McLaughlin v Lefanue T/As St Bernard's Hotel Motel Pty Ltd

[1996] IRCA 144

DECISION NO:  144/96

CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - whether applicants employees or directors of respondent company - applicants misled by respondents’ accountant - - harsh unjust or unreasonable - admissibility of unexecuted document of deceased respondent - HEARSAY - admission of document denied - REMEDY - impracticability of reinstatement - compensation - RELEVANT WAGE -  application for costs

Industrial Relations Act 1988 (Cth) s 170 EA, s 170 DC, s 170 DE, s 170 EE,
s 347
Evidence Act 1995 s 59, s 63 (1), s 63 (2), s 67 (1)
Industrial Relations Court Rules Order 6 Rule 10

Lane v Jurd (unreported) McClelland CJ November 1995
Nicholson v Heaven & Earth Gallery Pty Limited (1994) 1 IRCR 199

RONALD VINCENT MCLAUGHLIN  V  FREDERICK LEFANUE T/AS ST BERNARD’S HOTEL MOTEL  PTY LTD
Matter No QI  1315of 95
  TOGETHER WITH
JOSEPHINE ANNE MCLAUGHLIN V FREDERICK LEFANUE T/AS
ST BERNARD’S HOTEL MOTEL PTY LTD
MATTER No QI 1313 OF 95

Coram  Tomlinson JR
Place              Brisbane

Date               23 February 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
  QI 1315 of 1995
B E T W E E N

Ronald Vincent MCLAUGHLIN
Applicant

A N D

FREDERICK LEFANUE
  T/as ST BERNARD HOLDINGS PTY LTD
Respondent

MINUTES OF ORDERS
17 April 199       TOMLINSON JR

THE COURT ORDERS THAT:

1. The respondents jointly and severally,  pay to the applicant, Ronald Vincent McLaughlin, the sum of six thousand five hundred dollars ($6,500.00) within 28 days of the date of this judgment.

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

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
  QI 1313 of 1995
B E T W E E N

Josephine  Anne MCLAUGHLIN
Applicant

A N D

FREDERICK LEFANUE
  T/as ST BERNARD HOLDINGS PTY LTD
Respondent

MINUTES OF ORDERS
17 April 199       TOMLINSON JR

THE COURT ORDERS THAT:

1. The respondents jointly and severally,  pay to the applicant, Josephine Anne McLaughlin, the sum of six thousand five hundred dollars ($6,500.00) within 28 days of the date of this judgment.

NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court

Rules

IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY

NO. QI 1315 of 1995

B E T W E E N

Ronald Vincent MCLAUGHLIN
          Applicant

A N D

Frederick LEFANUE T/as 
ST BERNARDS HOTEL MOTEL
  Respondent  

TOGETHER WITH

NO. QI 1313 of 1995 

B E T W E E N

Josephine Anne MCLAUGHLIN
  Applicant

A N D

Frederick LEFANUE T/as
ST BERNDARDS HOTEL MOTEL PTY LTD
          Respondent

REASONS FOR DECISION

17 April 1996  TOMLINSON JR

By applications both dated 21 July 1995 applicants Ronald Vincent McLaughlin and Josephine Anne McLaughlin his wife sought reinstatement and or compensation from Frederick LeFanue t/as the Mount St Bernard Hotel Motel.  By consent the applications were heard simultaneously.  Counsel on behalf of the applicants stated compensation for under-award payments of salary would be sought in the accrued jurisdiction of the court.  Counsel on behalf of the respondent stated that Mr Frederick LeFanue died on 14 February 1996 - after the commencement of proceedings - and that questions of the admissibility of an affidavit prepared but unexecuted as a result of instructions received would be addressed.   That affidavit had been filed and served for the purposes of resisting the applicants’ claims.

The court heard from the applicant Mr Ronald Vincent McLaughlin who outlined his career in the hotel and hospitality industry.  Admitted into evidence as exhibit 1 was the certificate of registration of the company Mount St Bernards.

