Lloyd & Co Pty Ltd T/A Lloyd & Co v Kirsten Suttie
[2015] FWCFB 7513
•11 NOVEMBER 2015
| [2015] FWCFB 7513 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Kirsten Suttie
(C2015/5020)
VICE PRESIDENT WATSON | MELBOURNE, 11 NOVEMBER 2015 |
Appeal against decision [2015] FWC 4242 of Commissioner Ryan at Melbourne on 14 July 2015 in matter number U2014/15392 - Permission to appeal - Whether grounds of appeal attract the public interest – Small Business Fair Dismissal Code - Fair Work Act 2009 - ss. 394, 400, and 604.
Introduction
[1] This decision concerns an application for permission to appeal against a decision of Commissioner Ryan handed down 14 July 2015. The decision of the Commissioner concerned an application made by Kirsten Suttie on 24 November 2014 under s.394 of the Fair Work Act 2009 (the Act) in relation to the termination of her employment with Lloyd & Co Pty Ltd T/A Lloyd & Co (Lloyd & Co). The decision of the Commissioner was that the dismissal was not consistent with the Small Business Fair Dismissal Code.
[2] At the hearing of the appeal matter on 27 October 2015 Mr M. Follett of counsel appeared on behalf of Lloyd & Co and Mr G. Dircks appeared for Ms Suttie.
Background
[3] Ms Suttie was employed by Lloyd & Co as an accountant in November 2005. Her employment was terminated on 3 November 2014. She subsequently filed an unfair dismissal application with the Fair Work Commission (the Commission). Lloyd & Co raised a jurisdictional objection to the application that Ms Suttie earned more than the high income threshold as set out by provisions of the Act. This jurisdictional objection was dismissed by Commissioner Blair on 27 February 2015. He directed that the matter proceed to conciliation. The conciliation took place on 1 May 2015 and the parties did not reach an agreed settlement.
[4] On 25 May 2015, Lloyd & Co filed a further objection that the matter should be dismissed because the dismissal was consistent with the Small Business Fair Dismissal Code. The decision of Commissioner Ryan concerned this objection and found that Ms Suttie’s dismissal was not consistent with the Small Business Fair Dismissal Code.
The Decision under appeal
[5] The Commissioner considered two alternative bases whether the dismissal was consistent with the code. First he considered whether the dismissal was consistent with the summary dismissal aspects. He said:
“[29] In all of the circumstances of this case it is absolutely clear that Mr Shaun Lloyd had no reasonable grounds for believing that the Applicant’s conduct was sufficiently serious to justify immediate dismissal.
[30] The elephant in the room, which the Respondent’s case on summary dismissal clearly treated as not being there, was the fact that not only was the Applicant an employee of the Respondent she was also a 20% shareholder in the Respondent and had become a 20% shareholder in the Respondent by agreement with Mr Shaun Lloyd (previously the 100% owner of the Respondent) and with the intention of eventually buying out Mr Shaun Lloyd’s 80% remaining stake in the Respondent. The elephant in the room is an elephant of considerable size and value. After the Applicant was dismissed the Applicant commenced separate proceedings in the Supreme Court against Mr Shaun Lloyd for oppressive behaviour against the Applicant as a minority shareholder. Recently the Applicant sold her 20% interest in the Respondent for $200,000 to two other employees of the Respondent.
[31] Apart from the elephant in the room it also appears that the room was lined with magic mirrors which only reflected an image of Mr Shaun Lloyd which he had created for and of himself.
[32] It is clear that Mr Shaun Lloyd considered Lloyd and Co Pty Ltd to be his personal fiefdom in which he could employ family members as he saw fit regardless of their cost to the business or their benefit to the business. This was best epitomised by the fact that Mr Shaun Lloyd engaged his parents not as employees but as independent contractors to do filing work for the Respondent and for which they were paid a consultancy fee. The view expressed by the Applicant that, but for the necessary presence of Mr Shaun Lloyd, the Applicant preferred a “Lloyd free zone” at the Respondent was clearly not going to endear her to Mr Shaun Lloyd. Whilst the Applicant considered that some members of the Lloyd family were not adding value to the business of the Respondent and whilst such a view was a reasonable view for a part owner of the Respondent to hold, it jarred with Mr Shaun Lloyd’s view.
