Mr Benjamin Molineux v Mackay Real Estate Pty Ltd

[2018] FWC 635

[2018] FWC 635

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Mr Benjamin Molineux
v
Mackay Real Estate Pty Ltd
(U2017/6205)

COMMISSIONER HUNT BRISBANE, 13 MARCH 2018

Application for an unfair dismissal remedy – jurisdictional objection – small business fair dismissal code – dismissal was consistent with the code – application dismissed.

[1] Mr Benjamin Molineux has made an application for remedy for unfair dismissal pursuant to s.394 of the Fair Work Act 2009 (the Act). Mr Molineux alleges that his dismissal from his employment at Mackay Real Estate Pty Ltd (Mackay RE) was harsh, unjust or unreasonable.

[2] Mr Molineux commenced employment with Mackay RE on 28 August 2014 in the role of Business Development Manager and Real Estate Salesperson, and was summarily dismissed on 29 May 2017. On the Employee Separation Certificate issued to Mr Molineux, Mackay RE gave as reasons for Mr Molineux’s dismissal his non-compliance, gross misconduct, direct opposition and workplace bullying and harassment.

Consideration of the Small Business Fair Dismissal Code

[3] It is not contested and I accept that Mackay RE was at the time of Mr Molineux’s dismissal an employer with less than 15 employees. Accordingly, it is necessary to determine if the dismissal was in accordance with the Small Business Fair Dismissal Code (Code) at s.388 of the Act. Given the reasons provided by Mackay RE to dismiss Mr Molineux, the Commission need only consider if the Code has been met relevant to ‘Summary Dismissal’, and not ‘Other Dismissal’. The relevant part of the Code is as follows:

‘Small Business Fair Dismissal Code

……

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.’

Background

[4] For context, a brief background to the business and its position leading up to Mr Molineux’s dismissal follows. Mackay RE was established in July 2013 with three directors, including Ms Cheryl Gilbert. Upon Mr Molineux joining Mackay RE in August 2014 the rental business improved, however, around the same time complaints were lodged with the Office of Fair Trading Queensland (OFT). In November 2016, OFT conducted an on-the-spot audit and commenced a review of suitability in March 2017, leading to Mackay RE being deregistered on 21 March 2017. On 22 March 2017 Ms Gilbert lodged a fresh application for registration. On 24 April 2017 the OFT issued a notice to Mackay RE, freezing its trust account. Following this, Mackay RE said it complied with OFT’s requests for documentation. 1

Conduct of the matter

[5] After the application was allocated to me, Mackay RE filed an application under s.399 of the Act to have Mr Molineux’s application dismissed for lack of merit. That application was dismissed and directions were issued for the filing of material.

[6] The matter was listed for Jurisdiction and Arbitration Conference/Hearing on 14 November 2017 in Mackay. After consulting with the parties I determined that it would be in all of the parties’ interests if the matter was conducted as a determinative conference. Mr Molineux represented himself, and Ms Michelle Gilliver, Client Services Manager appeared on behalf of Mackay RE, accompanied by Ms Gilbert, and Mr Kevin Paine, Ms Gilbert’s former partner.

[7] Following the determinative conference further directions were issued to the parties requesting particulars arising out of the conference. Potential witnesses were identified and statements sought from those witnesses. Subsequently, the Commission received statements of Ms Leanne Kemp (Locksmith), Ms Hollie-Louise Whitcher (former Mackay RE employee), and Mr Peter Clark (Solicitor, Strutynski Law).

[8] The parties were each directed to file with the Commission documents and emails relevant to Mr Molineux’s employment and dismissal that covered a particular period of time. The Commission assisted the parties to determine which of the documents were relevant, and these were then shared with the other party. The matter was listed for a further hearing by telephone on 17 January 2018. The parties were invited to provide final submissions by 30 January 2018.

The Code and unfair dismissal applications

[9] Throughout the proceedings the parties were informed that the Commission was required to determine if the Code had been complied with. If it had, the application would be dismissed. If the Code had not been complied with, the Commission would then undertake a consideration of s.387 of the Act to determine if the dismissal was harsh, unjust or unreasonable.

[10] Mr Molineux raised concerns that documents and information before the Commission as a result of the proceedings, which were not within Ms Gilbert’s knowledge at the time of making the decision would be used against him.

[11] Throughout the proceedings I informed the parties as follows:

(a) In determining if the Code had been met, only those documents, or information within Ms Gilbert’s knowledge would be considered by the Commission to determine if Ms Gilbert believed on reasonable grounds on 29 May 2017 that Mr Molineux’s conduct was sufficiently serious to justify immediate dismissal;

(b) If the Code has not been met, and it is then necessary to undertake a consideration in accordance with s.387 of the Act. All other relevant documents or information before the Commission in evidence may be argued by Mackay RE to demonstrate that there constituted a valid reason for the dismissal, even if this was not within the knowledge of Mackay RE on 29 May 2017. This is so by virtue of the authority in Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-378.

[12] This decision will make clear the information that was within Ms Gilbert’s knowledge on 29 May 2017, as opposed to information acquired or discovered following the dismissal.

Evidence of Mackay RE relevant to the Code

Evidence of Ms Cheryl Gilbert

[13] Ms Gilbert is the Principal and Director of Mackay RE. Over the last few years there have been difficulties between various directors of the respondent, and compliance issues with the OFT.

[14] Ms Gilbert’s evidence is that she and Mr Molineux did not work well together. Their relationship had become so strained that she often permitted Mr Molineux to work from premises next door to Mackay RE. From 1 July 2016, Mr Molineux leased the premises next door where he operated a property maintenance business titled ‘Budget Guys’.