The applicant learnt his trade as a hotelier from his father and told the court that throughout his married life he and his wife together had managed and operated hotels of varying sizes with considerable success.  The careers of the applicant and his wife began at Tyalgum and in 1987 and the couple then managed the Tweed Heads hotel as licensee/manager controlling some 25 employees.  It was the evidence of Mr McLauglin that he assumed the role of manager and that his wife attended to the banking, the payrolls and the administrative side of the hotel businesses.  After a short break away the applicant and his wife returned to the hotel industry at Coolangatta.  Thereafter the applicants managed a tavern in a plaza at Surfers Paradise and from 1992 applicants have been employed by the liquidators of hotels and motels on a consultancy basis.  At the date of the hearing of their applications the applicants managed a bowling alley.  It was the evidence of Mr McLaughlin that towards the end of 1994 he made the acquaintance of a Mr Wally Backhouse who advised that he had a friend  - Mr Frederick LeFanue - who was about to purchase the hotel at Mount Tambourine.  Mr McLaughlin stated he would be interested in speaking with Mr Frederick LeFanue.  A meeting between the two men took place on 25 April 1995 and the hotel/motel premises the subject of the proposed purchase at Alpine Drive Mount Tambourine were inspected.  The applicant stated the premises were in a run down condition and that he was aware that Mr LeFanue had no experience in the hotel industry.  The applicant stated he was unaware of the official financial profit and/or loss information of the hotel.

It was the evidence of the applicant that during the purchase negotiation period Mr Pitt the then manager employed by the vendors told him that on a good week the hotel took $20,000.00.  It was also the evidence of the applicant that he believed Mr Pitt was being paid at the rate of $1,000.00 per week together with a share of the profits and that Mr and Mrs Pitt were live in hands on managers such as the McLaughlins proposed to be.

The applicant stated that in the interim period of negotiation Mr Backhouse advised him Mr LeFanue had sacked his chauffeur and requested that the applicant drive Mr LeFanue up and down the mountain to the hotel/motel some 3 or 4 times each week.   It was the evidence of the applicant that his wife met Mr LeFanue on one such occasion and that she too had inspected the premises.    The applicant stated that he and his wife were offered the manager’s job by Mr LeFanue and that it was agreed that for only for a  short period of time the applicants would be paid a total $500.00 and then the wages position would be reviewed.  The applicant told the court that he advised Mr LeFanue of the salary arrangements of the Pitts.

The applicants commenced work for the late Mr LeFanue on 4 June 1995 on a live-in basis and Mr McLaughlin became the licensee of the hotel on 7 June 1995 and that the transfer of the licence went through quickly due to the efforts of the applicant.  In cross examination the applicant stated on 9 June 1995 Mr LeFanue promised him a share of the net profits of the hotel and that he further agreed to pay the applicant what Mr Pitt had been receiving “on an incentive basis”  The applicant stated he agreed to work for less pay in the beginning stages on the basis that he would be compensated later.  Mr McLaughlin stated he believed Mr LeFanue was the purchaser of the hotel and that he discovered later the hotel was purchased in the name St Bernard’s Holdings.

Mr McLaughlin told the court that on 8 June 1995 Mr LeFanue told him that his accountant Mr Vivian “ would be arriving with papers for the applicant to sign”.  It was the evidence of the applicant Mr Vivian did come to the hotel and further that he instructed the applicant as to how to do the banking. It was the evidence of the applicant that at that meeting Mr Vivian requested the applicant sign various documents.  Those documents were admitted into evidence as exhibit 2 and 3.  Exhibit 2 was a “ Resignation of a Director of St Bernards Holdings Pty Ltd” and exhibit 3 was a “Consent to Act as a Director of St Bernards Holdings”.  Both forms were signed by the applicant and the Resignation form was undated.

The applicant stated that the presentation of these two documents to by his employer’s accountant Mr Vivian came “as a shock”. The applicant stated he sought an explanation of the documents and that Mr Vivian said words to the effect “You’ve got to learn to trust me” and later in cross examination Mr Vivian stated that at the time he told the applicant that he too had to sign such documents for Mr LeFanue.  The applicant stated that one of his reasons for signing the papers was that he thought it would entitle him to a better salary and possible profit sharing.  The applicant stated that in three weeks after he commenced working for the late Mr LeFanue he had doubled the takings of the hotel and that in the initial stages Mr LeFanue said words to the effect “You’re doing a good job son”.  That evidence remained uncontroverted.  The applicant stated during the three week employment period he and his wife worked long hours seven days a week.

