Hussein v Westpac Banking Corporation

[1995] IRCA 132

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1228 of 1994

BETWEEN:

ISMET HUSSEIN
Applicant

AND

WESTPAC BANKING CORPORATION
Respondent

REASONS FOR JUDGMENT

30 March 1995  Judicial Registrar Staindl

Introduction

On 8 June 1994 Ismet Hussein (“the applicant”) pleaded guilty to a charge of obtaining property by deception.  The Broadmeadows Magistrates’ Court convicted him and sentenced him to a term of imprisonment of 3 months, such term to be suspended for a period of one year.  He was also convicted of possessing an unregistered firearm (a “slug gun”) and of failing to store firearms and ammunition as required and was fined a total of $500.00 on these charges.  These two firearms charges were of less importance in this case compared to the first charge.  The charge of obtaining property by deception related to the applicant’s allegedly fraudulent use of an ANZ bank card.  This had no direct connection with his employer.

As a result of the applicant’s conviction Westpac Banking Corporation (“the respondent”) commenced an investigation into the applicant’s behaviour. It warned him that one of the possible outcomes was the termination of his employment. In fact, the applicant’s employment was terminated on 21 July 1994 although whether or not it was a termination at the initiative of the employer is vigorously contested. The applicant then applied to this Court, alleging that the termination of his employment contravened the Industrial Relations Act 1988. The hearing of this matter lasted six days during which time the applicant appeared for himself and Mr Bleeby QC and Mr G. Smith appeared for the respondent.

Resignation Or Termination At The Initiative Of The Employer

The first issue to decide is whether or not this Court has jurisdiction, i.e., whether the applicant resigned or had his employment terminated by the respondent.  A determination of this issue entails reference to the facts.  The evidence demonstrates the following chronology in relation to this matter:-

8 June 1994	Hearing at Broadmeadows Magistrates’ Court.
28 June 1994	Interview between the applicant and Mr Scilini (a union representative) on the one hand and Mr Trevor McMahon (Westpac’s Manger, Loss Prevention and Control) and Mr Michael Butler (a senior investigator with Westpac) on the other hand.
11 July 1994	Meeting between the applicant and Mr Alan Harrison (Regional Manager) and Mr Wes Smith (Manager Personnel) at which the applicant was handed a letter detailing the allegations against him.
18 July 1994	Further meeting between the applicant and Mr Harrison and Mr Smith to enable the applicant to present a reply to the allegations.
21 July 1994	Meeting between the applicant and Mr Scilini and Mr Harrison and Mr Smith at which the applicant signed a hand written letter of resignation.

(a)8 June 1994:  Hearing At Broadmeadows Magistrates Court

The applicant had been charged on summons with 25 counts of obtaining property by deception, 1 count of making a false document and 1 count of using a false document.  These charges all concerned the operation of accounts in the name of Mrs Peyman Mustafa, the applicant’s aunt.  The 25 counts of obtaining property by deception related to withdrawals of various amounts from the one account in Mrs Mustafa’s name.  The majority of these withdrawals occurred through automatic teller machines and some of them involved another person in actually using the card.  The applicant described this person as a “cousin”.

On the day of the hearing of the charges the applicant was represented by counsel.  The applicant learnt prior to the hearing commencing that his aunt was ready to give evidence, having travelled out from Turkey to do so.  There were negotiations with the police and ultimately the applicant pleaded guilty to one count of obtaining property by deception in the amount of $11,600.00 (this sum being the total amount of money obtained through the 25 separate transactions on the one account).  All the other charges of dishonesty were withdrawn.  I have earlier set out the Court’s penalty in respect to this charge.  I note that written instructions were obtained from the applicant to agree to a plea of guilty.

I am satisfied that at the hearing of the matter the applicant knew that a representative from Westpac was present in Court:  this fact was mentioned by the Magistrate.  The applicant realised that the outcome of this matter would place his employment at risk:  the advice of his own counsel dated 2 June 1994 (ie. prior to the hearing) draws attention to the ramifications on the applicant’s employment should there be a conviction.

