Laura Marie Forman v Archers Smash Repairs Gold Coast Pty Ltd
[2011] FWA 1122
•24 FEBRUARY 2011
[2011] FWA 1122 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Laura Marie Forman
v
Archers Smash Repairs Gold Coast Pty Ltd
(U2009/11962)
DEPUTY PRESIDENT SWAN | BRISBANE, 24 FEBRUARY 2011 |
[1] An application for an unfair dismissal remedy, pursuant to s394 of the Fair Work Act 2009 [‘the Act’] has been made by Ms Laura Forman [‘the applicant’]. The application has been made against Archers Smash Repairs Gold Coast Pty Ltd [‘the Respondent’; ‘Mr Archer’ ; ‘Mrs Archer’]
[2] The Applicant’s representative did not challenge the eligibility of the Respondent to be covered by the Small Business Code on the number of employees employed by the Respondent.
[3] Section 388 of the Act sets out the Small Business Code.
“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.”
[4] The Applicant commenced employment with the Respondent in June 2000. The position held was that of Office Manager. The requisite duties primarily included management of Respondent accounts.
[5] The wages paid were $1149.00 gross per week. A fully maintained motor vehicle was also provided. It was agreed that the Respondent regularly paid [bonuses [sometimes of significant amounts] to the Applicant.
Respondent’s reasons for summary dismissal of Applicant
[6] The Respondent’s reasons for terminating the employment of the Applicant are set out in the Notice of Dismissal dated 24 August 2009. These are as follows:
“You did at several times at Ashmore within the State of Queensland perpetrate a fraud upon Archers by persuading its debt-factoring provider Premium Funding Pty Ltd ACN 057306171 ABN 34057306171 (‘Premium’) NOT to contact Rodney Albert Archer a Director of Archers DIRECTLY so as to inform him as to the true financial status of Archers’ then factoring debt due to it on the grounds that you feared the loss of your employment if it did so because it would then have become apparent to such Director that you had failed to carry out with due diligence and in good faith the duties expected of you as the employee responsible for overseeing the proper operation of Archers then debt-factoring arrangement with Premium. In so preventing the said Rodney Albert Archer from becoming aware of the true financial status of the subject factoring debt you caused Archers’ business to suffer severe liquidity problems and otherwise placed the financial security of the same in jeopardy such that it suffered and will continue to suffer considerable loss and damage particulars whereof are still being assessed”.
[7] The Respondent also advised the Applicant that she had received all of her entitlements [ie wages, pro-rata long service leave, accumulated annual leave and accumulated sick leave].
[8] The Applicant admits to falsifying the Respondent’s financial records for a period of time, but says this occurred under instruction from the Respondent, Mr Archer.
Debt-factoring allegations
[9] The Respondent had been factoring clients of Premium Funding Pty Ltd [‘Premium’] for approximately 8 years.
[10] The factoring arrangement was described by Mr Peter Wildin [Manager Recoveries at Premium] as follows:
“A factoring arrangement is one where a business buys the accounts for outstanding work from the business who has performed the work and for whom that outstanding account is an asset, and provides to the business that performed the work the amount of the invoices purchased less a fee. This is documented by a factoring contract on each occasion factoring occurs.” 1
[11] If an account is outstanding after 35 days, Premium investigates the claim.
[12] At 40 days, Premium provides a list of claims to the repairer. This list was provided to the Respondent each Thursday before factoring occurred on Friday.
[13] Premium has claims repurchased by the repairer [ie by the Respondent] if the invoice remains unpaid after 90 days.
[14] It was Mr Wildin’s practice to telephone the Applicant every Friday to discuss the accounts on the 90 day list and ascertain which of those accounts would be deducted from the factoring for the week.
[15] In April/May 2009, the Applicant claimed that the Respondent’s business ‘was in trouble’. 2
[16] The Applicant alleges that Mr Archer had falsified $540,000 worth of factored invoices through Premium. The Applicant says that Mr Archer instructed her to generate bogus invoices naming fake customers and fake jobs so that a cash flow would be received from them.
[17] The Applicant stated that the relationship between the Respondent and Premium was based on lies and deception. The Applicant further alleges that:
“These ghost invoices were never issued and this money was used to keep the business with positive cash flow as Rod used to siphon a lot of cash out of the business to support his extravagant lifestyle with its numerous luxuries and assets.” 3
[18] The Applicant says that in May 2009, Premium commenced restricting the Respondent’s factoring arrangements.
[19] The Applicant said that Premium demanded the return of $540,000.
