the year is written as "05" and "822507 dot" instead of "8225 dash 07".
I note on exhibit 7 there is the possibility that a dot is included on the left hand side in the middle of the "0" in the series of numbers. But this is very indistinct and would require the sighting of the original document to make it quite clear. The chance of this occurring was rendered even more remote because the Foreign Exchange Department relies on a facsimile transmission of the original document from the branch of the bank that takes the requisition.
The third error occurred in the failure of the checking officer to make the figures clear. This could have been done by crossing out the figures and rewriting them. I mention in passing that there is also apparently a requirement for further checking which is shown under the headings. Whilst I am unable to say that this is an error, it seems that the document would have undertaken another process of checking before it came to the person "Kelly".
The fourth error occurred when the incorrect figures were input to the Swiss system by a person called "Kelly".
The fifth error occurred when the release of funds required by the requisition was done by Carol Moran. I note her initials do not appear in the document exhibit 7.
The sixth error occurred in that the system used by the Bank for inputting data to the SWIFT system apparently allows no means of ensuring that the local equivalent of the foreign currency to be transmitted overseas which has already been calculated in the Branch and is on the requisition, can be manually, electronically or mechanically checked by the SWIFT operators against the branch calculation shown on the requisition. Had this been the case the figures recorded on the form, (exhibit 7), as $10,933.58, could have been cross checked before the entry was released by Carol Moran.
The seventh error occurred in the failure of a timely reconciliation; this duty was clearly Mr Smith's. I have earlier remarked on the involvement of Mr Barker and Miss Bennett's and their joint responsibility for this issue.
The eighth error occurred when Mr Smith was apparently under no clear direction to report immediately to Mr Barker or Miss Bennett, any discrepancy which exceeded say, for example, $5000 in a single transaction. My reason for adopting this figure is based on the response given by Miss Bennett and Mr Barker to questions from me on this issue. I allowed the answers to be written down in the interests of the respondent preserving its confidential business arrangements. These are included in exhibits H and G . (See annexures D & E).
The ninth error occurred when Mr Smith sought out Carol Moran to try and redress the situation. Mr Smith was not called to give evidence and I am unable to assess his motivation in taking this course of action.
The tenth error occurred when the applicant agreed to assist in the recovery of the funds on an informal basis rather than requiring Mr Smith to report the matter formally and then assist as directed, or required, to recover the funds. I am unable to form a concluded view as to why the applicant took this course of action without closely examining the working relationship between Carol Moran, the applicant, Mr Smith and their supervisors, Ms Bennett and Mr Barker. Such an examination is not necessary to enable me to determine this case. In any event, it would probably be an impossible task without Mr Smith's version. Such an exercise at this time would also be unfair to Miss Moran given that, with the concurrence of the parties, I have taken steps to ensure I do not hear her case.
This completes my analysis of at least 10 significant and objective errors which occurred in this transaction. There were other errors which I will refer to separately. On the best case available to the respondent the applicant committed the 10th error on 24 October 1995. This is at least the day after and it may even have been longer when an amount of at least $780,000 was withdrawn from the American Bank by KCK.
Mr Barker in his evidence suggests that had he and Ms Bennett known at that point then the bank may have had a better chance of recovering these funds. In the absence of any confirmatory evidence I am inclined to doubt this proposition. Any person such as KCK who received into his account a bonus of some $880,000.00 (eight hundred and eighty thousand dollars) out of a transaction involving an initial outlay of $8,225.07 (eight thousand two hundred and twenty five dollars and seven cents) and who does not query it with the bank at that time is acting, on any view of the situation grossly improperly.
The applicant was cross‑examined quite fully about a number of issues in particular about her understanding of the reporting requirement of her position and whether she knew that it was important to report such a matter as this particular error. The applicant consistently denied that there was any error on her part in that it was not her role to be reporting the incident as her task was to assist to secure the funds.
I have some reservations about her failure to be a little more contrite about the incident. However, I cannot ignore the "butt out and leave it to Miss Bennett" direction given by Mr Barker. In the light of her previous work history before and with the bank, I think the applicant will learn by her experience. I am not prepared to take my reservation about her expressing sufficient contrition about this matter to a point where it should affect or alter the decision I make in this case.