The applicant stated on Sunday 25 June 1995 he indicated to Mr LeFanue that he wished to discuss the remuneration position.  It was the evidence of the applicant that the next day, Monday 26 June 1995 after a brief discussion he was terminated by Mr LeFanue who stated words to the effect “You can go”.  The applicant stated he immediately telephoned Mr Wally Backhouse about his dismissal and that Mr Backhouse allegedly said words to the effect “You’ve got to be kidding.” 

The applicant and his wife left the hotel that day and remained unemployed for six months. At the time of departure it was the evidence of both applicants that Mr LeFanue gave them the sum of $200.00 “for doing a good job” at the time of their departure from the hotel. 

The applicant stated he was seeking reinstatement and compensation.

The evidence of the wife Mrs Josephine McLaughlin was identical to that of her husband and it was clear that she too worked long hours as manageress/financial controller of  the hotel.  Mrs McLauglin similarly signed forms in relation to being a director of the respondent company at the specific request of Mr LeFanue’s accountant Mr Vivian.

On behalf of the applicants the court heard from Mr Wally Backhouse who agreed he had introduced the applicants to Mr LeFanue.  The evidence of Mr Backhouse corroborated that of the applicants.  Mr Backhouse told the court that on 26 June 1995 Mr McLaughlin telephoned him and said words to the effect “I've been sacked” and that he responded with words to the effect “I will come to the hotel at once”.  It was the evidence of Mr Backhouse that he did in fact go straight away to the hotel and that when he arrived Mr LeFanue said words to the effect to him “Matey, I’ve got rid of the McLaughlins”.

On behalf of the respondent the court heard from Mr John Francis Connors the solicitor of the late Mr LeFanue and confirmed that the acquisition of the hotel was completed on 6 June 1995.  Exhibit B was a copy of a letter dated 14 February 1996 from J F Connors and Associates to the applicant’s solicitors enclosing a copy of an affidavit.  That letter stated inter alia “the original executed copy of which will be filed with the Court in the near future...”.  That affidavit was not signed by the deponent Mr LeFanue but witness by John Francis Connors Solicitor and Andrew Vivian Accountant.  Mr Connors told the court he was present with Mr Vivian when her received the instructions that formed the basis of the affidavit and that at that time he made notes of those instructions.

On behalf of the respondent the court heard from Mr Andrew Vivian, a chartered accountant and the personal accountant of the deceased. Mr Vivian confirmed he was present with Mr Connors when the instructions were given that formed the basis of the affidavit sought to be tendered.  Mr Vivian also confirmed he met with both applicants shortly after they commenced employment with the late Mr LeFanue and that he requested they sign exhibits 2 and 3.  Mr Vivian stated he did not explain the implications of the documents he requested the applicants sign and further he told the court he was instructed to obtain the signatures by his client LeFanue.  Mr Vivian stated at the time he told the applicants words to the effect “they should not worry as he had signed such documents himself”.  Mr Vivian under cross examination stated that he did not tell the applicants that he personally was in fact resigning as a director of the company and the court heard no evidence as to any conversation Mr Vivian may have had with either of the applicants concerning his possible conflict of interest situation.

Formal application was made on behalf of the respondent to admit into evidence the unsworn affidavit of the late Mr LeFanue on the basis that it was an exception to the hearsay rule as outlined in S 59 of the Evidence Act. The jurat of affidavit reads:

“The deponent being physically incapable of executing this affidavit acknowledged in our presence and in the presence of each other at the same time the contents hereof and confirmed the statements herein as true and correct on the 8th day of February 1966.”

Mr Connors gave evidence that the jurat was not intended to read that the contents of the draft affidavit.  The application to admit was opposed by the representative of the applicants on the basis that the document fell squarely into the category of hearsay.  The purpose of the application was to prove the existence of facts that the deceased deponent intended to assert by those representations in the affidavit.