In giving evidence in the present application the applicant denied any wrongdoing on his part.  He said that he pleaded guilty to the dishonesty charge in order to save his elderly aunt the experience of having to be cross-examined and in order to make peace with his aunt’s family.  I do not accept this evidence as to his innocence.  His version of events was inherently improbable, especially given his background in banking procedures and his recognition of the need for written authorities within banking circles.  Furthermore the applicant’s plea of guilty to the charge and conviction represent an admission by the applicant which is quite inconsistent with his evidence before me.

(b)28 June 1994:  Interview With Westpac Investigators

The applicant and a union official, Mr Scilini, attended Mr McMahon’s office in relation to the applicant’s conviction.  Mr McMahon asked him to explain in his own words the outcome of the court case.  Although Mr McMahon at times questioned the applicant I am satisfied that the applicant had a proper opportunity to put his version of events to Mr McMahon.  During the course of this interview there was disagreement between Mr McMahon and Mr Scilini concerning Mr Scilini’s role.  Mr McMahon stated that Mr Scilini was there only as an observer:  Mr Scilini insisted that he should be able to advise Mr Hussein when he thought it was as appropriate.  In view of this disagreement Mr McMahon terminated the interview and told the applicant that Westpac would send him a letter asking him to respond in writing.

(c)11 July 1994:  Letter Given To applicant

The applicant attended a meeting with Mr Harrison (the Regional Manager) and Mr Smith (Manager Personnel).  Mr Harrison explained to the applicant that an investigation had been conducted by Mr McMahon and that the applicant was to be given a right of reply.  A letter dated 11 July 1994 was read to the applicant and he was then given a copy.  It was a carefully drafted letter and refers to the allegations concerning the dishonesty charge and the firearms charges.  The applicant was given a week in which to respond to the matters set out in the letter (and I note that a shorter period had been proposed initially, but that it was extended at the applicant’s request because of the unavailability of his counsel).  I note that in this letter it was stated:

“The Bank is treating this matter seriously and dependent on your response, will consider all of its options, one of which could be the termination of your employment”.

A further meeting was scheduled for 18 July 1994 to enable the applicant to present his response.  I note the sensible procedure which was adopted in this case of a file note being drawn up concerning this meeting on 11 July 1994 and a request being made of the applicant at the next meeting to sign the memo as being a record of the meeting.  The applicant did in fact sign a memo in respect to the meetings on 11 and 18 July 1994.

(d)18 July 1994:  applicant’s Written Response Given To Westpac

The applicant, Mr Harrison and Mr Smith again attended this meeting.  Its purpose was explained, i.e., to allow the applicant to present his response to the letter of 11 July.  The applicant presented a written response which was dated 13 July 1994:  this had been drafted by the applicant’s counsel but was signed by the applicant.  The document was six type-written pages in length and was immediately copied so that both Mr Harrison and Mr Smith could read it.  Having done so, there were no matters which they felt required further explanation.

The applicant’s response recognised that his continued employment with Westpac was at risk.  However, it is obvious from his response that he wished to continue this employment.  Towards the end of the document he states:

“I value my job and respect the organisation.  If you deem that such conduct, through (sic) my plea in all the circumstances, is such that I cannot retain my position within the bank will you at least consider a situation whereby I could be afforded the opportunity of a voluntary resignation.”

At the conclusion of this meeting the applicant was told that he would be contacted by 20 July 1994.

(e)21 July 1994:  Letter Of Resignation Signed

Mr Harrison and Mr Smith attended this meeting on behalf of Westpac.  The applicant attended with Mr Scilini.  There was some conflict on the evidence about what was said at this meeting.  Although a file note was later made by Mr Smith about what occurred at this meeting I am satisfied that it is a highly abbreviated record and contains significant omissions.

Mr Harrison again explained the procedure and then stated that the bank’s position was that it would allow the applicant to resign.  I am satisfied that at some stage the applicant asked if that meant that he could not continue in his job.

