Matthew James Dwyer and Bill McLean's Hi-Fi
[1995] IRCA 707
•14 November 1995
In the Industrial Relations
Court of Australia
New South Wales District Registry Matter No: NI 95/2380
Between: Matthew James DWYER
Applicant
And: Bill McLean’s Hi-Fi
Respondent
Coram: Tomlinson JR
Place: Gosford
Date: 14 November 1995
Reasons for decision delivered Ex-Tempore revised from Transcript
By application dated 30 May 1995 the applicant, Matthew Dwyer, sought compensation and to use his words on the back of his application form “a fair and just settlement of this situation.”
Mr Moore, on behalf of the applicant, stated that the applicant was dismissed summarily and that the applicant under Section 170 DC was afforded no opportunity to deal with the allegations levied against him by the respondent.
Mr Moore further stated that it was agreed to that there was a meeting on 16 May 1995 between the his client, the applicant, and the respondent, and that the respondent gave direction that the applicant was not to sell his speakers through the store of the respondent.
Admitted into evidence as exhibit 1 was the statement of the applicant that stated inter alia that he was 35 years of age, that he had been employed in and around the electronics industry for at least 10 years. An impressive list of employers was provided that indicated, among other things, that the applicant had been in employed positions for commercial organisations engaged in retail activity.
The applicant stated to the court that he commenced work with the respondent in approximately May of 1994, however his application stated he commenced work on 3 August 1994 as an electronics technician. It seems the applicant in fact started work on 11 July 1994. The applicant stated that from the beginning of the employment with the respondent he made it clear he was running his own business and in the written testimony the applicant stated that involved electronic repairs, speaker modifications and building of speakers. The evidence of the applicant was that the respondent, Mr McLean, had indicated at that time that he would allow the applicant to carry on his home activities on condition that it did not prevent him from carrying out is jobs with the respondent.
On 16 May 1995 the applicant told the court there was an incident at work when he was accused by another employee, Mr Lemmin, of selling his own product, hand made speakers through the shop of the respondent. The applicant told the court that he denied the incident. The applicant denied that he was warned not to let a similar thing occur again.
Allegedly the incidents giving rise to this termination occurred on 29 May 1995, when a Mr John Bourke came into the respondent’s premises looking for speakers. The applicant’s written testimony was inter alia, that:
“I had no idea what he, Mr Bourke, needed and he wanted my advice as I believe he trusted me and my work was good.”
The court heard evidence from Mr Bourke that the respondent, Mr McLean, had referred him to his employee, the applicant, and accordingly, the statement of the applicant was substantiated. The statement of the applicant continued:
“During my conversation with him Mr Bourke asked me if there were any other places that sells speakers because he was thinking about a cheap pair for outside and didn’t like any in the shop. Upon this request I informed him of the following: (a) Sydney Hi Fi and (b) my own home phone number as I build speakers. In doing this I did not say that it was my phone number. Approximately one hour later, my wife phoned me to advise me that Mr Bourke had phoned me to advise that Mr Bourke had phoned inquiring about the speakers.”
About 10 minutes later, Mr McLean came in with his wife, Margaret, and said he was listening on my phone call and he wanted to know what it was all about. Mr McLean asked me now Mr Bourke got my phone number. I informed him I gave it to him or that he could have got it from the flier that I had left in Macron Music. When I informed Mr McLean of this, he went into a rage. I informed Mr McLean that he had always known about my own repair and speaker building business known as Denmor, which I had before I had been employed by him.
Mrs McLean said she thought I was unethical. Mr Paris said that it was confusing to him. At that time, Mr McLean was totally unreasonable. On 16 May 1995, a meeting took place between Mr McLean, Mr Lemmin and myself. I say that I had informed Mr McLean at my interview for the position that I operated my own business from home. Mr McLean said “that’s fine. There will be no conflict as long as you can do the work.” I say that I brought my speakers to the shop early in 1995 and left them there for use for some months.
