Karamitsios, Vasilios v Alan Beckwith Macbro Pty Ltd

[1997] FCA 1306

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VI 5788  of   1995

BETWEEN:	VASILIOS KARAMITSIOS APPLICANT
AND:	ALAN BECKWITH MACBRO PTY LTD ACN 006 296 635 RESPONDENT
JUDGE(S):		SPENDER J
DATE OF ORDER:		24 OCTOBER 1997
WHERE MADE:		MELBOURNE

THE COURT ORDERS THAT the application be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VI 5788 of 1995

BETWEEN:	VASILIOS KARAMITSIOS APPLICANT
AND:	ALAN BECKWITH MACBRO PTY LTD ACN 006 296 635 RESPONDENT

JUDGE(S):	SPENDER J
DATE:	24 OCTOBER 1997
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

This is a review pursuant to s 377 of the Industrial Relations Act 1988 (Cth) (‘the Act’), now the Workplace Relations Act 1996 (Cth), of a decision of a Judicial Registrar dismissing an application by Mr Karamitsios for compensation subsequent to the termination of his employment.

On 14 November 1995, the respondent (‘Beckwith Macbro’), terminated the employment of Mr Karamitsios, the applicant. He had been employed as a labourer at the foundry conducted by Beckwith Macbro which had taken over the business at the foundry in June 1995. Previously, the foundry had been run by the Stanley Group, and earlier by the Siddons company, the manufacturers of Sydchrome. On 17 November 1995, the applicant made an application under s 170EA(1) of the Act for compensation in respect of the termination of his employment, including a component of compensation for the loss of pro rata long service leave in respect of the nine years and nine months continuous employment at the Coburg foundry he had rendered prior to his termination.

On 21 October 1996, this court, constituted by Judicial Registrar Ryan, dismissed Mr Karamitsios's application.  The present application to the court, as it is now constituted, is by way of re-hearing.  The hearing proceeded by way of oral evidence.  The central contentions of the applicant are that there was no valid reason for his termination and that he was given no adequate opportunity to respond to any allegation of poor performance.

Further, Mr Karamitsios says that he was given no warning at any time for poor performance.  Included in his general denial, he denies that he was formally warned on 7 September 1995 or again on 17 October 1995.  He claims that a written warning from his employer of 9 November 1995 in evidence was not accompanied by any oral advice that his employment was in jeopardy.

It is for the respondent to prove in the present proceedings that there was a valid reason or valid reasons pursuant to s 170DE of the Act for the applicant's termination. That section provided:

(1)  An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service.

(2)  A reason is not valid if, having regard to all of the circumstances of the case, including the employee's capacity and conduct and those operational requirements, the termination is harsh, unjust or unreasonable. This subsection does not limit the cases where a reason may be taken not to be valid.

Section 170DC provided:

An employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless:

(a)the employee has been given the opportunity to defend himself or herself against the allegations made, or

(b)the employer could not reasonably be expected to give the employee that opportunity.

The meaning of "valid reason" in the first subsection of s 170DE was the subject of observations by Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. His Honour said at 373:

Section 170DE(1) refers to ”a valid reason, or valid reasons”, but the Act does not give a meaning to those phrases or the adjective “valid”.  A reference to dictionaries shows that the word “valid” has a number of different meanings depending on the context in which it is used.  In the Shorter Oxford Dictionary, the relevant meaning given is: “2.  Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.”  In the Macquarie Dictionary the relevant meaning is “sound, just or well founded; a valid reason”. 

In its context in s 170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that” the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, when considering the construction and application of s 170DC.

Judgment in that case was delivered prior to the judgment of the High Court in Victoria v Commonwealth (1996). This application must be determined on the basis that s 170DE(2) is invalid as determined by the High Court in Victoria v Commonwealth (supra).  That was the position in Nettlefold v Kim Smoker Pty Ltd (1996) 69 IR 370 where Lee J had invited counsel to make submissions consequent on the determination by the High Court of the invalidity of s 170DE(2). Lee J said at 371:

Neither counsel made any submissions on the question whether the phrase “valid reason” used in s 170DE(1) of the Act imposed a requirement that in all the circumstances a termination of employment at the initiative of an employer not be unjust or unfair. The terms of the Act suggest that such a construction is arguable. Section 170CA of the Act states that the object of Div 3 of Pt VIA is to give further effect to the Termination of Employment Convention (the Convention) the text of which is set out in Sch 10 of the Act. Article 8 of the Convention requires a contracting party to the Convention to ensure that a worker who has been dismissed is entitled to challenge that dismissal in an appropriate tribunal if the worker considers that his or her “employment has been unjustifiably terminated” and pursuant to Art 9 of the Convention that Tribunal is to be empowered “to examine the reasons given for the termination and the other circumstances relating to the case and to render a decision on whether the termination was justified”.

