Hodges v Madden Woods Pty Limited
[1996] IRCA 305
•02 July 1996
DECISION NO: 305/96
C A T C H W O R D S
INDUSTRIAL LAW - Termination of Employment - notice - dishonesty - misconduct - allegations not put and not sustained - compensation
Industrial Relations Act 1988 ss.170DB, 170DC, 170DE, 170EA, 170EE
Industrial Relations Regulations - Regulation 30B
CASES:
Briginshaw v Briginshaw (1938) 60 CLR 336
Byrne and Frew v Australian Airlines (1995) 131 ALR 422
Nicholson v Heaven and Earth Gallery Pty Limited (1994) 1 IRCR 199
HODGES AND ALHMWU -v- MADDEN WOODS PTY LIMITED
No. VI-1146 of 1996
Before: Ryan JR
Place: Melbourne
Date: 2 July 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-1146 of 1996
B E T W E E N :
GRAEME HODGES
Applicant
AND
MADDEN WOODS PTY LIMITED
Respondent
MINUTES OF ORDERS
Judicial Registrar Ryan 2July 1996
THE COURT ORDERS:
(1)for breach of section 170DB the Respondent pay the Applicant compensation in the sum of $472
(2)for breach of sections 170DE(1) and section 170DC, the Respondent pay the Applicant compensation in the sum of $6150.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-1146 of 1996
B E T W E E N :
GRAEME HODGES
Applicant
AND
MADDEN WOODS PTY LIMITED t/a THE DELI BAR
Respondent
Before: Ryan JR
Place: Melbourne
Date: 2 July 1996
JUDGMENT EX TEMPORE
(revised from transcript)
The Applicant claims unlawful termination of employment. He seeks compensation and asserts that reinstatement is impracticable.
Mr Farouque of the ACTU appeared for the Applicant and for his union, LHMWU. Mr John Kougiannis, the manager of the Deli Bar in South Yarra appeared for the Respondent. The Respondent company is the proprietor and the licensee of the Deli Bar.
According to the Applicant, and his evidence is uncontested, the Deli Bar is an Italian style restaurant and bar which served up to 120 patrons when he first began to work there as a barman in April 1995. Later, after renovations, the capacity rose to about 200 persons.
The Applicant claims that he worked at least 50 hours a week and sometimes 60 hours. He states that in December 1995 Mr Kougiannis was employed. The Applicant thought he was employed as an accountant because he did not work on the floor of the restaurant and, according to the Applicant, Mr Kougiannis worked with and seemed to have authority over the person then working as the manager of the Deli Bar.
The Applicant states that about Christmas 1995 there was a general staff meeting called by Mr Kougiannis and the two owners of the Deli Bar. At the meeting Mr Kougiannis spoke and announced that the restaurant was running at a loss, (that is the Applicant's claim), and that staff hours needed to be reduced and a new roster system produced. At that time, apparently as a result of that meeting, or about the time of the meeting, a clock-in and clock-out system replaced the previous practice of staff signing on and signing off.
This evidence too is uncontested with one exception: Mr Kougiannis denies that he told the staff the restaurant was running at a loss. He claims he said that the restaurant needed to improve profitability.
A few days after the staff meeting, probably still in late December, the Applicant states that Mr Kougiannis asked him to look at a bar roster he, Kougiannis, had put together. The Applicant's evidence is that the new roster would have reduced his weekly hours to 45 a week at a time when he was working up to 60 hours a week and that he told Mr Kougiannis that he would prefer to continue with that span of working hours and that there were problems with staff cross-overs in the roster proposed by Mr Kougiannis.
The Applicant claims that he wrote up another roster in consultation with his barman colleagues and that he hung that roster up in the bar after obtaining approval for it from Mr Kougiannis. Again, the evidence is uncontested. The Applicant admitted that this roster changed the hours worked by barmen a little but that over any two-week period it did not really result in any reduction in hours, or at least no reduction in hours worked by the Applicant.