The respondent sought to have the document admitted into evidence on the basis that it was an exception to the hearsay rule. Section 59 is placed at the beginning of Part 3.2 of the Evidence and is entitled “Hearsay. Division 1 - The Hearsay rule - exclusion of hearsay evidence”. The section provides inter alia:

“59. (1)         Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that the person intended to assert by the representation”.

The application to admit the affidavit was made under Section 63 (1) of the Evidence Act. That section states deals with the exceptions to the hearsay rule and provides inter alia:

“Exception: civil proceedings if maker not available
63.(1) This section applies in a civil proceeding if a person who made a previous representation is not available to give evidence about an asserted fact.

(2)      The hearsay rule does not apply to:
            (a)     oral evidence of the representation that is given by a person who
  saw heard or otherwise perceived the representation being made                or
             (b)     a document so far as it contains the representation, or another
  to understand the representation”

Section 67 of the Evidence Act provides inter alia that a party has given reasonable notice in writing to each other party of the party’s intention to adduce the evidence. It was submitted that notice under s 67 (4) of the Evidence Act was given and further that the conditions of the application of s 63 of the Act were satisfied.
Section 62 of the Evidence Act deals with the restriction to “first-hand” hearsay and provides:

“62.(1) A reference in this Division (other than in subsection (2)) to a previous representation is a reference to a previous representation that was made by a person who had personal knowledge of an asserted fact.

(2)      A person has personal knowledge of the asserted fact if his or her knowledge of the fact was, or might reasonably be supposed to have been, based on something that the person saw, heard or otherwise perceived, other than a previous representation mad by another person about the fact.”

The respondent relied on the unreported case of Lane v Jurd a decision of McLelland CJ in Equity being matter number 3886 of 1994 heard 24 November 1995 judgment being delivered on that date. In that case the defendants tendered a signed witness statement by a Mr Major. Unfortunately Mr Major died a dew days before the hearing before McLelland CJ and the defendants relied on two separate basis of admissibility of the statement. The first related to the Supreme Court Rules and the second to s63 of the Evidence Act. His Honour stated:

“In determining the application of that provision in relation to Mr Major’s statement, the Court may examine that statement and draw reasonable inferences from it (s183).  Where s63 applies, subs (2) excludes from the operation of the hearsay rule, a document so far as it contains a previous representation (or another representation to which it is reasonably necessary to refer in order to understand that representation)...It is important to recognise that an asserted fact may be the fact that something was said by some other person, and that fact becomes admissible if that other person is a party and what was said can be utilised as an admission of a relevant fact by that party, of if the making of the statement is itself relevant to a fact in issue (otherwise than as an intended assertion of that fact)”.

On behalf of the applicant it was correctly submitted that the notes of instructions taken by or on behalf of the solicitor Mr Connors in consultation with the deceased were not tendered into evidence at the hearing and further that Mr Connors conceded in cross examination that the document drawn by him in the form of a draft Affidavit only came into existence after 8 February 1996.

It is a finding of this court that the draft affidavit of the late Mr LeFanue should not be admitted into evidence as it is not, for the purposes of subsection 63(2)(b) of the Evidence Act a document containing the representations of the late Frederick LeFanue. The circumstances of the case in Lane v Jurd differ as in that case the deceased witness had executed the document. I do not agree with the submission of the respondent that Mr LeFanue’s version of events cannot be disregarded.

I agree with the submission of the applicants that matters arising from the text of the draft affidavit of Frederick LeFanue concerning the circumstances of the employment and termination of the applicants were not put to either applicant in cross examination.  I agree with the applicants that this failure seriously restricts the probative value of the document.

The applicants submitted that they commenced their proceedings against Frederick LeFanue of St Bernard’s Hotel Motel Pty Ltd. Bernards Holdings Pty.  From the evidence it is clear that the applicants at all times believed Frederick LeFanue was both the purchaser and employer. I agree with the assertion of the applicants that their applications do not abate by reason of the death of Mr LeFanue (Order 6 Rule 10).  In the circumstances I find that the defendant in these proceedings to be “the Estate of the Late Frederick LeFanue t/as St Bernard Hotel Motel Pty Limited” and that in light of the evidence placed before this court that I am able to make orders against the respondents jointly and severally.