Mr Harrison replied that this was the case although I am unable to make a finding about the exact words used.  However, I am satisfied that it was made clear to the applicant that his employment could not continue.  The applicant did not want to resign and began to talk to Mr Scilini about it:  at this stage Mr Harrison said that the applicant and Mr Scilini obviously needed time to talk about it and he and Mr Smith left the room.  Prior to doing so Mr Scilini had enquired about the payment of what was known as a “retirement allowance” and a period of notice.  He was told that the applicant would receive both these benefits.

The applicant and Mr Scilini were alone for about 10 to 15 minutes.  At the end of this time the applicant gave Mr Harrison a handwritten letter of resignation.  It reads:

“Dear Sir

Following the Bank’s recent investigation the result of which was that, I have been advised that it is not possible for me to continue in my employment with Westpac, I regretfully submit my resignation to be effective from 18/8/94.  I do this with much sadness as I have not been give the chance (sic) to continue in my employment with Westpac.

Yours faithfully

I. Hussein.”

The applicant was in fact paid four weeks pay in lieu of notice (ie until 18 August 1994) and also received a retirement allowance of $4,973.00.  This allowance was only paid to employees with at least 20 years service.

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It was argued by Mr Bleeby that the applicant had resigned his employment in his letter of response to the respondent on 18 July 1994.  It will be recalled that the applicant requested that the respondent allow him to resign if he could not retain his position.  In my view this is not a resignation by the applicant.  He has made it very clear in this letter that he wished to keep his job.  His fall‑back position was that he be able to resign.  He maintained this position throughout the whole process.

It was also argued that the handwritten letter of 21 July 1994 was a resignation by the applicant and accordingly the court lacks jurisdiction.  However, in the conversation which occurred at this meeting he asked whether he could continue in his job.  It was made clear to him that he could not.  In this situation the only options for the applicant were to resign or be dismissed.  Understandably he opted for resignation.  In my view this is a situation of constructive dismissal, one of “resign or be dismissed".  It is conduct by the employer which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract.  See Western Excavating Ltd -v- Sharp [1978] ICR 221 per Lord Denning MR, W. Silverschneider -v- MRSA Earthmoving Pty Ltd [1988] AILR 65 and Roberts -v- Prince Alfred College [1979] AILR 320.  Accordingly in my view this is a case involving the termination of employment at the initiative of the employer.

Valid Reason For Termination

This case is unusual.  It involves a dismissal for conduct which is not directly related to the applicant’s employer, the charge of dishonesty related to the ANZ bank, not to Westpac.

There is surprisingly little case law on when a dismissal is justified in such circumstances.  In my view a conviction on a drink‑driving charge which occurred outside work hours would not be relevant to the employment of many people.  However, it would be of critical relevance to a truck or taxi driver.  It seems to me that an appropriate test is whether or not the conduct has a relevant connection to the employment.

Deputy President Lawrence used this test in the case of HEF of Australia -v- Western Hospital 4 VIR 310 at 324 where he said:

“The conviction of an individual for a criminal offence does not necessarily have any effect upon that person’s employment.  The question of the relevance of a conviction or an employee’s alleged misbehaviour to the employee’s work should be considered in terms of whether or not the employee has breached an express or implied term of his or her contract of employment.  Whether events occurring outside the actual performance of work will be relevant to the employment relationship will vary from case to case.  For example, an accountant who has committed an act of dishonesty (for which he may have been charged and convicted) in the course of some activity outside his employment might be said to have breached a term of his contract of employment.

The contractual right of an employer to dismiss an employee summarily on the ground of serious and wilful misconduct is a right which is limited to cases where the misconduct has a relevant connection with the performance of his or her work as an employee.  The position has been summarised by E I Sykes and H J Glasbeek, Labour Law in Australia, Butterworths, Sydney 1972, p 71 in the following terms:

‘In relation to criminal or quasi-criminal offences, it appears that commission of one of these at the place of work is enough.  Where, however, the criminal conviction is in respect of an act which is committed away from the place of work and not in the hours of duty, it appears that the crucial test is whether the criminal conduct touches the course of duties of the workman or his abilities in relation to such duties.’

In dealing with such issues in unfair dismissal claims, two questions will need to be asked.  First, did the employee do the things which are alleged against him?  Second, did the action have any relevant connection to the performance of his duties as an employee?  These two questions have relevance to the present case because it will be necessary to determine if the employees misbehaved themselves, as alleged by the hospital, and whether any misbehaviour had a relevant connection with the performance of their duties as employees.”