[20] The Applicant’s assertions were that the Respondent’s business was trading as an insolvent business because “we were using today’s money to pay for last month’s bills, always playing catch-up.” 4
[21] Prior to Mr Wildin calling at the Respondent’s premises on Friday 24 July 2009, the Applicant told Mr Wildin that she was having a difficult time at work with Mr Archer and she hadn’t finalised her 90 day accounts. Mr Wildin says that the Applicant “asked me not to discuss the 90-day accounts with her when I called at Archers.” The evidence was that the Applicant did not want Mr Archer to know of the difficulties being encountered by her with Premium. Mr Wildin’s evidence was that this request from the Applicant for him to refrain from mentioning the 90 day account was repeated again by the Applicant on 24 July 2009. Mr Wildin agreed to these requests that financial information should be kept from Mr Archer.
[22] Mrs Archer, who had been absent from working in the business for some years, returned to perform some of the administrative duties. Her evidence was that “I started coming into the office more frequently and I told Laura that I was keen to assist with the factoring ….. When I asked her if I could assist, on factoring day, Laura would give me an errand to do out of the office, sending me away from what was taking place. She did this on a few occasions. She told me that whatever it was she was giving me to do was really important for her, but she had to stay and do the factoring...” 5
[23] During the course of Premium’s visit, Mr Archer had called into the office to ask if all was right with regard to his factoring, to which Mr Wildin responded “yes”. Mr Wildin said he agreed that everything was fine because he believed that the Applicant would pay outstanding monies during the following week.
[24] Mr Wildin says that when the Applicant declined to pay the accounts on the 90 day list on 31 July 2010, the Respondent in effect defaulted on its Factoring Agreement terms with Premium. 6
[25] Upon advising his employer, Premium, of the situation, Mr Wildin was told by Ms Angela Scales [Office Manager – Premium] that the Managing Director of Premium, Mr Barry Hayward, had instructed that the Applicant be advised that the outstanding 90 day list had to be paid by Friday 31 July 2009.
[26] The Respondent says at that date the actual amount to be paid was $32,000. Despite the Applicant claiming that the Respondent could not meet its debts, Mr Archer says that there was $26,000 worth of invoices to factor. That being so, it would only have necessitated the Respondent finding a further $6,000 to finalise the debt.
[27] The Respondent stated that the Applicant had no authority to be making any decision which put the business into default.
[28] On 31 July 2009, Mr Archer said that the Applicant told him that Premium had run out of money and that the Respondent would have to find a new factorer.
[29] Mr Wildin received a telephone call from Mr Archer on 31 July 2009 who claimed to have just been told that Premium was not coming out to factor that day.
[30] Mr Wildin explained that he had discussed the issue with the Applicant and that she had advised that the Respondent was not able to make the payments required on 31 July 2009.
[31] Mr Wildin said Mr Archer sounded shocked at hearing this news.
[32] Mr Wildin eventually had a meeting with Mr and Mrs Archer regarding the debt and was advised by them that they would repay all amounts in full. This occurred and the debt was finalised by 10 December 2009. The Respondent says that he was unaware of what was occurring between the Applicant and Premium. Mr Archer said there was no need to put the business into default.
[33] The Respondent says that he realised something was wrong with the accounts, and having raised the issue with the Applicant he said that on a number of occasions the Applicant had cried, said she was sorry for what she had done, and had offered to resign.
[34] Mr Wildin did not agree with the Applicant’s assertions concerning any restriction placed on the Respondent by Premium in May 2010. There were never outstanding invoices totalling $540,000 – the correct amount was $479,648.93; there were no ‘lies and deception’ between Premium and the Respondent. Premium had never experienced difficulties with the Respondent and Premium regarded the Respondent as a valued client over the previous 8 years.
[35] The Applicant said that she was afraid to discuss the issue of Premium debts with Mr Archer because she had advised him in June 2009 that she was pregnant. She said that following her announcement, Mr and Mrs Archer had discussed the repayment by her of $10,000 that the Archers had given to her when she purchased her home in 2009. She said that $8,600 represented her long service leave and the remainder was a ‘bonus’ given to her by the Archers. The Applicant said that both Mr and Mrs Archer were annoyed that she was pregnant and that Mr Archer had said that “it was a slap in the face as he was going to look like an idiot paying my long service leave early and in return this is how I repaid him”. 7
[36] Mr Archer said that when advised of the Applicant’s pregnancy, he and his wife had congratulated her. Ms Danielle Saxe, an employee of the Respondent, gave evidence that she had returned to work with the Respondent in June 2009. She recalled that the only account she could give regarding Mr and Mrs Archer’s response to news of the Applicant’s pregnancy was that there had never been any derogatory words spoken about the pregnancy and in fact “Rod used to joke with Laura about being pregnant and eating chips. It wasn’t negative. We all laughed about it and Laura laughed too.” 8
[37] Mr Archer had said he had loaned the Applicant $10,000 in December 2008 because she had not considered the payment of Stamp Duty when she had purchased a home. Mr Archer said it was the Applicant who had said that if she became pregnant, she would repay the money to Mr Archer. The Respondent says it was the Applicant who had raised the issue of the $10,000 loan at the meeting, not the Respondent.
