John Cole v Roy Hill Station Pty Ltd T/A Roy Hill Station

[2019] FWC 5358

[2019] FWC 5358

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

John Cole
v
Roy Hill Station Pty Ltd T/A Roy Hill Station
(U2018/10397)

DEPUTY PRESIDENT BEAUMONT PERTH, 30 AUGUST 2019

Application for an unfair dismissal remedy.

[1] Mr Cole (John) applied for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth) (the Act) after his employment with Roy Hill Station Pty Ltd (the Station) came to an end. It is uncontentious that the Station is a small business employer within the meaning of s 23 of the Act. For some time, the Kennedy brothers – Murray and Ramon, both of whom are directors of the Station, have operated it.

[2] Murray lives with Ramon, who is plagued with health problems and now, according to Murray, finds it hard to communicate or undertake physical activity. Ramon is cared for on a full-time basis, and understandably did not give evidence at hearing. Murray, while spritely, has weathered a fair period on this Earth, and is the first to admit that information technology (IT) is not his foray. He possesses no penchant for business administration or management.

[3] It was within this context that the brothers employed John to be their personal assistant. He was to run the administrative arm and management aspect of the Station. Not long after commencing at the Station, John was appointed as a director. This allowed him to perform banking transactions including the ability to transfer funds from all of the Station’s bank accounts. However, over a period, the relationship between John and the brothers broke down. According to Murray, John was not complying with directions; and this conduct continued after John was removed as a director. A letter was sent to John on 21 September 2018 informing him that his employment had been terminated.

[4] The Station raised a jurisdictional objection to the application. It therefore followed that several issues arose for determination; namely:

a) whether John abandoned his employment from 10 September 2018 thereby repudiating his employment contract, such that the Station was entitled to accept that repudiation and terminate the employment contract, which it did by letter of 21 September 2018;
b) if there was not an abandonment of employment, was there nevertheless compliance with the Small Business Fair Dismissal Code (Code) because the Station had reasonable grounds for forming the belief that John had engaged in misconduct of a serious nature which justified immediate dismissal; or
c) if found that there was non-compliance with the Code, did it remain the case that John’s dismissal was neither harsh, unjust nor unreasonable.

[5] While I did not find that John had abandoned his employment, I did conclude that the Station had complied with the Code when it terminated John’s employment having formed a belief on reasonable grounds that John’s conduct was sufficiently serious to justify immediate dismissal. 1 It therefore proved unnecessary to consider subparagraph 4(c).

[6] In short, the Station dismissed John ‘without notice or warning’, as it ‘believed on reasonable grounds’ that his conduct was ‘sufficiently serious to justify immediate dismissal’. It follows that John was not unfairly dismissed and his application for an unfair dismissal remedy is therefore dismissed. My reasons follow.

Background

General context

[7] The Station owns a large area of land near Newman in Western Australia. 2 It is a remote site far removed from the metropolitan area of Perth. It runs a cattle station here,3 and up until the end of 2016 it also leased land and performed work for Roy Hill Iron Ore and Fortescue Metals Group on that land.4

[8] Murray readily conceded that he had spent his life working on cattle stations and working cattle as his occupation. 5 He and Ramon were not computer literate, and until about the end of 2018, neither Ramon nor Murray knew how to deal with emails or enter information into a computer.6 Murray said John knew this.7

[9] In or around March 2015, John commenced in his position as a personal assistant to the directors of the Station, namely Murray and Ramon. 8 John said that the contract was signed in or around April 2015.9 According to John, the contract was for an initial engagement of 12 months. By mid to late May 2015, John was appointed as a director of the Station at Murray’s request.10

[10] John gave evidence that after his appointment as a director he was the sole contact person for the Station and was responsible for most communications between the Station and its numerous business contacts. 11 However, he qualified his statement noting that he was the sole contact primarily for operations out of Perth and administrative purposes.12 John’s evidence was that Ramon had always been consulted for approval prior to any significant transaction or business activity. Murray conducted the activities at the Station in Newman.13

[11] In short, John said that he was responsible for payroll and superannuation, procurement, financial officer duties, administrative management, staff/contractor liaison and compliance with relevant government departments. 14 He gave evidence that he continued in the role until his removal from the directorship on 9 August 2018 and thereafter his employment was terminated on 21 September 2018.15

[12] Murray gave evidence that John was doing all of the administrative work for the Station and managing its finances. 16 Murray said that John dealt with all email and most other correspondence, did the bookkeeping by entering into accounting software the invoices and arranging payment of the same,, and dealt with all of the Station’s clients and suppliers.17 Murray said that this work was done in consultation with him and Ramon, unless it was general day to day work.18

[13] Other than the Station’s accountant, who had access to the accounting software for the regular accounting work needed for the Station, Murray stated that John was the only person who had access to the accounting software, ‘Xero’. 19 According to Murray, John was the only person doing any of the kind of work described above for the Station until about July 2018.20 This meant that John had access to all of the Station’s bank accounts and he was provided with Ramon’s login details and his secure banking device.21 Murray gave evidence that this meant John would log in as Ramon and authorise payments.