I asked Mr McLean if he wanted to sell them through store and he said no. I say that on numerous occasions I informed Mr McLean that I had my own clients and that I had left a flier in Macron Music.
In cross examination of the applicant, the court heard evidence of the intensive training the respondent provided to the employees at his store and the assistance provided for the selection and maintenance of personal goals. Time recording was obviously a tool used effectively by the respondent. The court heard evidence from the applicant of the attention to detail required by the respondent of his employees as to things such as the importance of punctuality.
The applicant told the court that he manufactured sound systems to assist people with hearing impairments. The applicant agreed with the suggestion that he could have attracted potential customers away from the shop of the respondent.
The applicant said early in 1995 he took into the store of the respondent a pair of speakers he had hand built at home and invited the respondent to listen. The respondent, Mr McLean, stated that he did not like them and that he did not wish to sell them in his store. It seems that thereafter the applicant retained his speakers in the workshop of the respondent and used them when he needed to test equipment. The applicant to the court stated that the told Mr McLean that he would sell the speakers if he got an opportunity to do so. In cross examination, the applicant admitted that he gave to Mr Bourke his home telephone number as a reference source where speakers could be purchased and that at the time he did not tell Mr Bourke that the number was his own phone number, as he was “probably taking a client from Bill.”
Later on in explaining his actions, the applicant stated that what he had done was “maybe a bad judgment call” and further that “it was probably not right” to give out his own phone number. The court heard evidence from the applicant that when he came home that night, he telephoned Mr Bourke and in fact visited the man at his home in order to take matters further, however matters went no further. The applicant denied that Mr Bourke said to him that he did not like the way the applicant did business. In cross examination, the applicant stated that Mr McLean had overhead his conversation with Mr Bourke and that a discussion followed. The applicant admitted that he, in response to a question from his employer, stated that the customer, Mr Bourke, could have got his home phone number from the flyer he had left in the store, Macron.
The applicant agreed the respondent said to him in seeking an explanation “what happened?” In cross examination, the applicant stated that prior to the preparation of his advertising flier for Denmore, he had discussed the preparation of the flyer with Mr McLean. Additionally, the applicant told the court he had performed work in the form of wiring speakers for a Mr Sam Coffey, the client of the respondent for which he was rewarded. At the conclusion of his evidence, the applicant said he was prepared to accept reinstatement to his former position, but that he no respect for his former employer, Mr McLean.
The applicant stated further that there would still be a conflict between himself and his employer in relation to the business enterprises of both, as he would not desist from his activities with Denmore.
On behalf of the applicant, the court heard initially from Mrs Jennifer Dwyer, the wife of the applicant, who confirmed she had taken a phone call from a Mr Bourke. The witness stated, in her opinion the respondent was aware of the fact that the applicant had a small little business that he ran from home. The witness told the court that she felt involved in her husband’s employment situation. As Mrs Dwyer was not present at the store, to my knowledge, on either 16 or 29 May 1995 I am unable to place much weight on her evidence at this stage.
On behalf of the applicant, the court heard evidence from Mrs Michelle Margin, a former co-worker with the applicant, who had left the store before the end of 1994. The witness gave her opinion that she was of the view the respondent knew of the business of the applicant he conducted from his home. In light of the time span of the employment of the witness, I am unable to place much weight on the evidence of Mrs Margin.
On behalf of the respondent the court heard from Mr John Bourke, whose statement was admitted into evidence as exhibit C. That statement provided inter alia:
“I visited the store of the respondent. I initially I discussed suitable speakers with Brian. On 29 May I called to collect my speakers and I engaged in a conversation with Matthew Dwyer. I was after a pair of speakers. I also mentioned I was looking for speakers for my outside area. I asked if I could buy better value elsewhere. He said, ‘I’ve got a friend who can do the same, if not better, he’s got a business, he can do a better price. Mr Dwyer wrote a phone number on a piece of paper and the name Matt. Mr Dwyer did not give me the name of any other retailer. Later I rang the number and a lady told me that Matt would call me back. That same day, Mr Dwyer himself rang me back. At first I didn’t know who I was taking to and Mr Dwyer even laughed and said ‘I’m the Matt you were talking to to-day”. I was very surprised. He came to my house and he told me he had been sacked because Bill had overheard a phone conversation. I later rang him back and I advised him that I did not approve of his business practice and would not do business with him.”