[38] Mr Douglas Witham [Public Accountant who has performed accountancy work for the Respondent for over 26 years] gave the following evidence:
- In May 20 2010, he was asked by the Respondent to review the statement of the Applicant which had been supplied to Fair Work Australia upon the applicant making application for an unfair dismissal remedy.
- There were no other signatures on any of the debt factoring documents other than those of the Applicant’s.
- The Applicant had not explained that there were two very distinct categories of the Respondent’s claims which Premium used to factor during the period of the Applicant’s work.
- The first category should have been “Archer’s Claims” and the second category should have been “non-Archer’s claims”.
- There were also two sub-categories of the abovementioned claims.
- An example of the type of instance where Mr Witham claims that the Applicant had falsified claims is identified below:
- Mr Witham believed it could have been of no possible monetary advantage to the Respondent to have sanctioned the methods being utilised by the Applicant. To have followed the Applicant’s approach would only have ensured that the Respondent would place himself further and further into debt.
- Mr Witham believed that the underlying reason for the Applicant’s behaviour was not to provide an increase to the Respondent’s cash flow, but rather to hide one prior falsification by substituting it with another.
- The Applicant had become duplicitous in her dealings with the Respondent in that she had understood what she was doing was wrong.
- Mr Witham likened the actions of the Applicant to those of one operating a “PONZI-Scheme”. 9
• On 6/11/08 the Applicant created a quotation for repairs to a vehicle totalling $22,227.59. The Job Number attributed to this was ‘Job Number 12938’.
• On 14/11/2008, the Applicant created a Tax Invoice for the completion of the job. This Taxation Number was ‘No. 9790’.
• On 14/11/2008 the Taxation invoice was submitted to Premium for factoring.
• On 20/2/2009 (after 90 days from inception) the value of this invoice [$22,277.59] was deducted from the Respondent’s total factoring for the Friday of that particular week because the Applicant had advised Premium that the Respondent had received payment.
Change to Applicant’s Hours
[39] The Applicant had encountered illness during the early part of her pregnancy and had produced medical certificates for the taking of sick leave.
[40] The Applicant had been advised by her medical practitioner that she should reduce her working hours. Upon her return to work in August 2009, the Applicant said that the Respondent restricted her access to its internet business banking, and had taken her office keys and her company vehicle from her.
[41] In mid August 2009, when the Applicant was again absent from work due to illness, she says that the Respondent advised her that she would now become a casual employee. The Applicant says that she had not agreed to this alteration to her work status.
[42] The Respondent’s evidence was that in August 2009, the applicant said she had wanted to work less hours. The Applicant had asked if she could perform some work from home because she wanted to work a couple of days a week in her husband’s business. It was the Applicant who had mentioned working as a casual. The question of the Applicant’s use of the business car arose and the Applicant was advised that she could keep it for another two weeks while she found another car.
[43] When the Respondent again spoke to the Applicant, she advised that she was not a casual employee. The Respondent said they would get together and discuss the matter the following week. The Respondent stated that he believed he was agreeing to the Applicant’s requests, but that he must have misunderstood exactly what she had wanted. However, the issue could not be resolved because the Applicant did not return to work.
Summary Dismissal of Applicant
[44] Mr Archer says that it was after he had found out that the Applicant had misled him that he determined that she would no longer be involved in the mainstream business.
[45] The Applicant heard through her family that Mr Archer had told them that she had resigned from her employment. The Applicant asserts that she had never resigned.
[46] The Respondents met with Mr Wildin and Mr Archer’s evidence was that:
“Peter Wildin came to see Peta and I not long after I sent that message. Peter provided us with a copy of an email (Addendum 3) which he hand delivered to Peta and I and he spoke to it. I was shocked. It made no sense to me. I could not understand why Laura would have left these outstanding from 2 July 2009. I did not understand why Laura had strung Peter along for 5 weeks and for 2 weeks asked Peter not to mention the outstanding 90 day accounts, and I did not understand why Laura had told Peter we could not attend to the outstanding 90 day accounts when we could well afford to attend to them at all times during July 2009.” 10
[47] Addendum 3 [abovementioned in paragraph 46] is a somewhat lengthy communication from Mr Wildin to Premium Management and to the Respondent concerning the 90 day accounts.