[14] Instructions were provided to John when he requested them, said Murray. 22 Otherwise, either Murray or Ramon would discuss things with John.23

[15] The Station had a storage facility in Maddington and a house in Forrestdale which was often used as an office. 24 John worked from his home in Perth and kept most of the Station’s current documents at his house.25 John had a desktop computer and laptop that belonged to the Station.26 He also had use of a car owned by the Station, which according to Murray, John was supposed to use only for the Station’s deliveries, collections and the Station’s business.

[16] Aside from John, Murray and Ramon were the only employees of the Station – although there were other workers in contract positions (independent contractors). One such person was Mr Rion Jelly, the Station Manager.

Annual leave

[17] About 12 months before John’s dismissal, Murray said that he and Ramon decided to get more involved in the day to day management of the Station. 27 An accountant who had audited the Station’s financials for a court case, reported that John had paid himself out 360 hours of annual leave.28 The amount was more than John was entitled.29 The payment occurred in or around November 2017.

[18] Murray said that neither Ramon nor he told John that he could pay himself out his annual leave and he was concerned that the amount paid was more than the entitlement due. 30

[19] While John acknowledged that his employment contract provided for four weeks paid annual leave a year, John purports that there was a conversation with Murray in which he informed him about paying out his leave. John’s belief was that Murray had forgotten the conversation about the leave. Murray was adamant that no such conversation took place.

[20] John’s evidence was that an arrangement was put in place and he had paid back the annual leave by March 2018.

Lawyer’s bills

[21] Murray gave evidence that he also found out that John had been asking the Station’s lawyers at the time to do a lot of work, some of which Murray was unaware of. 31 He stated that the Station had spent about $1.7 million in legal fees while John was working for the Station.32

Email addresses

[22] In July 2018, the Station engaged a contractor, a Ms Rebecca Reid, to help Murray and Ramon with emails, gain access to information on the computer and other administrative tasks. 33 Murray’s evidence was that he was worried about the legal fees and overpayment of annual leave, and was worried that other similar things might be going on.34 Murray said he wanted to get more involved with the administration and management so that what had occurred would not occur again.35

[23] Murray said that he informed John that Rebecca was helping him and Ramon. 36 There was no indication from John, according to Murray, that John did not trust Rebecca.37

[24] Because Murray wanted help to make sure he could access all email addresses used by the Station and all electronic information for the Station, Murray said that Rebecca suggested the use of an IT Consultant, ‘Derek’. 38 Murray stated that Derek suggested that the Station’s IT be cleaned up and made simpler. Murray said he asked Derek to do this.39

[25] On 4 July 2018, with the help of Rebecca, Murray said that he sent John an email asking for login details for Xero because he did not have those details and could not access Xero. The email was signed off from Murray and came from an email address with Murray’s name in it. Murray said that John did not respond to the email. 40 According to Murray it took several emails to elicit the required information from John, and at no time, said Murray, did John express that he was concerned the emails were not coming from him.41

[26] With regard to Rebecca’s involvement with the Station, John gave evidence that Rebecca would email him, he assumed on Murray’s behalf, wanting information and access to the system. 42 John stated that he took it upon himself not to provide Rebecca with access to the bank account and the system in general.43 His reasons for doing so – her poor standard of communication in the emails received, as well as John only just having met her.44 John said, that as a director of the Station, he did not feel it appropriate for Rebecca to have access.45 In his evidence John stated that he could not be entirely sure that Murray was actually receiving the emails sent to Rebecca, so he was very guarded when he responded.46

[27] Concerning the use of email addresses, it was Murray’s evidence that an old email address (old email account/address) was still in use, did not appear to be monitored and was receiving important emails. 47 Murray said that in early 2017 he had told John to shut down the old email account.48 Murray said that he asked his lawyers to give John various directions about the old email account, and emails generally in August 2017.49

[28] Murray gave evidence that in July 2018 he discovered that John had not shut down the old email address as requested. 50 He again asked John to cease use of the old email address, notify suppliers and ensure they removed it from their contact database, and to ensure that all incoming mail was followed up on and information provided that the old email address was no longer in use.51 It was Murray’s observation that the old email address in question was still active and receiving emails when John left employment.52

[29] John gave evidence that he had informed Ramon and Murray that they should retain the old email account and simply monitor it. 53 John said that he suggested to Ramon that he would monitor the old email account and on receipt of an email would advise.54 John’s evidence was that Ramon agreed to this and that was what occurred.55 John stated that toward the end of his employment Rebecca appeared to make an issue regarding why the old email account was active.56 John continued that Murray informed him the old email account was not to be used and that he wanted the password.57 John said that he informed Murray that he would not be held responsible for the old email account when it was handed over and that it would need to be monitored.58 John started to receive phone calls from contacts stating they were not receiving replies from the old email account, which John pointed out to Murray.59

Passwords and login details

[30] Murray gave evidence that he and Rebecca wrote several emails to John asking him to provide all passwords and login details for the Station software and online accounts, from in or around July 2018. 60 According to Murray, despite the numerous requests to John, the information requested was not provided until September 2018.61

[31] The bank accounts for the Station had in place a two-step authority process. 62 The phone number for the security codes for the authorities were sent to John’s personal phone number. Murray stated that he was not able to reset passwords or authorise payments.63 Other online accounts that the Station held also sent codes to John’s personal phone number.64 Murray said that if John had been more willing to cooperate with him and Ramon the significant administrative problems and delays would not have occurred.65

[32] When asked at hearing why he had not complied with Murray’s request for login details and passwords, John confirmed that he did not trust Rebecca or Rion and therefore withheld the information. Evidence was given that John had raised concerns with Murray and Ramon in an email dated 25 July 2019 regarding Rebecca’s request for login details for the host that held various email accounts. 66 In that same email John warned, to the effect that if Rebecca’s request was complied with, all the emails both sent and received could be viewed from anywhere on any device by anyone who had access to those details.67 When asked in cross examination if John could point to any other occasion where he had raised such concerns he was unable to do so.

