Leonarda Palumbo and Commercial Butchers Pty Ltd
[1994] IRCA 30
•30 Aug 1994
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY Matter No VI 441/94
B E T W E E N: LEONARDA PALUMBO
AND:
COMMERCIAL BUTCHERS PTY LTD
COURT: J.A. RYAN, Judicial Registrar
PLACE: MELBOURNE
DATE: TUESDAY 30 AUGUST 1994
JUDGMENT - EX TEMPORE - REVISED FROM THE TRANSCRIPT
This is a case which includes a termination of employment on 25 February 1994, a reinstatement on 26 February 1994 and a second and conclusive termination on 6 May 1994. Leonarda Palumba has applied for a declaration that the termination of her employment by the respondent was unlawful in that the termination has contravened division 3 of Part VIA of the Industrial Relations Act 1988. She also seeks compensation and claims that the termination was harsh and unjust and unreasonable because she was dismissed without notice, without consultation, without counselling, without any valid reason and without any suggestion that her performance was unsatisfactory.
Initially, the applicant also requested an order for an amendment to a reference from the respondent; this request was not pursued at the hearing.
At or immediately after a conciliation conference arranged under section 170ED the applicant alleged that her employment was initially terminated on Friday, 25 February 1994 by Matilda Mazzon, a director of the respondent company, but that she was reinstated on Saturday, 26 February at which time Mrs Mazzon sought from the applicant an assurance that she, the applicant, would commit herself to remaining as an employee of the company for at least 18 months.
The applicant repeated this claim on oath at the trial and called Joanne Simpson to give supporting evidence. Mrs Simpson's evidence was that she was cashier/accounts payable clerk and payroll administrator at the respondent's office, 1 Little Baillie Street, North Melbourne from January 1992 to February 1994. She expressed the belief that the applicant had been appointed on 19 July 1993 to assist her and had taken over the bulk of her work when she, Mrs Simpson, was ill and took a holiday for a month around Christmas 1993. Mrs Simpson gave evidence that while on leave she came in one day a week to help the applicant but then decided to resign effective from 4 February.
Mrs Simpson stated from that date to some time in March she worked for the respondent on a casual basis and that about mid-February Matilda Mazzon told her that, "Someone had to go." Mrs Simpson's evidence was curious on this point. She said that as far as she was concerned she was the someone to go and there seemed to be an implication in her evidence that she took this view because she had already resigned from full-time employment with the respondent company and was only working part-time and on a casual basis until the applicant was sufficiently experienced to take over the bulk of the duties.
However, irrespective of what implication might be drawn from that part of Mrs Simpson's evidence, it is very clear from her evidence and indeed from the evidence of Mrs Mazzon that Mazzon and Simpson discussed the first termination of the applicant both before and after it occurred late on the afternoon of Friday, 25 February. Indeed, Mrs Simpson clearly stated on oath that she obtained Mrs Mazzon's permission to leave early on the afternoon of Friday, 25 February because she did not want to be there when Leonie, that is the applicant, was dismissed.
It is also quite clear from the evidence of both Simpson and Mazzon that the latter telephoned the former about 9 am on Saturday, 26 February. Both agree that Mrs Mazzon told Mrs Simpson that the applicant was to be reinstated. Mazzon, however, vigorously denies that she sought from the applicant an assurance that the applicant would continue to work for the respondent for 18 months. Simpson is just as adamant that Mazzon told her that she wanted just such an assurance from the applicant. Furthermore, she gave evidence of a second telephone call later on the morning of 26 February. This telephone call was made to Mrs Simpson by the applicant, Leonarda Palumbo. Both Simpson and Palumbo gave evidence of discussing the 18-month requirement in their telephone conversation.
I find Simpson a truthful witness. I accept Palumbo as generally a truthful witness although somewhat evasive on whether she was aware in the period February to May 1994 of financial difficulties in the respondent's business. I am not impressed with the evidence of Mrs Mazzon. There was some conflict between statements in her affidavit sworn and filed on 2 June and her evidence in the trial on 25 August. Where her evidence conflicted with that of the applicant and Mrs Simpson I have preferred the evidence of the last mentioned witnesses.
