Miller v Sunland Park Pty Ltd
[2014] FCCA 89
•31 January 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MILLER v SUNLAND PARK PTY LTD & ANOR | [2014] FCCA 89 |
| Catchwords: INDUSTRIAL LAW – Workplace Relations Act 1996 (Cth) – termination of employment – Federal contravention claims dismissed – matter not referred to conciliation pursuant to s.643 prior to application to court – common law claim for breach of contract of employment – summary dismissal of employee – allegation of serious misconduct – allegation not established – damages for breach of employment contract. |
| Legislation: Federal Magistrates Court Rules 2011 (Cth), r.1.05(2) & (3) |
| Beck v Spalla [2005] FCAFC 82 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 |
| Applicant: | ALEXANDER THOMAS MILLER |
| First Respondent: | SUNLAND PARK PTY LTD (ACN 064 792 632) |
| Second Respondent: | ROSS MANTON HUTCHENS |
| File Number: | ADG 259 of 2008 |
| Judgment of: | Judge Simpson |
| Hearing dates: | 1, 2, 3 February 2011 24, 25, 26, 27, 28 October 2011 |
| Date of Last Submission: | 18 July 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 31 January 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Manuel |
| Solicitors for the Applicant: | Langsford Solicitors |
| Counsel for the Respondent: | Ms N Hurley |
| Solicitors for the Respondent: | Randle Taylor |
ORDERS
The first respondent do forthwith pay the applicant the sum of THIRTY FIVE THOUSAND, EIGHT HUNDRED AND EIGHT DOLLARS AND EIGHT CENTS ($35,808.08) (“the said sum”).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 259 of 2008
| ALEXANDER THOMAS MILLER |
Applicant
And
| SUNLAND PARK PTY LTD (ACN 064 792 632) |
First Respondent
| ROSS MANTON HUTCHENS |
Second Respondent
REASONS FOR JUDGMENT
(As Corrected)
Introduction
The applicant, Alexander Thomas Miller (“Mr Miller”), commenced employment as a manager with the first respondent, Sunland Park Pty Ltd (“Sunland”) trading as ‘Corna Hardware’, in August 2007. To avoid confusion in these reasons, I will refer to the business and the company as “Sunland”. The second respondent, Ross Manton Hutchens (“Mr Hutchens”) was the owner and sole director of the Sunland and was the only person who made decisions for it. Sunland summarily terminated Mr Miller’s employment on or about 24 September 2008 for what the respondents say were his acts of serious and wilful misconduct.
Mr Miller brings these proceedings claiming damages (plus interest) for breach of his employment contract. In addition he seeks the imposition of penalties for breach by the first respondent of various provisions of the Workplace Relations Act 1996 (Cth) (“the Act”). He says that the second respondent was knowingly involved within the meaning of s.728 of the Act in the first respondent’s contravention. The applicant also seeks costs.
The respondents say in their Amended Defence, filed on 3 August 2010, that the summary termination of Mr Miller’s employment was justified on the basis of his serious and wilful misconduct. They deny that Mr Miller is entitled to the relief that he claims or any other relief.
In these reasons, statements of fact are findings of fact arrived at on the balance of probabilities after a consideration of all of the evidence.
Counsel for the parties have submitted that certain passages of evidence in the affidavits tendered at the hearing contain objectionable material and should not be received. I have decided to receive all of this evidence and to give it such weight, if any, as I consider that it deserves.
Evidence relied upon and assessment of witnesses
Mr Miller relied on his two affidavits filed on 22 September 2010 and 27 January 2011 respectively. Mr Miller was subjected to a very lengthy cross-examination which lasted three and half days.
Mr Miller was an impressive witness. Notwithstanding the length of his cross-examination about events that occurred many years before, he was generally consistent with his evidence. He appeared to be trying to answer each question fully and accurately. I found the evidence that he gave in support of his case to be plausible. The numerous challenges to Mr Miller’s credit in cross-examination by counsel for the respondents were, in the main, unsuccessful. I find Mr Miller to be a truthful witness.
Mr Miller also relied on an affidavit of Mrs Miller filed on 22 September 2010. Mrs Miller was cross-examined for a lengthy period lasting about a day and a half over a four day period.
Mrs Miller’s evidence was taken over a four day period partly because her health and emotional state prevented her from dealing with questions in cross-examination for lengthy periods. Her cross-examination was mainly in relation to credit issues and, in particular, her mental state. I found it quite understandable that she felt unable to continue with her cross-examination when dealing with matters raised by counsel that touched on unpleasant events that had occurred earlier in her life. She was nevertheless clearly able, in her less emotional moments, to give accurate and complete evidence on matters directly relevant to the issues in the trial.
The longer that the cross-examination of Mrs Miller took, the more impressed I became with her as a witness. She gave her evidence politely notwithstanding the sensitivities of some of the topics raised by counsel. I formed the view that she was trying to be helpful and accurate with her evidence. I did not form the view that she was trying to tailor her evidence to assist her husband, Mr Miller. She clearly had the capacity to give reliable and accurate evidence.
Mr Miller also relied on an affidavit of Ms Rosemarie Faye Schutz (“Ms Schutz”) filed on 22 September 2010. Ms Schutz was often referred to throughout the trial as “Rosie”. Ms Schutz was employed by the company in an administrative capacity from 25 September 2006 until 30 January 2009 and was therefore working with Mr Miller and Mr Hutchens during the period of Mr Miller’s employment. Ms Schutz was also subjected to cross-examination which took about a half a day.
Ms Schutz gave her evidence well. She answered questions directly and, where the opportunity allowed, briefly. There was no suggestion in cross-examination that Ms Schutz was anything other than an independent witness. My assessment was that she was not partisan and at all times was trying to give accurate and complete answers to questions.
The respondents relied on two affidavits of Mr Hutchens filed on 12 and 27 October 2010 respectively. Mr Hutchens was cross-examined on his affidavits for approximately half a day. He later returned to the witness box on two occasions on separate days for further cross-examination for approximately half an hour on each occasion.
Unfortunately, Mr Hutchens was an unimpressive witness. Much of his evidence was implausible and suggested to me that he was concocting evidence that he thought would either strengthen his case or damage the applicant’s case.
I have decided that I should exercise great care in making any finding in Mr Hutchens' favour where it is inconsistent with the evidence of the other witnesses.
Contravention claims
I propose to deal firstly with the contravention claims as they can be simply disposed of. To decide them it is not necessary to refer to the evidence in any detail.
Mr Miller claims that his employment was terminated by Sunland in contravention of s.661 of the Act. That section makes it an offence for an employer to terminate an employee’s employment unless certain conditions are met. The section states:
“661 Employer to give notice of termination
(1)Subject to subsection (8), an employer must not terminate an employee’s employment unless:
(a)the employee has been given the required period of notice (see subsections (2) and (3)); or
(b)the employee has been paid the required amount of compensation instead of notice (see subsections (4) and (5)); or
(c)the employee is guilty of serious misconduct, that is, misconduct of such a nature that it would be unreasonable to require the employer to continue the employment of the employee concerned during the required period of notice (see subsection (7)).
(2)The required period of notice is to be worked out as follows:
(a)first work out the period of notice using the table at the end of this subsection; and
(b)then increase the period of notice by 1 week if the employee:
(i) is over 45 years old; and
(ii) has completed at least 2 years of continuous service with the employer.
Employee’s period of continuous service with the employer Period of notice Not more than 1 year At least 1 week More than 1 year but not more than 3 years At least 2 weeks More than 3 years but not more than 5 years At least 3 weeks More than 5 years At least 4 weeks
(3)For the purposes of subsection (2), the regulations may prescribe events or other matters that must be disregarded, or must in prescribed circumstances be disregarded, in ascertaining a period of continuous service.
(4)The required amount of compensation instead of notice must equal or exceed the total of all amounts that, if the employee’s employment had continued until the end of the required period of notice, the employer would have become liable to pay to the employee because of the employment continuing during that period.
(5)That total must be worked out on the basis of:
(a)the employee’s ordinary hours of work (even if they are not standard hours); and
(b)the amounts ordinarily payable to the employee in respect of those hours, including (for example) allowances, loading and penalties; and
(c)any other amounts payable under the employee’s contract of employment.
(6)The regulations may make provision for or in relation to amounts that are taken to be payable under a contract of employment for the purposes of paragraph (5)(c) in relation to an employee whose remuneration before the termination was determined wholly or partly on the basis of commission or piece rates.
(7)Without limiting the generality of the reference to serious misconduct in paragraph (1)(c), the regulations may identify:
(a)particular conduct; or
(b)conduct in particular circumstances;
that falls within that reference.
(8)The regulations may exclude from the operation of this section terminations of employment occurring in specified circumstances that relate to the succession, assignment or transmission of the business of the employer concerned.”
Mr Miller also says that Sunland failed to pay him all of his annual leave and superannuation entitlements.
Contravention of s.661 is not an offence[1] but, by reason of s.663, would allow an employee to bring a contravention application in this Court for orders under s.665 of the Act. Before commencing with such proceedings, the employee must first comply with ss.663(5). It states:
[1] See s.662.
“663 Application to courts in relation to alleged contravention of section … 661
…
(5)An application under subsection (1), (2), (3) or (4) in respect of an alleged contravention of section … 661 may not be made to a court unless the applicant:
(a)has received a certificate under subsection 650(2) regarding conciliation of an application made wholly or partly on the ground of the alleged contravention; and
(b)has elected under section 651 to begin proceedings in that court for an order under section 665 in respect of the alleged contravention.”
The certificate referred to in sub-s.663(5)(a) is one provided by the Australian Industrial Relations Commission (“the Commission”) stating that conciliation has been attempted but has been unsuccessful.
Mr Miller does not plead in his Statement of Claim that he received the certificate or that he even sought conciliation from the Commission. No evidence has been tendered that would allow the Court to find that such a certificate had been received by Mr Miller prior to these proceedings being commenced.
As sub-s.663(5) was not complied with, Mr Miller’s application alleging contraventions should be dismissed, as should Mr Miller’s application alleging that Mr Hutchens was complicit in Sunland’s contraventions. As a further result, Mr Miller is not entitled to ask that the Court make any of the orders that it could otherwise make pursuant to s.665, in particular penalties.
I note that paragraph 13 of the Defence pleads that sub-s.661(1)(c) of the Act allowed Sunland to terminate Mr Miller’s employment without notice if he had been guilty of serious misconduct. I consider that this subsection may, if Mr Miller had brought a valid application for contravention having potentially provided a defence to the proceedings. The subsection does not however provide Sunland with a potential defence other than in validly brought contravention proceedings. Sunland will therefore only be able to rely on the well-known common law defence to an action for summary breach of an employment contract that the employee was guilty of serious misconduct.
Should the proceedings be dismissed?
Mr Miller’s contravention claims being dismissed, the Court must now consider whether the proceedings as a whole should be dismissed, and if not, determine the other issues which are involved in the controversy as identified in the pleadings.
