Jae Min Kim v Sydney Tools

[2021] FWC 3301

[2021] FWC 3301

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jae Min Kim
v
Sydney Tools
(U2021/76)

DEPUTY PRESIDENT CROSS SYDNEY, 8 JUNE 2021

Application for an unfair dismissal remedy – application dismissed.

BACKGROUND

[1] An application was filed on 5 January 2021 (the Application), by Mr Jae Min Kim (the Applicant), pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act), following his dismissal on 17 December 2020. The Applicant seeks an unfair dismissal remedy of 26 weeks compensation.

[2] The Applicant commenced employment with Sydney Tools Pty Ltd (the Respondent) on 11 January 2016. The Applicant was employed as a Lead Graphic Designer.

[3] On 15 February 2021, directions were issued to program the manner in which the Application was to proceed to hearing (the Directions). The Directions were as follows:

1. Jae Min Kim (the Applicant) is directed to file with the Fair Work Commission, and serve on Sydney Tools (the Respondent), an outline of submissions, witness statements and other documentary material the Applicant intends to rely on in support of the application in this matter by 4pm on 1 March 2021.

2. The Respondent is directed to file with the Fair Work Commission, and serve on the Applicant, an outline of submissions, witness statements and other documentary material the Respondent intends to rely on in opposition to the application in this matter by 4pm on 15 March 2021.

3. The Applicant is directed to file with the Fair Work Commission, and serve on the Respondent, any reply material, that is, any witness statements and other documentary material in reply to the Respondent's witness statements and documents by 4pm on 22 March 2021.

4. Any party that requests permission to be legally represented at the hearing is directed to file with the Fair Work Commission, and serve on the other party, a brief outline of submissions in support of its request by 4pm on 15 March 2021.

[4] The parties complied with the Directions. In particular:

(a) On 1 March 2021, the Applicant filed an Outline of Submissions (the Applicant’s Submission), a statement of the Applicant dated 26 February 2021, a statement of Matthew Ciantar dated 20 February 2021, and an undated letter in the form of a statement from Mr Phillip Cavagna;

(b) On on 15 and 19 March 2021, the Respondent filed an Outline of Submissions (the Respondent’s Submission) with annexures, a statement of Mr David Hernandez, Human Resources Business Partner of the Respondent, and a statement of Ms Chloe Bryant, Lead (Senior) Graphics Designer of the Respondent; and

(c) On 22 March 2021, the Applicant filed an Outline of Submissions in Reply (the Applicant’s Reply Submission), a further statement of the Applicant dated 22 March 2021, and a further undated statement of Matthew Ciantar.

[5] On 26 March 2021, additional to the Directions, the Respondent filed a Supplementary Statement of Chloe Bryant.

[6] The hearing of the matter occurred on 29 March 2021 (the Hearing). Each party sought and was granted permission to be represented by Legal Practitioners.

Factual Background

[7] Over the course of the Hearing, the relevant factual background of the matter was refined, and the controversy between the parties related to the legal consequences of those background facts. In the course of that refinement, the initial position of the Applicant changed to an extent, and as outlined below, I consider that to have reflected adversely on his credit.

[8] The Applicant was employed by the Respondent on 11 January 2016, as a Graphic Designer. In 2018 he was promoted to Lead Graphic Designer. The Applicant’s key areas of responsibility in his role as a Lead Graphic Designer included:

(a) Photography of products for the Respondent’s website (the Website);

(b) Photoshopping and editing products for the Website;

(c) Listing products on the Website; and

(d) Liaising with the import team for new listing of ‘home brands:’

[9] All of the Respondent’s employees enter into an employment contract. Prior to commencement of employment, employees are sent their contracts for review. It was an express written term of the Applicant’s employment contract (at clause 16.1) that he would not:

‘…during the course of his employment with Sydney Tools and for the restricted period after the termination of your employment with Sydney Tools, directly or indirectly:

…

c) Within the industry, engage in, or directly or indirectly assist any person or entity other than Sydney Tools to engage in a business, or further a business interest, similar to or in direct or indirect competition with Sydney Tools’ business.’