Insurance issues

[33] Murray gave evidence that in or around July 2018, he had been informed by John and a broker that six trucks and one grader that the Station owned could not be insured. 68 As a consequence Murray said he asked Rebecca to look into it.69

[34] According to Murray, Rebecca was able to arrange insurance of the vehicles within 48 hours with a new broker. 70 The same broker advised the Station to review all of its insurance policies.71 John provided the insurance policies to Murray, and Murray noticed that all of the policies had lapsed in May 2018 and had not been renewed because the new policies had not been paid for.72 Murray said that this included the insurance for the Station’s properties, vehicles, aeroplane and all of its other assets.73 Murray stated that John had always been responsible for renewing the insurance and he had no idea why the insurance had not been paid.74 It was Murray’s evidence that he had told John to insure everything with the exception of the trucks and the grader.75 Murray said he became concerned about everything else John was responsible for.76

[35] On 19 July 2018, Murray sent an initial email to John outlining his dissatisfaction regarding the insurance issue. 77 Murray observed in the email that several vehicles were doubled up on the policy and some were left off, while others were only covered for fire damage.78 John replied to the email on that same date and provided an explanation why the aeroplane was not covered, noting that he had previously suggested he visit the Station to undertake a reconciliation of the vehicles but Murray had not wanted this to occur, and that a broker had spoken to Murray about travelling to the Station to assess the current insurance requirements, but this never occurred.79 John’s email included reference to having been advised by Murray during a conversation to ‘just roll-over the insurances and we will deal with them later’.80

[36] John insists that he reminded Murray of the insurance review and had attempted to reconcile the vehicles with no success due to Murray being unable to locate keys to vehicles and at a later date John requested that Rion reconcile the vehicles but this did not occur. 81 At hearing, John confirmed that there was more than one insurance policy, and that there were different types for the different assets. John also confirmed that he was responsible for paying the insurances once they were sorted out. John accepted that the insurance premiums in question were not paid.

[37] However, it was John’s evidence that all the insurances would have been paid once the trucking vehicles were sorted; that is, sorted out with an asset register. John noted that he had the verbal assurance of the broker that the insurance company would cover all assets notwithstanding the premium had not been paid. To support his position that the assets remained covered notwithstanding the non-payment of the premiums, John referred to an email sent to him by the Station’s contact at the insurance brokerage company, Trident. The email dated 20 November 2018 confirmed that the Station had insurance cover from 1 May 2018 until appointing another company on 9 July 2019. 82

[38] In response to John’s email on 19 July 2018, Murray wrote in his later email dated 19 July 2018, ‘this failure to pay insurance policies could have created a significant liability for Roy Hill Cattle’. 83

Deterioration of the relationship and removal from directorship

[39] Murray’s evidence was that by mid-2018 he was becoming frustrated with John. 84 He gave evidence that John was ignoring him, not telling him about important things that were happening and was unwilling to share information with both him and Ramon.85 Murray said he was concerned that John was hiding things from Ramon and him.86

[40] Murray expressed that at times John was rude and aggressive to him over the telephone and it got to the point where he was only comfortable communicating with John over email with Rebecca’s help. 87

[41] On 9 August 2018 the shareholders of the Station resolved to remove John as a director. 88 Murray said that he did this because he was very concerned about John’s conduct and thought that John was not acting in the Station’s best interests.89 After his removal as a director, Murray said that John would often not respond to email, and if he did the response was unhelpful and argumentative.90

A period of sick leave and continuing computer issues

[42] Murray said that on 17 August 2018 he received an email from John attaching a medical certificate covering the period of 17 August to 31 August 2018. 91 On 21 August 2018, Murray sent John an email to which, says Murray, John did not respond.92 Expecting John to return to work on 3 September 2018, Murray said he sent John an email with his job description and various directions.93 Murray stated that he did not receive a response from John to the email.94 John supplied another medical certificate covering the period 3 September to 7 September 2018.95

[43] During this period, Murray said his concern was heightened because John was not working, and he did not have access to emails being sent to John’s email address. 96 In effect the emails sent to the Station were unmonitored, and Murray did not have access to any of the information that was needed to operate the Station.97 Murray reached out to Derek to obtain assistance to access the Station’s email accounts so they could be monitored while John was sick.98 To obtain access to the computers Derek required remote access and therefore contacted John to establish this.99 However, Murray gave evidence that on contacting John, Derek said that John would not cooperate and declined to provide Derek with access to the computer on the basis that he had personal information on it.100 Murray caused the Station’s lawyers to send a letter of 4 September 2018 to John instructing him to copy his personal information that was stored on the Station’s computer and thereafter delete that same information from the Station’s computer.101 The letter instructed John to provide the Station with access to its property including the Station’s computer and documents.102

[44] By email dated 5 September 2018, John informed Murray that he had only sought confirmation of whether the IT Consultant, Derek, was authorised to have remote access. 103

[45] On 7 September 2018, Murray went to John’s house to collect the Station’s property. 104 Murray recalled that John had said that he would be in touch with Murray about the passwords; and the next day, on 8 September 2018, John sent the emails to the Station’s lawyers.