[15] On or around 28 April 2017, while Mr Molineux was on holidays in South Australia, he and Ms Gilbert had a telephone conversation. Mr Molineux stated that he was inquiring about real estate franchises. Ms Gilbert suggested that franchisors can take approximately 10% of commissions, and Mr Molineux corrected her by advising that some take as little as 4.5%. Ms Gilbert’s evidence is that this was the first indication that she suspected that Mr Molineux was in the process of starting up his own real estate agency.

[16] Mr Paine was assisting Ms Gilbert between 8 May and 19 May 2017 with the compliance issues that the business was facing. On 17 May 2017 Mr Molineux entered the business premises and informed Ms Gilbert and Mr Paine that he had obtained a corporations licence to allow him to be a real estate agent. He stated that if Mackay RE was having difficulties with its compliance issues, Mr Molineux’s new agency could step in, and all clients of Mackay RE could be transferred to the new agency. Ms Gilbert informed Mr Molineux that she would never agree to the proposal put by him.

[17] It is Ms Gilbert’s evidence that Mr Molineux stated to her words to the effect, “You’re a very nice person, but unfortunately I can no longer work with you. As soon as the compliance issues have been resolved, I’m done with Mackay Real Estate.” Ms Gilbert asked him which agency he was going to go to, to which he answered, “You’re not so stupid, are you?” Mr Molineux stated that his solicitor would send a letter to Mackay RE.

[18] On the same day the following letter was sent to Ms Gilbert by a solicitor retained by Mr Molineux:

‘Dear/Sir Madam

RE: Our Client: Benjamin Molineux

Mackay Real Estate Pty Ltd

We have accepted instructions from Benjamin Molineux to act for him in connection with matters pertaining to his employment with and his proposed acquisition of shares in Mackay Real Estate Pty Ltd.

The facts as we understand them, and based on our instructions are as follows:

1. Mr Molineux accepted an invitation to join Mackay Real Estate Pty Ltd in 2014 under which arrangement:

(a) He would be employed by the business principally to develop the rental side of the business;

(b) He would be paid a base salary as well as sale commissions, and would also be entitled to a share of the profits; and

(c) There was a promise at the time that he would eventually acquire shares in the business.

2. At a number of meetings since his commencement date with the company it was resolved that our client would acquire hares in the company which would be issued in different classes to reflect the respective interests of the shareholders in income differentiated between rental division and sales commission income. At that time it was proposed that there would be a division of differential shares between Bob Jocelyn (who would have no interest in the rental income), Cheryl Gilbert (who would retain an interest in both rental income and sales commission income) and our client (who would have an interest in the rental income and a smaller share in the sales commission income).

3. On 6 May 2017 Cheryl Gilbert, sole director of Mackay Real Estate Pty Ltd distributed an email to the clients listed on the rent roll for the company advising them that there had a been a change of business structure of Mackay Real Estate Pty Ltd, and asserting that she continued as the licenced agent handling the day to day management of the business. That email also urged those clients to sign a new appointment form for the new entity.

4. It is apparent that there has been no issue of shares as was proposed in the representations made to our client and that he still has no shareholding in the company. In fact from our company search conducted this week it is client that the shareholding for the company remains as follows:

(a) Twenty (20) ordinary shares to Cheryl Gilbert;

(b) Twenty (20) ordinary shares to Bob Jocelyn; and

(c) Twenty ordinary shares to David Edwards.

We are instructed that David Edwards has had no association with the company for a number of years and so far as our client was aware had divested himself of his shares.

Our client was alarmed to learn that the shares that he was promised had never been issued to him despite numerous representations to the effect that this was being attended to or had been completed.

Our client was also alarmed that the clients of the company had been misled in Mrs Cheryl Gilbert’s email dated 6 May 2017 describing the formation of her new business as a change of structure.

Despite the fact that our client does not own shares our client asserts an equitable interest in the shareholding of the company by constructive or resulting trust as a consequence of the representations made by the other shareholders and in particular Cheryl Gilbert in her capacity as director of the company, in numerous meetings which were attended by our client and at times in company with his partner.

Our client’s principal grievance is that the conduct of Cheryl Gilbert as director of the company constitutes one or a combination of:

1. a breach of her obligation to our client in respect of his interest pursuant to the constructive and/or resulting trust over the shares of the company as aforesaid;

2. misrepresentations to our client as an employee of the business;

3. deceptive and misleading conduct; and/or

4. unconscionable conduct.

We reserve all our of client’s rights as a consequence of Ms Gilbert’s conduct in this matter.

Our client has estimated the value of his prospective shareholding in the company to be in the order of $400,000.00 and we reserve all our client’s rights in respect thereof.

We shall be writing to you separately in respect of our client’s claim for unpaid wages and superannuation.

…’

[19] On 19 May 2017 Mr Molineux signed up a new landlord/owner to have his property managed by Mackay RE. Ms Gilbert was not aware of this until 25 May 2017, when the tenant of the property transferred bond and rent money into the business trust account. Ms Gilbert asked Mr Molineux to provide to her the signed original of the form appointing Mackay RE as the managing agent (a Form 6), as it is a legislative requirement that the principal agent, Ms Gilbert retain an original.

[20] It is Ms Gilbert’s evidence that Mr Molineux refused to do so, informing Ms Gilbert that he would only do so if Ms Gilbert signed a form stating that the appointment would be automatically transferred to his agency as soon as he was ready to open. Mr Molineux did not provide the original to Ms Gilbert.