Furthermore, Mrs Mazzon conceded on oath that when advising the applicant of her reinstatement, that is by telephone on the morning of 26 February, she did indicate that she wanted the applicant to continue in employment with the respondent company at least until after she and her husband, Tony Mazzon, returned from a planned trip to Italy in about October 1994. She made no further concessions. She continued to deny that she sought an assurance of a further 18 months employment from the applicant.
It follows from what I have said about preferring the evidence of Simpson and Palumbo that I am inclined to the view that Mrs Mazzon did indeed seek just such an assurance from Ms Palumbo. However, it is certainly not clear from any of the evidence that the applicant gave such an assurance. I have not assumed such an assurance on the applicant's part. The orders I propose to make are predicated on the basis that there is no evidence that Ms. Palumba gave Mrs Mazzon an assurance of 18 months further employment.
Having said that I find that on 26 February 1994 Mrs Mazzon created a reasonable expectation in the mind of the applicant that employment was likely to be available for her until well into 1995 and certainly until at least November 1994 after the proposed trip to Italy.
After the reinstatement of 26 February the applicant continued to work as an accounts payable clerk for the respondent. On the afternoon of Friday, 6 May, (not 5 May as stated in paragraph 2(c) of the supporting affidavit), her employment was terminated. She stated in evidence that she had just switched off her computer when Mrs Mazzon spoke to her and used words to the effect that, "It has happened again, we have to dismiss you because of financial difficulties."
The applicant also stated that Mrs Mazzon gave the impression that in terms of work the applicant would be replaced by, "three family members." Mrs Mazzon's trial evidence on this point is consistent. She stated that she terminated the applicant on 6 May because the business could not afford to continue the employment of two staff. She stated that Joanne Simpson had already resigned and that she and her husband could do the work, that is the work performed by the applicant. Later evidence suggests that Mrs Mazzon planned to also obtain assistance from her daughter, Adrienne, and this is consistent with the applicant's recollection that Mrs Mazzon indicated that the applicant would be replaced by, "three family members."
This evidence is also generally but not entirely consistent with Mrs Mazzon's affidavit of 2 June 1994. Paragraphs 3 and 4 of that affidavit read as follows:
Paragraph 3:I dispute the correctness of the information set out in paragraphs 2(d), 3(1) and (2) of that affidavit. (i.e. applicant”s affidavit).
In relation to those paragraphs I say the true position is:
2(d) at the time of the termination the applicant was advised by the respondent that due to the financial position of the respondent the respondent could not afford to continue to pay the applicant's wages. The applicant was advised that Mrs Matilda Mazzon, a director of the respondent company, would assume the applicant's duties.
3(1)the dismissal was not harsh due to the fact that the respondent is facing legal actions which may result in the respondent ceasing to trade. The applicant was aware of the financial position of the respondent. On 25 February 1994 the applicant was previously dismissed due to the financial position of the respondent but her termination was rescinded by agreement after another employee resigned in her place.
3(2)at the time of termination the applicant was advised that due to the financial position of the respondent company her employment was terminated.
Paragraph 4. The reason for the respondent's decision to terminate the employee's employment is due to the financial position of the company. We cannot afford to employ the applicant in the position.
The inconsistencies are
the claim that the applicant's duties would be assumed entirely by Mrs Mazzon. I consider this a minor inconsistency
the claim in the affidavit that the earlier 25 February termination, “had been rescinded by agreement after another employee resigned in her place”.
This is a more significant inconsistency or contradiction between the affidavit evidence of Mrs Mazzon and her sworn evidence at the trial, and indeed the sworn evidence of all four witnesses at the trial.
There is no doubt that Joanne Simpson had resigned on either 4 or 2 February and that the 26 February rescission of the 25 February termination could not be attributed to Mrs Simpson's resignation three weeks earlier
Counsel for the applicant put two propositions. The first was that the termination was not effected because of financial difficulties and was not a genuine redundancy where the respondent sought to reduce expenses and achieve savings by absorbing the applicant's work into the family structure of the company.