I am unable to place any weight at all on the evidence of Mr Andrew Vivian the chartered accountant.  Mr Vivian persuaded the applicants to sign forms whereby they agreed to act as directors of his client’s company. However it is a finding of this court that at all times the applicants remained employees of the respondent and that Mr Vivian totally failed to explain the attendant responsibilities and liabilities of the status of director.  I place no weight on the evidence of Mr Andrew Vivian that at about 10 am on the morning of 26 June 1995 Mr McLaughlin telephoned him to advise that he and his wife were resigning. 

The court heard no evidence of any unsatisfactory performance on the part of the applicants and I am unable to agree with the submission of the respondent that the contract of employment was terminated by mutual consent.  It is a finding of this court that the applicants were unlawfully terminated by the respondent, that there was no valid reason for that termination and that the effect of the termination has been harsh and unjust and unreasonable.  It is further a finding of this court that the applicants were denied procedural fairness and that a remedy is appropriate.

Section 170 EE (2) of the Industrial Relations Act provides in respect of contravention of s 170 EE (1) that if the court thinks reinstatement of the employee is impracticable, the court may make an order for compensation.
In Nicholson v Heaven & Earth Gallery Pty Limited (1994) 1 IRCR 199, Wilcox CJ at 210 dealt with the question of relief. His Honour said:

“The word “impracticable” requires and permits the Court to take
           into account all the circumstances of the case, relating to both
           the employer and the employee, and to evaluate the practicability
           of a reinstatement order in a commonsense way.  If a 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."

I agree with the assertion of the respondent that there was no endeavour to establish in cross examination that the existing management of the hotel is other than satisfactory, but it is my opinion that that fact alone is not sufficient to resist an order for reinstatement.  What is relevant in my view is that no attempt was made to ascertain if there were in fact a positions still  for the applicants to occupy and indeed the applicants stated the late Mr LeFanue had little experience as a hotelier.  The court had no knowledge as to whether it was a viable commercial enterprise.  It is possible also that reinstatement could affect harmony with the respondent’s business as  there was some evidence that the applicants were aware Mr LeFanue stated during the course of the employment that he doubted their honesty.  In that regard I have to say generally I found both applicants to be credible and reliable witnesses and that I place weight on their evidence.         

It is a finding of this court that reinstatement is impracticable within the meaning of the Act and that compensation is appropriate.

It was common ground that the applicants commenced employment with the late Frederick LeFanue and that they were to receive $250.00 each per week gross.  The evidence concerning other arrangements concerning remuneration was not tested and the court heard no evidence as to the rates of any award that may have governed the employment  There was no evidence nor submission received from either party as to the monetary value to the applicant of accommodation apparently provided by the respondent.  It is noted the applicants in submission abandoned their claim for under- Award payments.  The applicants submitted for the first few weeks they would draw a minimal sum of $250.00 each per week gross and that a wage and incentive package appropriate for their position would be settled upon commencement of their management of the premises.  Further that this wage would be comparable with the arrangements in place between the previous of the Hotel and the previous manager who allegedly was paid a salary of $1,000.00 per week with 25% profit share from the takings of the hotel.  However I agree with the submission of the respondent that put it its highest the applicants’ evidence establishes no more than an expectation on their part that they would be able to negotiate an agreement with Mr LeFanue.  I disagree with the assertion of the respondent that there is no evidence which permits the court to come to a satisfactory conclusion regarding the remuneration lost.

The applicants submitted that notwithstanding that the applications were heard together it is submitted that the two claims be determined independently in assessment of loss.  The court heard evidence that the applicants reach received the sum of $250.00 per week and so it is a finding of this court that maximum compensation be awarded to each party on that basis.

I dismiss the respondent’s application for costs against the applicants on the basis that their applications were frivolous and vexatious and make no order in that regard.

I certify that this and the preceding twelve pages are a true copy of the reasons for decision of Judicial Registrar Tomlinson as recorded in the transcript and revised by the Judicial Registrar.

Associate:     J A Liston
Dated:  16 April 1996

APPEARANCES
Applicant
Solicitor        Mr M J Tomasoni
  Witheriff Nyst Solicitors
Respondent
Counsel         Mr F Redmond
Solicitors      J F Connors & Associates