The fact that the only federal claims in the proceedings are dismissed does not, contrary to the submission put by counsel for the respondents, result in the proceedings being dismissed generally. This is so irrespective of whether the federal aspect of the proceedings is dismissed on a question of law or fact. The dismissal does not deprive the Court of jurisdiction to deal with the non-federal claims.[2]
[2] See Beck v Spalla [2005] FCAFC 82.
What is left to be decided is Mr Miller’s common law claim against the first respondent for breach of his employment contract with Sunland. There is no further claim against the second respondent. For reasons to be provided later, there is no counterclaim or set off raised by the respondents’ defence.[3]
[3] See paragraph 165.
The parties’ non-Federal causes of action
The Statement of Claim shows that the applicant’s common law case is a simple one: he says that his contract of employment with the first respondent was unlawfully terminated. He says that he is entitled to damages consequent on the breach.
The respondents’ common law case is not so easily understood. Paragraph 12 of the Amended Defence (“the Defence”) states that the applicant’s employment was firstly suspended on 18 September 2008 and the reasons for the suspension are identified. Paragraph 17 of the Defence then states that the applicant’s employment was lawfully summarily terminated on 24 September 2008 for the applicant’s misconduct as pleaded in paragraphs 12 and 14 of the Defence. Paragraph 15 of the Defence pleads that, “(b)y reason of the matters pleaded at paragraphs 12 and 14 herein, the Applicant has been guilty of serious misconduct …”. Then, confusingly, paragraph 16 of the Defence pleads that, “Further or in the alternative … the First Respondent is lawfully able to summarily terminate the Applicant’s employment for the wilful disobedience of instructions, acting outside authority, dishonesty and fraud.” (my emphasis). It will be seen that the plea in paragraph 16 refers to additional acts by the applicant that the respondent says justifies summary dismissal in addition to the acts pleaded in paragraphs 12 and 14. No particulars are provided to the general allegations made in paragraph 16 of the Defence.
I propose to deal with this matter on the basis that the respondents’ case is that the applicant was guilty of serious misconduct as particularised in paragraph 14 of the Defence, which, by reason of subparagraph 14.17 of the Defence, includes the matters pleaded in clause 12.
Paragraph 12 and 14 of the Defence are in the following terms:
“12. The First Respondent denies paragraph 11 of the Statement of Claim and states that at the time of suspension of the Applicant on 18 September 2008 the First Respondent put to the Applicant the grounds for the suspension.
Particulars
12.1Misuse of the Mastercard with personal spending by the Applicant which was not work related, particulars of which appear at paragraph 12.5 herein.
12.2Failure by the Applicant to return the Mastercard despite previous instructions.
12.3Tendering of an invoice for payment by the Applicant on the Applicant’s wife’s behalf, which invoice was paid on29 August 2008 which was contrary to the agreement that the preparation of the Applicant’s expenditure whilst overseas would not be charged by the Applicant’s wife.
12.4Despite requests by the First Respondent the Applicant’s refusal to account for the cash and Mastercard expenditure whilst on the Overseas Trip which was requested on or about 18 August 2008.
12.5The First Respondent on 18 September 2008 discovering that the Applicant had spent company funds on personal trips to Glasgow, associated expenses, personal trips to Poland and Billings USA, and purchase of gifts.
12.6The invoice tendered on 28 August 2008 for alleged work completed by his wife pleaded in paragraph 12.3 herein, which he had paid by the company was an invoice falsified by the Applicant with use of an invalid ABN number.
…
14.The First Respondent denies 12 of the Statement of Claim and in answer to paragraphs 11 and 12 of the Statement of Claim states that the Applicant during his employment has committed acts of serious misconduct:
14.1On approximately 5 March 2008 the applicant purchased a phone in the sum of approximately $179 from All Phones Mt Barker on the First Respondent’s Mastercard (“the Mastercard”) without the Respondent’s consent.
14.2On approximately 28 March 2008 the Applicant reimbursed himself from the First Respondent’s bank account the sum of approximately $665 for a travel insurance policy with QBE Insurance for the Overseas Trip. The Applicant did not take out any travel insurance for the Overseas Trip.
14.3On April 8 2008 the Applicant withdrew $1000 from the Respondent’s Mastercard and gave the money to the Applicant’s wife.
14.4Between approximately 27 April 2008 and 2 May 2008 the Applicant travelled to Glasgow to visit his sister. The drawings on the Mastercard without the First Respondent’s consent for this period amounted to approximately $1158.50.
14.5Between approximately 25 June 2008 and 29 June 2008 whilst on the Overseas Trip the Applicant purchased approximately $192.08 of clothing and gifts on the Mastercard.
14.6The Applicant was in Poland between approximately 27 May and 30 May 2008. The Applicant’s attendance in Poland was only required for one day in Warsaw with respect to the First Respondent’s business. The Applicant spent $1400.89 by unauthorised use of the Mastercard for personal use which sum has not been account for nor repaid.
14.7On approximately 13 June 2008 the Applicant without the authority or consent of the First or Second Respondent used the First Respondent’s Mastercard to purchase for a Peter Young a return airfare from London to Poland with two nights accommodation.
Particulars
14.7.1An airfare in the sum of approximately $200.28 for Peter Young.
14.7.2Accommodation in the sum of approximately $426.24 for Peter Young.
14.8On approximately 16 June 2008 the Applicant used the Mastercard to withdrawal $424 without the Respondent’s consent.
14.9Between 18 and 22 June 2008 without the authorisation of the First Respondent the Applicant holidayed in Billings, United States of America and used the Mastercard of the First Respondent in the sum of approximately $3477.51 which sum has not been fully accounted for nor repaid by the Applicant.
14.10On the Overseas Trip the Applicant purchased jewellery for his wife on approximately 29 June 2008 in the sum of approximately $797 on the Respondent’s Mastercard without the consent of the Respondent, which jewellery has now been returned to the First Respondent.
14.11The Applicant returned from the Overseas Trip on or about 4 July 2008 and was expected to return the Mastercard to the First Respondent on or about that date.
14.12The Applicant continued to use the Mastercard after the expiration of the Overseas Trip and failed to return it to the First Respondent despite the First Respondent’s requests without the First Respondent’s knowledge.
14.13On approximately 8 July 2008 the Applicant used the Mastercard without consent to register his Holden Commodore in the sum of $199.
14.14On approximately 8 July 2008 the Applicant used the Mastercard without consent to pay the Applicant’s fines to the Magistrates Court in the sum of $500. The First Respondent has been reimbursed the said sum by the Courts Administration Authority.
14.15In approximately July 2008 the Applicant used the Mastercard without consent to withdraw cash in the sum of approximately $1650.
14.16Despite the First Respondent’s demands the Applicant has failed and refused to fully account to the First Respondent for the Applicant’s spending on the Mastercard.
14.17The First Respondent repeats paragraph 12.1, 12.3, 12.4, 12.5 and 12.6 herein.
14.18The Applicant completed and submitted an Austrade claim form on behalf of the First Respondent. The Applicant claimed:
14.18.1an airfare from Calgary, Canada to Billing USA which was an airfare that was not connected to authorised overseas business on behalf of the First Respondent.
14.18.2an airfare from Billings, USA to Chicago, USA in the sum of approximately $991.61, again for an airfare that was not authorised business on behalf of the First Respondent.
14.19The Applicant completed and attempted to submit an Austrade claim form on behalf of the First Respondent knowing that Young was not a representative of the company in the United Kingdom but still attempted to claim him as a consultant such as to make a false claim to Austrade.
14.20The Applicant sought to allege in an Austrade claim form that he was on a “bonus” with the First Respondent and to make a false claim with Austrade.
14.21The Applicant submitted on behalf of the third party a false invoice to the First Respondent which was paid by the First Respondent prior to the First Respondent becoming aware that the invoice was false with such funds being paid to the Applicant by the First Respondent.”
As will be addressed later in these reasons, Mr Hutchens’ evidence does not address all of the numerous allegations pleaded in paragraphs 12 and 14 of the Defence. His evidence does not address the following subparagraphs of paragraph 14, namely, 1, 5, 7, 14, 15, 16 and 17.
Mr Miller’s evidence
Mr Miller was 58 years of age when in late August 2007 he obtained employment with Sunland. Mr Miller came to Australia from the United Kingdom in 1982. Whilst in Australia, he had a number of jobs in management and administration of various companies. For some time, he held the position of marketing manager with British Aerospace in South Australia.
In August 2007, Mr Miller was interviewed by Mr Hutchens for a management position with Sunland. The interview took place at Sunland’s offices at Goolwa. During the interview, employment with Sunland was offered by Mr Hutchens and accepted by Mr Miller.
It was agreed that Mr Miller would have a starting salary of $60,000 plus superannuation. Mr Hutchens told Mr Miller that the office would be open from 9.00am to 5.00pm Monday to Friday but that his attendance would not be restricted to those days and times. The job required flexibility as to working hours. Leave entitlements were agreed. Mr Hutchens also said that the business would be closed down during the Christmas break for about four weeks with the business opening again in mid January of each year.
It was agreed that as Mr Miller resided at Nairne, some considerable distance from Goolwa, he would be given a petrol allowance and a Caltex card to purchase the petrol.
The question of a bonus or profit sharing arrangement was mentioned with Mr Hutchens suggesting that 10% of overseas sales would be fair. It was agreed that there would be further discussions concerning the composition and detail of this component of Mr Miller’s package.
Mr Miller says that at the meeting Mr Hutchens explained at great length his personal life history together with the history of the development of the business. He told Mr Miller that he wished to take a backseat and to leave the administration of the business to the general manager.
Mr Miller says that Mr Hutchens spoke at length about his “dream” to sell his products internationally. Both parties believed that with Mr Miller’s qualifications and experience, Mr Hutchens’ dream might be realised. Mr Miller says that Mr Hutchens stated that there were no outstanding debts in the business and that the company had access to substantial funds. Mr Hutchens also said that he could use whatever funds were necessary to achieve international market penetration of his products. He said that so far as the international expansion of the business was concerned, money was of no concern and neither was the time frame involved. He told Mr Miller that he was not concerned if it took a couple of years because the work that Mr Miller would be doing would be “sowing seeds for the future of the business”.
Mr Miller says that on commencing his employment at Sunland in or about September 2007, he was introduced to the staff by Mr Hutchens, as the General Manager with Mr Hutchens explaining that Mr Miller would be taking over the running of the business. Mr Hutchens said that Mr Miller would be making decisions pertaining to the business and that staff should go to Mr Miller if they have any issues to be dealt with.
Mr Miller was later provided with personalised business cards with the title, “General Manager” under his name.
As it was decided between Mr Miller and Mr Hutchens that Mr Miller would be travelling overseas for Sunland at some time in 2008, it was necessary that Mr Hutchens continue his involvement in the business rather than spending less time in the business and more time pursuing his sailing interests. Mr Miller says that notwithstanding this, Mr Hutchens seemed to be happy and excited about the future of the business with Mr Miller’s involvement. Mr Miller says that at this stage, he and Mr Hutchens were on cordial terms.
Mr Miller gave evidence of Mr Hutchens being drunk at work. As will be seen later in these reasons, this evidence has been corroborated by other witnesses. Mr Miller says that he detected that Mr Hutchens’ drinking habits increased on Mr Miller’s return from overseas.
