Juy Hepner v Fine Food Solutionz Pty Ltd

[2013] FWC 430

Note: An appeal pursuant to s.604 (C2013/2819) was lodged against this decision - refer to Full Bench decision dated 5 April 2013 [[2013] FWCFB 2060] for result of appeal.

[2013] FWC 430

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Juy Hepner
v
Fine Food Solutionz Pty Ltd
(U2012/8468)

COMMISSIONER MCKENNA SYDNEY, 18 JANUARY 2013

Application for unfair dismissal remedy - application dismissed.

[1] Juy Hepner (“the applicant”) has made an application pursuant to s.394 of the Fair Work Act 2009 seeking an unfair dismissal remedy. The applicant contends that his dismissal by Fine Food Solutionz Pty Ltd (“the company”) was harsh, unjust or unreasonable.

[2] The company has been involved in the production and supply of Asian-type foodstuffs under the brand name “Crazy Dragon”. The applicant’s former employment principally involved elements of sales and business development. The factual circumstances that formed the backdrop to this application, and the relationship between the applicant and the company, are somewhat atypical. Shortly stated, the applicant founded the company from which he was, in the end, dismissed. Although the applicant founded the company, was formerly a director of the company and presently has shareholdings in the company, he was not, at the time of the dismissal, a director of the company. The applicant had relinquished his former directorship of the company as part of a business arrangement that resulted in the appointment of directors other than the applicant.

[3] The company has two co-directors, namely, Nathan Catalano and Byron Kurth. Apart from being a co-director, Mr Catalano is employed by the company in a general manager role. Mr Kurth, who is the applicant’s step-father and who had a long association in assisting the applicant with the development and expansion of the business of the company, is not employed by the company.

[4] At the time of the dismissal, the company employed two employees, namely, the applicant and Mr Catalano.

[5] The dismissal, which was effected by Mr Catalano, arose in circumstances of acrimonious dispute directly or indirectly related to the operation, direction or control of the company. Some of the circumstances, which I do not detail in this decision, are set out in Catalano v Managing Australian Destinations Pty Limited [2012] FCA 632. Further, as considered in earlier proceedings concerning an extension of time for the applicant to make his application for an unfair dismissal remedy, there was dispute or uncertainty about whether Mr Catalano had authority to dismiss the applicant: Hepner v Fine Food Solutionz T/A Crazy Dragon[2012] FWA 7523. The question of whether Mr Catalano was properly authorised - without Mr Kurth’s concurrence - to effect the dismissal does not, it seems to me, need to be determined in these proceedings. That is, the cases advanced by the applicant and the company proceeded on the basis there was a dismissal. I do not consider it is apposite to purport to determine whether the dismissal was, for instance, void or voidable for reasons related to the dispute between the co-directors concerning scope of authority. I proceed on the basis the applicant was dismissed from his employment with the company by Mr Catalano.

[6] For the range of reasons detailed in the applicant’s evidence and submissions in the proceedings before me concerning the substantive claim of unfair dismissal, the applicant considered Mr Catalano was not acting in the best interests of the company. Indeed, the applicant considered Mr Catalano was acting improperly against the interests of the company in order to favour Mr Catalano’s own interests or the Catalano family’s interests, or both (collectively ”the Catalano interests”). The applicant considered the Catalano interests had acted improperly in a broad range of areas concerning the company, although this was put in much stronger terms in the applicant’s submissions.

[7] The applicant and Mr Kurth aligned in taking steps the applicant or Mr Kurth, or both, considered to be in the best interests of the company. The applicant considered that, in taking those steps, he had legitimate, director-level authority and instruction from Mr Kurth; and that these factors were among the mitigating circumstances concerning certain actions he undertook. The applicant’s evidence otherwise also indicated that he had instigated what he thought should be done, and sought and obtained approval from Mr Kurth.

[8] Contrary to the views of the applicant and Mr Kurth concerning the actions taken in what the applicant or Mr Kurth, or both, considered may be in the best interests of the company, Mr Catalano deposed that he considered he was acting in the best interests of the company. Mr Catalano’s evidence relevantly expressed his concern that the applicant had withheld company equipment and established corporate arrangements to compete with the company - being a company in which Mr Catalano was not only a director and general manager, but in which his family had invested substantial amounts of money.