[33] The elephant in the room directly impacts on whether Mr Shaun Lloyd’s belief that the Applicant’s conduct was sufficiently serious to justify immediate dismissal was based on reasonable grounds.
[34] The inquiries made by Mr Shaun Lloyd into the conduct of the Applicant is insufficient to satisfy the “on reasonable grounds” test.
[35] The Respondent relied on the Full Bench decision in Steri-Flow Filtration Systems (Aust) P/L v Erskine and on the case cited therein of Concut P/L v Worrell. I accept the correctness of both decisions and apply them to the current matter. The key differentiating factor in the present matter is that for the Applicant to act in a manner which was incompatible with a continuation of the employment relationship and which justified summary dismissal requires the Applicant to act against her own interests as a 20% part owner of the respondent. The evidence of the Applicant which is unchallenged is that the Applicant was the highest income generator for the Respondent. The conduct of the Applicant as established by the evidence was to support and grow the business.
[36] The Applicant was not an employee of Mr Shaun Lloyd but an employee of the Respondent and the Applicant’s conduct was not conduct which was incompatible with the Applicant’s duties and obligations towards the Respondent, nor was the Applicant’s conduct incompatible with the continuation of the employment relationship existing between the Applicant and the Respondent.
[37] There was no reasonable grounds for Mr Shaun Lloyd holding the belief that the conduct of the Applicant justified immediate dismissal.”
(references omitted)
[6] In relation to the “Other Dismissals” part of the Code the Commissioner said:
“[45] In the context of the specific denials of the Applicant that she was so warned I am not satisfied that the Applicant was warned that she was at risk of being dismissed.
[46] Given that the Applicant was both an employee of the Respondent and a part owner of the Respondent it beggars belief that Mr Shaun Lloyd would not have put in writing the warnings which he says he gave to the Applicant especially when in relation to the alleged “loud, heated verbal stoush” on 27 August 2014 Mr Shaun Lloyd says that he “told her she would be terminated immediately if she did it once more”.
[47] Further I am not satisfied that the complained of conduct on 27 August 204 actually occurred. The evidence of the Applicant is consistent with the email exchanges on that day whereas the evidence of Mr Shaun Loyd that there was a loud verbal stoush is not consistent with the email exchange.
[48] The notes relied on by Mr Shaun Lloyd and included in his evidence may or may not have been made contemporaneous with the events that they refer to. However I do not accept that those notes accurately record the contents of discussions or conversations or interactions between the Applicant and Mr Shaun Lloyd. I also do not accept that some of the events recorded in the notes actually occurred.
[49] In relation to the “loud verbal stoush” on 27 August 2014 it would appear that the Mr Shaun Lloyd concocted the event and the contemporaneous notes.
[50] Apart from the oral evidence of Mr Shaun Lloyd and his notes of events, which on his evidence were made contemporaneously with the vents, there is nothing in the emails produced by Mr Shaun Lloyd which identifies warnings given to the Applicant or complaints as to her misconduct. By way of example:
● the email exchange on 5 June 2013 concerning the clean desk policy does not disclose any intention of the Applicant not to comply with the policy;
● the email exchange on 12 June 2013 only shows communications between the Applicant and other employees but there is nothing to support the claim from Mr Shaun Lloyd that he had given directions in relation to parking in his car parking space;
● the email exchange on 15 November 2013 clearly identifies that the Applicant accepted the position being put by Mr Shaun Lloyd;
● the email exchange on 10 October 2014 ended on the Applicant’s side with her asking a question of Mr Shaun Lloyd and then he replying dismissively and without bothering to answer the question put.
[51] The conclusion to be drawn is that none of the notes were made contemporaneous with the events allegedly described and the events as described appear not to have occurred. The contest between the conflicting evidence of the Applicant and Mr Shaun Lloyd is resolved in favour of the Applicant. Her evidence is consistent with the emails.
[52] As the Applicant was not warned that she was at risk of being dismissed, then there has been no compliance with an essential element of the Other Dismissal provisions of the Code.”