The Applicant also gave evidence of a direction which he says came from Mr Kougiannis and which was conveyed to the Applicant by another barman, Mr John Siekris. The direction appears to have been made by Mr Kougiannis and conveyed to the Applicant in late December 1995. The Applicant's evidence is not clear as to whether this direction was conveyed to him before or after the staff meeting or before or after he gained approval for the new bar roster. It seems likely that the direction was made and conveyed, if made and conveyed, after the staff meeting and about the time when the Applicant gained approval for the new bar roster.
The direction, according to the Applicant, was to the effect that a slip print, that is a cash register record of items in an order for food and drink, was to be raised in respect of any refund made for items in excess of $20. To understand the direction it is necessary to understand the sense in which the term “refund” is used by the Applicant. “Refund” was the term used when the account was reduced because of an inaccurate itemisation of a drink, or an item of food or when an item of food was incorrectly included on an order, or when food was rejected, or when a customer, rightly or wrongly, successfully claimed that an item was incorrectly included.
Mr Kougiannis seemed to accept that definition of “refund”, although he claimed that his direction on slip receipts applied to all transactions and not just to transactions over $20. He also claimed he told the Applicant face to face and not via Mr John Siekris. However, the term “refund” was also used by the Applicant, but not by Mr Kougiannis, to describe a practice of notionally refunding all items on an order from a particular table in any case in which the patron moved from one table to another.
In such cases, the items, notionally refunded and cancelled out from the billing record of that particular table, were supposed to be transferred to the new table by keying into the cash register all items recorded on the order and recording the items to the number of the new table. The Applicant gave evidence that at busy times the recording of the items to the new table might wait for 30 or even 45 minutes by way of a slip print affixed to a docket spike which also held normal dockets where no transfer of table took place.
In other words, at busy times the transfer of the refund would occur well after the cancellation out of the original order when, according, to the Applicant, when time permitted, he would use the slip print on the spike to key in the items for the new table. The Court notes that such a system could lead to underpayments if customers leave the restaurant without offering to pay, having changed tables and having left during a period when the order had not been transferred to the new table.
Mr Kougiannis raised this risk in his evidence, but it is not clear he spelt out the risk to the Applicant, although the Court would be surprised if he did not do that. The Court also notes that the potential for under-payments was even more likely under a previous practice, which the Applicant claims applied, whereby no separate record by way of slip print was made or kept in respect of such refunds.
By way of complication, the Court further notes that a single item on an order, or for that matter an order entered as a single item, can be cancelled or removed or voided by pressing a Void Key in the cash register. The Void Key is intended to be used to immediately cancel an error in recording an item in an order prior to keying in the corrected item. But there was potential for a Void Key to be manipulated and used dishonestly to deprive the proprietors of legitimate takings.
It is clear from the evidence of the barman, Mr Camelleri, that this weakness has been addressed by the inclusion on cash registers of a Transfer Key. The Court simply notes that there is still potential for dishonest manipulation of the Void Key although such manipulation maybe detectable if there is an appropriate audit trail on the cash register roll or recorded in the register memory.
The Applicant claims that the general practice was that orders for food and drink were taken by waiters and that the barman keyed in the orders for both food and drink and then prepared the drinks which were conveyed by waiters to the tables or picked up by customers from the bar. However, the Applicant also claims that waiters on the floor and staff behind the bagel bar at times keyed in orders into the cash register especially when bar staff were busy. Mr Camellari claims he discouraged this practice but that it still occurred at busy periods.
The Applicant asserts that on the morning of Saturday 6 January 1996 Mr Kougiannis approached him at the cash register and indicated that he wanted slip prints done on every single refund. The Applicant described the request as made in a demanding manner. He says he understood the demand to be one in which a slip print was required for every occasion on which the Void Key was used to correct an error and for every refund record, including items under $20.
The Applicant claims he remonstrated with Mr Kougiannis and said that the requirement was not workable in every situation and that if he was busy, and presumably if the items were under $20, he would continue to use the void button and continue the enter process. According to the Applicant, Mr Kougiannis replied as follows:
You may as well leave Graham.