[21] During Mackay RE’s compliance difficulties, Mr Ian Barnabas, Compliance Consultant was consulted. On 25 May 2017 Ms Gilbert sent the following email to Mr Barnabas:

‘Hi Ian

Whilst Ben refuses to give me the original Form 6, I found a copy that he scanned in on Tuesday, 23 May.

As there are a few documents, I will be forwarding more than one email.

…….

I will forward separate emails of the other support documents in relation to this “new” management.’

[22] On 26 May 2017 Ms Gilbert was contacted by telephone by an owner of two properties managed by Mackay RE. The telephone conversation lasted approximately one hour, and the owner of the properties informed Ms Gilbert that Mr Molineux had approached him and stated that he was leaving Mackay RE and setting up his own franchise with LJ Hooker. On the same date Ms Gilbert wrote the following to Mr Barnabas:

‘Hi Ian

I have just had a lengthy discussion with the male owner of [premises].

……

……

He then advised me that the subject person approached them directly to remove themselves from this agency and to go with him.

He also advised that the subject person was considering/looking/in the process of opening up a L J Hooker business.

……….’

[23] On the same date, at 3.52pm Ms Gilbert sent the following email to Mr John Farren-Price Manager Qld North - NT, of L J Hooker head office:

‘Good afternoon John

I am forwarding you this email following discussions with Ian Barnabas with regard Benjamin Ross Molineux (Baileux Pty Ltd).

In summary, I advise in the time that I have known Benjamin from late August 2014 to today, Benjamin has been subject to a number of compliance breaches with the Office of Fair Trading in Mackay. These have resulted in the pending renewal of the Corporation Licence.

The Office of Trading has brought to light in the past month, the following actions by Benjamin:

•  Completion of incorrect Form 6s which have been withheld

•  Providing misleading information to landlords of my business leading to outright soliciting of those landlords

•  We have become aware of him using the agency database for his own benefit and other intellectual properties by operating outside of Mackay Real Estate known as Budget Guys Property Services. He has been avoiding our policies and procedures which were that all maintenance and repair requests were to be passed through Mackay Real Estate. This has not been the case with many landlords that the agency has been left unaware of these approaches for all work to be done by his business.

•  Display of unprofessional leadership towards staff employed by this agency and others

•  Inappropriate management skills subjecting my staff to copious amounts of verbal and written abuse. These staff members Hollie and Kristy have agreed to be contacted by you to substantiate these claims before you.

•  Not becoming a mature adult

Whilst this is a small portion or a condensed outline of his business acumen, I would be pleased to provide you with a more detailed synopsis of next week after we discuss this in more detail.

You may also discuss related issues with:

[Name – number]

[Name – number]

I look forward to talking with you next week.’

[24] It is clear from the email sent by Ms Gilbert to Mr Farren-Price that by 26 May 2017, she was aware that Mr Molineux had established an entity titled Baileux Pty Ltd.

[25] On 29 May 2017 at around 8am, Mr Paine provided to Ms Gilbert a company extract of Baileux Pty Ltd, informing Ms Gilbert that Mr Molineux is the single director of the company, and his partner, Jenny is a shareholder, but has a different class of shares compared to Mr Molineux.

[26] On 29 May 2017 Mr Peter Clark, Solicitor of Strutynski Law attended Mackay RE at approximately 3.00pm, although Mr Clark nominates the time as 5.00pm. Together they discussed the respondent’s compliance issues, and Mr Molineux’s activities in what Ms Gilbert considered ‘using the agency database and resources until he was ready to leave.’

[27] Ms Gilliver came into the room to advise that Mr Molineux had been at the door and listening in to the conversation. She reported that he was observed using his phone, and Ms Gilbert was concerned that Mr Molineux might be seeking to record the conversation that she was having with her lawyer.

[28] At 4.36pm that day Ms Gilbert received an email from Mr Mathew Jeffery, the owner of two properties that were being managed by Mackay RE. The email stated:

‘To MackayRE

I Mathew Jeffery property owner of:

[addresses]

Am giving my written notice to terminate our property management agreement immediately for properties under the breach of Part D of the REIQ property management schedule.

Ben Minoulnx (sic) will be there to collect my affects (sic) and any information regarding the properties. Can you please respond with a time this can be arranged?

Please responds in regards to this email with full acknowledgement of my required actions.

Regards Mathew Jeffery’

[29] Upon receiving this email, Ms Gilbert discussed it with Mr Clark. He informed Ms Gilbert that there were grounds for immediate dismissal and a termination notice was prepared. Ms Gilbert asked Ms Gilliver to deliver it to the office next door, Budget Guys.

[30] It is Ms Gilbert’s evidence that up until the time when she received the above termination notice from Mr Jeffery, she had suspicions that Mr Molineux was starting his own agency. She concluded this from what Mr Molineux had stated to her, and what owners of properties managed by her business had said to her; however she considered that she didn’t have ‘concrete evidence’. She considered herself stuck in a situation where Mr Molineux was approaching Mackay RE’s clients on the database, but she was unable to take action for fear of retaliation until she had evidence.

Evidence of Ms Michelle Gilliver

[31] Ms Gilliver’s evidence is that Mr Molineux was rarely in the offices of Mackay RE, as he spent most of his working time in his premises next door. During the time that Mr Paine was assisting the respondent in May 2017, there were several conversations she had with Mr Paine about Mr Molineux.

[32] On 29 May 2017 Ms Gilliver observed Mr Molineux standing near the door to the conference room while a meeting with Ms Gilbert and Mr Clark was taking place. Ms Gilliver considered that Mr Molineux was trying to listen in to the conversation and she asked him to leave.

[33] A termination notice was received (referred to above at [28]). It is Ms Gilliver’s evidence that at approximately 5.30pm, Mr Molineux was banging 2 on the door asking for the keys to the property owned by Mr Jeffery.