Mr Miller said that Mr Hutchens’ relationship with other staff seemed to be pleasant enough. For Christmas 2007, Mr Hutchens gave all employees a Christmas gift card. He also told Mr Miller to arrange with Ms Schutz for she and Mr Miller to have a small bonus of $50 in recognition of their efforts.
Mr Miller gave extensive evidence about the work that he undertook to prepare for the overseas trip, particularly in relation to the application to the Australian Trade Commission (“Austrade”) for Sunland’s claim for reimbursement of expenditure for the trip. Providing Sunland qualified, Austrade would reimburse approved expenditure on a 50/50 basis (ie, would pay 50% of approved expenditure). Austrade also assisted Sunland with contacts that Mr Miller might pursue during the trip.
Mr Miller says that he had extensive conversations with Mr Hutchens about the overseas trip. Mr Hutchens agreed with Mr Miller that Europe and North America would be the present targets. They also discussed the likely length of the trip. Mr Miller explained to Mr Hutchens that there were many factors to such a trip which were not foreseeable and that, therefore, the length of the trip was somewhat uncertain. Illness, change of itinerary, unavailability of prospective contacts, airline delays or strikes and holidays in various countries at unexpected times, were all matters that would affect the length and cost of the trip. Mr Miller explained to Mr Hutchens that however carefully a trip might be planned, unforeseen events might render a short trip entirely useless. Mr Miller also explained to Mr Hutchens that there was a high cost of living in the areas that he would be travelling to.
Mr Miller says that Mr Hutchens was happy and excited when he was told by Mr Miller that he would be able to stay rent free with his brother-in-law, Peter Young, in his London home. Mr Miller says that it was agreed with Mr Hutchens that Mr Young would meet Mr Miller at the airport and drive him around London as required. Mr Miller would also have access to the internet at Mr Young’s home so that airline bookings and the like could be arranged.
Mr Miller told Mr Hutchens of three factors which would drastically reduce the costs associated with the trip. These were firstly, that a ‘round the world’ airline ticket be purchased rather than two or three short trips; secondly, that Mr Miller be able to stay with Mr Young in London; and, thirdly, the Austrade contribution to expenditure. As to the use to be made of Mr Young whilst in London, Mr Miller says that Mr Hutchens expressed his approval by saying more than once that they had effectively, “established a London office at no cost”.
Mr Miller says that Mr Hutchens said that he would provide him with a credit card for all overseas expenditure. Mr Miller says that this was first raised in November 2007 after he (ie Mr Miller) had attended a seminar at Austrade. Austrade actively encouraged the use of a credit card so that all claimable expenditure would be detailed in the one statement. Mr Miller says that he received a Mastercard from Mr Hutchens on 29 March 2008.
Mr Miller says that Mr Hutchens told him not to use his own credit card for usage overseas for private expenditure but to instead use the company Mastercard for everything including cash withdrawals. He said that it would be easier that way and that reimbursement of expenditure for personal purchases could be sorted out on Mr Miller’s return to the office.
Mr Miller says that in his discussions with Mr Hutchens, prior to his departure, he suggested to Mr Hutchens that, if time permitted, he wished to visit Little Big Horn in America, and on his European trip, to lay a wreath at Auschwitz, Germany for Mrs Miller’s relations. Mr Miller says that Mr Hutchens knew of his intentions of this travel before, during and after the overseas trip.
Mr Miller left on his trip on or about 8 April 2008. This was only eight months after he started with Sunland. He returned to Australia on 4 July 2008.
He had regular contact with Mr Hutchens throughout the trip. At no time before or during the trip, did Mr Hutchens make any complaint to Mr Miller about his behaviour or work performance. He did not complain to Mr Miller about his use of the company Mastercard for personal spending, including the purchase of a mobile phone, the withdrawal of $665 for a travel insurance policy with QBE for the overseas trip, or, the withdrawal of $1,000 on 8 April 2008 (the day of his departure) to be provided to Mrs Miller as spending money for her in his absence.
On the trip, Mr Miller visited numerous companies with the intention of expanding Sunland’s business interests. These occurred during Mr Miller’s visits to the USA, Canada, Germany and Sweden.
On 16 June 2008, Mr Miller was using the business Mastercard to withdraw cash at an ATM at Heathrow Airport. The records show that two withdrawals, each for 100£, were withdrawn at Heathrow Airport on 16 June 2008. Mr Miller says that when he again tried to use the Mastercard in the ATM, the ATM failed to return the Mastercard to Mr Miller and showed a message on the screen saying, “refer to your bank”.
Fortunately, Mr Miller was with Mr Young at the time that the ATM withheld the Mastercard. Mr Young agreed to lend Mr Miller 700£ for Mr Miller to use at his next stop which was Canada. The records tendered show that Mr Miller was provided with a replacement card which he started using on 23 June 2008. The card was on the same account as the earlier Mastercard, namely the account of Mr Hutchens. It is reasonable to assume that Mr Hutchens arranged for Mr Miller to have the use of this replacement card.
Mr Miller says that on 17 June 2008, he sent an email to Mr Hutchens explaining the problem that he had with the Mastercard. Mr Miller says that later in the day, in the evening, he phoned Mr Hutchens from his hotel. He says that Mr Hutchens told him that he had received his email and that he had, as a result, sent $1,500 to him, which sum could be collected from Western Union.
Mr Miller had difficulty in accessing the money from Western Union and, as a result, found himself financially embarrassed whilst in Canada. He was assisted financially by one of the customers that he was visiting. That assistance allowed Mr Miller to fly to Billings and to visit Little Big Horn instead of flying direct to Chicago. Mr Miller believed that spending time in Chicago would have drained his meagre financial resources.
On 19 June 2008 (Canadian time) Mr Miller contacted his wife by telephone and asked her to contact Mr Hutchens as a matter of urgency to address his financial circumstances.
On 20 June 2008, Mr Hutchens contacted Mr Miller by phone and informed him that he would correct the error in relation to the monies that had been intended to be forwarded to him and that he would send another payment.
Mr Miller says that he then told Mr Hutchens that he would be going to Little Big Horn on Saturday 21 June 2008, to try to relax to which Mr Hutchens responded, “Just relax. Take it easy.” He says that Mr Hutchens said that going to Little Big Horn the next day to try to unwind was a good idea.
Mr Miller says that he went on his trip to Little Big Horn and that when he returned an email from Mr Hutchens was waiting for him indicating that Mr Hutchens had sent $3,500 to him using the services of Western Union.
On 22 June 2008, Mr Miller was able to access the money. He immediately booked a flight out and on 23 June 2008 left for Chicago to pick up his prepaid flight to San Francisco.
Mr Miller says that he contacted Mr Hutchens as least twice a week whilst he was away. He says that he regularly spoke to Mr Hutchens about his purchases, for example, his purchase of bear claws for Mr Hutchens’ partner’s children; Australian wine for a client in Poland; and, a thank you trip to Poland for Mr Young, who had assisted Mr Miller in London.
Mr Miller returned to Australia from the overseas trip on or about 2 July 2008 but did not arrive in Adelaide until 4 July 2008.
Mr Miller says that soon after his return from the trip overseas, his wife, with Mr Hutchens’ approval, commenced collating the documentation so that Export Solutions could submit the company’s documents to Austrade. Export Solutions had been engaged to make the submission and to negotiate, if necessary, with Austrade.
Mr Miller says it was not part of Export Solutions’ brief to sort through the pile of receipts and that this had to be attended to by somebody else, namely Mrs Miller. Mr Miller says that he discussed this fact with Mr Hutchens and told Mr Hutchens that Mrs Miller would charge $19 per hour for this work. He says that Mr Hutchens responded saying words to the effect, “I really appreciate that. It’s very generous of her.”.
It was further agreed between Mr Hutchens and Mr Miller that Mrs Miller would keep a record of her hours which Mr Miller would include in an invoice to be submitted to Ms Schutz at Sunland for payment. Mr Miller prepared the invoice and presented it to Ms Schutz for payment. Mrs Miller was paid for all of her work up to Thursday 28 August 2008.
After Export Solutions prepared their submission to go to Austrade, Mrs Miller was asked to check the submission for any errors. This work was carried out by Mrs Miller with Mr Hutchens’ knowledge and consent. Mr Miller says that Mrs Miller’s job was to ensure that the submission accurately represented all documentation that had been presented to her and that it was in a correct and cohesive presentation. The checked submission was then returned to Export Solutions.
Mr Miller says that the information presented to Export Solutions was also provided to Mr Hutchens. Mr Miller says that when Mr Hutchens was provided with his copy, he (ie Mr Miller) suggested to Mr Hutchens that he thoroughly check the submission as he was the person that had the greatest knowledge of the matter. Mr Hutchens replied that he would do the necessary checking.
As a result of an unpleasant incident that occurred between Mrs Miller and Mr Hutchens on 18 August 2008 (full details of which are provided later in these reasons) Mrs Miller also undertook to do the cash accounts for the company, including an analysis of the expenditure for the trip, so that Mr Miller’s personal expenditure items could be identified and reimbursed.
Mr Hutchens initially requested that Mrs Miller prepare cash accounts that included details from the Mastercard accounts. Mrs Miller started work on these but some time later Mr Hutchens changed his mind and said that he just wanted the cash accounts attended to.
Mr Miller says that on Saturday 30 August 2008, he went to the Goolwa office where Mr Hutchens was working to keep him company until he finished. After Mr Hutchens had completed his task, he and Mr Miller went for a drink at a pub at Goolwa. At the pub Mr Miller and Mr Hutchens discussed how well everything seemed to be going with the business.
On 8 September 2008, Mr and Mrs Miller and Mr Hutchens were discussing whether it was worth holding back the current Austrade claim to submit two claims in one (ie, 2007/2008 financial year and 2008/2009 financial year). Mr Miller says that the advantage of doing so was that Austrade required a threshold expenditure of $15,000 before any payment could be made.
Mrs Miller informed Mr Hutchens that she would finish the accounts at home without further charge to Sunland. She requested that Mr Miller bring home the papers on which she was working. On 16 September 2008, after close of business, Mr Miller took the documents home for Mrs Miller to work on.
Mr Miller says that on 17 September 2008, Mr Hutchens requested that the documents be returned to the office so that he could inspect them. Knowing that Mr Miller contacted Mrs Miller by phone to find out when the accounts would be ready, Mr Miller informed Mr Hutchens that Mrs Miller had said that the documents would be ready on 22 September 2008. Notwithstanding this Mr Hutchens made an unannounced visit to Miller’s house on 18 September 2008. Mr Miller was not present at his home when Mr Hutchens called and was therefore only able to give evidence about the events that took place at Sunland’s offices a little later in the day. He said that he agreed with Mrs Miller’s evidence where she deposed to events that were within his knowledge.