Inter alia, it includes the following:
“Laura rang me Friday morning 17 July while I was at Bk of Qld and was crying and asked if I could not discuss the 90 day accounts with her when I called at Archers about midday. She said that Rod had yelled at her and slammed a file on her desk which had upset her. I didn’t discuss the 90 day files with her that day.
Laura rang me on Friday morning 24 July and asked again if I could not discuss these 90 day files at Archers later that day and assured me that she had sorted them with NRMA and they would all be paid within the next week. I did discuss these files “quietly” with Laura that day and told her they would need to be all paid by the following Fri 31 July as PF MD Barry Hayward was aware of the situation and not prepared to carry this sum further – (one account was now 120 days outstanding). Rod did come in as I was finishing the days factoring and enquired, “Is everything all right?” to which I mistakenly replied, “Yes”, as I had been assured by Laura that NRMA would pay all these accounts by next Friday.
…….
Barry Hayward advised me on Monday 27 July that if the 90 day accounts totalling $32,605.05 were not all paid by 31 July then I was not to do any factoring for Archers on Friday 31 July. This was communicated to Laura on Friday morning 31 July (she had already been advised by Angela Scales Friday 24 July that the sum of $32,605.05 was to be paid by Friday 31 July), when she said she/Archers can’t pay that sum to PF today, as they only have $26,000 of factoring to do. Barry Hayward said well we require all of the $26,000 to be deducted. Laura advised that it is not possible, so I advised Laura that I wouldn’t be calling at Archers that day for factoring. Laura at this time had to advise Rod that PF was not coming to factor that day and the reason why. I am not sure whether Laura communicated the full story outlined above. I suspect she just communicated as much as she had to which probably showed PF in ‘bad’ light rather to highlight her miscommunication. I believe that a lot of this information has now become clearer to you, Rod and Peta as you have more carefully questioned Laura Foreman on these events, during the week following 31 July.”
[48] The Respondent was unable to contact the Applicant for some time. Mr Archer was advised by a member of the Applicant’s family that she would not speak with Mr Archer. Mr Archer also said he received a call from the Applicant’s mother-in law who advised him that the only way the Applicant would speak to the Respondent was in arbitration. The Respondent sought advice from both his accountant and solicitor and determined to summarily dismiss the Applicant.
Conclusion
[49] The small Business Code applies in this case because the Respondent satisfies the criteria as a small business on the basis of the number of persons employed by the business.
[50] The Small Business Code includes within its consideration of what might constitute serious misconduct matters such as ‘theft, fraud, violence and serious breaches of occupational health and safety procedures”. The Small Business Code also states that 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.
[51] The Taxation consequences of the situation in which the Respondent had found itself had not been finalised at the time of the hearing. There was no evidence given that the matter had been referred to the Queensland Police. While the Small Business Code says that it is not essential that a formal complaint to the Police, for example, must have occurred, it is apparent from the evidence given by the Respondent and Mr Witham, which I accept, that there would be serious Taxation implications, amongst other things, which would eventually need to be addressed by the Respondent.
[52] The Respondent states that the Applicant was dismissed summarily for serious misconduct. There is no evidence to suggest that the Applicant took money from the Respondent for her own purposes. Rather, the allegation is as described in paragraph [6] of this decision.
[53] The initial question to be answered is whether the Applicant was told she had to falsify the Respondent’s records.
[54] The Applicant commenced her employment with the Respondent in 2000. She was, at the time, a young woman with no real training or experience for the position she occupied as Office Manager.
[55] The evidence given by the Respondent’s Accountant, Mr Witham details the type of the factoring arrangements which were in place between the Respondent and Premium.
[56] Large amounts of money were involved in these arrangements. Mr Witham strongly asserts that the Applicant was sufficiently aware that what she was doing with the Respondent’s finances was inappropriate and wrong.
[57] There was evidence that the Applicant did not want to take leave (or only when others did) and that she did not want Mrs Archer to assist with the administration side of the business strongly suggesting that the Applicant did not wish anyone else to overview the factoring arrangements in which she was involved.