There are some evidentiary difficulties in that I am not completely satisfied that I have all the documentation which relates to this case. That may not be because of any error or omission on behalf of counsel but because the documents have been required for other legal proceedings.
In cases of this nature there is usually one persons word pitted against the other, I would prefer, if I can, to refer to written documentation either to support or reject the oral explanations given by the parties. (See the discussion on this issue by Chief Justice Wilcox in Nicholson -v- Heaven & Earth Gallery Pty Limited (1994) 57 IR 50 at 58-59.
In this regard evidence was given by Ms Bennett and Mr Barker that they produced a chronology on Saturday 11 November 1995, which is exhibit F. Their evidence as to what occurred between them over this weekend was very sketchy. It may be that they did not have the value of the written document, exhibit C is, prepared by Ms Moran and dated 8 November 1995. In that document, Ms Moran, who gave evidence on behalf of the respondent, sets out her version of how the matter came to her attention. I regard the chronology to be self serving. In that regard, for instance, in the third paragraph the applicant, Ms Moran notes:
"In touch with ... Sydney who was in touch with ... N.Y."
There is no mention in the chronology put forward by Mr Barker and Ms Bennett of that contact. There is no evidence before me which would allow me to conclude that Ms Moran was not telling me the truth when she suggested that she had made an early contact with Ben in Sydney to see if the funds could be recovered. (See transcript at page 1419. Reference should also be made to the transcript at page 158, which involves the applicant in suggesting this initial approach.)
It seems to me that this may have been the first approach to the bank prior to any written documentation that was issued.
There was no mention made of the applicant in the 8t November 1995 note. I am of the view that other documents were attached to exhibit (See transcript page 141) where should this be??
On the documentary evidence produced to the Court, it appears that the first written message that was issued was sent at 16.47 hrs on 24 October 1995 and is exhibit B in these proceedings. Tan extract from that message is as follows:
"WE REFER TO OUR MT 100 SWIFT MESSAGE DATED 19TH OCTOBER 1995 PAYMENT OF USD822507,00 VALUE 19TH OCTOBER 1995,...., THIS PAYMENT SHOULD HAVE BEEN FOR USD8225,07 AND NOT USD822507.00, PLEASE RECALL THE DIFFERENCE, ON OUR BEHALF.
MANY THANK FOR YOUR ASSISTANCE WITH THIS MATTER.
REGARDS
CATHY MORAN
FX SUPERVISOR "
(See Annexure "F")
In exhibit 6 Elaine Hayter prepared a document which was sent by facsimilie on 9 November 1995 and in that version she maintains:
"That the error was detected on 24 October 1995 and a message was sent to our correspondent requesting them to contact yourselves and obtain the reimbursement of the overpayment. A reply was received from our correspondent the next day October 25 stated that they were contacting your bank."
It seems to me that the oral approach may have occurred on 23 October 1995 that being probably the first day, given the intervention of the weekend, that it was possible that the reconciliation error had been established. The difficulty for the Court is that apparently any written evidence as to when this report was received by the bank is not available because, apparently Mr Smith had adopted the unusual practice of shredding these reports after he had seen them on the basis that outstanding errors would be taken into account in the following report received the next day. I find that an extraordinary error of judgment on behalf of management to allow that sort of reconciliation practice to occur particularly as Mr Smith's service with the company was under scrutiny. According to evidence given by Mr Barker he was being carefully scrutinised and, there had been a meeting as late as on 18 October 1995 to discuss the performance of Mr Smith.
Evidence was given by a number of other witnesses and I will just summarise their evidence I think at this stage.
I accept that Ms Moran attempted initially to recover the funds by telephoning the Sydney branch of the other bank and speaking to the person named "Ben" in that organisation. No evidence has been led by the bank to say that such a person does not exist and in those circumstances, whilst I am unable to put a firm date or time on it, I accept the evidence of Ms Moran that she did make this approach. I find it is more likely then not that it was reported to Ms Hayter after these phone calls appeared to be unsuccessful. The full picture surrounding this error then resulted in the SWIFT Message of 24th October 1995 being sent.