[9] The matters relied on by the applicant in relation to his application for an unfair dismissal remedy were interwoven with matters related the proceedings before the Federal Court. Notwithstanding the corporate-related disputation, the applicant nonetheless comes before the Tribunal seeking an unfair dismissal remedy on the basis that he was unfairly dismissed from his employment - and this is so irrespective of matters including, but not limited to: the relationship the applicant had with the company as the founder of the business; as shareholder in the company; the relationship the applicant has with Mr Kurth as a director; and as a dismissed employee who considered that Mr Catalano had, as a director and general manager, engaged in conduct designed to undermine the company. While I hold general sympathy for the applicant concerning the overall predicament in which he found himself concerning the various matters in dispute about the business he built from scratch, this application falls to be determined according to ordinary employment principles. The corporate-related disputes concerning the company have been the subject of proceedings before the Federal Court and there are further proceedings pending.

[10] The following précis of matters relied upon by Fine Food Solutionz Pty Ltd as the named respondent to the proceedings (in the manifestation of instructions from Mr Catalano as a co-director who is employed by the company in a general manager role, rather than in the manifestation of the company’s other co-director, Mr Kurth) in relation to the termination of the applicant’s employment is drawn from its final submissions. As I understood it, the applicant’s submissions did not contest those matters relied on by the company as to the actions in question. Rather, the applicant’s contention was that he acted at all times in what he considered to be the best interests of the company and with director-level authority from Mr Kurth. For instance, the applicant submitted he was concerned, among other matters, to ensure the continued quality supply of product to customers. The applicant also considered that Mr Catalano had engaged in conduct in relation to the company of the type upon which Mr Catalano had relied in relation to dismissing him from his employment.

[11] By way of partial background to what subsequently unfolded in the dismissal of the applicant, the company formerly had an arrangement with Won Sum Pty Ltd (“Wonsum”), by which Wonsum manufactured Asian food products for the company for re-supply by the company to its customers. Wonsum produced these products at premises at Hoppers Crossing in Victoria, using a leased shu mai machine and associated equipment (collectively “the equipment”). Mr Catalano wanted to move the equipment to the premises of another supplier. The applicant or Mr Kurth, or both, refused to permit the relocation of the equipment. In late-March 2012, Mr Catalano learned the following:

• The applicant, had, on or about 29 February 2012, entered into a lease concerning the former Wonsum-operated premises at Hoppers Crossing, where the equipment was located.



• The applicant had, on or about 28 March 2012, registered a company named “The Gourmet Dim Sim Company Pty Ltd” (“GDSC”) of which the applicant was sole director, secretary and shareholder. (The applicant apparently informed Mr Catalano of this development.)



• The applicant/GDSC had, on or about 29 March 2012, registered in Victoria the business name "The New Crazy Dragon", with the nature of the business described as being Asian food production.



• In April 2012, the applicant/GDSC began using the equipment at Hoppers Crossing to produce and sell product to Alpha Flight Services (“Alpha”) a regular customer of the company, without Mr Catalano’s authority and without accounting to the company for the proceeds. Initially, the applicant sold product to Alpha on his own behalf in response to orders placed by Alpha with the company; subsequently, the applicant diverted the Alpha business to his own account.

[12] A principal aspect of the applicant’s case was that he “had been taking direction from one director and not the other” - in the midst of allegations by each of the directors respectively as to misconduct by the other. As it was put in the company’s submissions, Mr Catalano, who managed the company’s operations on a day-to-day basis, was “kept in the dark” about the applicant’s actions. Mr Kurth’s evidence confirmed his knowledge and authorisation of the actions taken by the applicant, in circumstances where Mr Kurth considered Mr Catalano to be a “hostile director”.

[13] The authority on which the applicant relied was authority from one of two rival co-directors with whom the applicant was aligned; the authority was not given by “the company”, more broadly considered. Whatever else may be said about aspects of the evidence in this case, I accept the company’s submission the evidence established the applicant and/or GDSC used the equipment for the production of foodstuff in competition with the company and for supply of that product to certain of the company’s customers. Notwithstanding the evidence and submissions in the applicant’s case to explain the context and motivations for the applicant’s actions (such as Mr Kurth’s authority, matters related to “vertical integration”, and attempting to counteract the harm the applicant considered was being inflicted on the company by the Catalano interests), I think the company’s submissions may be accepted that the applicant used the equipment for his own benefit (or for future anticipated benefit), rather than for the benefit of the company - and in circumstances where the company apparently continued to make the lease payments for the equipment. This is so notwithstanding the applicant’s submission that GDSC did not make any profit, that product was sold at cost, and that GDSC was involved in the foodstuff production for reasons including retaining staff skilled in making the products. The applicant submitted that GDSC was an entity created for an emergency to facilitate production for the company, although there appears to have been a broader agenda related to the various disputes between the Catalano interests and the Kurth/applicant interests about corporate manoeuvrings. In this respect, I have also noted the applicant’s submissions he had been advised by a liquidator to register a name similar to the company’s name, but that he did not intend to use it unless the eventuality occurred that the company was wound-up.