The Applicant states that he continued to dispense drinks as he was the only barman then present and that, in any event, he did not really believe Mr Kougiannis wanted him to leave and that it was what he described, somewhat curiously, as “just a scare tactic”. Another barman arrived shortly thereafter and the Applicant received a message that Mr Kougiannis wanted to see him in the office. He states that Mr Kougiannis met him on the way to the office, they went into the office and Mr Kougiannis slammed the door and waved a finger at the Applicant and spoke to him loudly and aggressively and said words to the following effect:
You do as you're fucking told when I fuckin tell you or fucking leave.
The Applicant says that:
he and Mr Kougiannis were standing toe to toe
he was shocked and dumbfounded
he withdrew rather than returning the aggression
Mr Kougiannis was explosive and was yelling and demanding that the Applicant explain refunds of $200 and refunds up to $400 and was shaking a cash register roll he held in his hand and pointing to folders behind his desk
he, the Applicant, was upset, choking and holding back tears and replied that in a restaurant the size of the deli a lot of patrons moved tables and that it was quite possible to get refunds of the amounts described by Mr Kougiannis.
The Applicant stated that Mr Kougiannis asked him what he did when patrons moved tables and that he then explained the process outlined above. He claims that Mr Kougiannis asked him how the register worked and asked the Applicant to be very careful, presumably to be very careful in his claims as to how the register worked. The Applicant claims:
he was adopting a low key attitude, but that Mr Kougiannis was still very aggressive
he offered to demonstrate on the register what he did in respect of refunds
Mr Kougiannis took him up on the offer and slammed the door of the office as they went into the restaurant and to the register
Mr Kougiannis asked the Applicant to key in a refund as if dealing with a table transfer and to do it using the Void Key on the register
the Applicant tried to do this twice using the Void Key but the register would not process the transaction
(6) the Applicant then successfully processed the demonstration transaction using what the Applicant described as the Refund Key
Mr Kougiannis then tried to process the demonstration transaction or at least to use the words of the Applicant:
“Tried the Void Key but it would not work.”
The Applicant states at this stage Mr Kougiannis lowered his voice, adopted a less aggressive tone, and was “obviously embarrassed” and said that he had been given wrong information. The Applicant claims that he responded with words to the following effect:
“Despite what you think I had your best interests at heart. If you are going to make accusations you need to ensure that your facts are right.”
The Applicant repeated that he was distraught, choking, and holding back tears, and that he went outside the restaurant for about 15 minutes, and that one of the owners, Michael Flaridia, entered the restaurant during this period and glanced at him (that is, glanced at the Applicant). The Applicant states that later that day Mr Flaridia had what could be described as a supportive conversation with him. As the Applicant has not called Mr Flaridia the Court places no weight on the conversation and has not taken any account of it as being supportive or non supportive.
The Applicant also gave evidence of a conversation the next day, 8 January 1996, with the other owner, Mr Sam Cosmano. Again the Applicant did not call Mr Cosmano and the Court would not normally place any weight on the substance of a conversation without the opportunity to hear evidence from both participants. However, the Court notes that the Applicant gave evidence of reported remarks by Mr Cosmano which were not necessarily supportive of the Applicant. The Applicant deposed that he asked to see Mr Cosmano and told him that he, the Applicant, was very upset about the events the previous day, and that Mr Cosmano replied:
“Graham, that still does not explain the refunds.”
The Applicant also stated that Mr Cosmano also confirmed that Mr Kougiannis was the overall manager.
The Applicant states that on 11 January 1996 in the evening:
he was working in the bar with another barman
he asked Mr Kougiannis could he leave early to pick up a friend from Melbourne Airport, that is from Tullamarine, and that Mr Kougiannis replied, "No worries, Graham"
as he was about to leave the premises to go to the airport he received a message that Mr Kougiannis wanted to see him in his office
he went to the office and Mr Kougiannis closed the door and said words to the following effect:
“I'll come straight to the point, Graham, you are stealing money from the till, I know you are taking money from the till, if you tell me who else is involved I will take no police action, you can leave.”