Mr Miller was working at Sunland’s offices on 18 September 2008. He says that Mrs Miller and Mr Hutchens entered the office at about the same time. Mr Hutchens had heated discussions with Mr and Mrs Miller during which Mr Hutchens informed Mr Miller that his employment was suspended. The reason given by Mr Hutchens for the suspension was that Mr Miller had provided Ms Schutz with Mrs Miller’s invoice and had it processed. Mr Hutchens wrongly believed that Mrs Miller had said that she would do this work free of charge when, in fact, it was different work that she agreed to do without charge. Mr Hutchens told Mr Miller that during the suspension he would not be paid his wages. Mr Miller was told by Mr Hutchens that he should hand over his keys to Ms Schutz. Mr Hutchens allowed Mr Miller to complete a proposal that he was working on before handing in his keys and leaving.
Mr Miller says that he was stunned by Mr Hutchens’ outburst and instructions.
Mr Miller says that he was not paid any amount on suspension of his employment. He says that at the time of his suspension, he was due one week’s wages for the week ending 17 September 2008. Mr Miller says that his holiday pay was due as was his superannuation for that period. Mr Miller says that he was not allowed to return to work or to have access to his office.
As a result of Mr Hutchens’ outburst and his suspension of Mr Miller’s employment, Mrs Miller became stressed and unable to cope. She was admitted to hospital where she stayed for about a month.
Mr Miller says that on 22 September 2008, he contacted Mr Hutchens by telephone and arranged to meet him on 24 September 2008 at the Commercial Hotel at Strathalbyn. The purpose of the meeting was to go through the company’s accounts as prepared by Mrs Miller.
At the meeting Mr Miller produced a copy of the accounts to Mr Hutchens. Mr Miller told Mr Hutchens that the accounts had been meticulously prepared by Mrs Miller and that she should be complimented on her work.
Mr Miller requested that Mr Hutchens sit down for a few minutes to go over the documents with him so that he could show Mr Hutchens how the information had been detailed. Mr Hutchens said that he would not sit down and that he was not staying. Mr Miller again urged Mr Hutchens to spend a little time looking over the documents with Mr Miller.
At one stage during the conversation Mr Hutchens said, “You had no authorisation to use the Mastercard for private expenditure on the trip.” Mr Miller responded by saying that he (ie Mr Hutchens) had requested that Mr Miller use the Mastercard for all expenditure and that this had been discussed with him on a number of occasions.
Before the parties left the hotel, Mr Hutchens handed Mr Miller a letter of dismissal dated 24 September 2008 in the following terms:
“Dear Alex
Following the suspension of your employment on the 18th September 2008 without pay I have been left with no option but to terminate your employment with Corna Hardware on the grounds of gross misconduct relating to financial matters.
All monies due to you will be held pending an investigation into the extent of amounts owed by you to the company.
To lessen the seriousness of this matter and the distress to the company, I recommend that you provide within five working days, evidence of your willingness, ability and initiation to repay all monies due to the company. Failure to do this will result in legal proceedings to recover the debt.
You are required to deliver up to the company within 5 working days, all records, files, data, contacts details and mobile phone. You are forbidden to make contact with any clients or prospective clients of Corna Hardware that you have canvassed during your period of employment. Your cooperation is also required to clarify the personal expenses that you incurred during your overseas trip that are owed to the company.
Without prejudice
Yours sincerely
Ross M. Hutchens
Managing Director”
Mr Hutchens then grabbed the cash accounts and, to quote Mr Miller, “stormed out.”
Mr Miller says that since being dismissed by Sunland he has had difficulty obtaining further employment. Mr Miller says that his employment with Sunland was terminated at the height of the Global Financial Crisis. Mr Miller says that his prospects look bleak. He says that he has found that there have been few opportunities for him to pursue. In interviews with potential employers he has been frank and honest about the events leading to dismissal by Mr Hutchens. He says that the circumstances of his dismissal find it very difficult for him to find a suitable position in what has turned out to be a very depressed market.
Mrs Miller’s evidence
Mrs Miller gave evidence that she had significant prior experience in accounts analysis, statistical compilation and fraud detection whilst working for 16 years in England where she ultimately led a team as a systems auditor for building societies.
Mrs Miller said that she first met Mr Hutchens on or around 12 September 2007. She said that on this occasion, Mr Hutchens came to her house to pick up some valuable wood panelling that she and Mr Miller had offered to Mr Hutchens as a gift. Mr Hutchens had expressed interest in the panelling.
Mrs Miller said that she subsequently worked for Sunland on a casual basis from home on an ‘as required’ basis doing a number of different clerical or accounting tasks. She sometimes worked from Sunland’s offices. Amongst other things, she wrote copy for advertising and editorial purposes. She also attended meetings on Sunland’s behalf to research the grant available from the Department of Industry, Tourism and Resources. Her invariable practice was to charge Sunland $19 per hour for her services. She kept a record of her hours and Mr Miller would put in an invoice to Sunland at the appropriate time. Until the events leading to Mr Miller’s dismissal, Mr Hutchens had never queried any of her invoices.
Mrs Miller says that she sometimes did work for Sunland at the company’s office at Goolwa. She says that on several occasions, she noticed that Mr Hutchens would start drinking beer during the morning. She says that in the afternoon he drank from a mug containing vodka and that by the end of the day, Mr Hutchens had a ruddy face, was glassy eyed and had speech that appeared to be slightly slurred.
Mrs Miller says that on 7 or 8 April 2008, just prior to Mr Miller’s business trip overseas for Sunland, Mr Miller and she met with Mr Hutchens at a Strathalbyn hotel for a farewell lunch. Mrs Miller says that at lunch Mr Hutchens spoke about the advantages of her doing the preliminary figures for Austrade. She says that Mr Hutchens seemed happy and excited about Mr Miller’s forthcoming trip and at some stage said, “I don’t care how long it takes. We are just sowing seeds.” Mrs Miller says that Mr Hutchens said that if there was anything that she needed while Mr Miller was away, that she should let him know.
Mrs Miller said that she remembers the week of 23 June 2008 as it was a bad week for her. At the beginning of the week, she had to take her pet cat to the vet to be euthanised. When she returned home, she discovered that the tank of the hot water service had ruptured and there was water everywhere. She spoke to AGL about the cost of a replacement and was informed that the type of hot water service that she had been using would only be available to be installed before 30 June 2008. In addition, she was informed that there was a rebate of $1,000 available if the service was installed prior to 30 June 2008. As Mrs Miller did not have access to $1,000 she decided to phone Mr Hutchens and take advantage of his offer to help that he made at the hotel just prior to Mr Miller’s departure. She explained her predicament to Mr Hutchens who then said, “Not to worry. I’ll put it on my card for you”. Mrs Miller arranged for the new hot water service to be installed and, as promised, Mr Hutchens made the payment of $1,000 using his credit card.
Mrs Miller states that on Mr Miller’s return from his overseas trip in early July 2008, she met him at the Adelaide airport. She says that he was ill and coughing constantly. When they arrived at their home, Mr Miller went straight to bed and slept for a long time. He did not unpack until the next day.
As he was no better on the Monday (ie 7 July 2008), Mrs Miller took Mr Miller to the doctor. He was diagnosed as having a viral infection. As Mr Miller’s condition did not improve, Mrs Miller took him to the doctor again on Saturday 11 July 2008. On Saturday 26 July 2008, Mr Miller again returned to the doctor to get a script for further antibiotics.
Mrs Miller says that Mr Hutchens engaged her to prepare financial statements and reconciliations in relation to a report to go to Austrade about Mr Miller’s trip to Europe and America.
The incident of 18 August 2008
Mrs Miller says that on 18 August 2008, she was working on the Austrade figures at the company’s office and that she was working alone in Mr Miller’s office. She says that Mr Hutchens came into the office and approached her. She says that he then made serious allegations about Mr Miller’s conduct. She says that Mr Hutchens said that Mr Miller had been, “drawing out thousands and thousands of dollars of company money” and that he suspected that Mr Miller had a gambling problem. Mrs Miller says that she initially burst out laughing because Mr Hutchens’ allegations were so unlikely to be true. Mr Hutchens continued to make allegations about Mr Miller’s conduct and she responded to each of the allegations put.
Mrs Miller says that at some stage Mr Miller returned to the office. She says that Mr Miller tried to enter the office that she and Mr Hutchens were occupying but Mr Hutchens put his foot in the door way to stop him from entering. Mr Hutchens then said to Mr Miller words to the effect, “Just having a little talk. Nothing to worry about”. She says that Mr Miller continued to try to enter the office to which Mr Hutchens responded by saying that he would only be a couple more minutes.
Mr Miller eventually was able to enter the office at which time Mr Hutchens said, “We are just having a little chat about these cash withdrawals”. When Mr Miller asked what the problem was, Mr Hutchens said that there was nothing serious and that he and Mrs Miller were simply trying to sort things out. When Mr Miller asked what things, Mr Hutchens said words to the effect, “It’s about all this cash you have been drawing out. I have been taken before and I’m not going to be taken again.”
Mrs Miller says that after some further discussion, Mr Miller suggested that Mr Hutchens’ mind could be put at rest by having the accounts reconciled and that if he wished, Mrs Miller would do this. Mr Hutchens said that he thought this a good idea. Mrs Miller said that she would have to finish the Austrade accounts before getting onto the company accounts.
The incident of 18 September 2008
Mrs Miller says that on 18 September 2008, she was at her home at Nairne when she heard a knock at the door. It was Mr Hutchens. She says that she initially thought that he was passing by and had dropped in socially. She greeted him and invited him in.
Having come in, Mr Hutchens then produced a piece of paper that he waved at her. He informed her that the paper was an invoice for her work on the accounts. He said words to the effect, “Mr Miller has typed this up. This is criminal. I could go to the police over this but I won’t.” Mrs Miller says that she informed Mr Hutchens that she had done the work and that Mr Miller always attended to forwarding her invoices to the company after he checked the arithmetic.
Mr Hutchens then accused Mr and Mrs Miller of having been cheats and conmen. Mrs Miller says that she continued to spend time trying to convince Mr Hutchens that there had been no impropriety. Eventually it was decided that they would go in separate cars to the Sunland office at Goolwa. Mr Hutchens stressed that he did not want Mrs Miller to speak to Mr Miller by telephone on the way to the office. Mrs Miller and Mr Hutchens then went to the office at Goolwa in convoy.
Mrs Miller says that when they got to the office, Mr Hutchens approached Mr Miller in her presence. Mr Hutchens waved a paper around and said, “It’s this that’s done it mate. It’s this that’s done it.” Mrs Miller says that the document that Mr Hutchens was waving was her invoice for the work that she had done for Sunland. Mr Hutchens suggested that it had been agreed that this work would be carried out without charge.
Mrs Miller says that eventually, after much discussion, Mr Hutchens said words to the effect, “I’ve had enough of you (referring to Mr Miller), I’m terminating your employment. I’m suspending you and I’m instructing Rosie (ie Ms Schutz) not to pay you your last week’s wages. Finish what you are doing and go. Hand over your keys to Rosie.” She says that after Mr Miller pointed out that he was working on a business proposal for the company, Mr Hutchens said that Mr Miller should complete the proposal and then leave.