In giving his reasons for coming to court and giving evidence the witness stated that it was his opinion that what the applicant had done was “just not right”, and that he himself was involved in the area of sales.
Further, the witness stated the respondent indicated to him that he had confidence in the abilities of the applicant and he had referred the witness to his employee, the applicant, for assistance. I found Mr Bourke to be a credible and reliable witness.
The court heard evidence from Mr McLean whose statement was admitted into evidence as exhibit D and that statement stated inter alia”
“We investigated a bonus scheme for the applicant to improve his take home pay. Breakfast meetings were for personal and business growth through programmes purchased through our business adviser were estimated to be $18,000.00 on a 12 month basis. Mr Dwyer was an important part of the team. Part of our development included up-front contracts, job specification and up-front program is to let all team members agree on their performance. The only repair business Mr Dwyer carried on at home to my knowledge was repair work done for family and friends and out of his own personal interest.
I had no knowledge of Denmor existing. I was not aware Mr Dwyer was operating a business in direct competition with Bill McLean’s Hi Fi...I was not aware that he was prepared to obtain customers during work time and had fliers out at other locations. Mr Dwyer did bring a pair of his own speakers into the workshop which he used to monitor repairs and listen to music. I was not aware he had demonstrated them to our clients in the workshop in order to make sales for Denmor. If I was aware I would have taken immediate action to ensure the practice ceased. I deny ever asking Mr Dwyer how his home business was going. On 16 May 1995 I spoke with Mr Dwyer and Peter Lemmin concerning allegations that Mr Dwyer had been offering his home made speakers to clients of Bill McLean. I accepted Mr Dwyer’s denial at face value but made it clear to him that if it did occur he would be putting his position at risk.
Two weeks later I was aware Mrs Dwyer was on the phone. Mr Dwyer talked in an excited but guarded tone answering Mrs Dwyer’s questions. Mr Dwyer said “Yes, Mr Bourke was just in here and I gave him our number. I’ll be able to sell him speakers and wire up his house for him.” It was at this moment I realised that Mr Dwyer may have been working in competition with Bill McLean’s Hi Fi. I went to my wife Margaret and asked her to accompany me. I called Mr Dwyer and asked him about his personal phone call.”
Mr McLean stated that prior to employing the applicant he had telephoned Cash Converters and established that the applicant had been employed there and that he performed technical duties. Mr McLean stated that at the commencement of the employment he was aware that the applicant was involved in electronics at home and that he probably carried out a small repair business on an ad hoc basis for family and friends.
The witness stated that until 29 May 1995 he was not aware of the name of the applicant’s business, Denmore. Mr McLean outlined to the court his philosophy and business practice and management. Mr McLean categorically denied that he had ever had conversations regularly with the wife of the applicant, Mrs Dwyer, indicating that he was aware that the applicant regularly worked at nights and on the business Denmore. Mr McLean denied that he had ever discussed at the Monday meetings, or sharings as they were called, any indication at to the extent of his knowledge of the applicant’s business venture.
In cross examination Mr McLean stated at no time was he ever made aware that the involvement of the applicant in other matters would place the applicant in a conflict of interest situation with himself or his store.
Mr McLean categorically stated he was not aware of the flier prepared by the applicant until the day of 29 May 1995. The court heard evidence of the up front contract arrangements the witness put into place with his employees generally and it was stated under cross examination that there was no reference to any potential conflict of interest situation or foreign order situation or acquiring personal gain at his expense as he just did not think it was relevant.