[10] Clause 15.1 of the Applicant’s employment contract, titled Intellectual Property, provided:

‘You agree that at all times during your employment and at all times following your employment with Sydney Tools, not to disclose any information relating to the Intellectual Property of Sydney Tools, including but not limited to the divulgence of client lists, supplier lists (including details of all international suppliers), company operations training, employee details, terms of employment, pricing structures and trade secrets unless permitted by law.’

[11] The Respondent operates a business of selling industrial, construction, automotive, trade power tools, both on a retail and wholesale basis, and through in-store and online sales. In addition to branded stock from well-known suppliers, the Respondent has its own ‘home brand’ range of products such as Daytona, Xtorque, Tradesman, Pinpoint, Fendi and CPI, which are a responsibility of its imports team that was previously managed by Mr Ciantar. The Respondent has registered approximately forty trademarks in connection with its ‘home brand’ range.

[12] The Respondent’s ‘home brand’ lasers are their number one selling product. The Respondent is known for selling premium products which provide it with a competitive edge in the marketplace.

[13] From November 2020, Mr Ciantar, who previously worked with the Applicant for the Respondent for five years, asked the Applicant whether he could design work for Mr Ciantar’s new pizza tool and portable home projects business. The Applicant said he could help Mr Ciantar. The Applicant did not disclose that work to the Respondent.

[14] At a later time, Mr Ciantar asked the Applicant if he could design a catalogue for a concept brand called Titant (the Titant Catalogue). Titant was said to be a non-existing brand. Mr Ciantar explained to the Applicant that he was starting an importing business.

[15] The Titant Catalogue was said to be intended to be used by a company called Tilbury Global (Tilbury), an importing agent, whose targeted customers are government and international retailers. Tilbury is run by Mr Cavagna who is based in Victoria. Mr Cavagna stated that Tilbury did not at the relevant time operate a business in Australia and did not plan to operate in Australia in the foreseeable future. The Titant Catalogue was intended to be used as a proposal for US customers of Tilbury.

[16] Mr Cavagna knew of Mr Ciantar due to Mr Ciantar previously working for the Respondent. After Mr Ciantar left the Respondent, Mr Cavagna contacted him and they formed a business relationship.

[17] The Applicant designed the Titant Catalogue at the request of Mr Ciantar and exchanged the Titant Catalogue with Mr Ciantar and Mr Cavagna. The Applicant stated that he worked on the Titant Catalogue outside of his working hours.

[18] The Respondent stated that the Applicant was sent an email on 16 December 2020 inviting him to a meeting with management. That meeting was called to discuss with the Applicant ‘rumours’ that he was working freelance with direct/indirect competitors. The Applicant claimed he never received that email, and submitted that the copy relied on by the Respondent in the Hearing was ‘reverse engineered.’

[19] On 17 December 2020 at 8:53am, Mr Cavagna mistakenly sent an email containing the Titant Catalogue to Mr Ciantar’s previous email address at the Respondent. The Respondent then became aware of the Titant Catalogue.

[20] On 17 December 2020, at around 12:00pm, Mr Jason Bey, the director of the Respondent telephoned the Applicant and asked him to come to his office. The Applicant subsequently went to Mr Bey’s office and the following conversation occurred:

Mr Bey:	‘Are you working for Matt?’
The Applicant:	‘Yes.’
Mr Bey:	‘Finish what you’re doing and leave!’
The Applicant:	‘Sorry.’

[21] Whilst the Applicant was leaving the office, Mr Bey approached to the Applicant and said words to the effect that he should not mention Sydney Tools and that ‘I will get you for sure if you do something to affect my business.’ The Applicant submitted that he tried to explain what had occurred, but Mr Bey ignored him.

