Kerry Anne Keating and Teico Investments Pty Ltd
[1994] IRCA 64
•17 Oct 1994
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA VI No. 281 of 1994
VICTORIA DISTRICT REGISTRY
BETWEEN:
Kerry Anne KEATING
Applicant
AND:
TEICO INVESTMENTS PTY LTD
Respondent
MINUTES OF ORDER
17 October 1994 TOMLINSON JR
THE COURT ORDERS THAT:
The respondent to pay to the applicant the sum of $12,000.
Such payment to be paid within 21 days of the date of this Order.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA VI No. 281 of 1994
VICTORIA DISTRICT REGISTRY
BETWEEN:
Kerry Anne KEATING
Applicant
AND:
TEICO INVESTMENTS PTY LTD
Respondent
Reasons for Judgement
17 October 1994
TOMLINSON JR
Be application dated 3 May 1994 under Section 170 EA of the Industrial Relations Act 1988 (‘The Act”) the applicant claimed:
1.(a) an order declaring the termination of employment to have contravened Division 3 of Part VI A of the Act.
(b) an order requiring the respondent to reinstate the employee.
(c) an order that the respondent pay compensation.
2.such other orders as will put the employee in the same position (as nearly) if the employment had not been terminated.
On 3 May 1994 the matter was referred for conciliation. On 15 July 1994 His Honour Mr. Justice Keely ordered that:
1. either party have leave to file and serve further affidavit material in respect of the proceedings by 5 August 1992.
2. the applicant file and serve her contentions of fact and law by the 12 August 1994.
3.respondent file and serve her contentions of fact and law by 19 August 1994.
4. the directions hearings be adjourned until 29 August 1994.
5. liberty to apply be reserved to both parties.
On 29 August 1994 the matter came before Judicial Registrar Ryan, directions were made that the respondent was to file and serve contentions of fact and law.
By letter dated 30 August 1994 the Registry advised the parties the matter be listed for hearing on 13 September 1994 and 14 September 1994.
By letter dated 7 September 1994 solicitors for both the applicant and the respondent advised the Registry that those dates were unsuitable for the parties and requested the matter be postponed for one week to 20 and 21 September 1994.
The parties were advised that the parties’ proposed consent orders for an adjournment of the proceedings were unacceptable. The applicant’s solicitors stated that they did not attend the directions meeting on 29 August 1994 and advised that they were some what taken by surprise when the matter was set down for hearing on 13 and 14 September 1994. After that order was made, the respondent’s solicitor ascertained that a director of the respondent Mr. John Smith would be overseas and another witness Mr. Paul Luntz would be interstate and unavailable.
On Tuesday 13 September 1994 at the hearing of the matter counsel for the respondent contended that there would be severe prejudice if the matter was to proceed. Both the applicant and her solicitor were in court and it was noted that when the applicant filed her original papers ongoing hardship was alleged as a result of the termination. It was established that the applicant had no other employment. The applicant had made arrangements for counsel to attend the hearing and the court determined that the matter should proceed.
The respondent advised the court that this ruling would be appealed and an order would be sought restraining the court from proceeding with the matter.
The respondent sought to invoke Section 378 (2) (3) and (4) of the Act which makes provision for a party to have an application heard by a judge rather than a judicial registrar and stated that the court had no jurisdictional discretion in the matter once such application had been made. The court determined that it had a discretion to hear the matter and elected to proceed. The respondent withdrew and the matter continued on an undefended basis.
The respondent filed a notice of motion outlining the objections to the matter proceeding and seeking the following orders:
1.That the decision of Judicial Registrar Tomlinson made 13 September 1994 by which an application to adjourn the hearing of the proceeding was refused, be reviewed pursuant to Section 377 (1) 1988 of the Industrial Relations Act;
2.That the Court order that the delegated power to hear and determine the application be exercised by a Judge pursuant to Section 377 (2) of the Act;
3.That pending the hearing of the application in 2 above, the Court order that the further hearing of the application before Judicial Registrar Tomlinson do not proceed in terms of Section 378 (4) of the Act.