[34] On Mr Clark’s advice, Ms Gilbert determined to terminate Mr Molineux’s employment. Ms Gilliver served a Separation Certificate on Mr Molineux at 8.57pm by placing it under the door of the premises of Budget Guys.

Evidence of Mr Kevin Paine

[35] Mr Paine’s evidence of the meeting with Mr Molineux and Ms Gilbert on 17 May 2017 largely reflects the evidence of Ms Gilbert. He stated that Mr Molineux attended the premises and advised that he had been speaking to a large number of Mackay RE clients and many were ready to leave.

[36] Mr Molineux stated that he was going to leave Mackay RE as soon as the compliance issues had been resolved, and said, “I am done with Mackay Real Estate.” Mr Molineux stated that he was starting his own agency and many Mackay RE clients would choose to come over to his agency. Ms Gilbert asked Mr Molineux to leave her office.

[37] On 26 May 2017 Mr Paine sent to Ms Gilbert and Mr Barnabas the following email titled ‘Removal of Ben – Client notification’:

‘Cheryl,

As discussed, I’ve attached a suggested notification to clients that I was thinking of during my morning run.

This may be more than you are prepared to send, but it may be a draft with ideas to start.

We are not saying that Ben has caused the OFT scrutiny, we are merely explaining Ben’s removal from the business and the resolution of OFT matters within the one correspondence.

…………..

AS we have discussed.

Have the locks changed so Ben cannot access the premises

Have iscape remove his MRE email and have all past and future emails directed to you

….

Alert all suppliers/creditors etc. that Ben is no longer part of MRE

Ian, your input on this would also be appreciated.

KP’

Evidence of Mr Peter Clark

[38] Mr Clark met Ms Gilbert for the first time on 29 May 2017, the day of the dismissal. Mr Clark provided legal advice to Ms Gilbert based on what she advised him during a meeting of the same date.

[39] While the meeting was taking place, Ms Gilbert received the termination notice from Mr Jeffrey. Mr Clark’s file note of advice, to which Ms Gilbert has waived legal privilege states the following:

‘Employment relationship – Ben M is actively competing against employer and harming employer’s business by diverting business from MRE to his own new LJ Hooker agency. He has downloaded particulars of all contacts etc of MRE. Ben is actively competing against employer and harming employer’s business. Clear breaches of obligations of cooperation and fidelity and duty of good faith. Grounds for dismissal exist warranting summary termination. Continuation of role with MRE untenable. Advised re procedural matters expected under FWA if the dismissal is not summary. Recognition by CG that we are beyond that situation. Advised of need to provide Centrelink Separation Certification on termination of employment.’

[40] Mr Clark was not aware on 29 May 2017 that a Separation Certificate was given by the respondent to Mr Molineux. Mr Clark’s evidence is that it was an item discussed as something to be done as soon as possible. Mr Clark left the premises of Mackay RE at approximately 6.30pm.

Evidence of Ms Hollie-Louise Whitcher

[41] Ms Whitcher ceased her employment with Mackay RE on 1 June 2017. She was present when Ms Gilbert approached Mr Molineux for the Form 6 paperwork for a new listing that Mr Molineux had signed up with Mackay RE. Her evidence is that Mr Molineux declined to hand the paperwork to Ms Gilbert unless she guaranteed the listing would be transferred to Mr Molineux’s new real estate agency once he commenced trading.

[42] Ms Whitcher recalls the conversation being heated, and Mr Molineux displaying strong resistance.

Evidence of Mr Molineux relevant to the Code

[43] Mr Molineux’s evidence is that he was induced into accepting employment with Mackay RE on a promise of acquiring a shareholding in the business and becoming a director. After he was employed, it is his evidence that he was promised a 50% shareholding in the property management part of the business, however this never eventuated. Nor was Mr Molineux ever appointed as a director. He understood that he would be remunerated over and above the fair market for a person in his position. He was, in fact, paid at or around the award rate of pay.

[44] At the time of commencing with Mackay RE, Mr Molineux was running his organisation, Budget Guys, providing household cleaning, maintenance and repair services. On 1 July 2016 Budget Guys began operating from the premises next door to Mackay RE, and he considered that the services offered by Budget Guys augmented the services of Mackay RE.

[45] Mr Molineux increased the rent roll from only six properties when he joined Mackay RE to 141 properties. He considered that he earned the right to be considered a valued team member in a senior role.

[46] His evidence is that throughout his employment, Ms Gilbert’s conduct was ‘temperamental’, including frequent negative outbursts with staff and clients. There was a number of compliance issues, which Mr Molineux was prepared to raise with other directors or business owners of Mackay RE. It is his contention that Ms Gilbert resented him for raising concerns with other management and owners.

[47] Mr Molineux stated that Ms Gilbert would often call meetings to sort out what he described as ‘personal differences’, including:

(a) Issues of concern Ms Gilbert had with Budget Guys;
(b) Mr Molineux’s use of the Mackay RE Property Management Facebook page;
(c) Administrative issues due to lack of training; and
(d) Ms Gilbert’s micro-management of him, including a constant ‘need to know’ of Mr Molineux’s whereabouts.

[48] Mr Molineux considered his relationship with Ms Gilbert to be so bad he decided to rent the premises next door so that he could continue to operate Budget Guys, while still performing work for Mackay RE.

[49] Mr Molineux began to hold concerns about the business and its ability to properly account to landlords when compliance issues began to be investigated by the OFT. On 6 May 2017, Mr Molineux was on holidays when he received an email stating that the respondent’s business structure was changing from that of an incorporated entity to that of a sole trader. Landlords were contacting Mr Molineux, expressing concern as to the security of the rent paid by their tenants under the new corporate structure.