The test proposed by McCullum, Pittard and Smith in Labour Law:  Cases and Materials (2nd Edition, Butterworths, 1990), is to a similar effect:  they see the crucial issue as being whether the criminal conduct “touches the employment” (at p. 140).

The applicant was employed as a migrant service officer.  He was stationed at Westpac’s Moreland branch in an area with a relatively large proportion of people whose first language was not English.  The applicant speaks Greek and Turkish and it was part of his duties to try and increase Westpac’s business within the Greek and Turkish communities.  I am satisfied that he was encouraged to promote himself as Westpac’s representative within those communities and that he did so.

The applicant assisted people who came into the bank:  at times he would interpret for them, explain the bank’s procedures, help them complete various forms, help them carry out a range of banking transactions and advise them about different services offered by the respondent.  At times he assisted in the processing of traveller’s cheques, he verified signatures on withdrawal forms, and was directly involved in the processing of loan application forms.  Although he would not  normally handle cash on behalf of customers I am satisfied that on occasions he did so.  In these circumstances it is apparent that the applicant had a position of responsibility and trust.  The respondent was entitled to expect that a person in his position be trustworthy.  It needed to be able to rely on his honesty in the carrying out of his duties.  Because of the applicant’s conduct the respondent no longer had that trust and could not rely on the applicant’s honesty.

In my view there was a relevant connection between the applicant’s criminal convictions and his employment and the respondent was able to rely on them as constituting a valid reason for the termination of employment.

Was The Termination Harsh, Unjust or Unreasonable?

Having found that the respondent had a valid reason for terminating the applicant’s employment I now consider whether the termination was nevertheless harsh, unjust or unreasonable pursuant to sub-section 170EA(2).

The applicant is aged 52 and had been employed by the respondent for just over 20 years.  Since his termination he has tried to obtain other employment but has been unsuccessful.  These factors weigh heavily on me.

On the other hand there is the serious nature of the dishonesty offence to which the applicant pleaded guilty.  I have noted already the importance of the respondent being able to trust the applicant.  There is a further element to this.  In his position as a migrant service officer the applicant was described by one witness as being an ambassador for the bank.  I think this is a fair description.  People within the local Turkish and Greek communities doubtlessly saw him as the public face of Westpac.  If the fact of his conviction became publicly known it could have damaged the respondent’s reputation within the area.  Banks and other financial institutions rely on the public having trust in them.  This trust could be undermined if employees in positions such as those of the applicant were known to be dishonest.  Accordingly, I am of the view that the termination of the applicant’s employment was not harsh, unjust or unreasonable.

I order that the applicant’s application dated 29 July 1994 be dismissed.

I certify that this and the preceding twelve (12) pages are a true copy of the reasons for judgment of Judicial Registrar Staindl.

Associate:

Dated:               30 March 1995

Applicant appeared in person.
Solicitor for the respondent: Counsel for the respondent:	Freehill Hollingdale & Page Mr Bleby QC with Mr G. Smith
Dates of hearing:	5 December 1994 6, 7 & 8 February and 7 & 8 March 1995.
Date of Judgment:	30 March 1995

CATCHWORDS

INDUSTRIAL LAW - Termination of employment - criminal conviction for dishonesty not arising out of employment - whether conviction has a relevant connection with duties - valid reason for termination.

Industrial Relations Act 1988, ss.170DE.

Western Excavating Ltd -v- Sharp [1978] ICR 221

W. Silverschneider -v- MRSA Earthmoving Pty Ltd [1988] AILR 65

Roberts -v- Prince Alfred College [1979] AILR 320

HEF of Australia -v- Western Hospital 4 VIR 310

Labour Law:  Cases and Materials (2nd Edition, Butterworths, 1990)

ISMET HUSSEIN -v- WESTPAC BANKING CORPORATION

NO. VI 1228 of 1994

Before:  STAINDL JR

Place:    MELBOURNE

Date:     30 March 1995