[46] Murray gave evidence that John sent various emails and text messages after 7 September 2018, most of which were requests for a position description. 105 On 14 September 2018, John sent Murray and the Station’s lawyers an email asking for payment of his wages and a position description.106 In response, the Station’s lawyers emailed a letter of 14 September 2018 to John noting the delay in the payment of wages arose from not having access to IT passwords and not having a bookkeeper.107 In a subsequent email on 14 September 2018, John informed the Station’s lawyers that the reference to personal/carer’s leave was incorrect as it referred to the leave amounting to ‘fulltwo fortnights’.108 In a further email on 14 September 2018, John, among other issues raised, disputed the reasons provided for the late payment of his salary.109

[47] According to Murray he had not heard anything from John about him returning to work or with regard to providing a further medical certificate. 110 Murray stated that he did not think that John would return to work, he no longer trusted him and considered his conduct to be very serious misconduct.111 In short, Murray thought that John had not performed his job properly and had placed the company at significant risk, particularly because of the insurances lapsing.112

[48] A letter was sent to John on 21 September 2018 informing him of the termination of his employment, and John received his last pay on 26 September 2018. 113

Issues that came to the attention of the Station post John’s departure

[49] In or around October 2018, the Station asked RSM Australia Pty Ltd to perform an audit of the financial transactions made by John for the Station. 114 Having reviewed the audit report, Murray identified that there were transactions listed as being made by Ramon and Murray, which Murray said neither he nor Ramon made.115 Murray also identified that John had paid himself additional money to that which was agreed concerning a loan to John’s company Reckless Regos. While Murray confirmed that the Station agreed to loan John money for Reckless Regos, Murray’s evidence is that an additional amount of $8000 was taken from the Station’s account for the loan, which was unauthorised.116

[50] There was in addition an issue regarding unpaid invoices. Murray’s evidence was that since John had been dismissed, the Station had been contacted by various service providers because of unpaid invoices (sent prior to John’s dismissal). 117 The invoices had not been entered in Xero and therefore the Station was unaware of them.118

[51] At hearing John gave evidence that he did not always enter the invoices into Xero on receipt. This was because much depended on the invoice and the circumstances he said. Notwithstanding, John said while not entered into Xero, he maintained an archive of every email received in a digital filing system. When asked if it followed that the accounting software Xero, would therefore not truly reflect the account, John disputed this noting that he was always speaking to the accountants.

Agreed matters

[52] I am satisfied that John was protected from unfair dismissal 119 and that his application was made within the required period as prescribed in s 394(2) of the Act. It was not contested by the parties that the dismissal was by way of genuine redundancy.120

[53] Having considered the evidence, I am satisfied that the Station is a small business employer as defined in s 23 of the Act, and that the Code applied to the dismissal. Neither party advanced an argument to the contrary. Further, it was agreed that a payment in lieu of notice had been provided to John albeit the amount paid appeared contentious.

Did John abandon his employment?

[54] In assessing whether there was an abandonment of employment, consideration is had to the factual matrix in terms of the context of events. 121 Whether or not an employee abandoned her, or his employment, is a finding of fact.122

[55] It could be said that an abandonment of employment occurs where the employee simply walks off the job, or fails to return from a period of authorised leave, in such a way that the employer is reasonably entitled to conclude that the employee no longer intends to be bound by their contract. 123 The finding of abandonment turns on whether the employee intended to repudiate the contract of employment by failing to perform in accordance with its terms, and whether that intention on the employee’s part was at his or her own initiative, or else was it consequential of the conduct of the employer (and without which the employee might have continued to perform the terms of the contract).124

[56] I am not persuaded that this case involved an abandonment of employment. The employment agreement did not contain a term that dealt with abandonment of employment. Neither party made submissions on whether an abandonment of employment applied by virtue of a modern award covering John.

[57] The Station submitted that John did not return to work when he was required to on 10 September 2018. Further, he did not perform any work or contact the Station from or after that date, other than to query the payment of his wages. John’s absences between the period of 17 August to 31 August 2018, and thereafter for the period of the period 3 September to 7 September 2018, were explained by way of medical certificate. 125

[58] The circumstances are however telling. The evidence showed that on 7 September 2018, Murray went to John’s house to collect the Station’s property. 126 This property included files, the cabinets in which the files were stored, and the Station’s computers. In effect, John was left with no equipment with which to perform his work and no direction concerning what to do in the absence of such tools or equipment. On 8 September 2018, John sent the emails to the Station’s lawyers, and when giving evidence Murray himself acknowledged that John sent various emails and text messages after 7 September 2018 seeking a position description. It was not the case that John ceased contact or was uncontactable. Further, it was entirely open for the Station to provide direction to John at any point during the period of 7 September 2018 until the date of his dismissal. While it may be the case that the Station did not chose to do so because of the purported mistrust in John, it nevertheless is the case that evidence does not point to John abandoning his position.