Ms Schutz’s evidence
Ms Rosemary (Rosie) Fay Schutz (“Ms Schutz”) gave helpful and independent evidence in this matter. She was employed by Sunland in an administrative capacity from 25 September 2006 to 30 January 2009. She therefore was working for the respondent well prior to Mr Miller joining the organisation and was still working there after the events leading to Mr Miller’s dismissal. As mentioned previously, Ms Schutz gave her evidence well. I had no reason to believe that she was not being completely honest at all times. In addition, she was helpful as she was an independent witness who corroborates, to a large extent, a number of the matters that support the applicant’s case.
Ms Schutz says that on the first morning that Mr Miller started work with Sunland, Mr Hutchens introduced him to the staff. Ms Schutz remembers Mr Hutchens saying words to the effect, “Alex is to be the new manager and you will report to him. If there are any problems, bring them to him”. She says that Mr Hutchens also told the staff and, over the next week or two, the contractors engaged by Sunland, that he (ie Mr Hutchens) was trying to be more “hands off” in his work with the company so that he could do more fishing and boat building.
Ms Schutz remembers a number of events that occurred during the period that Mr Miller was preparing to travel overseas for the company. She heard discussions between Mr Miller and Mr Hutchens. She says that on one occasion, she heard Mr Hutchens say to Mr Miller that he should use the business Mastercard for all expenses incurred by him whilst he was overseas. She heard this said to Mr Miller on more than one occasion. She says that she also remembers Mr Hutchens saying to Mr Miller words to the effect, “Use the Mastercard for everything”. She says that Mr Hutchens also said to Mr Miller that as well as putting all expenses on the Mastercard, that Mr Miller could reimburse the company for any personal expenses upon his return. She heard Mr Hutchens say words to effect, “We will sort it out when you get back”. She says that on the last day that Mr Miller worked at Sunland before departing overseas, Mr Hutchens said to her words to the following effect: “Don’t forget to remind Alex that he uses the Mastercard for all expenses and we will sort it out when he gets back”.
Ms Schutz says that Mr Hutchens directed her to check the Mastercard balance every day using computer banking. She says that at no time while Mr Miller was overseas did Mr Hutchens ever say to her anything about any of the expense items on the Mastercard account being inappropriate. In fact, she says that Mr Hutchens was generally making supportive comments about Mr Miller whilst he was overseas. She remembers Mr Hutchens telling people in her presence that Mr Miller’s trip was going very well and that orders had increased as a result.
Ms Schutz says that her desk was only a couple of metres from desks usually occupied by Mr Miller and Mr Hutchens. She says that she overheard numerous conversations that took place between them within her hearing concerning a bonus to be paid to Mr Miller. As a result of the discussions, Ms Schutz understood that Mr Miller was to be paid a bonus at the end of the year in recognition of the time that he was away on the company’s business. She says that she was present when Mr Hutchens discussed with Ms Schutz’s supervisor, Ms Anne Stott, how the bonus to be paid to Mr Miller could be put into the accounts.
Ms Schutz had a criticism of Mr Hutchens. She said that he would drink significant quantities of alcohol at work and that he would often have had a number of beers by mid-afternoon. She says that on occasions, he started drinking at about 10.00am. She says that after drinking he often had a dishevelled appearance and would become aggressive towards staff. He used offensive language and gave instructions that were unclear and inconsistent.
Ms Schutz says that late on 29 August 2008, Mr Miller approached her with an invoice, being Invoice No. 0808 from Mrs Miller for $1,634.00 being for the following:
“Audit of account consolidation for submission to ‘export solutions’ Austrade Grant.
Checking Account (marketing trip) cash expenditure reconciliation April/June 2008.
Expenditure analysis for excess (21 day) Austrade submission.”
She says that Mr Miller requested that the invoice be paid as soon as possible as the invoice was to be included in the claim back from Austrade. Ms Schutz says that she entered the account into the company’s books and paid the sum of $1,634.00 to Mrs Miller using the computer based electronic funds transfer facility. She says that Mr Hutchens was not present in the office as he had left for the day at about 4.00pm.
Ms Schutz says that after suspending and then firing Mr Miller on 18 September 2008, Mr Hutchens instructed her to withhold payment of Mr Miller’s wages. The last quarter payment of Mr Miller’s compulsory superannuation was also withheld.
Ms Schutz says that on 19 January 2009, she received a letter from Mr Hutchens advising her that her employment would be terminated on the basis of redundancy. Her employment with Sunland ceased on 30 January 2008. The letter read:
“Dear Rosemarie
As you are aware, you partly filled the position of Sarah Hill who was my administration officer. Additionally, Anne has been engaged for the same reason. During the employment of yourself and the engagement of Anne, I have also played a considerable role in regards to the general administration that was previously reliant on Sarah. The engagement of Alex Miller was to remove much of that role from me. As you are aware, this did not happen and the role reverted back to me in February 2008.
The running of Corna Hardware has not been to my satisfaction and to this end, it is necessary to make some substantial and responsible changes. In order [sic] see this through, I will require, at least, the services of a level 4 clerk. That person will also be responsible for much of the work you have been doing. My partner, Mardi, will assist the new appointee as required, as well as oversee operations, for the goodwill of the company.
You have been a valued employee of the company and I regret to inform you that your position is no longer available and that no other type of work opportunity exists for employment at this time. Following your three weeks’ notice which I am giving, and starting from 20th Jan 2009, I am willing to engage you on a casual basis for staff training should it be required but only if this is suitable to you. During your notice period, some changes will already take place and I do ask that you support the company during this period.
I trust that you will appreciate the reasons for change and thank you for your service over the last couple of years.”
Ms Schutz said that sometime after her dismissal by Mr Hutchens, she discovered that Mr Hutchens had reported to the police that she had stolen an external hard drive for the company’s computer whilst in employment with Sunland. Ms Schutz subsequently obtained from SAPOL, through Freedom of Information, a redacted copy of the police incident report. It showed that Mr Hutchens made the complaint to police on 30 March 2009 and that Mr Hutchens said that the theft occurred on 19 January 2009. The 19th January 2009 saw the commencement of Ms Schutz’s three week period of notice of termination of employment, during which period she was required to continue working. Mr Hutchens had not at any time raised the issue of the loss of the hard drive with Ms Schutz.
Ms Schutz strongly denies Mr Hutchens’ allegation of theft. She says that she was never charged with theft. She knows of the external hard drive as during her employment she was required to take the drive home each night for safe keeping. She says that she remembers giving the external hard drive to Mr Hutchens at his request and that he never returned the drive to her.
Ms Schutz says that she had no contact with Mr Miller after termination of his employment with Sunland until some considerable time after her employment was terminated.
Mr Hutchens’ evidence
Mr Hutchens says that Mr Miller was engaged by Sunland as a manager from approximately 23 August 2007 until 24 September 2008. He says Mr Miller was given a salary of $60,000 per annum plus superannuation plus 4 weeks annual leave, sick leave and public holidays. He says that it was never agreed that Mr Miller would be paid a bonus.
Mr Hutchens says that Mr Miller was engaged to manage the Sunland’s business for approximately two days a week. This involved managing three staff, the taking of orders, the ordering of stock and working in the warehouse. Mr Hutchens says that on the other three days, Mr Miller was to set up an agency agreement with Thernwood CNC Machinery, a company that operated a machinery manufacturing business.
Mr Hutchens said that Mr Miller did not set up the agency with Thernwood but concentrated his energies on pursuing overseas sales and marketing of Sunland’s products.
Mr Hutchens says that the purpose of Mr Miller’s overseas trip was to establish sales of Sunland’s products in Europe, to spend a number of days with an existing customer of Sunland, a Canadian company called Primoware, and to visit Sunland’s other existing customers in America.
Mr Hutchens says that Export Solutions Pty Ltd was engaged to assist Sunland in preparing an Austrade application for a Commonwealth Government grant. Mr Hutchens confirms that Mr Mitchell, from Export Solutions, advised that it was Austrade’s preferred requirement that a person taking a trip involving international travel, as Mr Miller was, be provided with a Mastercard so that Austrade would be provided with accurate details of expenses which would assist them in determining what might be recoverable by Sunland pursuant to the Austrade grant.
Mr Hutchens’ allegations of dishonesty/misconduct
In Mr Hutchens’ first affidavit, he identifies what he says were 11 acts of Mr Miller’s dishonesty and misconduct.[4]
Allegation 1
[4] See paragraphs 35 to 113 of the affidavit.
Mr Hutchens says that Mr Miller’s first act of dishonesty/misconduct related to a QBE Insurance Policy. He says that on approximately 28 March 2008, Mr Miller reimbursed himself from Sunland’s cheque account for the sum of $665.00 for a travel insurance policy for the overseas trip with QBE Insurance. He says that Mr Miller had been dishonest in relation to the QBE Insurance Quotation because it was never obtained.
This allegation by Mr Hutchens appears to relate to the allegation to be found in paragraph 14.2 of the Amended Defence filed on 3 August 2010.
Allegation 2
Mr Hutchens says that Mr Miller’s second act of dishonesty/misconduct concerned an unauthorised withdrawal of $1,000. He says that on approximately 8 April 2008, Mr Miller used the Mastercard to obtain the sum of $1,000 which he gave to his wife, Mrs Miller. Mr Hutchens says that this was not authorised by Sunland.
This allegation appears to relate to the allegations to be found in subparagraph 14.3 of the Amended Defence.
Allegation 3
Mr Hutchens says that Mr Miller’s third act of dishonesty/misconduct concerned his failure to advise Sunland that he was holidaying in Glasgow and using unauthorised Sunland funds whilst on holidays. He says that the paperwork prepared by Mrs Miller shows that Mr Miller had a personal withdrawal in the sum of $370 which he used to visit his sister in Glasgow. Mr Hutchens says that there was no associated business reason for Mr Miller to visit Glasgow. He says that Mr Miller did not make a request or give notice of his intention to take annual leave whilst on the overseas trip. He says that this is in breach of Sunland’s practice. Mr Hutchens says that Sunland accepts that whilst overseas, Mr Miller was entitled to each weekend off or, if he had to work on the weekend, to take days off in lieu.
This allegation appears to relate to the allegations contained in paragraph 14.4 of the Amended Defence.
Allegation 4
Mr Hutchens says that Mr Miller’s fourth act of dishonesty/misconduct concerned Mr Miller’s trip to Poland. Mr Hutchens says that Mr Miller should only have been in Poland for one day and one night to do the business that was necessary, but instead took four nights. Mr Hutchens says that the only company business in Poland was at Wroclaw and that therefore, Mr Miller only needed to travel from London to Wroclaw via Warsaw and return. He says that other parts of Mr Miller’s trip to Poland were not necessary for company business. Mr Hutchens says that Sunland has been put to the additional expense of $1,400.89 by this unauthorised use of Mastercard.
This allegation appears to relate to the allegations contained in subparagraph 14.6 of the Amended Defence.
