Mary Abbott-Etherington and Houghton Motors

[1995] IRCA 558

C A T C H W O R D S

INDUSTRIAL LAW ‑ Termination of employment ‑ claim of unlawful termination ­procedural unfairness ‑ whether reinstatement impracticable ‑ meaning of 'impracticable' ­compensation.

INDUSTRIAL RELATIONS ACT 1988, Ss 170EA, 170DC, 170EE

Liddell v Lembke (1994) 127 ALR 342

Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 125 ALR 233

MARY ABBOTT‑ETHERINGTON v HOUGHTON MOTORS PTY LTD ­-
WI 429 of 1994

BEFORE:        BOON JR
PLACE:          PERTH
DATE:            31 MAY 1995

­IN THE INDUSTRIAL RELATIONS            )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. Wl 429 of 1994

BETWEEN:  MARY ABBOTT‑ETHERINGTON
  ‑          Applicant

AND:  HOUGHTON MOTORS PTY LTD
  ‑          Respondent

MINUTE OF ORDERS

BEFORE:      BOON JR

PLACE:         PERTH

DATE:           31 MAY 1995

THE COURT ORDERS THAT:

1. That the respondent pay to the applicant the sum of $30,000 by way of compensation for the unlawful termination of her employment.

1. That the amount of compensation be paid within 21 days of the date of this order.

NOTE:Settlement and entry of Orders dealt with by Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS            )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. Wl 429 of 1994

BETWEEN:  MARY ABBOTT ETHERINGTON
  ‑          Applicant

AND:  HOUGHTON MOTORS PTY LTD
  ‑          Respondent

BEFORE:      BOON JR
PLACE:         PERTH
DATE:           31 MAY 1995

REASONS FOR JUDGMENT

The respondent, Houghton Motors Pty Ltd, is a large car dealership operating in the East Victoria Park area of Perth. It holds a franchise to sell Ford motor vehicles. Mr Clifford William Houghton has been in the motor vehicle business for about sixty years and established the business when he was about 25 years old. He still goes to the office of the respondent almost every day and works in an office at the respondent's premises. His son, Colin Clifford Houghton, is the Managing Director and Dealer Principal of the respondent. As the Dealer Principal, Mr Colin Houghton is responsible to the Ford Motor Company for the franchise which Houghton Motors holds. Houghton Motors employs approximately 120 employees. Between 28 April 1994 and 1 October 1994 the applicant was employed by Houghton Motors as the New Vehicle Sales Manager.

On 1 October 1994, the General Sales Manager of the respondent, David Border, terminated the applicant's employment with the respondent. He stated that he believed it was not in the best interests of the company to keep her on.

At the hearing of the matter several issues were raised by the respondent in relation to the applicant's performance at work. Those issues included:

(a)       the alleged poor performance by the applicant in managing the New Sales
           Department of the respondent's business in that the sales figures for that section
           were alleged to be very poor during the time the applicant was employed;
(b)       the failure of the applicant to sign a written contract of employment;
(c)       the fact that the applicant had not provided copies of her yard manager's licence or
           her driver's licence, both of which were prerequisites for her position; and
(d)       the applicant was alleged to have altered valuations of vehicles for trade‑in without
           the respondent's authority.

The applicant strenuously denied all of the allegations made by the respondent.

The matter proceeded to hearing and at the close of the evidence the respondent admitted that the procedural fairness requirements of Section 170DC of the Industrial Relations Act 1988 had not been complied with by the respondent. The only issue to be determined by this court therefore is the appropriate relief to be provided to the applicant.

The applicant seeks reinstatement to her previous position with the respondent and the respondent argues that reinstatement is 'impracticable' within the meaning of Section 170EE Sub‑section 2 of the Act.

The applicant states that it is her ultimate intention to become a dealer principal of a car dealership. Since termination she has applied for a number of jobs and was successful in obtaining a position as a Fleet Salesperson at another car dealership at the end of March 1995. Until she obtained that new position, her income from other employment was negligible. In her position with the respondent her salary package was at least $70,000 per annum.

THE MEANING OF 'IMPRACTICABLE'

The primary remedy available to this court in respect of the unlawful termination of employment of an employee is reinstatement. It is only if the court thinks that reinstatement is impracticable that the court may grant compensation of such amount as it thinks appropriate.

The meaning of the word 'impracticable' has been canvassed in a number of decisions in this court. In the case of Liddell v Lembke (1994) 127 ALR 342 at page 360, Wilcox CJ and Keely J stated in obiter dicta that "although 'impracticable' does not mean 'impossible', it means more than 'inconvenient' or 'difficult'". In the case of Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 125 ALR 233, Wilcox CJ stated at page 244 "it is important to note that Parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word 'impracticable' requires and permits the court to take into account all the circumstances of the case, relating to both the employer and employee, and to evaluate the practicability of a reinstatement order in a common sense way. If any reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer's business, it may be 'impracticable' to order reinstatement, notwithstanding that the job remains available".