Mr McLean stated he thought the events of 16 May 1995 were serious. The matter that confronted the applicant was that his co-worker, Peter Lemmin, stated the applicant was attempting to sell his own product, his own hand made speakers through the respondent’s store. Mr McLean indicated to the court that after he had investigated the matter he was prepared to give the applicant the benefit of the doubt. The employment situation continued.
In reaching the conclusion to dismiss the applicant, Mr McLean took all the circumstances into consideration and in the opinion of this court placed weight on the fact that the applicant had lied to him when he was trying to find out what had happened.
On behalf of the respondent the court heard from Mrs Margaret McLean, the wife of Mr Bill McLean, whose statement was admitted into evidence as exhibit E. That statement provided information to the court that on 29 May her husband invited her to come to the back of the store as he had just overheard a conversation involving Matthew Dwyer.
It was the evidence of Mrs McLean that Mr Dwyer eventually admitted he had lied about the customer coming in with the his flyer and that the applicant had actually given the customer his phone number. Shortly thereafter the respondent said “I have no alternative other than to terminate your employment.”
On behalf of the respondent the court heard evidence from Mr Peter Lemmin, an employee of the respondent whose statement was admitted into evidence as exhibit G. It was indicated to Matthew Dwyer that Mr Lemmin was aware that Matthew Dwyer had been offering his home made speakers to the clients of Bill McLean’s.
I find most telling in this affidavit to be paragraph seven that Bill McLean indicated that he accepted Mr Dwyer’s denial at face value but went on to warn him that such practice would not be allowed.
On behalf of the respondent the court heard form Mr Brian Paris who stated he had been employed by the respondent for six years. On 29 May he attended, as indicated earlier, a discussion between himself, Margaret McLean and the applicant, Matthew Dwyer.
It was indicated that a conversation had been overheard. Initially, according to this witness, Mr Dwyer denied the allegation but paragraph seven stated that inter alia:
“Matt did admit he had lied about how Mr Bourke had attained the number and stated that he had obtained it directly from himself.”
CONCLUSION
Basic to any contract of employment is the duty of loyalty and fidelity. The cases setting out the terms and conditions giving rise to that duty are legion. Of primary obligation on the employee is the mandatory duty not to do anything nor to engage in any conduct which would detract from the undertaking or enterprise of his employer.
The clearest cut example of all must occur in a sales situation when it is obligatory on that employee employed not to engage in any conduct likely to detract from the employer attracting or gaining a sale. Simply put, an employee must not put himself in a position of a conflict of interest whereby the commercial interests of his employer suffer and his own interests gain. The applicant in the case before the court to-day was employed as a technician and from his own evidence from time to time in a sales capacity.
The question for determination before this court is whether the applicant in giving the respondent’s customer his own phone number during the course of his employment with the respondent breached his basic obligation of fidelity and loyalty to the respondent. Further for determination by this court is the question whether the respondent, Mr McLean, allowed and tolerated or acquiesced to the fact that the applicant was allowed to give customers his own phone number for the purpose of making a sale of his own private home built sound systems.
It is clear from the evidence before the court that in the eyes of the applicant the respondent employed excessive methods and with regard to the manner in which he conducted his business but I have to say I found the business management practices of time recording and goal maintenance by the respondent to be excellent and in these difficult economic times having regard to the general position of retail on the Central Coast of New South Wales generally to be sound business practice.
In this regard the attitude of the applicant was immature and unrealistic even to the extent that the applicant could not indicate whether the thought Mr McLean was a good or successful business man. In this regard I found the applicant to be naive. Clearly the respondent is a successful and operates his store on the basis of trust and proven sales techniques.
I found the applicant’s recounting of his attitude to be required to purchase morning tea on occasions when he came late for work to be petty. On a more serious note I found the applicant to dissemble in the giving of his evidence when directly asked if the sound speakers he built at home to be in any way competition with the products of that of the respondent.