Ms Hayter and Ms Moran contrary to the written evidence seemed to indicate that their first knowledge of the matter or certainly Ms Hayter's knowledge of the matter was on Thursday or 26 or Friday 27 October 1995. Ms Moran suggested that she could support this view by a notation in her diary as to having to meet a particular individual on the Friday evening. When the opportunity was given to Ms Moran to produce the diary it was not able to be located. I am unable to have reference to that diary for support, or, in rejecting her "feeling" which tendered to support Ms Hayter on this aspect of the case. However, both counsel did not wish to raise with me any difficulties about the failure to locate the diary.
In the overall scheme of things, I do not think the discrepancy between the 24 and the 26 or 27 of October 1995 matters to a large extent because it is clear to me on the evidence that by then the money had left the control of either bank. The evidence of the respondent is to the effect that at least 780,000 had been withdrawn by 23rd October 1995. So that even if there had been some cover up it would not have assisted in returning the funds given the fact that the person was located in America. It may have been a different question if the beneficiary had been in New South Wales so that an urgent injunction to freeze the funds could have been obtained.
It no doubt may be important for the bank to establish from its point of view when the first contact was made with the other bank, if there is any prospect of any further proceedings against that bank in another jurisdiction. In the absence of some further documentation I am unable to establish exactly the date or time that such call was made. I accept that a call was made and I believe that this call was made before Ms Hayter was aware of the extent of the discrepancy.
I have received detailed evidence from Mr Barker and Ms Bennett in these proceedings. It is clear to me on the evidence of both of those persons that there was a failure on both of their parts to clearly define who was to have the day to day supervision of the activities of Mr Smith. Ms Bennett in her evidence was very loyal to Mr Barker and was very reluctant to admit any contribution in this matter by Mr Barker. It is clear to me that there had been a failure between the two of them to make it clear who was to be responsible for following up Mr Smith's activities. It may have been contributed to by Mss Bennett having to fill in for an absent employee. This was a further error that led to the difficulties in this transaction. In relation to these remarks about Ms Reading, I make no finding that she was deliberately intending to mislead the court but I gained the impression that she had been placed in a difficult and stressful situation which she was having difficulties in coping with.
I have had the chance of observing all the witnesses. The three major witnesses, Ms Hayter, Ms Bennett and Mr Barker, all had a personal interest in the proceedings from their different perspective's in relation to their employment with the bank. The witness whom I most expected to exhibit a degree of independence, whose involvement in the case was marginal to say the least was Ms Reading. My first observation of Ms Reading was sitting in the front row of the court room before she was to commence her evidence. From the very start Ms Reading gave me the appearance of being extremely nervous and although I tried to reassure her before she commenced her evidence‑in‑chief her nervousness and tension appeared to increase.
In fact at one stage I formed the view that she was quite distressed as she seemed to be breathing very heavily and I asked if she would require a short adjournment. My offer was graciously declined. Ms Reading's evidence was used to confirm the allegation that Ms Hayter was involved in a deliberate "cover up" of the error or of her own "serious error of judgment" because the applicant had not notified Ms Bennett or Mr Barker of the problem. In the light of my observations, I gained the impression that wherever Ms Reading was required to give an answer that could embarrass either Ms Bennett or Mr Barker an evasive answer was given to the Court or the complete truth was not forthcoming. Therefore I do not place any reliance on her evidence in any substantial way in relation to the allegation that Ms Reading said or tried to make it clear to the applicant that the incident should have been immediately reported. In any event, this would only have been on 8 November 1995.
Initially I formed the view about Ms Bennett that she was a person of swift and decisive action and generally I regarded her as being a truthful witness.
The matter then came to a head after Elaine Hayter sent, as I have referred to earlier, a fax on 9 November 1995 to the receiving bank in an attempt to get the funds back. The applicant went home ill on that day.