That motion was dealt with by His Honour Mr Justice Northrop on 14 September 1994 and the matter was dealt with in detail. His Honour granted the following orders:
1.That the motion for review of the exercise of power to refuse to grant an adjournment in so far as it is based on paragraph 466 (1) (e) of the Industrial Relations Act 1988 and Section 377 of the Industrial Relations Act is refused;
2.Otherwise the orders sought in the motion dated 13 September 1994 are withdrawn.
At the hearing of the application under Section 170 EA counsel for the applicant stated the applicant commenced employment on 5 December 1983 and was terminated on 2 May 1994. On 5 February 1994 the respondent purchased the hotel where the applicant had worked since 1983. The hotel, the Oasis Oz Hotel, was where the applicant’s partner Mr. Jim McKenzie had been the manager and the previous owner of the hotel. Towards the end of March 1994 the new proprietors, the respondents, dismissed Mr. McKenzie.
The applicant told the court that she began as a sales assistant in the Liquor Barn of the Oasis Oz Hotel and at the time of her dismissal she was an executive assistant, her duties being mainly banking and the day to day running of the hotel, supervising all staff. The applicant had held the position of executive assistant for approximately eight years.
The applicant was unable to continue physically working in the Liquor Barn and stated that her legs were not strong enough for her to cope with that kind of work.
In an affidavit of response, John Smith stated that he was a director of the respondent and that no federal award applied to the applicant’s work. Further, Mr. Smith stated that the applicant did not commence work with the respondent until 15 February 1993, the date being when the respondent purchased the hotel, known as The Oasis Oz Hotel.
The respondent contended that the applicant’s employment was not terminated but rather that the applicant unilaterally resigned on the 2 May 1994 and as the applicant was not dismissed, the respondent was not in a position to give the applicant notice.
In the contentions of law and fact provided by the applicant it was stated:
The applicant commenced employment at The Oasis Oz Hotel, situated in Dryburgh Street, North Melbourne (“the hotel”) on 5 December 1993.
Over the course of ensuing years the applicant acquired extensive experience, skill and know-how in the running of the hotel.
On 5 February 1993 Teico Investments Pty. Ltd (“Teico”) purchased and took over the running of the hotel, it’s buildings and business.
Immediately prior thereto, the applicant held the position of “executive assistant” at the hotel. Thereafter, the applicant continued to be employed at the hotel in the position of executive assistant but from then on in the legal employ of Teico.
On 18 April 1994, after returning from annual leave the applicant was removed from the position of executive assistant. Instead she was offered a position as a full-time bottle shop attendant (“the alternative position”).
On 2 May 1994 the applicant left the employ of Teico.
On 3 May 1994 the applicant received $854.90 by way of termination payment.
The conduct of Teico Pty Ltd in transferring her out of the position of executive assistant and offering her the alternative position amounted to a demotion in her position, status and responsibilities at the hotel.
This demotion was unjustified in the circumstances. In particular the applicant did not breach any duty of loyalty, good faith or confidentiality owed to the respondent, nor did she display an improper attitude towards her employer or inadequately perform the responsibilities of her position. She conducted herself in an appropriate manner during her employment of Teico.
During the conciliation hearing in this matter it was stated by solicitors for the respondent that investigations were being conducted into certain ‘goings on’ at the hotel while the applicant was in the employ of Teico.
To the extent that nay such investigations formed a reason for the applicant’s removal from her position (reference is made to line 26-29 of page 3 of the transcript of the Conciliation Proceedings held before Deputy President Maher on 20th June 1994) the applicant submits that she:
(a)was demoted before the results of any such investigation were available;
(b)was not then, or ever since, made aware by the respondent of the nature of any investigations or allegations being conducted or made against her:
(c)was not, and has not since, been given opportunity to reply to any such investigations or allegations.
In particular, the position of bottle shop assistant was not appropriate for the applicant. Aside from amounting to an unjustified demotion in her position the applicant was unable to accept the alternative position due to medical difficulties she encountered caused by protracted periods of standing on the floor of the bottle shop. The respondent was aware or ought reasonably to have been aware of this fact. It was well documented in hotel records. The respondent’s behaviour was such that the applicant was left with no choice but to resign after removal from her former position.