Finally, the applicant in response to a direct question under cross examination the applicant stated words to the effect:
“Yes - Denmore produced stereo systems. Yes I was looking for customers in the same market. Yes, there was a conflict. I came to work and offered my speakers to Bill but he was not interested in selling them.”
In cross examination I found the applicant prevaricated in an attempt to alter the complexions of his actions, that is, disloyalty to one’s employer in the form of attempting to gain a personal advantage over that employer. That conduct is misconduct and no way can be referred to as a “bad judgment call”. I place weight on the evidence of Mr John Bourke and I prefer his evidence to that of the applicant with regard to the evidence of that facts that occurred on 29 May 1995. It is clear that the respondent trusted his employee, the applicant, and I am of the view that he would not have referred Mr Bourke to the applicant if he had been in the slightest way aware of the activities of the applicant in this regard.
Mr Moore on behalf of the applicant, requested this court to take into consideration the fact that the evidence of Mr Bourke was only made available to him very shortly before the hearing of the application. That fact was taken into consideration and I can say that it was the evidence of the applicant himself given to the court that will form the basis of this decision. On the second day of the hearing of the matter the applicant sought to re-open the cross examination of the respondent and obtain evidence as to why permission was refused to supply written statements of additional forthcoming witnesses to the applicant overnight. On the basis that information may fall into the category of privilege between client and legal representative, leave was refused.
However, it should be noted that there was no order made for the exchange of written statements and so the request was only made on the basis of a possible courtesy and not a legal right. I do not think the applicant could be seriously disadvantaged in the written statements at they were placed on the record. The evidence of Mr Bourke and Mr McLean to a large extent corroborates the evidence of the applicant and is similar in several vital points. The actions of the applicant vis a vis Mr Bourke fell into a different category than did the actions of the employee, Jason, as revealed to the court in cross examination of Mr McLean.
With the applicant the position was that the evidence disclosed a concerted plan to deceive his employer on an on-going basis as evidenced by the flier. To my mind the activities of Jason were not proven to be in conflict with the activities of the respondent and it is noted that the respondent dealt with the allegations on the basis of Jason’s youth and the fact that the allegations were largely hearsay. Whether or not a written warning was or was not delivered to the applicant in my opinion is not relevant. It is clear a warning was delivered in placing the job of the applicant in jeopardy. I place little weight on the fact that the applicant in taking his tools home at night was placing the respondent on notice of the fact that he was running a business in opposition from his home. I place little weight on the evidence of the applicant.
I find Mrs McLean to be a most credible and reliable witness who stated that when she could, only some twenty percent of the time, attend staff meetings. Mrs McLean was not aware that the applicant had placed his speakers in the store of her husband. With regard to the affidavit of Mr Peter Lemmin, objection was taken to paragraph 3 on the basis of hearsay. What was not objected to was the fact that a meeting took place on 16 May 1995 wherein allegations of disloyalty were put to the applicant concerning the selling of his own speakers to customers of the respondent.
The date in that affidavit is noted as being 15 May 1995 and I can only assume it is a typographical error and should read 16 May 1995.
I find Mr Lemmin to be a most credible and reliable witness and give weight to the fact that the witness did not learn of the name Denmore until well after the applicant had left the respondent’s employment. However, Mr Lemmin was aware through conversations with Mrs Dwyer that the applicant was performing service type repairs in his own home at night for his own separate clients and it is my opinion that Mr Lemmin perceived no conflict in that activity and it was not brought to the attention of the employer for that reason.
I am satisfied that the witness Mr Lemmin accurately recalled the position put to the applicant as a result of the meeting on 16 May 1995 that if his misconduct continued in that he would continue to sell speakers through the store of the respondent that his services would be terminated.
I found Mr Paris to be a credible and reliable witness and the value of his evidence is that he was present when the respondent placed the allegations of conflict before the applicant on 29 May 1995.