The Applicant produced handwritten notes, exhibit A1. The notes bear the time and date 1.40 am, 12.1.96. He deposed that he wrote the notes soon after he got home from the airport on 12 January 1996. The notes are consistent with the Applicant's oral evidence and read as follows:
“I'll come straight to the point, Graham, I know you've been stealing from the till, tell me who else is stealing and I'm willing to let everything drop and you walk free. If you don't admit to stealing I will ring the police and press charges. I have video evidence that shows you putting money in your apron on more than one occasion. Security firm by the name of Honeywell Security.
I've had a staff member watching you and they've seen you void money off items that went there and placed the money in your apron. I know what's been going on with the tips and the till Graham. I'll ring the police in front of you Graham. 10.40 pm.”
The note reads:
“Hang up once and rings again -”
the note then reads -
“from the deli -” (a reference to Mr Kougiannis introducing himself on the phone as John Kougiannis from the deli)
“Is Angela there, I have a staff member who I believe is stealing money and I want to press charges.”
The note continues -
“What I say in this office doesn't go any further. If you think the room's tapped we can go outside and you can give me names there.”
The note also briefly summarises what the Applicant deposed happened on Saturday 6 January. There is no need to repeat that note. It is consistent with the Applicant's oral evidence but is less detailed.
At the hearing the Applicant denied stealing money at any time and expressed the belief that no other member of staff had done so either. He stated that Mr Kougiannis concluded the interview by saying:
“Come back at 12 tomorrow. I'll have your pay ready and the police will be ready to charge you.”
The Applicant deposes that he tried to contact Mr Flaridia by telephone from the airport and eventually spoke to him by telephone about 2 am. He also states he rang Mr Flaridia again at 11.30 am and was told his final pay would be ready at 3 pm. At 3 pm he saw Mr Kougiannis who said: “I know you called Michael, that is Mr Flaridia, last night, but my word is final”.
The Applicant received an underpayment owed to him for the previous week and a payment for wages owing to him to 11 January 1996. He did not receive a payment in lieu of notice. He asked for an employment separation certificate. He states that Mr Kougiannis indicated that he would mail the certificate. As this did not occur the Applicant obtained an employment separation certificate and took it to Mr Kougiannis. Exhibit R2 is an employment separation form signed by Mr Kougiannis and dated 17 January 1996.
The Applicant deposes that, at first, Mr Kougiannis did not indicate a ground for termination, but asked the Applicant what he should put on the form. The Applicant states he replied: “put whatever you like” and that Mr Kougiannis then ticked the box marked "shortage of work."
The Court notes that he did not tick the box marked "misconduct" or the box marked "unsatisfactory work performance." Mr Kougiannis claimed on several occasions during his evidence that he marked the shortage of work box because he wanted to assist the Applicant to draw unemployment benefits as quickly as possible. He claims that in the circumstances he does not see any inconsistency in reporting in those terms to the Department of Social Security, although the form clearly states:
Please note there are penalties for deliberately giving false or misleading information.
Even more extraordinary is the response to the Court given by Mr Kougiannis on oath when he was recalled to the witness-box. He had earlier, on several occasions, denied that he ever contacted the police, but admitted that he had said that he would do so.
When recalled to explain an earlier admission, that the reference to “Angela” in the Applicant's evidence and in exhibit A1 could have referred to “something that may have happened when the employment separation certificate was completed”, Mr Kougiannis claimed that about the time of completion of the certificate, he decided that he should get the police to handle the matter. He stated he rang the Prahran Police Station and asked for a policewoman he knew by the name of Angela, but that she was unavailable.
This appears to be an inherently unlikely action to take at the time when he had just completed a declaration to the Department of Social Security omitting to indicate that the Applicant had been terminated for stealing which, of course, is clearly serious misconduct, if established and if the real ground for termination. It is far more likely that the telephone call to the Prahran Police Station, first denied and then admitted by Mr Kougiannis, took place, as the Applicant deposed, and also recorded in exhibit A1, namely at the termination interview on the evening of 11 January 1996.