Later at 372 Lee J said:

By giving effect to the Convention the Act seeks to establish a balance between the right of an employer to duly manage an enterprise in which labour is employed and the right of an employee, and of the community, not to have the asset represented by the capacity of employees who provide such labour, whether skilled or unskilled, depreciated by incompetent or capricious management of labour by an employer.

In Kerr v Jaroma Pty Ltd (1996) 70 IR 469, Marshall J said at 476:

...a reason which is based on the operational requirements of an undertaking does not thereby become “valid” because of it being so characterised from the subjective view of the employer.  The question remains as to whether the employer has satisfied its onus of proof in showing that a reason it alleges to be based on its operational requirements, in fact, was justified or objectively defensible in the circumstances.  The Court will in each case determine, in the particular circumstances prevailing, whether any termination alleged to have been taken due to operational requirements was nonetheless effected for a valid reason, ie, one which is defensible or justifiable on an objective analysis of the relevant facts.

Finally, I refer to some observations of Moore J in Wadey v YWCA Canberra, (12 November 1996, unreported).  In that case Wadey had her employment terminated after an incident in which she had placed tape over the mouth of a child under her supervision as a child care worker at a child care centre at a time when the child was misbehaving.  At page 12 of the reasons for judgment of Moore J, his Honour said:

It is not for this Court to approach the matter as if it is to make a decision whether termination should occur or not. A range of rational and reasonable views may exist as to whether particular conduct warrants termination. If the view adopted by or on behalf of the employer is rational and reasonable, then in my opinion the employer has established a valid reason for the purposes of section 170DE(1). In putting it this way I am not attempting to depart from the views expressed by Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373 which have been referred to with approval on a number of occasions since. [The director of the child centre] was entitled to view the applicant’s conduct with the gravity she did. Her decision to terminate was for a valid reason.

In the present case there is a conflict in the version of events according to the witnesses for the respondent and the version given by the applicant.  In the hearing before me, three witnesses were called on the behalf of the respondent.  Mr Geoffrey Alan Mark, a shop steward at the foundry; David Wilson, the foundry supervisor; and Mr Terry Beckwith, the managing director of the respondent company.  I was impressed particularly by the evidence of Mr Wilson. 

Mr Mark gave evidence that a month or two before the takeover by the respondent company on two separate days he logged the absence of Mr Karamitsios from his work station on the first day for 178 minutes in total and on the second day for 182 minutes.  These, I infer from his evidence, were the aggregate periods of intervals of up to 40 minutes at a time.  He said that he did this in response to complaints by other workers because in the absence of the applicant the machine for which he then had responsibility had to be operated by someone else. 

Mr Mark admits that after the takeover, the work responsibility of Mr Karamitsios was increased, although whether it went from two machines to three (as Mr Mark said), or as Mr Karamitsios indicated, it went from one to three, I am not able authoritatively to conclude.

Mr Wilson (the foundry supervisor) deposed that in July or August 1995, he himself had to unload the shot blaster because Mr Karamitsios had been absent for some 25 minutes.   Mr Wilson logged his departure from his work station for the rest of that day at three hours and 42 minutes.  He said that he confronted the applicant with that the following day.

Mr Wilson said that on a number of occasions he indicated that his work performance was “not good enough”, and then on 7 September 1995 he took the applicant to the office of the foreman, where a warning was administered and noted in the day book of the foundry.  I am satisfied that Mr Karamitsios was told that unless there was an improvement in his performance he would be given later warnings, and if ultimately the position remained the same, he would face dismissal.