[50] Mr Molineux contacted Ms Gilbert on a number of occasions, however he considered her answers to be ‘clouded’, and he was not satisfied with her response. He considered that there were deeper issues, and he held concerns for his employment.

[51] Mr Molineux accepts that when he met with Ms Gilbert and Mr Paine on 17 May 2017, he said words to the effect, “I am done.” He denied that the statement conveyed an impression that he was setting up an agency in competition with Mackay RE, and it was said in frustration with the concern he had regarding the compliance issues of his employer.

[52] During the hearing, and answering questions of the Commission, Mr Molineux said the following:

MR MOLINEUX:  The discussion around that was exactly that.  It was – I had put the – had got that corporations licence for a fall back again, because it hadn't – it looked like we were being wound up, with the Office of Fair Trading.  In fact, Cheryl was in court only a couple of weeks ago with many a – many counts of – of things that I would like her to also explain what the outcomes of that hearing was with the Office of Fair Trading.  The reason that all of that was put in is my honest concern for the business that I had spent – poured my heart and soul into, to – the hours that I hadn't been paid for, the money that I hadn't – hadn't received.  That was all at jeopardy and I was solely reliant on the fact that I had been promised these shares.  If the Office of Fair Trade took the business away, in my understanding I would lose everything in regards to what I'd been building up for the last three years, those former three years.  3

…

MR MOLINEUX:  Sorry, specifically, you – you mentioned that did I request for that – for the clients to be transferred.  I did not request for the clients to be transferred.  As I – as I mentioned before, I'd set up the business initially with Baileux, which was registered, for the transfer of the shares.  Then once all of this had come to light when we were back in Adelaide, discussions with my solicitor was surrounding having another fall back there, and it was discussed with Cheryl as a fall back option.  There was nothing in my mind that I would be setting up another agency.  It was that I did not want to lose all of the hard work and blood, sweat and tears that I had poured into Mackay Real Estate.

COMMISSIONER:  That's on 17 May.  So you're saying that, no, I've got a fall back here, if you'd like.  So it's a gesture, is it, for an alternative - - -

MR MOLINEUX:  It was another option, because if I wasn't really aware of exactly what the situation was – I was very much - - -

COMMISSIONER:  Do you recall what time of the day that was?

MOLINEUX:  Afternoon, I believe.

COMMISSIONER:  Ms Gilbert?

MS GILBERT:  The conversation (indistinct) was in the – midday or the afternoon.

MR MOLINEUX:  Correct.

COMMISSIONER:  So why, Mr Molineux, are you emailing Westpac at 8.41 am, that same day about opening a new trust account for your new real estate agency?

MR MOLINEUX:  It's – I don't recall if that was the same day and - - -

COMMISSIONER:  Well, it is, and you've just given evidence to this Commission that you had no intention of setting up an agency, but that morning you had emailed Westpac asking for a trust account for a new real estate agency.

MR MOLINEUX:  Commissioner, we would still need a trust account if anything was to be transferred.  If you didn't have money for everyone to pay into then you would have nothing.  I don't – didn't need the – just setting up a trust account does not mean I was going to take on clients.  It's sitting there as a fall back, as the discussion with the manager was that it could sit there as long as we needed it, until it was able to be used or we needed to use it.  The actions - - -

COMMISSIONER:  So you were just squatting a business name, a corporation, a real estate licence and a trust account, were you?

MR MOLINEUX:  When I was looking like the business that I'd poured all my time and effort was about to go down the gurgler with the Office of Fair Trading, and this is why I brought up the – the proceedings against the respondent and wanting to know what happened, and my – and that would be my justification before you as to why, my grievances, my concerns, about the business and why I did that, because it was my understanding that there was up to nine counts against Cheryl in regard to trust account false – I don't know if it was misappropriation or something.  Maybe you can ask the respondent a little more about that so that you can see where I – my head was at. 4

[53] Mr Molineux could not recall saying to Ms Gilbert words to the effect, “You’re not so stupid, are you?”

[54] On 17 May 2017 Mr Molineux’s solicitor wrote to the respondent expressing Mr Molineux’s concerns, detailed in [18] above. On 29 May 2017 Mr Molineux was aware that Ms Gilbert met with her solicitor. The locks to the premises of Mackay RE were changed, locking Mr Molineux out, and a Separation Certificate notifying Mr Molineux of the termination of his employment was slipped under the door of Budget Guys.

[55] In questioning from the Commission during the determinative conference, Mr Molineux could not recall a conversation with Ms Gilbert on 25 May 2017 regarding the Form 6 and what she and Ms Whitcher describe as Mr Molineux’s refusal to provide the original unless Ms Gilbert agreed to sign over the property management to Mr Molineux upon him setting up his new real estate agency.

[56] As to the reasons given by Mackay RE for his termination, Mr Molineux stated the following:

(a) Non-Compliance – OFT letters to support

Mr Molineux denied that he engaged in any conduct that may have compromised the respondent’s compliance obligations. The services provided by Budget Guys was complementary to the property management of Mackay RE, and at all times Mr Molineux conducted his Budget Guys business with the full knowledge of Ms Gilbert.

(b) Goss Misconduct – damage to reputation of Mackay Real Estate

Mr Molineux denied engaging in any conduct that would damage Mackay RE’s reputation. He considered the respondent’s conduct caused damage due to Ms Gilbert’s failure to comply with directions of the Office of Fair Trading.