[22] The Respondent stated that it sent a notice of termination to the Applicant on 18 December 2020, but the Applicant claimed that he never received that notice and that it only came to his attention when it was annexed in the Respondent’s response delivered on 27 January 2021. The notice of termination stated:

‘I confirm that Sydney Tools have decided to terminate your employment effective immediately due to serious misconduct. The allegations were communicated to you on the 17 December 2020 and you were given an opportunity to explain your conduct to the Director. Based on the information you provided and your admittance that you did engage in work with an indirect/direct competitor, Sydney Tools Pty Ltd believes that your actions constitute serious and wilful misconduct.’

[23] After the Applicant left, he telephoned Mr Bey to ask for his final payment. The following conversation was exchanged:

Mr Bey:	‘Why did you call me?’
The Applicant:	‘I haven't received my final payment and I heard you told Tony not to pay anything to me.’
Mr Bey:	‘What payment are you talking about?’
The Applicant:	‘Annual leaves, the hours I have worked on the week and payment in lieu of notice.’
Mr Bey:	‘I'm not going to pay payment in lieu of notice, you are terminated for misconduct.’
The Applicant:	‘I didn't steal any of Sydney Tools property and It wasn't like that.’
Mr Bey:	‘You sold our company for hundred bucks! Ask Matt to pay you!’
The Applicant:	‘No, you are not trying to listen to me.’
Mr Bey:	‘Anyway I will pay you what I owe you and Jay! You are a dog!’

The Applicant didn’t receive his outstanding annual leave payments until 1 February 2021.

[24] After the dismissal, the Applicant attempted to mitigate his loss, however those attempts were delayed for a ‘few weeks’ as he injured his achilles tendon and could not work for a period of time as a result of the injury.

Refinement of the Applicant’s Evidence

[25] In the first Statement of the Applicant dated 26 February 2021, he stated:

‘I believed that I would have no problem working with Matt and Tilbury. Therefore, I designed a catalogue for them. This project was only discussed between Mr Philip Cavagna, director of Tilbury, myself and Matt. I never worked on it during my working hours at Sydney Tools.’

‘I never intended to behave against my employer or my employment contract and cause risk to their business.’

and

‘I do not admit that I have engaged in work with an indirect/direct competitor and I did not breach my employment contact. I did not intend to do so.’

[26] In the totality of the second Statement of the Applicant dated 22 March 2021, he stated:

‘Designing products during the employment with Sydney Tools (‘the Respondent’)

1. During the employment with the Respondent, normally I designed a product when the product was provided by the Import Team. I am aware that the Import Team usually obtains those products from a supplier or a range of suppliers who are publicly available on websites such as aliexpress.com, alibaba.com or eBay. When the sample product arrives to the Respondent, it was the design team's job to design the product by including a logo and inserting some colours.

2. For the purpose of designing the product, I usually made references to, at the direction of the Respondent, the supplier's website or competitor's website. There are same types of products but sold under different brand name.

3. Once I change the logo and colours, I usually bring a mock-up design to director. Then the director confirms the design and then we send it back to supplier so that they make it according to our design.

Designing the concept brand for Tilbury

4. When I was designing the mock up, I made references to the Respondent's website.

5. However, I had no intention to cause detriment to the Respondent. I would never go against the Respondent as I was having a stable employment there.

6. Since it was just a mock up flyer and given that those products are available publicly, I believed making some references to the design would be no harm.

7. Furthermore, Tilbury and Titant was not even operating real business in Australia.

8. The similar designs that I referred to can be found publicly on different website. The true copies of the website are annexed as ‘JK-1.’

[27] In cross-examination of the Applicant in the Hearing, the Applicant conceded that the images he used for the Titant Catalogue were not from the Respondent’s publicly available website, but from the Respondent’s secure database. His evidence was: 1

Ms Siv:	‘Sorry, Jae. For clarity, you meant that you had used the images from the secure database, not the raw image from the web site?’
The Applicant:	‘Sorry?’
Ms Siv:	‘I will just repeat that again. You agree that you have used the secured image from our database rather than the raw image from the JK1 annexure?’
The Applicant:	‘First one - yes.’