[59] It follows that based on the evidence before me, I am not satisfied that it was reasonably open to the Station to conclude that John no longer intended to be bound by his employment contract by abandoning his position.

Was the Station compliant with the Code at the time of John’s dismissal?

[60] Therefore, the focus quite rightly rests on whether the Code was complied with. Initially, that requires consideration of the Summary Dismissal aspect of the Code.

[61] Unsurprisingly, John’s view is that his dismissal was non-compliant with the Code.

Small Business Fair Dismissal Code

[62] Section 396 of the Act provides that before considering the merits of an application for unfair dismissal remedy order, the Commission must determine some other initial matters. which include:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code; and

(d) whether the dismissal was a case of genuine redundancy.

[63] A person has not been unfairly dismissed where the dismissal is consistent with the Code. It is useful to set out s 388 of the Act:

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small

Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair

Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair

Dismissal Code in relation to the dismissal.

[64] The Code is only relevant if the employer is a small business as defined in s 23 of the Act.

[65] The Code provides:

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

[66] The ‘Summary Dismissal’ section of the Code clearly applies to dismissals that have ‘immediate effect’ as that term is understood by reference to the decision in Ms Li Li Chen v Australian Catering Solutions Pty Ltd T/A Hearty Health, 127 and are not dismissals on notice.128 As explained in JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services (Ryman) an immediate dismissal includes a dismissal with a payment in lieu of notice which is intended to have immediate effect.129

[67] In Ryman the Full Bench provided a useful synopsis of the proper approach to the construction and application of the Summary Dismissal aspect of the Code and its interaction with Regulation 1.07 of the Fair Work Regulations 2009 (Cth) (Regulations). 130

[68] In Ryman the Full Bench considered the meaning of ‘summary dismissal’ and said that it referred to a dismissal without notice arising from ‘a breach of an essential term of the employment contract, a serious breach of a non-essential term of the contract, or conduct manifesting an intention not to be bound by the contract in the future on the part of the employee’. 131

[69] However, it is not the case that under the Code the Commission must be satisfied that serious misconduct was the basis for the dismissal 132. Rather, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal and one must also consider whether that belief was based on reasonable grounds.133 This element, which has been described as the second element,134 incorporates the concept that the employer has carried out a reasonable investigation into the matter.135 It is not necessary to determine whether the employer was correct in the belief that it held.136 Whether the employer had ‘reasonable grounds’ for the relevant belief is of course to be determined objectively.137

[70] The focus on ‘serious misconduct’ must be taken as identifying the subject matter and it appears to be accepted that this term gleans its meaning from s 12 of the Act and thereafter Regulation 1.07 of the Fair Work Regulations 2009 (Cth). 138

[71] In applying these requirements, I must also have regard to the procedural matters highlighted within the Code.

[72] If an applicant’s dismissal was consistent with the Code, it cannot be considered unfair within the meaning of the Act.

Consideration

[73] In or around November 2017, about 12 months give or take a couple of months, before John’s dismissal, he paid himself 360 hours of annual leave. The evidence led, and agreed to by both parties, was that at the time John paid out his annual leave he did not have an entitlement to 360 hours. However, the parties were in dispute about whether the Station had authorised the paying out of the leave.

[74] It was not until March 2018 that an external auditor identified that John had paid himself annual leave to which he was not entitled. By way of observation only, at hearing John noted that he had taken four weeks annual leave. However, when one considers that 360 hours were paid out, this would amount to the equivalent of working a 90-hour week.

[75] At the time of paying out the annual leave, John was responsible for all the administrative work of the Station, managing company finances, and performing duties such as bookkeeping and payroll. John, the only person performing this work, was entrusted with what Murray referred to as, a significant amount of autonomy. 139 John also knew that Murray and Ramon were not computer literate. And, apart from the Station’s accountant, John was the only person who had access to the accounting software. However, John gave evidence that he did not pay much attention to his entries into Xero as he would get Beaumaris Business Solutions to make such entries.

[76] As observed, the parties are in dispute over whether John informed Murray he would pay himself out his annual leave. However, what is not in dispute is that John overpaid himself and the error was not identified until an external audit was conducted. I am satisfied that Murray’s concern that John had paid himself more than he was entitled was justified. While it was agreed that a repayment plan would be implemented to address the overpayment, I am unpersuaded that such action does not belie the concern Murray held. Further, I am not convinced that somehow the responsibility fell upon the contractor Beaumaris Business Solutions to ensure that the correct amount of annual leave was paid out. This clearly sat within John’s remit.

[77] Murray’s concern extended at that time, to the amount the Station had incurred on legal fees since John’s employment commenced. According to Murray the fees amounted to $1.7 million dollars. 140 Murray expressed that he was shocked by the amount. Regarding the legal work undertaken, Murray stated that he was unaware of some of the work done.141 In response, John submitted that he did not know how Murray and Ramon could be shocked given that Beaumaris Business Solutions were aware, and Murray and Ramon had frequent discussions with them. Further, John directed the Commission’s attention to Exhibits A4 and A5, the financial statements for the Station for the year ending 2017, which Murray had signed. The financial statements referred to amounts of $734,923 and $503,585 for ‘Legal Costs’ in the years 2017 and 2016 respectively.