Such conduct on behalf of Teico Pty Ltd amounted to:
(a)a unilateral variation of her contract of employment without consultation, consent, approval or justification:
(b)a breach of contract evidencing an intention on behalf of the respondent to no longer be bound by it’s terms.
(c) constructive dismissal of the applicant.
Further the dismissal was harsh, unjust and unreasonable in the circumstances entitling the applicant to be eligible for relief under the provisions of Division 3 of Part VIA of the Industrial Relations Act 1988 (Cth).
Further, the respondent assumed liability as legal successor to the previous employer for all outstanding entitlements of the applicant stemming from her employment with the Oasis Oz Hotel since 5 December 1985 by express or implied term of the contract of sale or otherwise by operation of law. In particular, the respondent was given a special dispensation in the purchase price as compensation for accepting liability for existing and outstanding obligations or employees of the Hotel.
The respondent (sic) claims entitlements owed in respect of her period of service with Oasis Oz Hotel since 5 December 1973 to 2 May 1994 in respect of:
(a) superannuation
(b) long service leave
(c) annual leave entitlements.
Details of such entitlements will be forwarded at the hearing of this matter.
Further, the monetary payment made to Ms. Keating was inadequate in lieu of her period of service, her experience, her tenure, her status at the hotel and other factors. The applicant claims a further three months wages as her notice period.
To the extent that investigations are being conducted into goings on at the hotel and to the extent that investigations involve allegations against the applicant, the respondent is not lawfully entitled to withhold any entitlements due and owing to the applicant pursuant to her period of service since 1983 pending completion of any such investigations.
The applicant claims further compensation for deliberate delay in payment of outstanding entitlements which has resulted in financial hardship to the applicant.
The applicant reserves its right to make further submissions pending disclosure of relevant material in the custody, control or possession of the respondent and in particular, the contract of sale for the purchase of the hotel and its business and buildings.
In her evidence the applicant stated that on 29 March 1994, after the respondents had assumed control of the hotel, she was called into the office and was told that her position with the hotel was available if she still wanted it. She was advised that nothing would change with her position. Her personal relationship with Mr McKenzie was referred to. The applicant was due to have the following day, Wednesday 30 March 1994 as leave, and accordingly she worked the next Thursday and Friday. The applicant was due for recreational leave commencing that Friday. The following three days, Friday, Saturday and Sunday, the respondents requested the applicant come to the hotel as they could not manage the accounting procedures and the cash registers.
On the following Monday the applicant stated she was contacted by someone from the hotel with a request concerning the computer programme. The applicant answered the request concerning the computer programme. The applicant answered the request to the best of her ability and advised that there was no need for Mr McKenzie to make a return phone call as there was no further information which could be provided to the hotel. Subsequently the applicant received a telephone call from Mr Paul Luntz, a call which she found disturbing and threatening in that Mr Luntz stated that if the applicant did not arrange for Mr McKenzie to telephone the hotel:
“...things would get very nasty and very dirty.”
The applicant subsequently went back to work on 29 April 1994 and reported to the new manager Mr. Stephen Lewis. Mr. Lewis explained to the applicant that under the circumstance os her friendship with Mr. McKenzie it would probably be a good idea if the applicant did not work so much with the office and clerical side of the hotel. The applicant responded that she needed her job and that she enjoyed her job. At this point it seems that Mr. Lewis advised the applicant words to the effect that:
“Money might go missing. A sum of $500.00 might go missing.”
At that time the applicant stated that Mr Lewis personally advised that he felt that he could work with the applicant. However, he then handed the applicant a letter which apparently related to the telephone call made by Mr Luntz to the applicant concerning the computer programme. It is noted that the letter handed to the applicant had neither sender’s address or letter head. The letter was dated 18 April 1994 and stated:
“Dear Miss Keating,
First Official Warning
I refer to your recent conversation with Jenny Lier, our Functions Manager and Paul Luntz, the accountant for the hotel, during which you displayed belligerence and a reluctance to relay information on behalf of the hotel (your employer). Such conduct is not considered consistent with the terms and spirit of your employment.