(c) Direct Opposition – opened real estate office next door with Mackay RE clientele

Mr Molineux agreed that he established a new real estate business, Baileux Pty Ltd. He did not commence trading in that business until after he had been dismissed. Any clients that chose to move to Baileux Pty Ltd did so of their own free will after resigning from Mackay RE.

(d) Bullying/harassment

Mr Molineux denied bullying or harassing anybody and stated that he had been bullied and harassed.

[57] Mr Molineux contended that he believed that Ms Gilbert terminated his employment after she had ‘swindled’ him out of a promised 50% share of the rent roll for managed properties. He considered the action was taken by Ms Gilbert after the letter was sent from his solicitor airing his grievances.

[58] Mr Molineux gave other evidence relevant to his conduct leading up to the dismissal, however it is not necessary to deal with that evidence relevant to Mr Molineux’s dismissal purportedly pursuant to the Code. The evidence will be canvassed later.

Determination of whether dismissal was in accordance with the Code

[59] As indicated directly above, there is evidence before the Commission that was within Mr Molineux’s knowledge at the time of the dismissal. It is necessary, however, to determine if the dismissal was in accordance with the Code relevant to what was within Ms Gilbert’s knowledge at the time of the dismissal.

[60] The Full Bench in Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services 5 considered the proper application of the ‘Summary Dismissal’ section of the Code. The Full Bench’s conclusions were as follows:

‘[38] We therefore consider that the “Summary dismissal” section of the Code applies to dismissals without notice on the ground of serious misconduct as defined in reg.1.07.

[39] To be clear, nothing stated above is to be taken as suggesting that in relation to such a dismissal it is necessary for the Commission to be satisfied that the serious misconduct which is the basis for the dismissal actually occurred in order for the dismissal not to be unfair. As was explained in Pinawin T/A RoseVi.Hair.Face.Body v Domingo:

“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.”

[40] Whether the employer had “reasonable grounds” for the relevant belief is of course to be determined objectively.

[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates in the following way:

(1) If a small business employer has dismissed an employee without notice - that is, with immediate effect - on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.

(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.’

[61] Regulation 1.07 of the Fair Work Regulations 2009 state:

‘1.07 Meaning of serious misconduct

(1)  For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2)  For subregulation (1), conduct that is serious misconduct includes both of the following:

(a)  wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b)  conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

(3)  For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i)  theft; or

(ii)  fraud; or

(iii)  assault;

(b) the employee being intoxicated at work;

(c)  the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.’

Did Ms Gilbert believe that Mr Molineux had engaged in conduct sufficiently serious to justify immediate dismissal?

[62] Whether Ms Gilbert genuinely held the belief that Mr Molineux’s conduct up to 29 May 2017 justified immediate dismissal is a question of fact. 6 The conduct alleged by Mackay RE that led to Mr Molineux’s dismissal is summarised as follows:

(a) On 17 May 2017, Mr Molineux stated that he was ‘done’ with Mackay RE, and he was setting up his own real estate agency. He offered to Ms Gilbert for Mackay RE’s clients to be transferred to his new agency;

(b) On 25 May 2017, Mr Molineux refused to provide to Ms Gilbert an original Form 6 for a new property management, and insisted that he would only do so if Ms Gilbert gave an undertaking that she would allow the property to be assigned to Mr Molineux’s new real estate agency upon it being set up;

(c) Ms Gilbert spoke with a client on 26 May 2017, who stated that Mr Molineux was soliciting the assignment of his two properties from Mackay RE to Mr Molineux’s new real estate agency, with connection to L J Hooker;

(d) On 26 May 2017, Ms Gilbert sent LJ Hooker a detailed email with the concerns she held with respect to Mr Molineux’s conduct;

(e) On 29 May 2017, Mr Paine informed Ms Gilbert of the incorporation of Baileux Pty Ltd, although Ms Gilbert must have been aware by no later than 26 May 2017 of the name of the incorporated entity as it was referred to in the correspondence to LJ Hooker;

(f) On 29 May 2017, Ms Gilbert received a termination notice from a client, informing her that Mr Molineux would accept the keys on the client’s behalf for tenants who were due to shortly arrive.

[63] At this time, and in the presence of her solicitor, Ms Gilbert determined to terminate Mr Molineux’s employment. She did so on the advice of Mr Clark.

[64] I have had regard to the decision in Baird v June Austen T/A Revitalise Face & Body Therapies; Lift Skin Body Beauty[2017] FWC 4256 where Saunders C said the following at [28]:

‘…… It is important to note that it is the risk to the viability and/or profitability which must be considered, not whether the viability and/or profitability of the employer’s business was in fact damaged. In my view, conduct by an employee setting up a business that competes with their employer’s business would give rise to a serious and imminent risk that clients of the employer would move to the employee’s business which would potentially impact the viability and profitability of the employer’s business. This risk is increased in circumstances where, as in this case, the employer is a small business employer and the employee had substantial interactions with the clients to whom she provided beauty services on behalf of the employer.’

[65] Considering the evidence adduced at the preliminary conference and the subsequent material filed, and the further telephone hearing, I am satisfied that Ms Gilbert held a genuine belief that Mr Molineux had engaged in:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment – Regulation 1.07(2)(a); and
(b) conduct that causes serious and imminent risk to the reputation, viability or profitability of the employer’s business – Regulation 1.07(2)(b)(ii)

that was sufficiently serious to justify summary dismissal.

[66] While there were four reasons given for the dismissal at [2], it is necessary to consider if at least one of those reasons concluded Ms Gilbert to believe that Mr Molineux had engaged in conduct sufficiently serious to justify immediate dismissal. Having found that the reason given by the respondent, ‘direct opposition’ is conduct sufficiently serious to justify immediate dismissal, it is not necessary to make findings relevant to the other grounds for the dismissal.