The Applicant subsequently agreed that each of three images that he was taken to were images of lasers from the Respondent’s secure database. 2

[28] The Applicant was clearly aware that any images that he created during his employment at the Respondent became the intellectual property of the Respondent, 3 and that the legal team or the marketing team of the Respondent had in the past taken action where images had been used without a licence or agreement.4

CONSIDERATION

Preliminary findings

[29] I am satisfied that:

(a) The Applicant was dismissed at the initiative of the employer (ss 385(a) and 386(1)(a)). While the Respondent submitted no dismissal occurred, and the Applicant simply left the Respondent’s premises, I have accepted the Applicant’s version of what was said in the meeting on 17 November 2020, and that he was told by Mr Bey to ‘Finish what you’re doing and leave.’ I also note that the notice of termination advised the Applicant his employment was terminated effective immediately due to serious misconduct;

(b) His unfair dismissal application was lodged within the 21-day statutory time limitation found at s 394(2) of the Act;

(c) The Applicant is a person protected from unfair dismissal in that he had completed the minimum employment period set out in ss 382 and 383 of the Act; and

(d) His dismissal was not a case involving the Small Business Fair Dismissal Code (s 385(c)).

Was the Dismissal Harsh, Unjust or Unreasonable?

[30] I must consider the question of whether the Applicant’s dismissal was ‘harsh, unjust or unreasonable’ and therefore an unfair dismissal, pursuant to the considerations outlined in s.387 of the Act. dealing with the matters to be taken into account by the Commission in determining whether the dismissal was unfair.

[31] Section 387 of the Act identifies the matters that the Commission must take into account in deciding whether a dismissal was ‘harsh, unjust or unreasonable:’

(a) Whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) Whether the person was notified of that reason; and

(c) Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) The degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) Any other matters that the FWC considers relevant.

(a) Valid reason

[32] The reasons relied upon by the Respondent were succinctly outlined in the Respondent’s Form F3 Employer Response to Unfair Dismissal Application. Those reasons were:

‘1. On 17 December 2020, the Applicant had a meeting with the General Manager to discuss and explain his actions regarding a breach in contractual obligation with reference to a conflict of interest. The Applicant confirmed during the meeting that he had been working with an ex employee who was engaging in competition with the business and within the same field.

2. The applicant was found to have breached his contractual obligations and engaged in conduct that seriously damaged the relationship of confidence and trust between the employee and the employer’ and for this reason, the applicant was dismissed from his role.’

[33] As the Full Bench found in Sydney Trains v Hilder: 5

‘The principles applicable to the consideration required under s 387(a) are well established, but they require reiteration here:

(1) A valid reason is one which is sound, defensible and well-founded, and not capricious, fanciful, spiteful or prejudiced.

(2) When the reason for termination is based on the misconduct of the employee the Commission must, if it is in issue in the proceedings, determine whether the conduct occurred and what it involved.

(3) A reason would be valid because the conduct occurred and it justified termination. There would not be a valid reason for termination because the conduct did not occur or it did occur but did not justify termination (because, for example, it involved a trivial misdemeanour).

(4) For the purposes of s 387(a) it is not necessary to demonstrate misconduct sufficiently serious to justify summary dismissal on the part of the employee in order to demonstrate that there was a valid reason for the employee’s dismissal (although established misconduct of this nature would undoubtedly be sufficient to constitute a valid reason).

(5) Whether an employee’s conduct amounted to misconduct serious enough to give rise to the right to summary dismissal under the terms of the employee’s contract of employment is not relevant to the determination of whether there was a valid reason for dismissal pursuant to s 387(a).

(6) The existence of a valid reason to dismiss is not assessed by reference to a legal right to terminate a contract of employment.

(7) The criterion for a valid reason is not whether serious misconduct as defined in reg 1.07 has occurred, since reg 1.07 has no application to s 387(a).

(8) An assessment of the degree of seriousness of misconduct which is found to constitute a valid reason for dismissal for the purposes of s 387(a) will be a relevant matter under s 387(h). In that context the issue is whether dismissal was a proportionate response to the conduct in question.