There is in evidence the following medical certificate as follows:
" WEST RYDE MEDICAL CENTRE
Date 13/11/95
This is to certify that
Mrs Elaine Hayter
Is suffering from Bronchitis & Sinusitis"and is unable to attend work/school
from 10/11/95 to 15/11/95 back on 15/11/95signed Dr G. Annetts"
The evidence of Ms Bennett and Ms Hayter support one another in the sense that Ms Bennett says that she phoned Ms Hayter at home to ask her where the file on the transaction was located and she was told where it was. No doubt Miss Bennett found it because that enabled Mr Barker and Ms Bennett to spend a considerable period on the Saturday going through the papers and preparing the chronology that I have earlier mentioned.
On 15 November 1995 the applicant returned to work. Ms Bennett again supports the applicant in her evidence to the effect that Miss Bennett was asked if the applicant could take the Friday off to attend the doctor as she still felt unwell and had arranged a doctor's appointment for that day.
It seems to me that it was readily apparent to Ms Bennett that the applicant was still ill and should have been obvious to Mr Barker, although it may not have been to the same extent I do not find that Mr Barker was told about the medical appointment for the Friday. Clearly at the time Ms Hayter was under some difficulties as a result of her illness and no doubt her concern about the transaction.
The bank has very properly conducted this case by a concession through its counsel that a document which is exhibit 9 in these proceedings and is in the following hand written form:
"P.O. Box 660,
Marsfield
NSW 2122
St George Bank
55 Market Street
SydneySeptember 15 1995
Dear Sue,
Please accept this as my resignation effective from today.
Yours faithfully
(signed)
Elaine Hayter."(My underlining)
The document came into existence directly as a result of an interview which occurred between Mr Barker and Ms Bennett and Ms Hayter on Monday 15 November 1995 . Had it not been for the concession by the bank in this regard, I would have had no difficulty in finding that the bank had breached section 170DC of the Act. In the light of this proper admission, I feel that it is not necessary for me to make such a declaration in the circumstances of this case.
It is important that I record my findings as to fact in case this matter has to have a further review. Given the limitation of the authority of Mr Barker delegated by the Board of "St George" which according to his evidence was $500,000, I consider that the correct way to have proceeded in this matter would have been for more senior management to have held an inquiry which focused on the involvement of all bank staff, including Mr Barker and Ms Bennett as well as the retail operation of the bank. A proper inquiry of that nature with the parties then being able to be represented or accompanied by a fellow employee or union official or union delegate and to respond appropriately would have allowed the matter in my view to have been properly investigated.
The way in which this matter has proceeded has meant that there will be difficulties in the future in establishing exactly what happened, It is quite unlikely that Mr Smith is going to co-operate in any way. In any event I regard the allegation of the shredding of documents on a daily basis, if true, to have been quite a serious admission in relation to his conduct. As I have said earlier where there are difficulties in determining who is telling the truth in oral evidence, the documents speak for themselves and are unlikely to have been falsified.
In any event, that procedure not having been adopted, what occurred then was that Mr Barker and Ms Bennett interviewed Ms Hayter about the incident. Their case, of course, was that she made a serious error of judgment from a managerial point of view in not informing them about the wrong payment.
As I have indicated earlier, I do not know why she did not inform them at an earlier date but I do make the positive finding that it was not because she was trying to withhold any information or to act improperly.
I am able to find that there was no deliberate or improper motivation on the part of the applicant intervening to assist Ms Moran and Mr Smith to recover the funds for her employer. If I were able to find any improper or deliberate motivation on the part of the applicant, I would have had no hesitation in dismissing her application. Indeed, I think the contrary was her intention.
The evidence of both Ms Bennett and Mr Barker and Ms Hayter accord in terms of what happened in that interview situation. The only discrepancies as far as I can determine is the allegation by the applicant that Mr Barker was standing up. He denies that allegation. I do not have to make any finding in that respect because it would be sufficient in my view to determine the document (exhibit "9") as being a forced resignation. I do not have to make any specific finding in relation to this matter because of the concession by "St George" through its counsel. NeverthelessIt is a simple task if reliance is placed on the evidence of Ms Bennett where she suggested that Mr Barker said:
"Well, you have a choice, if you resign we will pay you up to the end of January. If we have to terminate your services you will be paid up to today."