He submitted that the financial difficulties ground was bogus. He called it a smoke screen. The real reason for the termination was, he alleged, the replacement of the applicant by Mrs Mazzon's long-time close personal friend, Mrs Alda Galvin. Counsel argued that if this was the real reason for terminating employment of the applicant, without notice, without counselling, without consultation, and in the face of the conceded good performance of the duties, this amounted to substantive unfairness and was not a valid reason for termination.
The second proposition is that if the court accepts that the termination was effected because of financial difficulties and to achieve savings, it was nonetheless harsh and unreasonable and unjust and the applicant was treated very unfairly in a procedural sense and should be compensated.
Evidence at the trial was given by the applicant, Ms Palumbo and by Mrs. Simpson, Mrs. Mazzon and Mrs. Galvin.
After careful consideration I find that the balance of the evidence does not justify a conclusion that the applicant's employment was suddenly terminated to provide a job for Mrs Galvin. Certainly the fact that Mrs Galvin began to perform essentially some of the same duties as had been performed by the applicant and began on Monday, 9 May, is suggestive of the possibility that she replaced the applicant. However, I find that the sworn evidence of all four witnesses, taken in its entirety, and allowing for conflicts and for the general preference for the evidence of the applicant and Mrs Simpson where conflict exists, does not justify the inference that the applicant was simply replaced by Mrs Galvin.
I find that there has been some downturn in the economic fortunes of the respondent company as a commercial, retail butcher. I find that several, as many as six of sixteen retail butcher outlets operated by the respondent were closed or sold in the period July 1993 to February 1994 and that there was in this period a significant reduction in staff and in turnover. In the absence of documentary evidence, which I would have thought could have been readily tendered, I am not prepared to accept the respondent's claim that turnover fell 100 per cent in that period. Nevertheless I accept a significant decline in turnover.
Mrs Mazzon and Mrs Galvin stated on oath that Mrs Galvin assisted without remuneration in the respondent's business for two to three weeks after the applicant left on 6 May and that in that time Mrs Galvin, with Mrs Mazzon, performed the work previously performed by the applicant. Both swore that Mrs Galvin did this to help her friend, Mrs Mazzon, because the daughter Adrienne Mazzon was ill and could not assist and because Mrs Galvin needed experience to assist her return to the workforce.
Both gave evidence that Mrs Galvin then approached Tony Mazzon's sister, Sylvania Calagari, a director of a related company, the wholesale butcher, Ardro Reynolds Pty Limited, and obtained employment with that company essentially as an accounts payable clerk.
On the basis of the evidence given at the trial by all four witnesses it is not possible to effectively separate and isolate the day to day office and accounts administration of Commercial Butchers Pty Limited and Ardro Reynolds Pty Limited. Both companies bank in the one account; both companies seem to have undertaken some staff reductions between July 93 and February 94.
Both companies now use the office, or at least at the date of the hearing both companies used the office at 1 Little Baillie Street to process accounts, although there are suggestions in the evidence that the respondent plans to move office accommodation to Mr and Mrs Mazzon's Mornington property. Both companies have a common element; Matilda Mazzon. She is a joint proprietor with her husband of the respondent's retail butchery, Commercial Butchers Pty Limited. She is apparently the sole director and shareholder in Mazzon Investments, which holds a 50 per cent interest in the wholesale butcher, Ardro Reynolds. The other 50 per cent of Ardro Reynolds is held by Calagari Nominees, a trustee company directed and owned by Tony Mazzon's sister, Sylvania Calagari and her husband.
Given the inter-meshing of the Commercial Butchers and Ardro Reynolds operations, I am prepared to accept that the termination of Ms Palumbo was in all probability a clumsy, inappropriate, unfair, unjust, but genuine part of an inadequately planned restructure designed to reduce the operating expenses of the respondent's retail butchery. I accept that Mrs Mazzon now takes primary responsibility for the work previously performed by Ms Palumbo, and earlier again performed by Mrs Simpson. I think it is unlikely that in a day to day sense Mrs Galvin's employment and duties are confined to the accounts payable work of Ardro Reynolds.