(9) Matters raised in mitigation of misconduct which has been found to have occurred are not to be brought into account in relation to the specific consideration of valid reason under s 387(a) but rather under s 387(h) as part of the overall consideration of whether the dismissal is harsh, unjust or unreasonable.’

[34] In order to be a valid reason, the reason for the dismissal should be ‘sound, defensible or well founded’ 6 and should not be ‘capricious, fanciful, spiteful or prejudiced.’7 However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.8

[35] There is no mandate for giving the ‘valid reason’ criterion any greater emphasis or weight than any of the other criteria in s 387. It is well settled that the statutory requirement to ‘have regard to’ or ‘take into account’ requires the Commission to give the matter(s) weight as a fundamental element in the decision-making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.

[36] I find that the evidence supports a finding that there were valid reasons for the Applicant’s dismissal. The Applicant was contractually obliged not to disclose any information relating to the intellectual property of the Respondent, including trade secrets. The images that he accessed and utilized were maintained on the Respondent’s secure database, and not the publicly available website as he originally claimed.

[37] The Applicant submitted that he did not engage in work with an indirect/direct competitor and so did not breach his employment contract because:

(a) Tilbury confirmed that they do not compete with the Respondent;

(b) Titant is a concept brand of Tilbury, that does not exist;

(c) Tilbury is an importing agent where the Respondent is a power tool retail;

(d) The Respondent’s competitors are Bunnings, Total Tools and Adelaide Tools;

(e) Tilbury’s targeted customers are government and international retailers where the Respondent’s targeted customers are individuals in Australia;

(f) Tilbury does not operate any brands in Australia; and

(g) Tilbury does not have plans to open and operate retail stores in Australia where the Respondent actively operates their retail stores in Australia.

[38] It is not apparent that the Applicant was aware of any of the above seven sub-paragraphs when completing the work for Mr Ciantar, and I do not consider that had he possessed such knowledge that his conduct could be excused.

[39] Quite simply, the Applicant was a Lead Graphic Designer, who in the course of his duties created images, including of laser levels, for the Respondent. Without advising the Respondent, the Applicant created images of laser levels for another Company to use in that Company’s marketing by unauthorised use of images from the Respondent’s secure database. Within the scope of the work of Graphic Designers, it is difficult to imagine a more wilful or deliberate example of behaviour by such an employee that is inconsistent with the continuation of the contract of employment, and so serious misconduct.

[40] In summary, there was evidence to support a finding that there were valid reasons for the Applicant’s dismissal, and this weighs in the Respondent’s favour.

(b) Notification of the valid reason and opportunity to respond - s.387(b) and (c)

[41] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, 9 in explicit terms,10 and in plain and clear terms.11

[42] An employee protected from unfair dismissal must also be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. Such requirement will be satisfied where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern. 12 This criterion is to be applied in a common sense manner to ensure the employee is treated fairly and should not be burdened with formality.13 The requirement to notify of the reason, together with the requirement to provide an opportunity to respond to the reason, involves consideration of whether procedural fairness was afforded to the Applicant before her dismissal was effected.

[43] Regarding s.387(b), the only notification sent, which the Applicant says he did not receive, was the email of 16 November 2020, which relevantly stated:

‘Please be advised you will have a meeting with Management tomorrow at 10am, 17 November 2020.

The meeting is in reference to a breach in your contractual obligations and conflict of interest which has been brought to our attention. We would like to better understand the situation and the reasoning behind your conduct.’

[44] The impugned ‘conduct’ was not specified, and the Applicant was not appropriately notified of the reasons for his dismissal in a way that allowed an opportunity to respond. It follows that this factor weighs in favour of the Applicant’s dismissal being found to be harsh, unjust or unreasonable.

(c) Unreasonable refusal by the employer to allow a support person - s.387(d)

[45] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[46] The Applicant was not refused a support person, however he does not seem to have been aware that he may have required one. The Applicant makes no submission that this is a relevant consideration in the assessment of the fairness or otherwise of the dismissal. Nonetheless, I consider this a neutral factor.