Allegation 5
Mr Hutchens says that Mr Miller’s fifth act of dishonesty/misconduct related to Mr Miller’s holiday in Billings, a town in the USA. Mr Hutchens says that between approximately 18 and 21 June 2008, Mr Miller holidayed at Billings. Mr Hutchens says that Mr Miller had advised him that he was going to holiday in Billings and that he therefore does not take any issue with Mr Miller doing so. Mr Hutchens says that Mr Miller’s actions were dishonest in that he never accounted to the company for the annual leave that he took whilst he was holidaying in Billings and never fully accounted with receipts to the company for his personal expenditure that he incurred whilst holidaying in Billings. Mr Hutchens says that Mr Miller used the Mastercard to the extent of $3,477.52 whilst at Billings and that these transactions were unauthorised by the company.
This allegation appears to be related to the allegations contained in subparagraph 14.9 of the Amended Defence.
Allegation 6
Mr Hutchens says that Mr Miller’s sixth act of dishonesty/misconduct related to the purchase of jewellery in the sum of approximately $797 using the company’s Mastercard. This purchase was to be a gift from Mr Miller to his wife. Mr Hutchens says that Mr Miller should have used his own money. Mr Hutchens says that in August 2008 Mrs Miller handed over the jewellery to him.
This count appears to be related to the allegations contained in subparagraph 14.10 of the Amended Defence.
Allegation 7
Mr Hutchens says that Mr Miller’s seventh act of dishonesty/misconduct was Mr Miller’s failure to return the Mastercard and that instead he continued to use the Mastercard after his return from the overseas trip.
Mr Hutchens says that Mr Miller returned from the overseas trip on approximately 4 July 2008. He says that he had expected that Mr Miller would return the Mastercard to the company promptly after his return but instead Mr Miller continued to use the Mastercard after his return from overseas and that he did so without Mr Hutchens’ consent or knowledge. Mr Hutchens says that Mr Miller used the Mastercard on approximately 8 July 2008 to pay fines at Port Adelaide Magistrates Court in circumstances where he had no right or authorisation from the company to do so.
Mr Hutchens says that he contacted the Courts Administration Authority and advised them that the payment into Court of $500 was with the use of his Mastercard but without his authority. Mr Hutchens requested that the Court return the sum of $500. He said that the Court did so and that a cheque to Corna Hardware was sent on 22 October 2008.
This count by Mr Hutchens appears to relate to the allegations contained in subparagraphs 14.11 or 14.12 of the Amended Defence.
Allegation 8
Mr Hutchens says that Mr Miller’s eighth act of dishonesty/misconduct concerns his unauthorised use of the Mastercard to register a motor vehicle. Mr Hutchens says that on approximately 8 July 2008, Mr Miller used the Mastercard to register his Holden Commodore in the sum of $199 and that this was unauthorised by the company.
This count appears to relate to the allegations contained in subparagraph 14.13 of the Amended Defence.
Allegation 9
Mr Hutchens says that Mr Miller’s ninth act of dishonesty/misconduct concerns withdrawals with the use of the Mastercard between 9 July 2008 and 2 August 2008. Mr Hutchens says that he told Mr Miller to hand back the Mastercard. He said that he made that request on becoming aware that Mr Miller had paid for the registration of his car using the Mastercard. Mr Hutchens does not say when it was that he requested that Mr Miller return the Mastercard. Mr Hutchens says that Mr Miller failed to comply with his directions.
This count would appear to relate to allegations contained in subparagraph 12.2 of the Amended Defence.
Allegation 10
Mr Hutchens says that Mr Miller’s tenth act of dishonesty/misconduct concerned the issuing of Mrs Miller’s Tax Invoice. Mr Hutchens says that Mr Miller and his wife caused an Invoice to be issued to Sunland for work alleged to have been done by Mrs Miller. The Tax Invoice was in the sum of $1,634. Mr Hutchens says that Mr Miller caused the company to pay the invoice without Mr Hutchens’ authority.
Mr Hutchens says that Mrs Miller was employed by Sunland as a consultant. He says that her responsibility when Mr Miller returned from overseas was two-fold: firstly to do an account of all of Mr Miller’s business expenditure items whilst on the overseas trip; and, secondly, to prepare the Austrade Export Grant. He says that Mrs Miller completed the work that was required for the Export Grant Claim. He says that on a date that he cannot now recall, but was on or about 14 August 2008, he spoke to Mr and Mrs Miller and that Mrs Miller suggested that the company should set-off the amount owed to her in relation to the Austrade Grant Claim against money that Mr Miller had incurred personally on the Mastercard. Mr Hutchens said that Mrs Miller indicated that she would not charge the company for the book work detailing Mr Miller’s overall business expenditure on the overseas trip. He says that as such, Mrs Miller was not to be paid for her work in relation to the Austrade Grant together with her reconciliation of Mr Miller’s expenditure on the trip.
This count would appear to relate to the allegation contained in subparagraph 12.3 of the Amended Defence.
Allegation 11
Mr Hutchens says that Mr Miller’s eleventh act of dishonesty/misconduct concerned the Austrade application.
Mr Hutchens says that Mr Miller prepared the Austrade 2007-2008 Application Form which he (Mr Hutchens) signed on behalf of Sunland and was submitted by Export Solutions to Austrade. He says that Mr Miller was dishonest in the Austrade claim in that he had claimed 100% of his airfares whilst overseas in a situation where he should not have included the airfares from Calgary in Canada to Billings in the USA as this was a holiday.
Further, Mr Hutchens says that the application was dishonest as it claimed that Mr Miller’s brother-in-law, Peter Young, was a representative of Sunland in the United Kingdom when this was not in fact true. Mr Hutchens said that if he had known the extent of Mr Miller’s dishonesty, he would have checked the Austrade Grant Application more carefully and not included anything that was improper.
These counts by Mr Hutchens appear to relate to the counts contained in the allegations in subparagraphs 4.18, 4.19, 14.20 and 14.21 of the Amended Defence.
Mr Hutchens alleges that on his return from overseas, Mr Miller failed to properly account for his expenditure. Mr Hutchens says that he continually asked Mr Miller to provide a breakdown of his expenditure. He says that he only received Mr and Mrs Miller’s attempt to account for Mr Miller’s expenditure on the Mastercard and his cash purchases on the overseas trip, on the day that Mr Miller’s employment was terminated, namely 24 September 2008.
Mr Hutchens said that Sunland never agreed to pay Mr Miller a bonus. He said that in or about July/August 2008, Mr Miller said words to the following effect:
“The overseas trip has been very successful. I can see myself earning a potential income of $100,000 per annum. Even just a 1% share in the company would be nice.”
Mr Hutchens says that in response he said to Mr Miller words to the following effect:
“You will never be a shareholder in the company. I would consider the company paying you a percentage of actual profit made from overseas sales in the future. If the company got to the stage of being profitable from overseas trading, then you will also have to be responsible for the entire running of the business including the warehouse. This will take a long time, realistically two years before the company makes a profit from overseas sales. It is premature at this stage to enter into an agreement.”
Mr Hutchens said that Mr Miller’s response was that he showed no interest in that type of bonus arrangement and said words to the effect that for the time being he was happy to go along with the current arrangement.
Findings
I find that Mr Miller entered into a contract of employment with Sunland on or about 23 August 2007 and that he was employed to be General Manager. The evidence from Mr Miller that he was appointed General Manager is corroborated by the evidence that he was provided with a business card showing the title, ‘General Manager’ and further that Mr Hutchens did nothing to prevent Mr Miller using the title.
At his job interview, Mr Hutchens explained to Mr Miller his reason for engaging a manager. He said that he wanted to spend less time in the business and more time finishing a boat building project. He told Mr Miller that he wanted to employ a manager so that he could absent himself from the office, slow down and enjoy sailing. He informed Mr Miller of his wish to take a backseat and to leave the administration of the business to a General Manager. He also indicated that in a few years he wished to sell Sunland and formally retire.
The first respondent engaged Mr Miller on a gross salary of $60,000 per annum.
Mr Miller was told by Mr Hutchens that there would eventually be some form of profit sharing or bonus. Mr Hutchens disputes this. Mr Miller says that the question of profit sharing/bonus was not discussed in detail but that Mr Hutchens told Mr Miller that he thought a bonus of around 10% of overseas sales would be fair. Mr Miller says that it was agreed that there would be further discussions about the composition and detail of this component to Mr Miller’s package when he started.
Mr Hutchens informed Mr Miller that the office would be open from 9.00am to 5.00pm Monday to Friday but that his attendance would not be restricted to those days and hours. Instead his hours would be flexible in accordance with the responsibilities that he was performing.
It was indicated by Mr Hutchens that Sunland would be closed during the Christmas break for about 4 weeks and would re-open in mid January of each year.
Mr Miller’s annual leave entitlements were discussed and it was agreed that they would be in accordance with industry norms.
Mr Miller was advised by Mr Hutchens that a petrol allowance would be paid. This was important from Mr Miller’s point of view as he lived at Nairne, some considerable distance from Goolwa. Mr Hutchens advised Mr Miller that he would be compensated for his daily travel to the extent of $80 - $100 per week and that he would be provided with a Caltex card for purchases of petrol.
Mr Hutchens informed Mr Miller of his long held dream to sell his products internationally. He said that he was convinced that any future expansion of the business had to be in the export to overseas markets. Mr Miller says that Mr Hutchens said that he was fully “cashed up” with in excess of $300,000 in his super fund which he hoped to be able to use to realise his dream for expansion of his business. He informed Mr Miller that these funds could be used to achieve international market penetration. Mr Hutchens also informed Mr Miller that even if it took a couple of years to, “sow the seeds” for the future, that this would not concern him.
At his interview, Mr Miller provided Mr Hutchens with his CV. It showed that Mr Miller was experienced in developing businesses internationally. He had completed his education in the United Kingdom and had attended Anniesland College in Glasgow completing a course in business studies and marketing. He subsequently worked in administration roles in the construction and civil engineering industry in the United Kingdom. He had held the position as General Manager with McNeil Overseas Ltd, which is based in London, and had territory responsibilities for Europe, North Africa, West Africa and the Middle East. After coming to Australia in 1992, he held a number of management roles including the position of Marketing Manager with British Aerospace at Technology Park in South Australia. Mr Hutchens was impressed with the CV.
At the job interview, Mr Miller and Mr Hutchens also discussed how overseas expansion might be achieved. Mr Hutchens was very enthusiastic about what Mr Miller had to say on the topic and indicated that he was keen to get on with the project.
The contract of employment was not reduced to writing. The terms of the contract are therefore to be found in the conversations that the parties had leading up to Mr Miller’s engagement and those terms that are to be implied as a matter of law.
The parties provided the Court with very little evidence about the structure and operations of Sunland’s business. It would appear that the business of Sunland was not large. What little evidence there is on the topic, shows that at the time that Mr Miller joined the company, the other staff comprised Rosemarie Schutz, who was employed as a full time secretary/clerk; a person by the name of Abe, who was also employed full time; together with a few people who were employed in the dispatch section. Other persons were employed on a casual basis as needed.