Mr Wilson said that a second warning of that kind, being oral in nature but of the content that I have indicated, (and being noted in the day book), was given on 27 October 1995, and a written warning in evidence before me as Exhibit 2 was given to the applicant on 8 or 9 November 1995.  The document signed by Mr Beckwith is dated 8 November and reads:

Mr Vasilios Karamitsios

This is to record that after numerous verbal warnings regarding your attitude to work practices this written warning is to be placed on your file. 

Continuation of your conduct may lead to termination of your employment.

You conduct will be reviewed on November 14th, 1995 to assess whether any change has occurred.

(Signed) Terry Beckwith
Managing Director

On 15 November 1995, a letter of dismissal was given to the applicant.  In terms it says:

This is to record that following numerous verbal warnings and a written warning regarding your work practices a review was undertaken.

As there was no significant effort on your behalf the Company finds that this conduct is unsatisfactory and that your employment with us is hereby terminated, effective immediately.

Please sign below for receipt of the following.

1.Copy of this letter.

2.Wages for week ending 15.11.95.

3.Holiday Pay.

4.4 weeks pay in lieu of notice.

and then in handwriting,

5.1 days(sic) pay

The signature of the applicant appears below that, no doubt as a receipt for the moneys set out in the letter.

Mr Karamitsios says that the written warning of 8 November 1995 was read to him by his son.  This refers in terms to previous warnings which Mr Karamitsios says in his evidence were never given to him.  If that had been the case, one would have expected an earlier protest from him prior to his letter of dismissal.

The applicant says, amongst other things, that no one spoke to him about his work performance, and that he was never away from his machine.

In respect of the suggestion that in July or August 1995 on one day he was told by Mr Wilson that he was absent for three hours and 42 minutes on that day in total, his response was:

If I had have been away that long I would have been sacked.

The conflict in the accounts is stark.  Without making findings wider than necessary for present purposes I prefer the account of the respondent’s witnesses.  That account conforms with the documentary material.

Independently of any further matter, I find Mr Wilson to be a credible witness.  He impressed me as giving a sensible, fair account of what in fact had occurred.

However, there is a degree of corroboration of the account on behalf of the respondent given in the evidence of Mr Esler, a witness called on behalf of Mr Karamitsios.

Mr Esler was previously in charge of the foundry when it was operated by the Stanley Group.  When asked by counsel on behalf of Mr Karamitsios as to his work performance, Mr Esler assessed it as "average to ordinary".  He said that Mr Karamitsios could have been at his work station more frequently than he was, and that on one occasion he spoke to his supervisor saying that he "spent too much time away from his machine".  In cross-examination he agreed that Mr Karamitsios was known to frequent the toilet in the machine shop area which adjoined the foundry and that he had meetings with colleagues along the way.

That evidence, in my view, supports the position that there was a long-standing problem involving Mr Karamitsios, who was spending time away from his machine, and that, on occasions, other workers were required to leave their tasks to complete the work that should have been done by him.  I am satisfied that the work performance of Mr Karamitsios was poor.  I am further satisfied that the employment of the applicant was terminated for a sound, defensible and valid reason.

The respondent has discharged the onus which lies on him under s 170DE(1). The evidence satisfies me that the performance of Mr Karamitsios was unsatisfactory for a long period of time even prior to the takeover in June 1995. I am satisfied that there were repeated warnings of his inadequate performance and that he was told by Mr Wilson of his lack of performance. He was formally informed on the two occasions when the notation was made in the day book about his poor performance and of the possible consequences on his employment should his work performance not improve.

I am further satisfied, therefore, that the employer has not been in breach of s 170DC of the Act.

In my opinion, the applicant had more than ample opportunity to respond to the allegations of poor performance and that he was aware that his employment was at risk, which was not simply a case of a mere exhortation to improve.  The procedure that the respondent adopted was fair in all the circumstances to Mr Karamitsios.

For these reasons, his application for unlawful termination of employment and his claim for compensation is dismissed.

It seems to me not to be the case that a person is to be put in jeopardy of costs in circumstances where any question of vexatious conduct of litigation depends on a rejection of that person's account. I am not minded to make any order pursuant to s 347 of the Act.

I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

Associate:

Dated:            24 October 1997

Counsel for the Applicant:	Mr Wilmoth
instructed by	Gregory's
Counsel for the Respondent:	Mr S Stuckey
instructed by	Metal Trades Industry Association
Date of Hearing:	23 October 1997
Date of Judgment:	24 October 1997