[14] As to the applicant’s actions, Mr Catalano’s evidence was as follows:

“I was deeply concerned with the actions of [the applicant] in refusing to release the shu mai machine to [the company], in setting up a company himself which traded with a substantially similar name to the business name used by [the company], and in direct competition to [the company] in the market of Asian foodstuffs. I was further disturbed that [the applicant] had taken it upon himself to utilise [company] property without authority, to fill orders for [the company’s] customers, and fail to remit any of the proceeds obtained to [the company].”

[15] Mr Catalano considered that the applicant had engaged in “grave misconduct” in relation to the matters described above.

[16] In correspondence dated 19 April 2012, Mr Catalano gave notice to the applicant of a disciplinary hearing to be held by teleconference on 20 April 2012. That correspondence was in evidence, and identified seven key matters (not all of which, such as allegedly unauthorised leave, appear to have been pressed, or otherwise relied upon, in these proceedings). The initial meeting was rescheduled to 24 April 2012 at the applicant’s request. In the conversation concerning the rescheduling, Mr Catalano deposed that the applicant stated: “You can’t fire me and I don’t have to answer to you”. Mr Catalano replied that he was giving the applicant the opportunity to explain matters; and if the applicant did not give him any information he would have no choice but to use the information on hand to decide what would happen. The rescheduled meeting did not proceed as the applicant advised he wished to provide a written response by the end of the week, that is, 27 April 2012. Apparently, Mr Kurth at some point advised the applicant to ignore Mr Catalano’s letter. The applicant did not provide a response to the matters raised in Mr Catalano’s correspondence dated 19 April 2012.

[17] On 30 April 2012, Mr Catalano then advised the applicant in writing of dismissal with one month’s pay in lieu of notice. The letter terminating the applicant’s employment noted, in part, that the reasons for the dismissal were those advised on 19 April 2012. The letter further noted the applicant had been given opportunities to respond to the matters advised on 19 April 2012, and had twice failed to do; and that the company was obliged to make a decision on the information available.

[18] Given the company had two employees, the Small Business Fair Dismissal Code (“the Code”) arises for consideration. The Code provides as follows:

“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.”

[19] The circumstances of this application are, as I have indicated earlier in the decision, atypical. Nonetheless, the objective evidence seems to be on common ground concerning the equipment, the establishment of GDSC and the registration of a trading name similar to that of the company - and this is so irrespective of the matters described in the applicant’s case concerning the motivating factors and the applicant’s undoubted conviction in describing such matters. It also appears to be common ground that the company gave the applicant written notice of matters of concern in advance of a meeting, being a meeting which the applicant determined not to attend. Further, the applicant determined not to provide a written response although given an opportunity to do following his advice as to providing a response by this means.

[20] Mr Catalano had corresponded with the applicant on 19 April 2012 outlining a range of concerns, convening a disciplinary hearing and advising the applicant could have a support person. Mr Catalano foreshadowed four possible outcomes in his correspondence, with the fourth being “Termination of Employment”. The applicant determined not to respond to the matters in Mr Catalano’s correspondence; he neither participated in the meeting that was rescheduled at his request nor provided a written response by the date specified. Mr Catalano then later proceeded to dismiss the applicant on the basis of the available information, being information which I accept, for the reasons described in Mr Catalano’s evidence, may be considered to constitute a valid, conduct-related reason for dismissal.

[21] It seems to me that the dismissal may be viewed as Code-compliant, considering the circumstances described in the evidence. Following from the approach in John Pinawin T/A RoseVi.Hair.Face.Body v Edwin Domingo[2012] FWAFB 1359 (albeit that decision concerned summary dismissal, whereas the applicant was given a payment in lieu of notice), the termination of the applicant’s employment was consistent with the Code and the termination thereby was not an unfair dismissal. As such, it is unnecessary to consider the other elements as to an unfair dismissal. Given my conclusion in this respect, it is also unnecessary to consider the alternative grounds relied upon in the company’s submissions concerning the termination of employment.

[22] An order dismissing the applicant’s application for an unfair dismissal remedy has been issued in conjunction with this decision.

COMMISSIONER

Appearances:

J. Hepner, in person.

M.Minehan of counsel, for the company.

Hearing details:

2012.

Sydney and Melbourne (video hearing):

December 10.

Sydney:

December 11.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR533318>