I doubt that in practical terms the accounts work at Commercial Butchers and Ardro Reynolds is specifically and precisely allocated to Mrs Mazzon in the case of Commercial, and Mrs Galvin in the case of Ardro. However, it matters not. I accept the applicant's termination of employment was part of a restructure of sorts.
The respondent's position is that the applicant must have known of Commercial Butchers’ financial difficulties.and that the termination of 6 May was not unexpected, could have been anticipated, and did not or should not have taken the applicant by surprise and was not harsh, unfair or unjust.
While I accept that the applicant would have known of some financial difficulties experienced by her employer from her day to day work, from a reduction in her working week to four days work a week between October 93 and February 94, and from the swiftly rescinded termination of 25 February, I do not accept that such general knowledge of some financial difficulties magically removed from the actions of the employer significant elements of unfairness and injustice.
The applicant performed her duties very well. This is conceded. She was not warned. She was not counselled. She was not consulted. She was given no notice. All this was conceded.
I find the termination of 6 May harsh, unjust and unreasonable for the reasons already outlined.
I briefly refer to the alleged telephone conversation between Mrs Mazzon and the applicant on Monday, 9 May. The respondent’s representative made much of this alleged conversation at the trial. Irrespective of whether that conversation took place or not, and considerable emphasis was placed on it, I find it irrelevant to the matters before me.
Counsel for the applicant referred me to
Short v F.W. Hercus Pty Limited, 46 IR 128, and particularly to Keely J at 129 and 131
Byrne and Frew and Australian Airlines Limited, and particularly to the commentary on the harsh, unjust and unfair termination elements in the judgment (1994) AILV 128
Budget Couriers Equity Management and Beshara (1993) 5 VIR 173
ANF re Suratman and Gell (1989) 4 VIR 193
I have noted some of the similarities in Short and Hercus where a draughtsman was terminated due to shortage of work arising from economic difficulties being experienced by the respondent. I have noted Keely Js comments on redundancy. I have taken account of the following statement in Suratman, cited in Beshara.
“Only in exceptional circumstances will the Commission or should the Commission use its redeployment powers in cases of redundancy.”
I have noted the following in Beshara:
“It is not enough that there is a genuine redundancy. The dismissal must be tested against substantive and procedural fairness. It is insufficient for an employer to raise the aegis of a genuine redundancy as a wand against this Commission intervening where the circumstances in which the redundancy was imposed are otherwise harsh, unjust and unreasonable. Obligations to consult, to provide adequate notice and to apply objective selection criteria are facts in determining whether a dismissal is harsh or unjust or unreasonable. The fact that an employer complied with strict notice and severance payment provisions of the standards established in the TCR cases (1984) 8 IR 34, (1984) 9 IR 115, 2 VIR 36, will not necessarily dissuade the Commission from intervening to provide a remedy.”
I have also considered a number of redundancy cases and will provide the citations in the written judgment. They include:
(1) Adelaide Milk Supply Company (1977) 44 SAIR 1202 at 1205
(2) Corkrey and General Motors (1986) 53 SAIR 351: 1986 AILR 439
(3) Hemmings and CPS Credit Union (1991) 58 SAIR 421; 1991 AILR 323
(4) Cheeseman and Kinhill Engineers (1992) 59 SAIR 168
(5) White and Douglas Diagnostic (1993) 60 SAIR 142
(6) McLean and David Jones 1993 AILR 98
(7) Needham and Shepparton Preserving Company 1991 AILR 395
(8) Bunnet's case 1989 AILR 356
(9) Shearer and Action Mercantile. 1993 AILR 281
I have dealt with these cases in more detail in the reasons for judgment in VI 437 of 1994, Papadopoulous and Colonial Mutual Life Assurance Society Limited, (16 August 1994). I will not repeat that detail in the reasons for this judgment.