[78] However, it is not apparent on the evidence before me that John took steps to inform Murray and/ or Ramon of the mounting legal costs. Or, for that matter,, sought authorisation for all legal expenditure. While the financial records referred to in Exhibits A4 and A5 included reference to costs incurred, there are observations to be made. The recording of costs in the financial records does not show that John informed Murray and Ramon of the amount of legal expenditure before those costs were incurred. Further, the evidence does not show that John directly informed Murray and Ramon of the legal costs already incurred. John was cognisant that both Murray and Ramon had delegated to him the responsibility of managing the financial aspect of the business. They had placed trust in him to act in the best interests of the business. It is open to conclude that in circumstances where the amount of legal spend over two years appeared to be in excess of $1,000,000, and Murray was unaware of the matters for which legal costs were incurred, this would not only have been disconcerting for a reasonable person, but in addition, would have raised suspicion about the conduct of the person instructing the solicitors on the Station’s behalf.

[79] Murray’s discountenance clearly accreted upon discovery of the unpaid insurance premiums. On the evidence before me it was open to find that the insurance premiums for the Station’s properties, vehicles, aeroplane and all of its other assets, had not been paid by the due date. 142 John provided a detailed explanation for having not paid the insurance premiums. However, with the exception of the six trucks and the one grader, it is difficult to comprehend why John considered it acceptable to not pay the remainder of the insurance premiums, when, on his own evidence, he had been advised by Murray in conversation to ‘just roll-over the insurances and we will deal with them later’.143 This had not been done.

[80] When Murray arranged for the invoices to be inspected, or undertook such inspection himself, clearly, and understandably, he became disturbed when he identified that the premiums had not been paid. He considered such conduct warranted writing to John to explain that ‘this failure to pay insurance policies could have created a significant liability for Roy Hill Cattle’. 144 Murray’s evidence was that he became concerned about everything else John was responsible for.145 Murray said that the only thing that John had mentioned to him about the insurance was that the current broker could not insure six trucks and the grader.

[81] While it was John’s evidence that all the insurances would have been paid, and he had verbal assurance from the broker that the insurance company would cover all assets notwithstanding the non-payment of premiums, he had failed to follow Murray’s instruction to roll over the insurances. Whether or not there was evidence of insurance coverage from 1 May 2018 until 9 July 2019, the pressing issue was John’s failure to follow a lawful and reasonable instruction.

[82] The concern about John paying himself annual leave in excess to that which he was entitled and the worry about the legal fees, led Murray to engage Rebecca’ services, and to become involved with the administration and management of the Station. While it may seem somewhat unconventional that Murray and Ramon would rely upon their cat carer to provide administrative support, clearly Murray trusted Rebecca to do so, and the evidence showed that John was informed of her engagement.

[83] While engaged by the Station, it was evident that John exhibited reluctance to assist Rebecca. Again, it was the case that John did not follow a lawful and reasonable instruction to assist Rebecca through the timely provision of login details and passwords. It appears that John unilaterally decided not to provide Rebecca with access to the bank account and the system in general. 146 This was the case even though her requests for access were sanctioned by Murray. John’s approach appeared to be based on his view that Rebecca had a poor standard of communication and John had only just met her.147

[84] While John may rely upon his position as a director of the business to justify the approach he adopted with respect to Rebecca, it was always evident that the control of the business sat with Murray and Ramon. 148 Although John oversaw the day to day administration of the Station; if Murray had instructed John to assist him with matters such as the provision of login details and passwords, then it is reasonable to have expected John to have complied with the instruction.

[85] In an email dated 25 July 2018, 149 John raised his concern with Murray and Ramon about Rebecca’s involvement in the Station. However, Rebecca’s assistance to Murray regarding the drafting and sending of emails on his behalf, did not, without further evidence, give a legitimate reason for John not to comply with the instructions given. John confirmed that he did not trust Rebecca and therefore withheld the information that Murray sought. However, there was insufficient evidence before me to support or justify John’s mistrust and refusal to assist.

[86] The parties were in dispute about the use of an old email account, which from the evidence given, appeared to be still receiving correspondence. Murray’s evidence was that he had told John to shut down the old email account, only to discover in July 2018 that this had not been done. Having heard from John and Murray concerning this issue, it remains perplexing as to why John simply did not comply with the instruction provided. Further, it appears remarkable that the lawyers for the Station were thereafter tasked with instructing John what to do with the old email account on 18 August 2018.

[87] Murray’s belief that John was not telling both him and Ramon important things that were happening and was unwilling to share information appears to have arisen in a context of continued difficulties in dealing with John. The evidence supports a finding that John was not following instructions provided, or if following such instructions, was not doing so in a timely manner. Therefore, on any view, it was open for Murray to deduce that John was not complying with lawful and reasonable instructions in a timely manner, was becoming remarkably difficult to interact with, and had omitted to pay insurance premiums when instructed to roll them over.

John’s conduct in and of itself was open to give rise to a belief that the trust in the employment relationship had eroded and he could not be trusted to do that which Murray asked of him, in a cooperative and timely manner.