Mr Kougiannis, in his evidence-in-chief, and in cross-examination, and in response to questions from the Court, constantly contradicted himself, gave conflicting evidence and changed his evidence and his evidence often bore the marks of recent invention. The conflicts and changes in his evidence will be apparent from any examination of the transcript. It is not necessary for the Court to call for a transcript or wait for a transcript or to enumerate the conflicts and changes. By way of example, at one stage in his evidence Mr Kougiannis claimed that he actually saw the Applicant steal money.
When taxed with that he claimed that:
there was an occasion when he saw the amount of money given by a customer to the Applicant
he saw an amount, which may have been dollar or a single coin, go into a tip jar
he ran after the patrons and they told him exactly what they had ordered and what they had paid and that it was about $43
he saw that amount exactly, whatever it was paid to the Applicant and the Applicant put a coin in a tip jar.
Mr Kougiannis described the above as an example of actually seeing the Applicant steal money.
At one stage he said he could not recall whether he had a conversation in the office on 6 January with the Applicant. Later he conceded he did and that it was on 6 January 1996.
He claimed he never told the Applicant he had been caught on video, but when pressed as to how the Applicant identified Honeywell Video, he replied that at some stage he told his staff that he was going to get Honeywell Video “to monitor operations”.
He gave evidence which conflicted with that of his own witness, Mr Camelleri in respect of what Mr Camelleri swore he saw on one occasion which was no more than a report of the Applicant operating the register very fast, slamming the drawer closed quickly and putting his hand in his apron pocket. Mr Kougiannis changed his evidence several times in respect of the provision of the employment separation certificate to the Applicant and as to what occurred on 6 and 11 January.
He suggested in his initial evidence that the cash register roll of 13 December 1995 was one taken into account by him and shown to the Applicant on 6 January 1996 but later admitted that he could not state that the Applicant was working on 13 December 1995 and that he was not himself yet employed by the Respondent on Wednesday, 13 December. The Court notes that Wednesday was the Applicant's usual day off.
When taxed with this, Mr Kougiannis denied that he had said or implied early in his evidence that the register roll of 13 December 1995 was relied on or referred to or shown to the Applicant on 6 January 1996.
At one stage he said he had a good grasp of the operations of the cash registers, but at other times he was uncertain and said that he did not need to have a technical knowledge of the registers and it was the Applicant who knew all about the operation of the register.
In all the circumstances, and based on a balance of probabilities, the Court must and does accept the consistent, precise and, in part, documented evidence of the Applicant in preference to the inconsistent, imprecise and changing evidence of Mr Kougiannis. There was absolutely no question of establishing from the evidence that beyond reasonable doubt Mr Hodges stole money from the Respondent.
Of course the test in this jurisdiction is not beyond reasonable doubt, but balance of probabilities. However, when the allegation is one of a criminal offence, stealing, an allegation justifying and incurring summary termination of employment, such circumstances indisputably require the Respondent to prove the allegation on a very high balance of probabilities test. Briginshaw v Briginshaw (1938) 60 CLR 336 is an adequate and long‑standing authority for this proposition. At 362 Dixon J, as he then was, said:
“Except upon criminal issues to be proved by the prosecution it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the Tribunal, but reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding, are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal.
In such matters reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences.”
Mr Farouque drew analogy with the statement of the majority in Byrne and Frew v Australian Airlines (1995) 131 ALR 422 at 434 as follows:
“The Respondent contends that having failed to consider whether the evidence established that the appellants had been involved in pilfering the majority in the Full Court were in no position to determine whether the procedure adopted resulted in their dismissal being unreasonable.”