(d) Warnings regarding unsatisfactory performance - s.387(e)

[47] The Applicant submitted, and I agree, that this is not a relevant consideration in the circumstances of the matter.

(e) Impact of the size of the Respondent on procedures followed (s.387(f)), and the absence of dedicated human resources management specialist/expertise on procedures followed (s.387(g))

[48] I am satisfied that the size of the Respondent and the absence of dedicated human resource management expertise did not impact on the procedures followed by it in effecting the dismissal. I note that a similar finding has been made previously by this Commission regarding the Respondent. 14

(f) Other relevant matters - s.387(h)

[49] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant. In this matter neither the Applicant nor the Respondent submitted that any factors warranted consideration under this factor.

[50] Section 387(h) is, however, the relevant provision for consideration of:

(a) An assessment of the degree of seriousness of misconduct which is found to constitute a valid reason for dismissal; and

(b) Matters raised in mitigation of misconduct.

[51] As alluded to in the analysis of valid reason above, I consider the degree of misconduct of the Applicant to be significant. It was wilful and deliberate behaviour by the Applicant that was inconsistent with the continuation of his contract of employment.

[52] Regarding matters of mitigation, it is irrelevant that Titant does not exist or Tilbury is said to have different target markets. It is impossible, notwithstanding the assertions of the Applicant and Mr Cavagna, to say that no competition between the Respondent and Tilbury may arise. That is because:

(a) As clearly established by the copying of images by the Applicant, they sell the same products;

(b) While Tilbury’s targeted customers are government and international retailers, whereas the Respondent’s targeted customers are individuals in Australia, customers are not precluded from purchasing outside their targeted areas; and

(c) While Tilbury does not have plans to open and operate retail stores in Australia where the Respondent actively operates their retail stores in Australia, as noted above, the Respondent sells through in-store and online sales. The online sales raise the spectre of competition.

[53] Quite simply, and as outlined in Clause 16.1 of the Applicant’s contract, Tilbury was an entity with a similar business to the Respondent. The Applicant was proscribed from directly or indirectly assisting Tilbury. In my assessment, the Applicant very well knew he was precluded from working for Mr Ciantar and Tilbury, but chose to do so nonetheless.

Conclusion on Dismissal

[54] Taking into account the matters referred to above, I find that the dismissal of the Applicant was not harsh, unjust or unreasonable. The Respondent had valid reasons upon which it relied to dismiss the Applicant. While an issue of procedural fairness arose in relation to notification of the reason for termination, I do not consider that one issue sufficient to render the termination of the Applicant as an unfair dismissal.

[55] If I am wrong in relation to issue of procedural fairness and notification of the reason for termination, I consider that such unfairness would have been remedied by the Respondent in no more than 48 hours, and in light of the facts as I have found them and as they refined in the proceedings, there would not have been a different decision in relation to the termination of the Applicant in light of his conduct.

[56] The termination of the Applicant was not harsh unjust or unreasonable. The Application is dismissed.

DEPUTY PRESIDENT

Appearances:

P Bae for the Applicant.
S Siv for the Respondent

Hearing details:

2021.
Sydney.
March 29.

Printed by authority of the Commonwealth Government Printer

<PR730560>

 1   Transcript PN 129 and 130.

 2   Transcript PN 147 and 148.

 3   Transcript PN 135.

 4   Transcript PM 139.

 5   [2020] FWCFB 1373, at [26].

 6   Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, at 373.

 7   Ibid.

 8   Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, at 685.

 9   Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].

 10   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, at 151.

 11   Previsic v Australian Quarantine Inspection Services Print Q3730.

 12   Gibson v Bosmac Pty Ltd (1995) 60 IR 1, at 7.

 13   RMIT v Asher (2010) 194 IR 1, at 14-15.

 14   Joel Small v Sydney Tools [2017] FWC 1272.