Now the evidence of Mr Barker and Ms Hayter are consistent on that point. I think there was a slight difference in relation to Mr Barker's evidence but I make no finding adverse to him in that regard. It seems to me that the applicant was faced with no option other than to resign and in those circumstances it was a forced resignation and therefore a termination of employment at the initiative of the employer. As I have earlier said the bank has properly and rightly conceded that point. However, in the applicant's case these are additional factors which would advantage her case.
The applicant was clearly on sick leave for a not insubstantial period of time, that is from 10 to 15 November 1995. Ms Bennett was aware that the applicant had to attend a further medical on the following Friday. Ms Bennett confirmed in some detail that she had been requested by Ms Hayter to have the Friday off to go and see the doctor.
There is no question raised that the applicant was not genuine in her illness. It was certainly not put to her that she was faking any illness and in those circumstances it is clear to me that her state of health on 15 November 1995 did not allow her the opportunity to defend herself and I would have therefore, on that basis alone, held the bank to be in breach of section 170DC of the Act. There is also support for the view which I have expressed in the resignation document where the applicant has quite clearly written September 15, 1995. The only coincidence about the date is that the 15th is the date of the interview but September is months earlier in relation to these events.
Given the remarks that I have made in relation to the series of errors that were made in this matter, the contribution made by other bank officers and by senior management to this error, I find that the bank has not established a valid reason for the termination. In those circumstances there will be a finding for the applicant on that basis alone.
In coming to that decision, I have had regard to the remarks of Northrop J in the case of Senrarajan and Rangren v Peteron Plastics Pty Limited (unreported IRCA decision no 329/95, 7 Jul 95).
"Subsection 170DE(1) refers to "a valid rason, or valid reasons", but the Act does not give a meaning to those phrases or the adjective "valid". A reference to dictionaries shows that the word "valid" has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is "2 Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value." In the Macquarie Dictionary the relevant meaning is "sound, just, or well founded; a valid reason."
In its context in 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 provisions must "be applied in a practical, commonsense way to ensure that" the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd, 5 May 1995, unreported, when considering the construction and application of section 170DC."
I particularly refer to in the Macquarie Dictionary the relevant meaning is "sound, just or well-founded" a valid reason. In my view the decision made by Mr Barker to terminate the employment of the applicant was neither sound nor reasoned. Moreover, in view of the limitation of authority delegated to him by the Board, or his more senior management, I doubt whether had the lawful authority to terminate the applicant without the approval of the Board of "St George" or senior management.
I now turn to the question of impracticality.
Mr Kethel, who has listened to the whole of the proceedings, gave evidence to me as to the fact that there may be a number of other available positions in the bank, however, some of them would require qualifications other than those possessed by the applicant.
There was evidence given that since the commencement of these proceedings a person has been placed in the position occupied by Ms Hayter. In this regard I have considered the decision of Marshall J in Abbott Etherington v Houghton Motors (unreported IRCA decision no 528/95, 28 Sep 96)
"In almost every conceivable case where the Court has found that an employer has terminated the employment of an employee in contravention of Division 3 of Part VIA of the Act it is likely that an employer will form the view that harmony at the workplace will be affected by the return to work of the employee it has terminated. Such a happening, I believe, is unexceptionable. In my view it is no more than a view that reinstatement is “inconvenient” or “difficult” if an employer says that harmony may be affected by an employee’s return to work in such circumstances. See Liddell v Lembke (“Liddell”) (1994) 127 ALR 342, 360 per Wilcox CJ and Keely J.
I agree with Gray J in Liddell at 366-367, at least in so far as His Honour made the following observations:-
1.The Court “does not possess an unfettered discretion to refuse that remedy [of reinstatement] upon any view as to the relevant merits of the parties.” (at 366).
2.“Its [reinstatement’s] practicability does not depend on notions of loss of confidence in the employee” (at 367).
I do not intend by the above statement to indicate agreement or disagreement with anything else contained in Gray J’s decision at 366-367. It is rather that the two points above are directly relevant to the facts of this case and in particular point 2 above."
Again, I also think the decision of Northrop J in Johns v Gunns (1995) 60 IR 258 is relevant to this issue.