Was Ms Gilbert’s belief based on reasonable grounds?

[67] The question of whether the belief of Ms Gilbert was based on reasonable grounds is to be determined objectively. It is also relevant to consider whether Ms Gilbert had carried out a reasonable investigation into the matter resulting in Mr Molineux’s immediate dismissal.

[68] In relation to the requirement for reasonable grounds and the need for a reasonable investigation, the Full Bench in Pinawin said the following:

‘Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.’ 7

[69] I accept Ms Gilbert’s evidence and that of Mr Paine relevant to the conversation with Mr Molineux on 17 May 2017. I do not accept Mr Molineux’s evidence that he was being helpful in suggesting his new real estate agency could assist the respondent in a difficult situation, and have all of the properties managed by Mr Molineux’s new agency as a way to ‘save the day’. While I accept Mr Molineux’s evidence that he was concerned that Mackay RE might be forced to cease trading due to the compliance issues, when he put his concerns to Ms Gilbert, he did so in his own interests, not that of Mackay RE. By his conduct and statements, Mr Molineux informed Ms Gilbert that he was in the process of setting up his rival real estate business, and that it was imminent.

[70] There is no doubt that the letter dated 17 May 2017 from Mr Molineux’s solicitors would have significantly damaged the relationship between the parties, with Mr Molineux claiming an equitable interest in the business, having been denied the granting of an interest in the business. I do not accept, however, that the receipt of the letter from Mr Molineux’s solicitors set about a contrived course of action or retaliation against Mr Molineux.

[71] I accept the evidence of Ms Gilbert and Ms Whitcher relevant to the Form 6 that Mr Molineux refused to provide to Ms Gilbert on 26 May 2017. Mr Molineux made clear representations to his employer that he was withholding the form, and would only provide it if Ms Gilbert agreed that the property could be managed by Mr Molineux’s new real estate agency upon him setting it up. This bold and unequivocal statement was clear notice that Mr Molineux was imminently prepared to start trading in competition to the respondent.

[72] While the owner of the two properties to which Ms Gilbert had a telephone conversation on 26 May 2017 did not give evidence, I accept Ms Gilbert’s account of the conversation. Ms Gilbert shortly thereafter emailed her business advisors her account of the conversation. I accept Ms Gilbert’s evidence that the owner of the properties reported to her that Mr Molineux was soliciting his properties to manage, and was looking to set up an LJ Hooker real estate agency.

[73] I have no hesitation in describing Ms Gilbert’s letter to Mr Farren-Price of LJ Hooker as churlish. It was clearly an attempt to encourage LJ Hooker to reconsider its plans, if it had any, of reaching agreement with Mr Molineux to enter into a franchising arrangement.

[74] By 27 May 2017 Ms Gilbert was primed and prepared to dismiss Mr Molineux. She had the support and encouragement of Mr Paine to do so. There is no doubt that Mr Clark was invited to provide advice to Ms Gilbert relevant to Mr Molineux, together with the other issues requiring attention relevant to compliance. As it was, the termination letter from Mr Jeffery arrived while Mr Clark was present, and this was sufficient for Ms Gilbert to conclude that Mr Molineux had indeed set his real estate business up, and in her view, he had encouraged Mr Jeffery to leave Mackay RE.

[75] It cannot be said that Mr Jeffery’s email to Mackay RE is definitive of a clear and unequivocal confirmation that Mr Jeffery’s property would thereafter be managed by Baileux Pty Ltd. Mr Molineux’s evidence during the hearing was that Mr Jeffery is a personal friend, and he had agreed to take only the keys upon the management agreement being terminated by Mr Jeffery. 8

[76] I accept, however, that Ms Gilbert, upon reading the email would have reasonably considered that Mr Jeffery had terminated the property management agreement to move from Mackay RE to Mr Molineux’s new agency.

[77] For the above reasons I am satisfied that Ms Gilbert’s belief was based on reasonable grounds, which followed a reasonable investigation into the matter.

[78] Accordingly I am satisfied that Mr Molineux was dismissed in accordance with the Code and Mackay RE’s jurisdictional objection is upheld. It is therefore necessary to dismiss the application.

[79] Before doing so, however, I consider it necessary for Mr Molineux’s understanding to separate what has been taken into consideration relevant to the Code, as opposed to what would have been considered if the matter had been determined under s.387 of the Act.

Information discovered subsequent to the dismissal

[80] The following evidence was discovered, or came to the respondent’s attention subsequent to the dismissal. None of this has been considered relevant to the Commission’s determination of the Code having been met. If the Code had not been met, Mackay RE would have been able to confidently rely on the information to demonstrate that there had been a valid reason for the dismissal pursuant to s.387(a) of the Act.

[81] On 10 November 2016 Mr Farren-Price from LJ Hooker wrote to Mr Molineux thanking him for meeting with him. Plans were made to further discuss opportunities of Mr Molineux working with LJ Hooker.

[82] On 17 November 2016 Mr Paul Nissirios, National Franchise Business Development Manager of LJ Hooker sent to Mr Molineux a flight itinerary for him to fly from Mackay to Brisbane on 8 December 2016 to attend an LJ Hooker presentation. LJ Hooker was comfortable to pay for Mr Molineux’s taxi to and from Brisbane airport.

[83] On 24 January 2017 Mr Molineux was invited to attend an LJ Hooker franchise owner’s retreat at Airlie Beach in April 2017. He did not attend.

[84] On 7 March 2017 Mr Molineux incorporated the entity, Baileux Pty Ltd.