[58] The most telling evidence (which is admitted by the Applicant and confirmed by Mr Wildin) is that she did not want Mr Wildin to raise any issue relating to the 90 day accounts when he visited the Respondent’s premises. Strangely, Mr Wildin agreed with the Applicant to this course of action, which in effect resulted in withholding crucial information from the Respondent. Mr Wildin says that he did this because he believed that the financial situation in which the Respondent had found itself would be rectified within a short period of time.
[59] On the one hand, the Applicant has stated that she had created fake invoices under instruction from the Respondent, but on the other, she chose to withhold information from the Respondent as it related to the ramifications of the fabrication of documents taking place.
[60] I have not accepted that the Applicant at any point was under instruction from the Respondent to create a series of fake invoices. I have accepted evidence from Mr Wildin that the Respondent was genuinely surprised and angry when he found out what had been occurring with the factoring process. As well, I have accepted the evidence of Mr Witham that, from his lengthy history with the Respondent, he had never observed any inappropriate financial dealings and that there was no reason, financial or otherwise, why the Respondent would adopt a course of action which would only ensure that he multiplied his debts, when he had always been able to meet his financial obligations. I have also accepted Mr Archer’s evidence on this point.
[61] It is my view that the Applicant simply tried to cover up each mistake. With each cover-up, a new set of obstacles arose which were then covered up. It became a process which inevitably imploded upon itself. But at its core, was a determination on the Applicant’s part to hide this information from the Respondent.
[62] I have not accepted that the applicant was frightened of the Respondent and therefore couldn’t discuss with him any difficulties she might have been having. Rather, the Applicant was the beneficiary of much of the Respondent’s generosity – being awarded handsome bonuses on regular occasions, being loaned money and also being given money when she found herself in financial need outside of the workplace. There is no evidence at all that the Applicant was reticent or apprehensive about requesting help of this type from the Respondent.
[63] To make decisions [for example, advising Premium that Archers could not settle its accounts and thereby putting it in default] without any reference to the Respondent, and without any authority to do so, shows that the Applicant was prepared to allow the Respondent’s business to fall into default with Premium and also shows a high level of deception on her part in her relationship with the Respondent.
[64] Contributing factors underlying the unusual relationship between the Applicant and the Respondent are that:
The Applicant, while receiving a good wage and conditions for her work, also received very handsome bonuses from the Respondent on fairly regular occasions.
The Respondent was very generous in loaning and/or giving the Applicant substantial amounts of money to assist in her arrangements outside of the workplace.
The Respondent and the Applicant’s family had been friends for a long time. Messages were being passed from one or another family member to the Respondent relevant to the Applicant. These messages related to whether the Applicant was going to return to work; whether the Applicant had resigned her employment and that the Applicant refused to talk to the Respondent amongst other things. This enmeshment between the Respondent and the Applicant and her family did little to assist the employment relationship between the parties.
[65] In all, I accept that the Applicant’s behaviour constituted serious misconduct sufficient for the Respondent to summarily dismiss her services. The Applicant, through her own actions, put the Respondent’s business into a parlous state. The Applicant breached her fiduciary duty to the Respondent.
[66] Even though under the Small Business Code it is not a requirement for the Respondent to have any discussions with the Applicant about the summary dismissal, the evidence shows that the Respondent sought, on many occasions, to make contact with the Applicant without success.
[67] The Respondent was unable to make contact with the Applicant towards the end of the employment relationship. The Applicant would not speak to the Respondent and messages were being passed between the Respondent and the Applicant’s family. The notice of the reason for the Applicant’s dismissal occurred through correspondence from the Respondent to the Applicant.
[68] While there may be a question around whether the Applicant was sufficiently capable of performing all of her duties as office manager, that does not exonerate her from inappropriately dealing with the Respondent’s finances by creating fake documents. As well, it does not exonerate her from making critical financial decisions about the Respondent’s business without discussing those issues with the Respondent and for procuring others to leave the Respondent in the dark with regard to its business. The level of inappropriateness on the part of the Applicant was acute. A summary dismissal was warranted in all of the circumstances.
[69] The application is dismissed.
DEPUTY PRESIDENT
Appearances:
Mr R. Steinitz for the Applicant
Ms K. Prior for the Respondent
Hearing details:
2010
Brisbane
5-8 July
1 Exhibit 1 – point 9
2 Exhibit 1 – point 14
3 Exhibit 6 – point 46
4 Exhibit 1 – point 16
5 Exhibit 4 – points 9, 10
6 Exhibit 6 – point 46
7 Exhibit 1 – point 16
8 Exhibit 5 – point 9
9 Exhibit 7
10 Exhibit 2 – point 89
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