The evidence shows that in late 2007 or early 2008 Mr Miller informed Mr Hutchens that he was short of money. He asked to borrow $6,000 from Mr Hutchens. Mr Hutchens was not immediately willing to provide a loan. Over time discussions continued resulting in an agreement being reached that Sunland, as trustee of the Sunland Park Superannuation Fund No.2, lend Mr Miller $10,000. The agreement provided that interest would be payable and that the debt was to be repaid by no later than 19 February 2009. A loan agreement was signed by the parties on 19 February 2008. The monies were paid to Mr Miller at some time in February or March 2008. Mr Miller failed to repay the debt.
Surprisingly, although paragraph 26 of the Defence refers to the loan, Sunland did not file a cross-claim in relation to this alleged debt. Had they wished to make a cross-claim or a set-off, they were obliged to file a Notice of Cross-Claim as is required by the Federal Court Rules 2011 (Cth).[5] The filing of such a Notice applies whether Sunland wished to cross-claim, as traditionally understood, or to set-off, as was briefly referred to in paragraph 27 of the Defence. The pleading in paragraph 26.1 of the Defence does not provide an avenue for an order that the applicant pay the debt. Similarly, the alleged debt of Mr Miller to Sunland pleaded in paragraph 26.2 of the Defence concerning the alleged ‘loan’ of $2,250 for the purchase of a new AGL hot water service that was installed in the Miller’s home at Mr Hutchens’ (or Sunland’s) expense whilst Mr Miller was overseas on the business trip was not pursued in this litigation.
[5] The Federal Court Rules apply as the Federal Magistrates Court Rules (as they were then called), were insufficient as they did not provide rules for the filing of pleadings. By reason of Federal Magistrates Court Rule 1.05(2) and (3), the Federal Court Rules as to pleadings applied.
When Mr Miller commenced work with Sunland, Mr Hutchens introduced him to staff as the “new General Manager”. Mr Hutchens explained to staff that Mr Miller would be taking over the running of the business and that Mr Miller would be making decisions pertaining to the business. Staff were advised that they should refer to Mr Miller as necessary. Soon after his appointment, Mr Miller was provided with a business card with the title, “General Manager”.
Mr Miller and Mr Hutchens had discussions about the desirability of Mr Miller travelling overseas to expand Sunland’s operations. Both men were keen that this should take place. With Mr Hutchens’ full endorsement and approval Mr Miller liaised with representatives from Austrade. The company’s approach to Austrade was with the intention of eventually receiving financial assistance from Austrade for Sunland’s expansion overseas. This would occur providing Sunland met certain criteria.
During the balance of 2007 and early 2008, Mr Hutchens and Mr Miller had numerous lengthy discussions about Mr Miller’s trip overseas. It was agreed that Europe and North America would be the initial targets.
Mr Miller explained to Mr Hutchens that there were many factors that might affect the length of time that he would need for such a trip. Many of these factors were unforeseeable. Matters such as illness, change of itinerary, unavailability of prospective contacts, airline delays or strikes and holidays in various countries at unexpected times. Mr Miller also explained about the high cost of living in most of the areas to which Mr Miller would be travelling. Notwithstanding these potential problems, Mr Hutchens was still keen for Mr Miller to embark on the trip.
Mr Miller informed Mr Hutchens that whilst in London, he would be able to stay rent free with his brother-in-law, Peter Young. It was agreed between Mr Hutchens and Mr Miller that Mr Young would meet Mr Miller at the airport and ferry Mr Miller about as was required. Mr Miller also pointed out that Mr Young would be a suitable person to co-ordinate travel as required through the internet leaving Mr Miller free to concentrate on the meetings that he would be attending.
As part of the preparations for the overseas trip, Mr Miller and Mr Hutchens met with a Mr Stuart Mitchell from Export Solutions, a company that specialises in Austrade grant applications. Mr Mitchell informed Mr Miller and Mr Hutchens that Austrade’s preferred requirement was that the person or persons travelling be provided with a Mastercard or Mastercards so that Austrade can be provided with Mastercard statements detailing all of the expenses that would or might be recoverable pursuant to an Austrade grant. Mr Mitchell also said that Austrade required that, where possible, the traveller was to keep the receipts for all such expenditure. Mr Hutchens agreed that he would provide Mr Miller with a company Mastercard prior to the overseas trip. Mr Hutchens said words to the effect that it was a good idea as it would help him track what Mr Miller was spending whilst on his trip.
A major aspect of the first respondent’s case is that Mr Miller used the company Mastercard for private purposes. I find that Mr Hutchens specifically requested and allowed Mr Miller to use the card in this way. I do not accept Mr Hutchens’ evidence to the contrary. I accept instead the evidence of Mr Miller and Ms Schutz that Mr Hutchens required that Mr Miller use the Mastercard for all expenditure on the trip whether for private or business purposes.
I accept Mr Hutchens’ evidence that the Mastercard given to Mr Miller was a secondary card to the primary Mastercard that was held by Mr Hutchens and that both cards were linked to the same account.
Austrade suggested strongly that a card, such as a Mastercard, record all transactions to be claimed so that they are clearly identified in the bank statements.
The use of a Mastercard for all expenditure, personal and business, accords with common sense. It would be difficult for Mr Miller to determine whether a particular transaction, for example, a meal, was claimable as a business expense or a private expense. Mr Miller would have found it very difficult to make the numerous decisions each day about whether a particular transaction, large or small, was business or private. Far better to have all business and all private transactions made with the use of the one card and to then determine, on return to Australia, which items should be considered private (and therefore refundable to the Company) and which items business and therefore claimable in the submission to Austrade.
Mr Miller received a Mastercard from Mr Hutchens on 29 March 2008. Mr Hutchens told Mr Miller that he should use the Mastercard for everything. He said that it would be easier that way and that personal purchases could be sorted out on Mr Miller’s return to the office.
During the discussions with Mr Hutchens, Mr Miller informed him that he would wish to have some private trips whilst on the business trip. He indicated to Mr Hutchens that if time permitted he hoped to visit Little Big Horn in America and to lay a wreath at Auschwitz in Germany for his wife’s deceased relations.
On 8 April 2008, Mr Miller embarked on his trip overseas. During the trip Mr Miller was using the company Mastercard for all of his purchases and cash withdrawals, as had been agreed to by Mr Hutchens.
On 16 June 2008, Mr Miller was at Heathrow leaving the United Kingdom for Canada. He tried to withdraw cash on the Mastercard but to his “horror” the card was withdrawn into the machine. To enable Mr Miller to continue his trip, Mr Young withdrew from his own account the sum of 700£ in cash for Mr Miller to use in Canada.
Whilst in Canada Mr Miller took steps to try to find out what had happened to the company’s Mastercard account. In an email communication, Mr Hutchens informed Mr Miller that he had sent $1,500 that could be obtained from Western Union Money Transfer Control. Mr Miller found it impossible to obtain the cash from Western Union as he did not have the correct reference number. Mr Miller had a number of embarrassing incidents as a result of not having sufficient cash or an active credit card. The details of those incidents are not relevant for these proceedings. In addition, his travel plans were disrupted.
No explanation was provided by Mr Hutchens as to why the company Mastercard account could not be used.
Because he did not have an active credit card, Mr Miller decided to fly to Billings and Little Big Horn instead of Chicago and to await assistance from Mr Hutchens.
On 20 June 2008, Mr Miller was able to speak to Mr Hutchens by telephone. Mr Hutchens informed Mr Miller that another cash payment would be sent. Mr Miller told Mr Hutchens that he was going to go to Little Big Horn on Saturday 21 June to try to unwind. Mr Hutchens said that Mr Miller should relax and take it easy.
When Mr Miller returned from Little Big Horn, he received an email from Mr Hutchens indicating that he could collect $3,500 from Western Union. On Sunday 22 June, Mr Miller managed to access the money. He then booked the first possible flight out so that he could get his flight to San Francisco.
As Mr Miller was reaching the final legs of his trip, he was contacted by Mr Hutchens who asked him to extend his trip by attending the Trade Show AWISA in Sydney. Mr Miller suggested to Mr Hutchens that it would be more appropriate for Mr Hutchens to attend as he was the owner of the business. Mr Hutchens said words to the effect, “I don’t want to go. I am not interested. You’re landing in Sydney. You might as well go.” Mr Miller agreed to attend. When Mr Miller indicated that Mrs Miller would not be happy about him having his overseas trip extended, Mr Hutchens said words to the effect, “Buy her something nice. That will keep her sweet.” As a result of Mr Hutchens’ urgings, Mr Miller bought his wife an item of pearl jewellery.
Mr Miller arrived in Sydney on 1 July 2008 and attended the AWISA Conference on 1, 2 and 3 July 2008. On 4 July, Mr Miller was so ill that he abandoned the AWISA Conference at midday and flew home the following day. He was unable to immediately return to work and during the first week back he attended his doctor on three occasions for a viral infection attributed to burnout.
Mr Miller says that as a result of Mr Hutchens’ request that all transactions for the trip be funded from the Mastercard, all transactions appeared either as readily identifiable items on the Mastercard or as cash withdrawals via Mastercard. Cash withdrawals were accounted for by Mr Miller by, firstly, business expenditure on taxis, trains, etc. for which receipts were obtained. Secondly, associated business expenditure items on food, small tokens of appreciation to Peter Young and personal maintenance were accounted for, in the main, by diary notes as was advised to be carried out by Austrade representatives.
During the trip, Mr Miller called Mr Hutchens at least twice a week. Mr Miller says that the company’s email records will show that he was constantly in communication with the office in general and Mr Hutchens in particular.
In the circumstances, I do not accept that Mr Hutchens was unaware of Mr Miller’s various private purchases prior to and during his trip. That being the case, if Mr Hutchens believed Mr Miller was acting unlawfully, it was up to him to terminate Mr Miller’s employment as soon as he held that belief. An employer exercising the power to summarily dismiss must act without undue delay. Undue delay may result in the employer waiving the employee’s breach of the employment contract.
On Mr Miller’s return to the office in early July 2008, his conversations with Mr Hutchens were initially cordial. They spoke of the next trip that might be taken overseas and what they hoped to accomplish.
Mr Miller says that during July 2008, he brought up the question of his ‘year-end’ bonus. Mr Hutchens said that he needed to get the accounts including the Austrade component finalised so that the bonus could be quantified. Mr Miller says that he raised the question of the bonus again on or about 4 September 2008 and that this time Mr Hutchens said that he was waiting for the conclusion of the cash accounts to determine the total personal expenditure to be offset against the bonus.
On 1 August 2008, Mr Hutchens informed Mr Miller that he would register the name “Corna Overseas” with Mr Miller as Executive Director.
Mr Miller having completed the trip, it was necessary for someone to prepare the documentation for the Export Solutions submission to Austrade. Export Solutions were engaged by Sunland to make the submission and, if necessary, to negotiate with Austrade. It was not part of Export Solutions’ brief to try to make sense out of the pile of receipts that Mr Miller returned with. It was therefore necessary for somebody to analyse and organise the documents so that the Austrade documentation could be accurate and complete. Mr Hutchens and Mr Miller discussed the preparation of the documents and, on Mr Miller’s recommendation, Mrs Miller was engaged to carry out the task. Mr Miller informed Mr Hutchens that Mrs Miller would carry out the work for $19 per hour, the rate that she had had for earlier casual work with Sunland.
