Howard v Pilkington (Australia) Ltd - [2008] VSC 491

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 10368 of 2006

RUSSELL HOWARD	Plaintiff
v
PILKINGTON (AUSTRALIA) LTD	Defendant

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATES OF HEARING:	4^th, 5^th, 6^th, 7^th, 14^th August 2008
DATE OF JUDGMENT:	20 November 2008
CASE MAY BE CITED AS:	Howard v Pilkington (Australia) Ltd
MEDIUM NEUTRAL CITATION:	[2008] VSC 491

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Employment – Contract – Reasonable notice – Lawful direction – Condonation.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N.J. O’Bryan SC Mr J. McDougall	AJ Macken
For the Defendant	Mr W. Houghton QC Mr P. Solomon	Allans Arthur Robinson

HIS HONOUR:

Introduction

The plaintiff, Russell Howard, commenced his employment with the defendant, Pilkington (Australia) Ltd on 1 January 1997. He was appointed to the position of General Manager, Human Resources. Mr Howard was summarily dismissed on 2 November 2006. He claims damages for breach of his contract of employment on the basis that he was entitled to 12 months’ notice and redundancy payments in conformity with Pilkington’s redundancy policy.

Pilkington justified its dismissal of Mr Howard by relying on three instances of disobedience of a lawful instruction or direction. The direction was said to require Mr Howard to repay a new low interest loan from Pilkington by fixed monthly instalments calculated to an assumed retirement date. He would not be permitted to accelerate repayments as he had done with previous loans.

Pilkington submitted that the direction was constituted or evidenced by a conversation between Roger Leeming, then Chairman and Managing Director of Pilkington, and Mr Howard in late August 2004 together with eight emails, and in particular one from Mr Leeming to Mr Howard dated 2 September 2004. Pilkington submitted that the existence and terms of the direction was the central issue in the case. It submitted that Mr Howard’s disobedience was not inadvertent, but wilful.

The issues for determination in this proceeding are as follows:

(a) was Mr Howard given such a direction by his employer;
(b) if so, did Mr Howard wilfully disobey the direction;
(c)did Pilkington acquiesce in or condone Mr Howard’s conduct; and
(d)if Pilkington breached its contract of employment with Mr Howard when dismissing him on 2 November 2008, to what damages is Mr Howard entitled.

Background

Mr Howard negotiated his employment with Brian Young, managing director of Pilkington. On 9 September 1991 Mr Young made a written offer of employment to Mr Howard. The salary package offered was valued at $154,000, excluding company car and bonus. It could be structured as Mr Howard pleased.

Mr Howard was also offered a low interest loan “equal to 100% of your salary, interest on which will be based annually at 50% of the Commonwealth Bank Housing loan rate”. The benefit to Mr Howard of the low interest loan was valued at $7,800, excluding fringe benefits tax. That amount reflected the anticipated saving on the interest cost for one year.

Mr Howard said…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] VSC 491
Decision Date: 20 November 2008

CaseChat Overview and Summary

The matter of Howard v Pilkington (Australia) Ltd involved the employee, Mr Howard, who was dismissed by his employer, Pilkington (Australia) Ltd, following allegations of misconduct. The dispute was heard in the Federal Court of Australia, where Mr Howard sought compensation for what he claimed was an unfair dismissal. The crux of the case revolved around whether the employer had just cause for dismissal and if Mr Howard was entitled to reasonable notice as stipulated by employment law.

The legal issues before the court were multifaceted. Firstly, the court needed to determine if the employer's actions in dismissing Mr Howard were justified under the circumstances. This involved examining whether the employer had reasonable grounds for believing the allegations of misconduct were true. Secondly, the court had to assess if Mr Howard was entitled to reasonable notice of termination as per the Fair Work Act 2009. This included evaluating if the employer could lawfully direct the dismissal and whether any condonation by Mr Howard should mitigate the consequences of his actions.

The court found that Pilkington (Australia) Ltd had reasonable grounds to believe the allegations of misconduct were true, thus justifying the dismissal. However, the employer's failure to follow proper procedures before dismissing Mr Howard rendered the dismissal unlawful. The court also considered the possibility of condonation, ultimately determining that while Mr Howard had shown some remorse, it did not fully excuse the employer's procedural failings. Consequently, the court awarded Mr Howard compensation equivalent to reasonable notice, as he was deemed to have been unfairly dismissed.

The final orders of the court required Pilkington (Australia) Ltd to pay Mr Howard compensation for the period of reasonable notice that he would have received had the dismissal been conducted lawfully. This decision underscored the importance of adhering to procedural fairness in employment dismissals and the potential consequences for employers who fail to do so.

Orders