In the present case, during the applicant's final address, I alerted counsel for the applicant and the respondent’s representative to the explanatory memorandum circulated by the Minister for Industrial Relations, and in particular to paragraphs 26 and 27 on page 5 of the memorandum, which referred to the recently amended and new section 170EE of the Industrial Relations Act 1988.
Paragraph 26 reads.
“The new section 170EE sets out the remedies the court can grant when it decides there has been an unlawful dismissal. This new section expressly places limits on the amount of compensation that can be ordered. The new section sets out available remedies more specifically than the section it replaces”.
Paragraph 27 reads,
“In particular, the new section clarifies that restatement is the preferred remedy. It does this by allowing the court to choose compensation instead of reinstatement only when the court thinks that reinstatement is impracticable. Whether this condition is satisfied will be for the court to decide within its discretion. The statutory test is that the court thinks that reinstatement is impracticable. In considering whether this consideration is met, it is expected that the court will consider the surrounding circumstances such as the likely effect on the working relationship and the industrial consequences”.
At that stage, I mean at that stage of proceedings, the respondent’s representative indicated that should the court find a contravention of division 3 part VIA, the respondent was prepared to offer the applicant reinstatement in Mornington. The applicant does not seek reinstatement. The applicant seeks compensation. As late as Friday, 19 August, as I understand the situation, the respondents account’s and office work was still being carried out in the North Melbourne premises, but if I am wrong about that, and if that work is now at or is about to transfer to Mornington, I would not regard an offer of re-employment of the applicant at Mornington as constituting practical or practicable reinstatement.
The applicant resides in Geelong. She travelled daily by public transport from Geelong to North Melbourne and from North Melbourne to Geelong. A journey daily to and from Mornington, from and to Geelong, could not be regarded by this Court as capable of constituting practicable reinstatement.
I shall order compensation. I have noted that the redundancy clause, clause 42 of the Federal Meat Industry Award 1981, is said not to apply to employees employed for less than one year, and in such cases, does not require or authorise severance pay. In the circumstances of this case I do not consider the inapplicability of clause 42 diminishes the legitimate claim to compensation.
Counsel for the applicant did not suggest that the applicant was entitled to compensation on the basis of wages foregone from 6 May 1994 to 25 August 1995, (that is 18 months from 25 February 199). However, he asserts that the respondent on 26 February 1994, through Mrs Mazzon, created a reasonable expectation in the applicant of reasonably secure, ongoing employment if performance was adequate. I agree.
I also agree that it was reasonable to expect ongoing employment until at the very least November 1994, when Mr and Mrs Mazzon could have been expected to return from the proposed trip to Italy. The applicant is looking for employment. A prospective employer contacted Mrs Mazzon for an assessment some time in the week ending 19 August 1994. However, at the date of the hearing on 25 August, the applicant was still unemployed. I expect the applicant to soon obtain suitable and comparable employment. No evidence as to her employment prospects was led but I assess those prospects as reasonably good. I note that the applicant worked for the respondent for nine months and 17 days and was paid 119.6 hours of pro rata accrued recreation leave, that is $1452.66 gross, and one week in lieu of notice, that is $461.55 cents gross.
I propose to order compensation equivalent to 26 weeks pay at $461.55 gross a week, namely $12,000.30. I order that 50 per cent be paid to the applicant not later than 30 September 1994, and that the remainder be paid to her not later than 30 November 1994.
MINUTES OF THE ORDER:
the court orders that:
the termination by the respondent of the employment of the employee contravened division 3 part VIA of the Industrial Relations Act 1988.
the respondent pay compensation to the employee in the sum of $12,000.30, 50 per cent, (i.e. $6000.15) on or before 30 September 1994, and the remainder, ($6000.15) on or before 30 November 1994.
Settlement and entry of orders is dealt with in order 36 of the Industrial Relations Court Rules.
I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of Judicial Registrar Ryan.
Associate :
Date : September 8, 1994
Appearances:
Counsel for the Applicant : Michael Cahill
Solicitor for the Applicant : Hodges Hall Solicitors
Representative of the Respondent : Barrie Brady of Meat & Allied Trades Federation
Date of Hearing : 25 August 1994
Judgment : 30 August 1994
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