Mrs Miller carried out and completed work on the submission to Austrade. The submission was sent to Export Solutions for comment after which certain changes were made.
Mrs Miller did not consider it part of her job to check the content and correctness of the information in the documents. She considered that her job was to ensure that the submission accurately represented all documentation presented to her in a correct and cohesive manner.
The information was presented to Export Solutions in two different sets, one set was expenditure relating to export activity pre-trip, the other was expenditure relating to the trip itself. Each set was photocopied three times before a copy was despatched to Export Solutions. A copy was sent to Mr Hutchens. Another copy was sent to Mr Miller and finally the third copy was put into Sunland’s office records.
Mr Miller warned Mr Hutchens that he should check the documents before he signed them. Mr Hutchens said that he would do so. After Mr Hutchens checked the documents, they were sent to Austrade on or about 22 August 2008.
A most unpleasant incident occurred during this busy period of preparing the submission to go to Austrade. Mrs Miller gave detailed evidence as referred to earlier in these reasons about this incident which occurred on 18 August 2008.[6] I accept as true all that Mrs Miller, and for that matter Mr Miller, had to say on the topic.
[6]. See paras. 95 - 98.
It was quite inappropriate for Mr Hutchens to have raised his concerns about Mr Miller’s behaviour with Mrs Miller. If he had concerns about Mr Miller’s honesty, the appropriate course would have been to take the matter up with Mr Miller or the police or both. The approach that he took was most unbusinesslike, inconsiderate to Mr and Mrs Miller, and reflects adversely on him.
The events surrounding Mr Miller’s dismissal on 18 September 2008 are also most concerning. Again, I say that it was wrong and quite unbusinesslike for Mr Hutchens to have approached Mrs Miller at her home uninvited, and to again make such serious allegations about Mr Miller’s behaviour. I accept as true what Mrs Miller had to say[7] about what happened at her home and at the office on 18 September 2008 and accept what Mr Miller had to say about the circumstances of his dismissal.
[7] See paras. 99 - 103.
Between 18 August 2008 and 18 September 2008, a number of meetings took place between Mr Miller, Mrs Miller and Mr Hutchens. Mrs Miller initially worked on the company accounts at the office but on 16 September 2008, requested that the accounts be taken home so that she could work on them there.
On 17 September 2008, Mr Hutchens informs Mr Miller that on the previous evening he came to the office but could not find the accounts. Mr Miller informed Mr Hutchens that the accounts were with Mrs Miller at home and that the accounts would be ready on 22 September 2008.
In my opinion, rather than engaging Mrs Miller to carry out the work, it would have been prudent for Mr Hutchens to have immediately engaged an independent person with accounting skills to prepare a report analysing the documents and determining which expenditure was private and which was business. It is a concern to me that, given the time that has elapsed, there has still been no evidence put before the Court that clearly provides this information.
Conclusions
The primary question to be decided in this case is whether or not Sunland was entitled to summarily dismiss Mr Miller for serious misconduct. For the following reasons I am not satisfied on the balance of probabilities that Sunland had any proper basis to summarily dismiss.
A close examination of the evidence in relation to Mr Hutchens’ dealing with Mr and Mrs Miller and Ms Schutz convinces me that Mr Hutchens far too readily makes allegations of dishonesty without first having the evidence to support such conclusions. The incidents of 18 August 2008 and 18 September 2008 are examples of this.
His allegations about the dishonesty of Mr Miller and, to a lesser extent, Mrs Miller, are not supported by the evidence or by the use of common sense. The evidence of Ms Schutz does not support Mr Hutchens’ evidence. Mr Miller used the Mastercard for numerous private purchases. It does not accord with common sense that he was doing so dishonestly as he knew that very soon afterwards Mr Hutchens would be able to see the entries on the Mastercard statement.
There was no element of subterfuge in Mr Miller’s actions. He was at all times transparent in his dealings with Mr Hutchens. Notwithstanding the evidence given during this lengthy trial, Mr Hutchens has continued to maintain that Mr Miller was acting dishonestly.
I have previously expressed my concerns about Mr Hutchens’ actions on 18 August and 18 September 2008. Those actions reveal Mr Hutchens to have a volatile personality. He should have addressed his concerns in a calm, methodical way and, if fraud was revealed, the matter should have been taken to the police.
Mr Hutchens’ action in allowing and encouraging Mr Miller to go on a lengthy and expensive overseas trip after he had only been with the company for eight months is hard to understand. A more cautious approach was called for.
The evidence before me does not suggest that the level of planning and control that one would expect in a business about to have an employee embark on such a significant trip was present. On Mr Miller’s return, Mr Hutchens should have taken responsibility of ensuring that careful analysis of the statements and receipts from the trip was undertaken so that he could require Mr Miller to explain the unaccounted for expenses.
I am not satisfied on the balance of probabilities that Mr Miller was guilty of dishonesty or misconduct as alleged by Mr Hutchens or at all. In my view, he was always acting honestly.
The allegations made in paragraphs 12.1, 12.5, 12.6, 14.1, 14.2, 14.3, 14.4, 14.5, 14.6, 14.7, 14.8, 14.9, 14.10, 14.12, 14.13, 14.14, 14.15 and 14.17 of the Defence are answered by my finding that Mr Miller was told by Mr Hutchens that he was permitted to purchase personal items using the Mastercard provided by Mr Hutchens on the understanding that there would later be an analysis to determine the amount that needed to be refunded by Mr Miller for these personal items.
In relation to the remaining allegations in paragraphs 12 and 14 of the Defence, I make the following findings in relation to subparagraphs 12.2; 12.3; 12,4; 14.16; 14.18; 14.19; 14.20 and 14.21:
12.2Mr Miller’s failure to return the Mastercard to Mr Hutchens is not sufficiently serious to justify summary dismissal from employment;
12.3Mr Miller acted honestly and appropriately in tendering Mrs Miller’s invoice for payment as there was no agreement that she would carry out the work being billed without charge;
12.4Mr Miller did all that he could to account for the cash and Mastercard expenditure whilst on the overseas trip. Work on this was still being carried out when Mr Miller was summarily dismissed;
14.16This allegation is the same as the pleading in 12.4. I make the same comment as appears above in relation to 12.4;
14.18, 14.19 and 14.20
The Austrade claim form was not submitted by Mr Miller. If there was any error in the claim form it was up to Mr Hutchens to alter the claim form before Sunland submitted it to Austrade. Mr Miller specifically warned Mr Hutchens that he should check the document for any errors before it was submitted. It was Mr Hutchens who signed the claim form on behalf of Sunland.
14.21This allegation in relation to this subparagraph is the same plea as the pleading in 12.3. I make the same comment as appears above in relation to 12.3.
I find that there has been no behaviour by Mr Miller that would justify summary dismissal. It follows that Mr Miller’s summary dismissal was a breach of contract by Sunland.
Sunland’s breach of contract has serious consequences: Mr Miller is entitled to damages for the breach. The damages are to be quantified, in part, by determining the length of time that would be needed were the respondent to have given Mr Miller reasonable notice of termination. The applicant submits that 12 months’ notice of termination would be reasonable.
In considering what damages should be payable, I need to take into account Mr Miller’s wage at the time, as well as the length of time that he had worked for the company. I should have regard to his age, seniority and duties, as well as the likelihood that he will find other suitable employment. It would appear to me that it is unlikely that Mr Miller will quickly find other suitable employment. He is likely to be unemployed for a considerable period of time.
In my view, Mr Miller should have been given no less than 6 months. I would therefore award Mr Miller damages of $30,000.
Mr Miller seeks compensation for bonuses that have been paid, had he not been summarily terminated. I do not propose to include any amount in the award for lost bonuses as the evidence does not support the conclusion that a bonus would be likely to have been paid during the period in question.
As there was no express provision in the employment contract in relation to termination, the gap is to be filled by the common law by means of an appropriate implied term. An apparently indefinite hiring may be terminated by either party giving reasonable notice of their intention.[8] What is reasonable notice for an employer to give in any case is to be determined by reference to the circumstances as at the date of termination.[9] It will depend on factors such as the employee’s age, length of service, qualifications, the nature of the employee’s responsibilities, how highly they are paid and the anticipated duration of the employment.
[8] Byrne v Australian Airlines Ltd (1995) 185 CLR 410
[9] Logan v Otis Elevator Co Pty Ltd (1999) 94 IR 218 at 229
The general rule is that the longer the employee has worked for the employer and the more senior and important the position they occupy, the longer their entitlement. Senior managers can generally expect at least six months’ notice even when they have been in their job for only a short period of time.[10]
[10] Lau v Bob Jane T-Marts Pty Ltd [2004] VSC 69; Thorpe v South Australian National Football League (1974) 10 SASR 17
It is not permissible at common law for an employer to suspend an employee without pay even in circumstances where it is thought that the employee has breached his or her contract of employment in some way.[11] If an employer suspends, it must be on the basis that the employee continues to be paid their full entitlements.
[11] Hanley v Pease & Partners Ltd [1915] 1 KB 698; Gregory v Philip Morris Ltd (1988) 80 ALR 455 at 472; Australian Workers’ Union v Stegbar Australia Pty Ltd [2001] FCA 367
Mr Miller has not been paid his outstanding wages. He was not paid his wages for the week ending 17 September 2008. He also was not paid his wages for the period of his suspension. He is entitled to the sum of $2,307.68 being two weeks wages before tax is deducted.
Mr Miller had outstanding annual leave. He was entitled to annual leave for the period 1 January 2008 until 24 September 2008, a period of 38 weeks. He was therefore entitled to 105.23 hours of annual leave and is entitled to the sum of $3,195.20 before tax in lieu of his pay for leave.
I do not propose to make any award in relation to the hurt feelings, humiliation, or loss of expectation of continued employment.
Mr Miller is entitled to superannuation at the rate claimed of 7% on the following sums:
Wages for period 10 – 24 September 2008 $2,307.68
Annual leave $3,195.20$5,502.88
A summary of the payments that Sunland must pay are as follows:
Pay in lieu of notice $30,000.00
Pay for unpaid wages $2,307.68
Pay for annual leave $3,195.20
Superannuation unpaid $305.20
$35,808.08
I make the orders to be found at the beginning of these reasons.
The applicant having sought pre-judgment interest on the sums awarded, I propose to give the parties the opportunity to address me on this issue.
I certify that the preceding two hundred and twenty-eight (228) paragraphs are a true copy of the reasons for judgment of Judge Simpson
Associate:
Date: 31 January 2014
CORRECTIONS
Page 2, under the heading “Orders” – delete the amount reading “FORTY ONE THOUSAND AND FIVE DOLLARS AND SEVENTY SIX CENTS ($41,005.76) and replace with “THIRTY FIVE THOUSAND, EIGHT HUNDRED AND EIGHT DOLLARS AND EIGHT CENTS ($35,808.08)”.
Paragraph 226, line 5 – add “unpaid” after Superannuation and change figure from “$5,502.88” to “$305.20”.
Paragraph 226, line 6 – change figure from “$41,005.76” to “$35,808.08”.
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