[88] When John departed on personal leave, understandably Murray’s concern escalated as the Station had no access to emails being sent to John’s company email address and was unable to secure remote access to the Station’s emails and documents. On 17 August 2018, John emailed Murray and Ramon a medical certificate that certified him unfit for the period 17 to 31 August 2018 and advised all relevant emails would be forwarded to an administration email address during the period. The email was sent from John’s Station email address.

[89] On 21 August 2018, Murray sent John an email requesting details of administrative logins and/or passwords for both Office 365 and Xero, and to arrange an automatic forwarding of all emails received by John to his Station email address. In the email, Murray explained the request was made in order to continue to manage the day to day operations of the business and to make sure the financial obligations of the business (such as payroll) were met whilst John was on personal leave. 150 On 3 September 2018, when John supplied another medical certificate, the Station was still unable to gain remote access to emails and the Station’s documents.

[90] By letter from the Station’s lawyers on 4 September 2018, the lawyers confirmed that, notwithstanding contact from the Station’s IT Consultant, remote access to the Station’s emails had not been provided and that the reason John cited was that he had personal information stored on the computer. The lawyers relayed their instruction to ask that John copy all personal information stored on the Station’s computer and thereafter delete it from the Station’s computer as soon as possible. 151 John responded by email dated 5 September 2018, ‘Please respect the fact that I am on leave as per the notification. Access to the system was not refused, only delayed until the identity of the caller was confirmed’.152

[91] By letter of 5 September 2018, the Station’s lawyers, noted that their client had been doing, and continued to do, everything possible to respect that John was on personal leave. However, given the period of personal leave, the lawyers noted that their client required access to its property and records urgently. John responded by email on 5 September 2018 that the Station’s property would be available by close of business on 7 September 2018. By an email address (that did not appear to be one that the Station used), John sent through all login and password details on 8 September 2018.

[92] The context of this matter is important. Murray and Ramon are elderly gentlemen with no IT skill set. Ramon is, according to Murray’s evidence, incapacitated. Murray has spent his life cattle farming with no history of business administration. They had placed trust in John to essentially run the administrative and management side of the business. With knowledge of this, John departed on a period of personal leave, with little contingency planning in place, with the exception that he would forward relevant emails to an administration address. One assumes that John would determine what was and was not relevant insofar as the emails were concerned whilst he was on personal leave. Further, it appeared that John intended to continue work while on personal leave – by forwarding the emails to the administration email address.

[93] While John may assert that he did not see the email sent on 21 August 2018, clearly, he had anticipated monitoring his email while on personal leave to ascertain relevant emails to forward to the administration email address. Hitherto , there was no response. John’s initial response to the letters of 4 and 5 September 2018, was not particularly forthcoming with assistance although the email from John later in the day of 5 September 2018, granted the Station access to its property on 7 September 2018.

[94] I am satisfied, based on the evidence before me, that before issuing the letter of termination dated 21 September 2018, Murray had conducted a reasonable investigation into the conduct issues that had arisen in the circumstances of this matter. While the Station cannot refer me to a breach of a non-existent code of conduct or a relevant policy, the evidence of Murray was that he believed John could not be trusted, was uncooperative, unresponsive to emails and had become more difficult to deal and communicate with (hence the use of emails). Such a belief is open to be found on the evidence.

[95] Serious misconduct as understood in the Code, takes its meaning from Regulation 1.07 and in doing so includes wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the employment contract. The notion of wilful or deliberate behaviour amounting to serious misconduct is conduct which strikes at the heart of the employment relationship. That notion has been considered in several well-known authorities, which were well traversed in the decision of Emma Horan v Tren Trading Pty Ltd t/a Dubbo Early Learning Centre. 153 I do not intend to repeat the authorities at length, but rely simply on the precepts that to justify summary dismissal a single act must be such as to show that the employee was repudiating the contract of service or one of its essential conditions,154 and such misconduct must at least have the quality that it is ‘wilful’: it connotes a deliberate flouting of the essential contractual conditions.155

[96] I conclude there was a reasonable basis for a belief being held that John had engaged in serious misconduct. That is conduct which consisted of a deliberate flouting of the essential contractual conditions – to follow lawful and reasonable instruction.

[97] I am therefore satisfied that at the time of dismissal, the Station held a belief that John’s conduct was sufficiently serious to justify immediate dismissal and the belief was based on reasonable grounds. Consequently, John’s application is dismissed, and an Order to that effect is published concurrently with this decision. 156

DEPUTY PRESIDENT

Appearances:

J. Cole on his own behalf.

C. Meighan of Hotchkin Hanly Lawyers, for the Respondent

Hearing details:

Perth, 24 July 2019.