There is no doubt that the events of 16 May 1995 were a pre-cursor to the events of 29 May 1995 and that the earlier events had an effect on the decision making deliberations of Mr Bill McLean. The applicant attempted to minimise the events of 16 May 1995 and to that extent I found the attitude of the applicant to be misleading. The importance of warning given to employees concerning misconduct cannot be under emphasised and it is a finding of this court that on and from 16 May 1995 the applicant, Matthew Dwyer, was on notice of the fact that on no account would any attempt by him to sell his own speakers or arrange for private work during his employment would be countenanced, and that such action would place his job in jeopardy. Accordingly I place no weight on the words by the applicant that in so doing he “meant no malice” and it is the finding of this court that the applicant chose to ignore the warning given to him some two weeks earlier, 29 May 1995.
The applicant was given an opportunity to explain his conduct on 16 May 1995, and at that time was given the benefit of the doubt. At that time, similarly, section 170 DC was complied with as it was on 29 May 1995. From the evidence of Mr McLean and Mrs McLean and Mr Paris I find that the applicant on 29 May 1995 was afforded with procedural fairness. With regard to the wiring the applicant performed for Mr Sam Coffey, the applicant admitted that he had placed himself in a conflict of interest position in that he performed work privately for a client of his employer for which he was paid or received reward and the he thereby deprived his employer of a right to earn that payment.
It is a finding of this court that the applicant deliberately and knowingly concealed that position from the respondent.
I do not agree with the assertion of Mr Moore on behalf of the applicant that the applicant was dismissed by the respondent for activity in the market place, as the actions of the applicant went beyond that. I agree with the submission of Mr Moore that Mrs Margin, Mr Paris and Mr Lemmin were all aware of the applicant’s activities at home. What was not proven was the fact that the applicant was purporting to sell his speakers through the respondent’s store.
It is a finding of this court Mr McLean knew the applicant carried on a small hobby type business. The applicant submitted the reason for dismissal was not a valid one within the meaning on the Industrial Relations Act having regard to the operational requirements of the respondent. I cannot agree with that submission and find the reason for dismissal was valid within the meaning of the operational requirements phrase of the legislation. I do not agree with the submission put on behalf of the applicant that at the finding on the 29 May that misconduct had occurred that he simply should have been sent home maybe to think things over.
This court has heard within the last 24 hours that the applicant, if he was re-instated, would not desist with his private activities with Denmore. It would be patently unfair for the respondent to continue to expose himself to that position. I agree, it does reflect positively on the applicant the he left notes stating what was to be done with the work in hand but sadly there is nothing I can do with that evidence. The applicant breached the trust placed in him by his employer and when the respondent tried to investigate the matters brought to his attention it is a finding of the court that the applicant first lied to the respondent and tried to conceal the true position. It is a finding of this court that in dealing with the respondent’s customer, Mr Bourke, in the manner in which he did the applicant was guilty of misconduct warranting instant dismissal.
Accordingly I dismiss the application of Matthew Dwyer.
I would like to point out to the applicant that provision 347 of the Act where it states that costs may be applied for if proceedings are instituted vexatiously or without reasonable cause. It is not my practice to award anything to a party who has not applied for it and it is noted that Mr Easton has refrained on behalf of the respondent for seeking costs in this matter. I have to say though that had costs been sought by the respondent serious consideration would have been given to the allowing of them.
Minutes of Order
The Court orders that:
That the application be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relation Court Rules.
I certify that this and the preceeding five (5) pages are a true and correct record of the reasons for decision of Judicial Registrar Tomlinson delivered ex- tempore.
Associate:
Date: 30 January 1996
Appearances
Cousel for theApplicant: Mr Moore
Instructed by: Messrs Ternes and Salier
Counsel for the Respondent: Mr Easton
of: Retail Traders Association of New South Wales.
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