[85] On 21 March 2017 Mr Nissirios wrote to Mr Molineux as follows:

‘Hey buddy,

I hope all is well since we caught up last week – my how time flies and seven days has already past (sic) so in saying this, we better get ready for the June/July start.

So my dear friend below is a short list of information, date and documents I will need to start processing everything on my end-

Scanned copy of you real estate licence

Scanned copy of your corporation licence

Completion of a business plan (see attached)

Completion of the Veda check form (see attached)

Lets get cracking buddy as we have the entire Mackay region to take over…well you do but I am here to make sure that happens – lol

Talk soon my dear friend’

[86] On 10 May 2017 Mr Molineux registered the business name, ‘LJH Mackay’

[87] On 17 May 2017 at 8.41am, Mr Molineux emailed Westpac Banking Corporation the following:

‘Good morning [name],

I am wondering if I could make an appointment with you to open a new trust account for my new real estate agency?’

[88] On the same day Mr Molineux emailed Mr Nissios the corporation licence for Baileux Pty Ltd to trade as a real estate agency. The title of the email continued, ‘Finalising franchise application’.

[89] On 22 May 2017 emails were sent between LJ Hooker, Mr Molineux and his accountant. LJ Hooker was seeking the ABN of Baileux Pty Ltd to progress Mr Molineux’s application to become an LJ Hooker franchisee. On 23 May 2017, Mr Nissirios wrote to Mr Molineux as follows:

‘Mate,

One more piece that is missing that we need completed ASAP in the business plan structure, which I have attached.

Please have a go and send back to me asap so I can move towards having the franchise drawn up very soon.’

[90] Mr Molineux completed the business plan and returned it to Mr Nissiros on the same day.

[91] On 24 May 2017 Mr Molineux’s accountant corresponded with him regarding the appointment of the accounting firm to be the auditor of the trust account for Baileux Pty Ltd.

[92] On 25 May 2017 Mr Molineux wrote the following email to a landlord contracted to Mackay RE:

‘Good evening [name],

Thank you for taking my call today to further discuss the situation with Mackay Real Estate. I unfortunately don’t have the new email address up and running today but should have it active some time tomorrow so please excuse the cross over with the Budget Guys email for the delivery of the attached form 6 appointment of agency contracts and associated documentation.

I have attached the forms for [properties]

The other attached forms are: an acknowledgement form pertaining to the transfer from Mackay Real Estate to Baileux Pty Ltd, Conflict of interest form for Budget Guys as we will be operating out of the same office for the time being and the prior appointment form just to cover us in case Cheryl feels the need to create waves and I end up being audited.

I would again like to profusely apologise for the situation but am looking forward to the new beginning and being able to concentrate on the business in my own light and focus on building a stronger, better business – and hopefully build the strongest agency in Mackay with an awesome team.

…..’

[93] On 28 May 2017 Mr Molineux received an email from an IT organisation informing him of the password for an email address for LHJ Mackay.

[94] On 29 May 2017 at 4.30pm, several hours before his employment was terminated, Mr Molineux sent the following email to a property owner:

‘Hi [name],

Thank you for the opportunity to assist you with your investment property. Please excuse the use of my Budget Guys email as I am still to create the Baileux email addresses for the new entity.

Attached is the form 6 appointment of agency contracts for your investment property [address]

……….’

[95] The same email was sent to Mr Jeffery relevant to his two properties at 5.53pm, several hours before Mackay RE dismissed Mr Molineux. Curiously, Mr Molineux gave the following evidence to the Commission: 9

THE COMMISSIONER:  On 29 May, on or before 29 May, what discussions did you have with the owner of [addresses]?

MR MOLINEUX:  Matt's friend, a friend of mine.  We've been mates for life.  Discussions were always - Matt's a very demanding owner.  He always wants to be kept up to date.  I had many conversations with him about his properties weekly.  Those discussions I had on a number of occasions about his concerns with the trust account.  He was on tenterhooks.  I almost lost him on many occasions.  The day in question, he specifically asked me to collect his keys and he would be coming to deal with that after that date.

There's no reference in his email to say that he was signing up with anyone.  As I mentioned to you before, I did not sign up any owners preceding my termination.  I had no intention - - -

Conclusion

[96] It is not necessary to undertake an examination under s.387 of the Act, given that I have concluded that the Code has been satisfied. If I had have been required to examine Mr Molineux’s dismissal pursuant to s.387, on the evidence before the Commission, I would have had no hesitation in determining that there was a valid reason for the dismissal, in light of the information that the respondent discovered post-dismissal. As I have found that the dismissal was in accordance with the Code, it is not necessary to canvass or determine the other considerations in s.387, that being the subsections (b)-(h).

[97] Mr Molineux was working with LJ Hooker to establish a franchise to commence on or about 1 July 2017. There is nothing unlawful about that activity, however one should not be surprised to be dismissed from one’s employer when they are discovered preparing to imminently directly compete with their employer’s enterprise.

[98] Mr Molineux’s explanation to the Commission that he was simply setting up a real estate agency to assist Mackay RE in the event that it was prevented from trading is not in any way, shape or form, plausible.

[99] The respondent’s jurisdictional objection is upheld, and the application is dismissed.

COMMISSIONER

<PR599956>

 1   Attachment to the Statement of Peter Clark, 5 December 2017.

 2   PN662-PN666.

 3   PN308.

 4   PN314 - PN327.

 5   [2015] FWCFB 5264.

 6 Ibid at [43].

 7   Pinawin T/A RoseVi.Hair.Face.Body v Domingo[2012] FWAFB 1359 at [30].

 8   PN568.

 9   PN567-569.

Printed by authority of the Commonwealth Government Printer