Printed by authority of the Commonwealth Government Printer

<PR710924>

 1   Fair Work Act 2009 (Cth) s 396(c).

 2   Witness Statement of Murray Kennedy (Exhibit R1) (Kennedy Statement) [9].

 3   Ibid.

 4 Ibid [10].

 5 Ibid [4].

 6 Ibid [22].

 7   Ibid.

 8   Witness Statement of John Cole (Exhibit A1) (Cole Statement) [5].

 9 Ibid [5].

 10 Ibid [6].

 11 Ibid [7].

 12 Ibid [8].

 13   Ibid.

 14   Ibid.

 15 Ibid [10].

 16 Kennedy Statement [18].

 17   Ibid.

 18   Ibid.

 19   Ibid [19] and [46].

 20 Ibid [20].

 21 Ibid [21].

 22 Ibid [24].

 23   Ibid.

 24 Ibid [27].

 25 Ibid [29].

 26   Ibid.

 27 Kennedy Statement [35].

 28   Ibid.

 29   Ibid.

 30 Ibid [37].

 31 Ibid [38].

 32   Ibid.

 33 Ibid [40].

 34 Ibid [39].

 35   Ibid.

 36 Ibid [42].

 37   Ibid.

 38 Ibid [44].

 39 Ibid [45].

 40 Ibid [48].

 41 Ibid [53].

 42 Cole Statement [45].

 43   Ibid.

 44 Ibid [47].

 45 Ibid [48].

 46 Ibid [50].

 47 Kennedy Statement [54].

 48   Ibid.

 49 Ibid [55].

 50 Ibid [56].

 51   Kennedy Statement [57]; R1 MK4.

 52 Kennedy Statement [60].

 53 Cole Statement [65].

 54 Ibid [66].

 55 Ibid [70].

 56   Ibid.

 57 Ibid [71].

 58 Ibid [72].

 59   Cole Statement

 60 Kennedy Statement [61].

 61   Ibid.

 62 Ibid [62].

 63   Ibid.

 64 Ibid [63].

 65 Ibid [64].

 66   Exhibit A 17.

 67   Ibid.

 68 Kennedy Statement [74].

 69   Ibid.

 70 Ibid [75].

 71 Ibid [76].

 72 Ibid [78].

 73   Ibid.

 74   Ibid [80]-[81].

 75 Ibid [83].

 76 Ibid [84].

 77   Exhibit R1; MK6.

 78   Ibid.

 79   Ibid.

 80   Ibid.

 81   Cole Statement [86]-[89].

 82   Exhibit A 18.

 83   Exhibit R1 MK6.

 84 Kennedy Statement [65].

 85   Ibid [65] – [67].

 86 Ibid [68].

 87 Ibid [69].

 88 Ibid [91].

 89 Ibid [92].

 90 Ibid [96].

 91 Ibid [101].

 92   Ibid [102]-[103].

 93 Ibid [104].

 94   Ibid.

 95 Ibid [106].

 96 Ibid [107].

 97   Ibid.

 98 Ibid [110].

 99 Ibid [111].

 100 Ibid [112].

 101   Exhibit R1 MK-14.

 102   Exhibit R1 MK-14.

 103 Kennedy Statement [114].

 104 Ibid [118].

 105   Kennedy Statement

 106 Ibid [121].

 107   Exhibit R1 MK-19.

 108   Ibid MK-20.

 109   Ibid.

 110 Kennedy Statement [127].

 111   Ibid [127] – [128].

 112 Ibid [128].

 113 Ibid [131].

 114 Ibid [136].

 115   Ibid.

 116 Ibid [135].

 117 Ibid [140].

 118   Ibid.

 119   Fair Work Act 2009 (Cth) s 382.

 120   Fair Work Act 2009 (Cth) s 382.

 121   Erbacher, Sean v Golden Cockerel Pty Ltd[2007] AIRC 491.

 122   Ibid.

 123   Breen Creighton and Andrew Stewart, Labour Law (The Federation Press, 4th ed, 2005) 429; Rowan Wallis v Hallsons T/A Megals [2016] FWC 4598 [98].

 124   Michael John Allen v Buses Queensland [2007] AIRC 200. .

 125 Kennedy Statement [101].

 126 Ibid [118].

 127   [2017] FWC 3930 [62]-[64].

 128   JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services[2015] FWCFB 5264 [36].

 129   JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services[2015] FWCFB 5264 [32].

 130   Ibid [37-38]

 131 Ibid [27].

 132   Ibid [39] (Ryman); Grandbridge Limited v Mrs Diane Wiburd[2017] FWCFB 6732 [28].

 133   John Pinawin t/a RoseVi.Hair.Face.Body v Edwin Domingo [2012] FWAFB 1359.

 134 Ibid [29].

 135   Ibid ; cited in JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services [2015] FWCFB 5264 [39] and referred to in Grandbridge Limited v Mrs Diane Wiburd[2017] FWCFB 6732 [28].

 136   Ibid.

 137   I JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services[2015] FWCFB 5264 [40]..

 138   Grandbridge Limited v Mrs Diane Wiburd[2017] FWCFB 6732 [28]; JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services [2015] FWCFB 5264 [37].

 139 Kennedy Statement [25].

 140 Ibid [38].

 141   Ibid.

 142 Ibid [78].

 143   Exhibit R1 MK6.

 144   Ibid.

 145 Kennedy Statement [84].

 146 Cole Statement [45].

 147 Ibid [47].

 148   Kennedy Statement [18], [24], [26].

 149   Exhibit A 17.

 150   Exhibit R1 MK11.

 151   Ibid MK14.

 152   Ibid.

 153   [2019] FWC 3249.

 154   North v Television Corporation Ltd (1976) 11 ALR 599.

 155   Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285; [1959] 1 WLR 698 CA .

 156   PR711900