Michael Baxter v Skyros Cycle Pty Ltd T/A South Yarra Picture Framers T/A South Yarra Art House Gallery

[2013] FWC 9435

[2013] FWC 9435

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Michael Baxter
v
Skyros Cycle Pty Ltd T/A South Yarra Picture Framers T/A South Yarra Art House Gallery
(U2013/12515)

COMMISSIONER BISSETT MELBOURNE, 16 DECEMBER 2013

Application for relief from unfair dismissal.

[1] This is an application by Mr Michael Baxter for relief from unfair dismissal. Skyros Cycle Pty Ltd T/A South Yarra Picture Framers (the Respondent) objects to the application on the grounds that the Applicant was not dismissed or, alternatively, if he was he has lodged his application out of time.

[2] The Respondent runs a small business which has two components: a gallery and a picture framing business. The Applicant was the head framer and the only permanent employee of the framing business.

[3] At the commencement of the hearing I gave permission to both the Applicant and Respondent to be represented during the hearing.

[4] The Applicant says he approached Mr Beavis of the Respondent on 6 May 2013 and asked if he could have leave without pay for five weeks so that he could travel overseas with a friend in late June. The Applicant had two weeks annual leave owing but did not want to use this leave as he was saving it for later in the year. The Applicant says he told Mr Beavis that he was flexible with the dates. He says that Mr Beavis agreed he could have the time off but that a replacement would need to be found for him.

[5] Having purchased his ticket to travel the Applicant then lodged a leave form and, after a period of time, proceeded on the leave. A replacement employee was found some four or so weeks before the Applicant was due to go on leave and the Applicant provided him with some training. The replacement employee however indicated that if he was offered ongoing employment elsewhere prior to his commencement date with the Respondent he would take it, as he could not afford to be out of work. Mr Beavis, concerned that he may lose the replacement employee, asked the Applicant if he could start his leave a couple of weeks early by accessing his annual leave so the replacement employee could start immediately. (The business could not operate without a head framer and Mr Beavis was concerned that it would be hard to find another one if the selected replacement went elsewhere.) The Applicant agreed to this to “help with the business”. At all times he understood he was on approved leave.

[6] Mr Beavis says the Applicant approached him on 9 May 2013 and told him he was travelling overseas in June for six-seven weeks. Mr Beavis says he indicated to the Applicant that he would have to be replaced and, when a replacement was found, asked the Applicant to leave immediately so the replacement could start. Mr Beavis at all times understood the Applicant to have resigned by indicating he was travelling overseas.

[7] The Applicant finished work on 7 June 2013. He left on his overseas trip on 25 June 2013 and returned to Australia on Friday 2 August 2013. On 5 August the Applicant returned to work. He says he was surprised to see the replacement employee still there. He subsequently spoke to the Respondent who said there was no work for him. The Applicant was given a separation certificate and a reference. The Applicant says his employment was terminated by the Respondent. The Respondent says that the Applicant resigned in May when he indicated he was going overseas.

[8] Whilst this is an extension of time application it requires a determination of whether or not the Applicant was dismissed, resigned or repudiated his contract of employment, as the relevant date and circumstances for the extension of time application depend on the circumstances of how the Applicant’s employment ended. The answer to this question lies in whose version of the conversation in early May 2013 I accept.

[9] In all respects the Applicant and Mr Beavis have a different recollection of that conversation.

[10] The Applicant says it took place on Monday 6 May 2013, Mr Beavis says the 9 May 2013. The Applicant says he asked if he could have leave without pay, Mr Beavis says the Applicant said he was going overseas. The Applicant says he did not purchase his ticket to travel until after Mr Beavis approved the leave, Mr Beavis says he never approved the leave and the ticket was purchased prior to any discussion. The Applicant says he completed a leave form but Mr Beavis says one was never submitted. The Applicant says that Mr Beavis indicated he would have to get in temporary replacement whilst Mr Beavis says he indicated he would have to replace the Applicant.

[11] The Applicant says he told two friends that his leave had been approved, Mr Beavis says he told his wife that the Applicant had resigned. The Applicant’s friends say the Applicant told them his leave was approved, while Ms Beavis made a contemporaneous note on her planner that the Applicant had resigned.