Please note that should you continue to conduct yourself in a manner which is considered prejudicial to the interest of the hotel it will result in the termination of your employment.
Please note also that with immediate effect, you have been demoted to the position of Bottle Shop Assistant and you are to commence your duties reporting to Ross Moloughney with immediate effect. Your remuneration remains unchanged.
Please acknowledge receipt hereof by signing in the space provided below.
On behalf of Teico Investments Pty Ltd Trading as Oasis Oz Hotel
Signed
Stephen J Lewis
Acting General Manager.”
The witness stated that the author of the letter, Mr. Luntz did not speak to the applicant subsequent to her receiving the letter. The applicant advised Mr. Lewis that she considered this letter to be constructive dismissal and accordingly left the premises of the hotel.
Subsequently by letter dated 3 May 1994 on the letterhead of Teico Investments Pty Ltd noted as being situate at 199 Toorak Road, South Yarra the applicant received the following:
“Dear Ms. Keating,
In light of your statement that you would be ‘leaving the hotel immediately’ we acknowledge your resignation effective 2 May 1994. Attached please find a cheque for $854.90 representing accrued annual leave and wages owing, as at that date.
This amount has been calculated as follow:-
DATE OF COMMENCEMENT OF EMPLOYMENT WITH TEICO INVESTMENTS P/L 5/2/93
DATE OF RESIGNATION 2/5/94
TOTAL PERIOD OF EMPLOYMENT 64 WEEKS & 1 DAY
ANNUAL LEAVE @ 20 DAYS p.a. 24.7 DAYS
LESS ANNUAL LEAVE TAKEN 1/4/94 to 30/4/94 21 working days less public holidays included therein
(Good Friday, Easter Monday, Anzac Day)3
LEAVE TAKEN 18
Therefore owing 6.7 days or 53.6 hours @ $12 per hour $ 643.20 $ 112.56
(17.5% loading)
$ 755.76
SALARY OWING April 2 & 3, May 1 & 2 32 @ $12
384.00
1139.76
less tax 205.16 $934.60 less staff purchases 9.70 less staff loan 70.00
Cheque herewith $854.90 Yours faithfully
Stephen J. Lewis
General Manager.”
The applicant testified she had had no contact with any one from the company since the termination of her employment and further that she did not seek reinstatement.
By letter dated 4 May 1994 the applicant wrote to Mr. Lewis as General Manager c/o Teico Investments Pty Ltd. That letter stated:
“Dear Mr. Lewis
I take issue with your letter handed to me, dated 3rd May, 1994.
Firstly your opening statement is misleading, and should indicate,
‘Having been told that my previous position of employment was no longer available to me and that I was being demoted to the lowest grade position, I am considering these facts to be that I have been terminated and will leave the hotel immediately.’
I also wish to point out that I asked you if I could return to my previous employment, and you said that this was not available to me.
Secondly I am deeply disturbed a the amount of termination monies that you handed to me with the details set out in the aforementioned letter. This amount was $854.90 and bears no mention or indication of the monies owing to me from my employment commencing 05/12/1983.
This indicates to me that you are attempting to deprive me of my legal rights to pro rata long service leave and accrued holiday pay.
I know, through contacting Arthur Anderson & Co., that monies were transferred to your company, at date of settlement, being apportionments for accrued long service leave, holiday pay and sick leave. I also know that the previous general manager was required to send updated balances of these accruements to your company’s accountant every month without exception. You would be therefore well aware of my date of commencement of service with the Hotel and the amounts owing to me.
I respectfully ask that these monies be made available to me, at the latest by Friday 6th May, 1994 otherwise I will pursue my legal rights accordingly. I will contact you accordingly for your answer.
Yours sincerely
Kerry Ann Keating
c.c. J. H. Smith
Paul Luntz.”
The court heard evidence from Mr. Ross Moloughney that he had initially resigned from the respondent and was due to finish on 20 May 1994 having given four weeks written notice but was advised by the respondent on 5 May or 6 May 1994 that his services were no longer required. Mr. Moloughney advised the court that as a result of arbitration he received his long service payments from the respondents.