(references omitted)
Grounds of Appeal
[7] Lloyd & Co submits that in relation to the application of the Small Business Fair Dismissal Code to Ms Suttie’s termination the Commissioner erred by failing to give adequate reasons for a number of his findings, failing to make adequate findings of fact, and having regard to a number of irrelevant considerations.
[8] Lloyd & Co further submits that the Commissioner erred by finding that the question of whether Ms Suttie’s annual rate of earnings were more or less than the high income threshold was finally determined by Commissioner Blair on 27 February 2015.
[9] Lloyd & Co also contends that the Commissioner made a number of significant errors of fact and that these errors had an important bearing on his disposition of the matter.
Permission to Appeal
[10] An appeal in relation to an unfair dismissal matter is governed by the provisions of sections 604 and 400 of the Act. Section 604 of the Act deals with appeals generally. These requirements are modified with respect to unfair dismissal appeals by section 400 of the Act which provides:
“400 Appeal rights
(1) Despite subsection 604(2), FWA must not grant permission to appeal from a decision made by FWA under this Part unless FWA considers that it is in the public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.”
[11] In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as ‘a stringent one’ 1. The Commission must not grant permission to appeal unless it considers that it is ‘in the public interest to do so’
[12] The test for determining the public interest has been described as follows: 2
“[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. [Comalco v O’Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O’Sullivan v Farrer (1989) 168 CLR 210]
[27] Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”
[13] It is also important to note that the decision under appeal is of a discretionary nature. Usually, such a decision can only be successfully challenged on appeal if it is shown that the discretion was not exercised correctly. 3 It is not open to an appeal bench to substitute its view on the matters that fell for determination before the Commissioner in the absence of error of an appealable nature in the decision at first instance. As the High Court said in House v The King:4
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
[14] There have been few Full Bench decisions about the application of the Small Business Fair Dismissal Code. For summary dismissals the key issue is whether the employer believes on reasonable grounds that the employee’s conduct is sufficient to justify immediate dismissal. The focus of such an enquiry is the ground relied on by the employer to make the decision to dismiss. Unfortunately the decision does not identify the conduct that the employer relied upon as constituting a ground for summary dismissal. Without identifying that ground it is not possible to discern a reasoning process nor assess the reasonableness of the belief in relation to that ground.
[15] In relation to the “Other Dismissal” part of the decision it is necessary to determine whether the employer gave the employee a valid reason why he or she is at risk of being dismissed and warn the employee of the risk of being dismissed if there is no improvement. Evidence was given as to a number of warnings and a deteriorating relationship between the co-owners. Ms Suttie denied that any warning was given. The Commissioner made findings of fact in which he believed the evidence of Ms Suttie and disbelieved the evidence of Mr Lloyd. He went to the extent of finding that some events that involved warnings did not occur and that contemporaneous notes were concocted.
[16] The reason for termination was that the relationship between Mr Lloyd and Ms Suttie, the two part owners of the business, was irretrievably broken, as evidenced by a catalogue of arguments and an assessment from a human resources consultant. It is possible that the termination could fall within one or other of the types of dismissal covered by the Code, or indeed both. In the light of the evidence led in this matter we are concerned that a mistaken answer may have been reached based on significant factual errors, limited reasoning and an incorrect analysis of the circumstances. In our view, there appears to have been an injustice arising from these deficiencies. We consider therefore that it is in the public interest to grant permission to appeal.
Conclusion
[17] For the above reasons the application for permission to appeal is granted. We will direct the parties to file further submissions on the grounds of appeal with the aim of determining whether to allow the appeal, and if so whether the dismissal was consistent with the Small Business Fair Dismissal Code. We propose to determine the matter on the papers if this course is agreed.
VICE PRESIDENT
Appearances:
Mr M. Follett, of counsel, on behalf of Lloyd & Co.
Mr G. Dircks on behalf of Ms Suttie.
Hearing details:
2015.
Sydney – Video Link to Melbourne.
27 October.
Final written submissions:
Lloyd & Co on 12 October 2015.
1 (2011) 192 FCR 78 at paragraph 43.
2 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343.
3 House v The King (1936) 55 CLR 499 at [504]-[505] per Dixon, Evatt and McTiernan JJ.
4 Ibid.
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