[12] I found both Mr Beavis and the Applicant to be believable and witnesses of truth. Both were forthright in giving evidence and there is no reason to doubt what each of them says.

[13] I have come to the conclusion that neither the Applicant nor Mr Beavis has sought to mislead the Commission as to the conversation they truly believe took place on or around 6 May 2013. I believe that the language used was more likely to be that as put forward by Mr Beavis but that the Applicant and Mr Beavis each heard what each wanted and/or expected to hear.

[14] A lack of clear response or precision in language by both the Applicant and Mr Beavis did not help. The Applicant said he wanted to travel overseas. Mr Beavis took this as an indication that he was leaving – that is resigning – his employment but never put this back to the Applicant.

[15] Mr Beavis indicated he would need to find a replacement employee (without saying ‘on an ongoing basis’) and the Applicant took this to mean it would be for the period until he returned from his overseas travel.

[16] When the replacement employee indicated he would not take up the position if he was offered other ongoing work prior to his commencement date Mr Beavis asked the Applicant if he could leave (that is, on Mr Beavis’ version, to give effect to his resignation) earlier than the originally advised date. The Applicant understood the request to be to extend his period of leave which he agreed to.

[17] The non-existence of the leave application has no bearing on my decision. Mr Beavis says that employees complete a leave form, it is then processed and noted in the pay system and returned to the person applying for the leave.

[18] I find that neither Mr Beavis nor the Applicant was precise in his language. Having understood that the Applicant to be resigning however, it was incumbent upon Mr Beavis to indicate that he accepted the resignation. Had he done so there would have been no confusion.

[19] In Ms Tamicki Louise Dover-Ray v Real Insurance Pty Ltd (Dover-Ray) a Full Bench of Fair Work Australia said:

This case is properly analysed by reference to principles of repudiation. In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd Gleeson CJ, Gummow, Heydon and Crennan JJ noted:

“The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. … Secondly, it may refer to any breach of contract which justifies termination by the other party. … There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words.

In the past, some judges have used the word ‘repudiation’ to mean termination, applying it, not to the conduct of the party in default, but to the conduct of the party relying upon such default. It would be better if this were avoided.”

(footnotes omitted)

As is apparent from this extract, the test for intention is not a subjective one depending on the actual intention of the repudiating party. Intention is to be judged from what the other party reasonably infers from the actions or words of the party who is alleged to have repudiated the contract.

A repudiation of a contract does not automatically terminate that contract. Rather, the contract comes to an end only when the other party elects to accept such repudiation. Such acceptance may be by words or conduct. The learned authors of Macken’s Law of Employment note that acceptance of a repudiation may be easily inferred. 1

[20] A person repudiates a contract where there is a breach of a condition going to the essence of the contract or where one of the parties has indicated an intention, through his or her conduct, either expressly or by implication to no longer be bound by the contract. 2 Whether there has been repudiation is a question of objective fact. A refusal to perform contractual obligations, if serious enough, will suffice. Repudiation however does not automatically bring a contract to an end but gives the affected party to right to terminate the contract.3 If the affected party accepts the repudiation the contract will end.

[21] In this case if Mr Beavis believed the Applicant was repudiatingthe contract of employment he had the right to accept that repudiation and bring the contract to an end. 4

[22] The questions to be answered are did the Applicant repudiate the contract (by indicating he would not be available to work because he was travelling overseas) and, if he did, did Mr Beavis accept this.

[23] In this case I do not accept that Mr Beavis accepted the repudiation and brought the contract to an end. Mr Beavis’ version of the conversation he had with the Applicant in early May is as follows:

Applicant: ‘I am going overseas in June for 6 or 7 weeks’

Beavis: ‘But you only have one week’s holiday pay left’

Applicant: ‘I don’t care about that’

Beavis: ‘I cannot run a business without a head framer for that long, you know that. I will have to find a replacement for you do you know anyone I can get... 5(sic)

[24] By his statement that he could not run the business without a head framer for that long I find that Mr Beavis indicated that he would need to find a replacement for the period of the Applicant’s absence and, by Mr Beavis’ words, it was reasonable for the Applicant to understand that that was the intention of Mr Beavis.

[25] At no stage in the conversation did Mr Beavis indicate to the Applicant that he would not have a job if he went away for any period of time on leave without pay nor did he clearly, unambiguously make it clear that he took the Applicant’s actions as a resignation and that he accepted that resignation.