Mr. James McKenzie, the partner of the applicant outlined the history of the applicant’s employment with the hotel and produced the balance sheet for Teico Investments Pty Ltd as of 28 February 1993 showing the sum of $12,166 being provision for holiday pay together with provision for long service leave in the sum of $8,857.00, sick leave in the sum of $1,007.00 and accrued charges in the sum of $2,896.00.
Clause 12A, 12B and 12C of the contract of sale wherein Mr. McKenzie sold the hotel to the respondents was noted wherein purchases may offer employment to all the employees (of the respondent) upon terms and conditions of employment similar to those enjoyed by the employees as at that date (being the date of settlement).
Mr. McKenzie further gave evidence as to the details of the conversation he had with the secretary of Mr. Paul Gronsbell-Luntz relating to the information sought of Ms. Keating concerning the operation of the computer at the hotel. Mr. McKenzie stated he had previously provided to Mr. Gronsbell-Luntz a password enabling them to be accessed.
In addition Mr McKenzie stated he had been employed by the receivers of the Oasis Oz Hotel from October 1993 through until February 1994 until the respondents assumed control. Mr McKenzie told the court:
“I was still employed by the receivers from October right through to February when they took over,. I was just helping then out, that was no problem to me, and they indicated they wanted to take over all the staff. They were told, and we were all told that they were buying the business as well as the property . The main reason that there was $2 million - why they wanted the business was because there (were) $2 million worth of losses, accrued tax losses in the company, which they were able to get and they have got ... Now ... John Smith, who was the managing director, asked me to convene a meeting of the staff ... so
he could talk to all the staff and all the staff came in ... Kerry went out and managed the bottle shop while all the other staff could be (there) ... we even hired another person to help Kerry in the bottle shop...”.
In summary counsel on behalf of the applicant stated that Section 170 DB of the Act had been breached in that the applicant had not received the relevant notice. Secondly under Section 170 DC an employer who terminates an employee’s employment for reasons related to the employee’s conduct or performance must afford the employee the opportunity to defend himself.
At no time was Ms. Keating given an opportunity to defend herself against the allegations made. Reference was made to “a sum of money” which might go missing. These allegations were never broached squarely by the respondent during the course of employment. The author of the letter of the so-called “warning” never provided the applicant with opportunity to answer the matters in the warning. It is not proposed to deal further with this matter as it is noted the court was unable to take evidence from the respondent.
Additionally it was argued that Section 170 DE had been breached, in that a termination must not be harsh nor unjust and must be for a valid reason.
In this case the termination of employment has in fact, I find, been both harsh and unjust.
The circumstances presently before the Court are similar to those presented to Parkinson J. R. in the matter of K J Kelsall and Bryan Snooks and Judith Snooks trading as Diamond Valley Ultra Tune (VI 202 of 1994) when the applicant appeared in person and there was no appearance for the respondents. Here, as in that case, there was no provision made by the respondents for adequate notice and I find that the respondents have a legal obligation to give to the applicant the full amount of notice required for the period of employment commencing from when she began work with the Oasis Oz Hotel.
I find that date to be 5 December 1983 and not 5 February 1994 as alleged by John Smith in his affidavit of response dated 17 June 1994 . To my mind the conditions of the contract of sale of the Oasis Oz Hotel affixed the respondents clearly with the responsibility for the full period of employment.
Having considered all the information presented to the Court I agree with counsel and accordingly I find that there has been an unlawful termination of the applicant’s employment by the respondent
The Court heard evidence the applicant will actively pursue her long service leave entitlements elsewhere and so makes no Order in this regard.
It was also argued that the Court could not contemplate re-instatement as a practical solution as the applicant clearly stated she did not trust the respondent Mr Luntz. I agree with this assertion that re-instatement is inappropriate.
Accordingly compensation is awarded to the applicant in the sum of $12,000.00
MINUTES OF ORDER
I certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgement of Judicial Registrar Tomlinson.
Associate :
Dated : 17 October 1994
Counsel for the applicant : Mr B Lacey
Solicitors for the applicant : John Lunny & Associates
Solicitors for the respondent : Middleton Moore & Bevins
Date of hearing : 13, 14 September 1994
Date of judgement : 17 October 1994
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