"The fact that the position held by Mr Johns has been filled by another person gives rise to greater concern. This is so particularly where so few people are employed in the beam plant area. There is no evidence to suggest that the new employee cannot be directed to perform different duties or otherwise be absorbed into the workforce. More importantly the mere fact that a position vacated as a result of the termination of an employee has been filled by the engagement of a new employee cannot make the reinstatement impracticable. A contrary conclusion would make the primary remedy ineffective. An employer could refill the position immediately thereby depriving the terminated employee of the remedy of reinstatement. There is no doubt that in cases of this kind an employer faces a difficulty, particularly where a small number of persons are employed. A solution may be for the employer to arrange for a replacement to be employed under a contract in conforming with section 170CC of the Act and Regulation 30BC. Otherwise, the employer may face an application under section 170EA by the employee who is to be terminated to permit the first employee to be reinstated.
In the present case, Mr Johns commenced his application within the prescribed time after his termination. It appears that at all times he has sought reinstatement. In my opinion, the fact that his position has been filled by another person does not make reinstatement impracticable."
In these and other cases, it has been made clear that the fact that a person has been placed into the job formerly held by the applicant may give difficulties to the employer should reinstatement be granted. This is a matter which the bank should have considered before it agreed to the employment of this other person in that position.
There is no doubt in my mind that Mr Barker and probably Ms Bennett - although I do not think she was questioned about this issue - knew that there was a claim for reinstatement and that any action taken by "St George" or him to put anybody in that position without acquainting the new employee with the fact that there was an outstanding application before this court is fraught with difficulties. The result from such an action may well be, if the bank has to terminate that employee, that there is another claim in this court against "St George". I am satisfied that it is not impractical to reinstate the applicant in her earlier position.
The only other issue that I need to look at briefly is the question as to whether "St George" should have the benefit of the applicant's endeavours to earn income in the period since the termination. I have been given a schedule of wages that the applicant received since her termination by "St George". These total some $11,163.75. In all the cricumstances of this case, I do not consider it appropriate to take these earnings into account on calculating the renumeration lost by the applicant.
In all the circumstances of the case, I find that the company had no valid reason pursuant to section 170DE(1) for the termination of the applicant. I am not going to make these orders immediately because I want to hear further from counsel, I propose a declaration and orders as follows:
I declare the termination of the applicant contravened Division 3 of Part VIA of the Industrial Relations Act 1988
The applicant be reinstated by the respondent company in the position that the applicant occupied immediately prior to the termination;
The respondent to reinstate the applicant on the same terms and conditions as applied to the applicant at the date of termination and that such period commence from the date of termination;
The period between the date of termination and the date of this decision be treated as continuous employment of the applicant by the respondent company for all purposes;
The respondent company to pay to the applicant the remuneration lost by the employee because of the termination.
After hearing from both counsel, the orders I make are as follows:
The court declares the termination of the employment of the applicant contravened Division 3 of part VIA of the Industrial Relations Act 1988 and the court orders that the applicant be reinstated by the respondent company in the position that the applicant occupied immediately prior to the termination.
The respondent to reinstate the applicant on the same terms and conditions as applied to the applicant at the date of the termination and that such period commence from the date of termination.
The period between the date of termination and the date of this decision be treated as continuous employment of the applicant by the respondent company for all purposes.
The respondent company to pay to the applicant the remuneration lost by the employee because of the termination between 26 January 1996 and the date of this judgment within 14 days of today.
By consent I grant a stay of my orders as follows:
The applicant will be regarded by the parties being as on paid leave up until 5 August 1996.
Such leave may be continued in the basis that prior to 5 August 1995 the respondent will seek an order from a judge to stay the orders which I have made.
In the event that such an application is not made by 5 August 1996, then the applicant should present herself for duty to Mr Kethel at the respondent's premises on 6 August 1996.
I certify that this and the preceeding twenty-nine (29) pages are a true copy of the reasons for decision of Judicial Registrar McIlwaine, revised from transcript.
Associate: Caroline Sternberg
Date: 21 August 1996
APPEARANCES
Counsel for Applicant: Ms N Rudland
Solicitor for Applicant: Yee & Co
Counsel for Respondent: Mr P Kite
Solicitor for Respondent: Allen Allen & Hemsley
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