Counsel for the respondent pointed to the fact that three witnesses for the respondent, namely Colin Houghton, Clifford Houghton and David Border, all passionately held the view that the applicant was not a good new vehicle sales manager. Their view will not be changed. It was submitted that according to Nicolson's case, this court must take a common sense, practical real world view. The reasons for termination were indications of a loss of confidence by the applicant's superiors in the applicant. Their confidence in the applicant was eroded from the beginning of her employment. It was said that there were and remain fundamental differences of opinion about the role of the New Vehicle Sales Manager of the respondent in respect of style of management and the alleged losses sustained by the respondent during the applicant's employment. The parties have polarised positions. It was submitted that if this court accepts that the applicant managed

the New Vehicle Sales Department badly, it can find that this is a case where reinstatement will affect productivity and harmony of the workplace of the respondent. It was also pointed out that the position which the applicant did occupy has now been filled.

On behalf of the applicant it was submitted that the fact that another employee has been engaged is not decisive and I accept that view. If it were otherwise, any employer could frustrate the intentions of the legislation by employing people to occupy the positions held by an applicant in this court.

Counsel for the applicant pointed to the fact that Colin Houghton said that he bore the applicant no grudge and Clifford Houghton stated that he did not question her integrity or honesty.

It was submitted that on the objective criteria set by the respondent's management, the applicant performed satisfactorily in that the respondent company met its target sales objective for the September quarter.

It was submitted that the termination arose because there was a clash of personalities between David Border and the applicant. Evidence was given at the hearing that David Border has now left the respondent's employment to work elsewhere. It was said that Mr Clifford Houghton may have formed a mistaken impression about the applicant and that this was not cleared up because it was never raised as an issue with her.

It was also submitted that there was no evidence that the applicant could not get on with her subordinates.

It was pointed out that David Border was the person who terminated the applicant's employment and that Colin Houghton and Clifford Houghton may well have decided not to do so. It was accepted by Counsel for the applicant that it would be inconvenient or perhaps even difficult to reinstate the applicant but it was submitted that this does not satisfy the test of impracticability.

Much of the evidence at the hearing concerned the question of the applicant's performance in her position with the respondent. It is not necessary for this court to decide questions of fact relating to the applicant's performance. I consider, however, that it is likely that I would not have been satisfied that the applicant's performance as a new vehicle sales manager was so poor that it would have warranted her termination. It was acknowledged by the applicant that the figures for new vehicle sales for the months of July and August of 1994 were poor. The figures for September, however, were much better and it appeared that the respondent met its September quarterly target. It may well have been that, as the applicant contends, her management practices were just beginning to show some results and that this good trend may have continued if the applicant's employment had not been terminated.

I have had the advantage of being able to observe the demeanour and verbal evidence of each of the witnesses called at the hearing. The overwhelming impression I gained was that this was not just a conflict of personalities but a question of different views about appropriate management styles. Colin Houghton and Clifford Houghton both appeared to favour 'old style' management practices which are somewhat authoritarian in nature. This is not intended as a criticism of their management style and it has appeared to have served Mr Clifford Houghton and Mr Colin Houghton well for many years. Their view was that the applicant was not 'strong' enough as a manager. The applicant's evidence was that she favoured a more 'interactive' style which is one used by many modern managers. This led to disparaging comments about a 'Club Ford' atmosphere within the new vehicle department while she was in charge.

I am satisfied that the principals of the respondent, Colin and Clifford Houghton, have totally lost confidence in the applicant's ability as a new vehicle sales manager. This loss of confidence may or may not be justifiable, but it is real. The difference between the parties is a fundamental one which goes to how the respondent's business should be managed. If the applicant were an employee at a lower level within the respondent's business, I would have no hesitation in ordering reinstatement. In the circumstances,

however, she would have to work in close consultation with the senior management of the company. I consider that this is likely to seriously affect harmony within the respondent's business and it is therefore impracticable to order reinstatement.

I have also taken into account that the applicant is obviously an intelligent woman who presents well, and that she has found alternative employment within the motor vehicle trade.

In the circumstances, I consider that an award of compensation is the appropriate remedy in this case. Under Section 170EE, in working out the amount of the compensation which is appropriate, the court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment. The amount of compensation must not exceed $30,000. The applicant was effectively unemployed for a period of approximately six months. Her salary package with the respondent amounted to at least $70,000 per annum. In circumstances, an award of $30,000 compensation is appropriate. The order of the court is therefore:

1. That the respondent pay to the applicant the sum of $30,000 by way of compensation for the unlawful termination of her employment.

1. That the amount of compensation be paid within 21 days of the date of this order.

I certify that this and the preceding six pages are a true copy of the reasons for judgment of Judicial Registrar Boon.

Associate:  (Susan Richardson)

Date:  (30 Aug 1995)

Counsel for the Applicant:  Mr C P Stokes
Solicitors for the Applicant:  Butcher, Paull and Calder
Counsel for the Respondent:  Mr A J Power
Solicitors for the Respondent:  Jackson McDonald

Date of Hearing:          16 & 19 May 1995
Date of Judgment:        31 May 1995