That was, of course, a reference to the Full Court of the Federal Court which, for particular reasons, did not find it necessary or even at that stage appropriate to consider whether evidence established pilfering. The principle, of course, stands, but a more appropriate citation could be made from later on page 434 of the judgment where the majority said:
“Failure to afford an employee the opportunity to explain apparent misconduct where there is an innocent explanation available would result in the dismissal of the employee being harsh, unjust and unreasonable. On the other hand, if an employer were to observe the actual misconduct of an employee in circumstances which allowed no innocent explanation, a summary dismissal might not be harsh, unjust or unreasonable.”
The fact is that here the Respondent has failed to establish a valid ground for termination and has signally failed to give the Applicant any warning of the allegations made on 6 January and 11 January 1996, and has failed to give the Applicant specific allegations to which he could respond. The evidence submitted does not substantiate dishonesty. It does not substantiate allegations of stealing by the Applicant. It does not establish discrepancies attributable to the Applicant. The Court is not surprised that the system in place then led to discrepancies. There is evidence there are still discrepancies, but Mr Kougiannis seems to think they are acceptable in a commercial environment of a busy and large restaurant (that is the present discrepancies, not the earlier discrepancies).
The discrepancies such as they were, and the Court accepts that there were indeed discrepancies, cannot be attributed to the Applicant and cannot justify his summary termination on the grounds of serious misconduct.
The Respondent has breached S170DE(1) and S170DC and indeed S170DB.
For the breach of S170DB the Applicant is entitled to the payment equivalent to one week's wages which the Court assesses as best it can in the absence of documentary evidence. The Court notes the final payment to the Applicant on the employment separation certificate was recorded as $462 and orders the Respondent to pay the Applicant $462 compensation in lieu of notice.
I find reinstatement impracticable. Both parties are also of that view. For the breach of S170DE(1) and S170DC, I am not prepared to award the maximum compensation which is 26 weeks. I will simply say that I am not prepared to award the maximum compensation which would be the equivalent of 26 weeks wages. In respect of average weekly wages I have already drawn attention to the fact that there is no documentary evidence of earnings. I do not accept that the Applicant would have continued to have work on average 50 hours a week. I do not accept the Applicant would have been able to continue to resist a reduction in his hours. He seems to have avoided a reduction in his hours in December 1995, but in my view his hours would have been reduced in early 1996 if he had remained.
I will base compensation on average earnings for 40 hours a week and I therefore assess average weekly earnings at a net amount of $400 a week and assume a gross amount of $520. I note that the Applicant is a full‑time student. He may not of course have taken up full-time study if he had not been terminated, but then again there is a real likelihood that he would have done so. Also, in accordance with assessment of likelihood of future employment, as outlined by the Chief Justice of this Court in Nicholson v Heaven and Earth Gallery Pty Limited (1994) 1 IRCR 199, I am not prepared to assume that the Applicant who had been employed from 1 April 1995 to 11 January 1996, a little over 8 months, would have remained there for more than another 5 months.
I propose to order compensation from a base equivalent to 20 weeks wages, with the average weekly earnings gross at $520 a week. That would amount to a sum of $10,400. I reduce that sum by the Applicant's earnings over 21 weeks at $85 a week and by weekly payments of Austudy allowance at $128.56 a week. I would therefore be reducing the compensation by $4256.20, which would leave notional compensation of $6144.80. What I propose to order is compensation in the sum of $6150. Therefore, the orders of the Court are:
for breach of section 170DB the Respondent pay the Applicant compensation in the sum of $472
for breach of sections 170DE(1) and section 170DC, the Respondent pay the Applicant compensation in the sum of $6150.
MINUTES OF ORDERS
THE COURT ORDERS:
(1)for breach of section 170DB the Respondent pay the Applicant compensation in the sum of $472
(2)for breach of sections 170DE(1) and section 170DC, the Respondent pay the Applicant compensation in the sum of $6150.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
I certify that this and the preceding 12 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.
Associate:
Dated: 11 July 1996
Representative for the Applicant: Mr K Farouque
Mr J Kougiannis appeared in person.
Date of hearing: 1 and 2 July 1996
Date of judgment: 2 July 1996
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