[26] For this reason I find that the Applicant did not repudiate his contract and, even if he did, such repudiation was not accepted by Mr Beavis.

[27] Even if the Applicant had repudiated his contract of employment, for a contract to come to an end the Respondent must accept the repudiation. Once accepted that repudiation is final. In this case Mr Beavis did not, viewed objectively, accept the repudiation.

[28] This is truly a case of two people participating in the one conversation and each telling and hearing a different story. I accept, particularly in a small business, that matters associated with the end of employment – whether brought about by the employee or employer – can be difficult, however clarity of intent and meaning are necessary.

[29] I do not doubt that Mr Beavis did take the Applicant’s actions as a resignation but this was never put to the Applicant so that he could clarify his intent. I also do not doubt that the Applicant did not intend to end his employment.

[30] To the extent it is necessary to do so I also find that the Applicant did not resign from his position. He did not submit a letter of resignation and did not take his personal belongings from the workplace prior to going on leave. He also returned to work at his normal commencement time on the day he intended to return, and the day he believed he would return.

What was the date of termination of employment?

[31] On the basis of the evidence before me I find that Mr Beavis terminated the Applicant’s employment on 7 June 2013. This is clear from the employment separation certificate and the Applicant’s PAYG statement for the 2012/13 financial year.

[32] The application for unfair dismissal was made on 14 August 2013. This is 68 days after the Applicant’s employment was terminated. The application was therefore made 47 days outside the statutory time limit set for making such an application.

Should I grant an extension of time?

Section 394 of the Act states:

394 Application for unfair dismissal remedy

(1) A person who has been dismissed may apply to the FWC for an order under Division 4 granting a remedy.

Note 1: Division 4 sets out when the FWC may order a remedy for unfair dismissal.

Note 2: For application fees, see section 395.

Note 3: Part 6 1 may prevent an application being made under this Part in relation to a dismissal if an application or complaint has been made in relation to the dismissal other than under this Part.

(2) The application must be made:

(a) within 21 days after the dismissal took effect; or

(b) within such further period as the FWC allows under subsection (3).

(3) The FWC may allow a further period for the application to be made by a person under subsection (1) if the FWC is satisfied that there are exceptional circumstances, taking into account:

(a) the reason for the delay; and

(b) whether the person first became aware of the dismissal after it had taken effect; and

(c) any action taken by the person to dispute the dismissal; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(e) the merits of the application; and

(f) fairness as between the person and other persons in a similar position.

[33] The Applicant says, and I accept, that he was not aware his employment had been terminated until he returned to work on 5 August 2013.

[34] The Applicant agrees he received payment for the paid annual leave he intended to take and for the work that he had done up until the time he went on leave. It would appear that this payment was made not on the normal pay day (of 1st and 15th of the month) but on 10 June 2013. The payments for work may have been made on a date that was not the normal pay date but I do not accept that this would necessarily indicate to the Applicant – who thought he was on approved leave – that his employment had been terminated.

[35] The Applicant became aware that his employment had been terminated when he returned to work from his leave on 5 August 2013. He took immediate action to dispute his dismissal by making application to the Commission for unfair dismissal remedy.

[36] I do not consider there would be any prejudice to the Respondent caused by the delay should the extension of time be granted.

[37] The circumstances of this case indicate that there is merit in the application.

[38] For these reasons, and for the circumstances surrounding the termination of the Applicant’s employment, I am satisfied that exceptional circumstances exist such that an extension of time should be granted to the Applicant within which to make his application for unfair dismissal.

[39] An order granting an extension of time for the making of the application to 14 August 2013 will be issued with this decision.

COMMISSIONER

Appearances:

T. Golding for the Applicant.

J. Lane for the Respondent.

Hearing details:

2013.

Melbourne;

29 November.

 1 192 IR 22 [21-23].

 2   See generally Sappideen, O’Grady & Waburton Macken’s Law of Employment (6th ed. 2008), 319 onwards.

 3   Visscher v Giudice (2009) 239 CLR 361, 388 [81].

 4   Dover-Ray 192 IR 22 [23].

 5   Exhibit R4, page 1, lines 8-12.

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