Mr Nigel Smith v Buick Holdings Pty Ltd T/A DVG Automotive Group - Midland City

[2016] FWCFB 3683

[2016] FWCFB 3683

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Mr Nigel Smith
v
Buick Holdings Pty Ltd T/A DVG Automotive Group - Midland City
(C2015/7245)

VICE PRESIDENT WATSON
SENIOR DEPUTY PRESIDENT DRAKE
COMMISSIONER JOHNS MELBOURNE, 17 JUNE 2016

Appeal against decision [2015] FWC 6900 of Commissioner Riordan at Perth on 21 October 2015 in matter number U2015/4370 - Permission to appeal granted – determination of compensation – Fair Work Act 2009, ss.394, 400 and 604.

Introduction

[1] On 23 March 2016 we issued a decision 1 (Permission to Appeal Decision) granting the appellant permission to appeal on the grounds of appeal regarding the assessment of compensation awarded in his favour pursuant to a decision2 of Commissioner Riordan handed down on 21 October 2015 (Primary Decision). The Primary Decision concerned an application for an unfair dismissal remedy made by Mr Nigel Smith on 27 March 2015 under s.394 of the Fair Work Act 2009 (Act) in relation to the termination of his employment by Buick Holdings Pty Ltd T/A DVG Automotive Group – Midland City (DVG).

[2] In the Permission to Appeal Decision we set out the relevant background as follows:

a) Mr Smith was employed by DVG on 5 June 2014. He was employed as a salesman in DVG’s used car division.

b) He earned a minimum weekly wage of $746.20 plus commission. It was also a term of Mr Smith’s employment that he be provided with the use of a motor vehicle from the used cars sales yard to travel to and from work and for his private use on weekends.
 
c) At some stage during the course of his employment DVG became concerned about the amount of fuel Mr Smith was purchasing on his company fuel card.

d) On 25 March 2015 Mr Smith’s employment was terminated following an investigation into his use of the fuel card. It was alleged that unleaded petrol had been purchased on his card on 2 occasions during the month of February when the company vehicle he had been provided used diesel fuel.

e) No logbook was used in the used-car side of the DVG business and it did not seek to obtain a copy of the relevant CCTV footage for the particular petrol stations where the unleaded petrol had been bought until many weeks after the purchases (by which time the footage had been erased).

f) Although other reasons for termination were cited at the time that Mr Smith’s employment was terminated, in defending the unfair dismissal application, DVG only relied upon the fuel card issue.

g) DVG conceded that it had denied Mr Smith procedural fairness in relation to the termination of his employment.

h) Mr Smith vehemently and consistently denied that he had fraudulently used the fuel card to purchase fuel for his private vehicle. However, in his application for an unfair dismissal remedy Mr Smith wrote:

“They state that I use my fuel card in a personal car, I did not deny this as my manager was aware - but denies now. I made him aware that I use my new A3 convertible on weekends and days off when I need them and was putting fuel in. He was okay with that for months until the DP Ross Bennett resigned and when the new DP came in who doesn’t like me now he denies that too.”

[3] Having found that Mr Smith was unfairly dismissed the Commissioner found that compensation was an appropriate remedy and determined the quantum of compensation as follows:

“[80] I note that Mr Smith received a week in lieu of notice when he was dismissed on 25 March 2015. I have taken this into account.

[81] I also note that Mr Smith sent an offensive text message to his Manager and ignored a lawful direction from his Manager to remain on site. These incidents would have resulted in significant and appropriate disciplinary action against Mr Smith. As a result, I do not believe that Mr Smith would have remained employed by DVG for a lengthy period. I have taken this into account.

[82] Taking into account the above issues, I have decided to award Mr Smith four weeks’ pay plus superannuation.”

[4] Section 392 of the Act sets out the circumstances that must be taken into consideration when determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered. While acknowledging that the Commissioner properly set out s.392 of the Act at paragraph [75] of the Primary Decision in the Permission to Appeal Decision we observed that,

[18] The method for calculating compensation under s.392 of the Act requires an orthodox approach. So much so was addressed by a Full Bench of the Commission in Bowden, G v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge 3 (Bowden). In that decision the Full Bench set out the order in which the criteria and other factors should be applied, taking into account authority under the Workplace Relations Act 1996 in Sprigg v Paul’s Licensed Festival Supermarket4 and Ellawala v Australian Postal Corporation5.

[5] Consequently we found that,

[39] …. In the [Primary] Decision the Commissioner does not appear to have adopted the methodology utilised in Bowden in determining the amount of a payment of compensation. He did not consider each of the criteria in s.392 of the Act.
[40] In failing to do so it is apparent that the Commissioner applied legal principles in a manner that was disharmonious when compared with other decisions dealing with similar matters. Consequently, we are satisfied that it is in the public interest to grant permission to appeal.

[6] Directions were issued for the filing of supplementary written submissions regarding the determination of the appeal. DVG filed submissions on 22 April 2016. Mr Smith filed submissions on 28 April 2016.

[7] The Permission to Appeal Decision set out in some detail the criteria under s.392(2) of the Act. We then provided the parties with a further opportunity to make submissions in respect of the criteria. The submissions filed by the appellant did not directly address each element of s.392(2). The appellant’s submissions substantially dealt with the question of valid reason. We did not give permission to appeal in relation to that aspect of the Primary Decision. In so far as the appellant addressed the criteria under s.392(2) of the Act he submitted that,

“Again they are correct that I would not have worked much longer at DVG but not as stated due to my actions-it was the fact that Ross the Dealer Principal left and I was out at any cost. I received no verbal, written or any other type of warning regarding my behaviour, actions or performance so it would be right to assume that if there were no premeditated agenda to dismiss me and I would be there today as I was still am a fantastic salesman that exceeds all performance related goals and achieves an exceeds all targets”. 6

[8] The submissions filed in the appeal do not persuade us that the correct approach to assessing compensation was applied by the Commissioner. A failure to address each element of s.392 was an error in principle. The consequence was that the discretion vested in the Commission was not properly exercised. It is appropriate therefore that we allow the appeal on that ground and re-exercise the discretion by reference to each of the s.392 factors. We propose to rely on the evidence before the Commissioner and have regard to findings that he made about those matters and the matters submitted before us.

Application of the criteria in s.392 of the Act

Remuneration that would have been received: s.392(2)(c)

[9] The starting point for the analysis is to determine the period of time the appellant would have remained employed by the respondent, or would have likely remained employed with the respondent, had he not been dismissed.

[10] In McCulloch v Calvary Health Care Adelaide 7 a Full Bench held that, “while the task of determining an anticipated period of employment can be difficult, it must be done.”8

[11] In the Primary Decision the Commissioner observed that because of events that happened post termination Mr Smith would not “…have remained employed by DVG for a lengthy period”. However, the Commissioner did not determine the period of time Mr Smith would have remained employed by DVG, or would have likely remained employed with DVG, had Mr Smith not been dismissed on 25 March 2015. We now do so.

[12] Noting that the Commissioner found that there was a valid reason for the termination of Mr Smith’s employment, 9 but that DVG “had not provided the requisite procedural fairness to Mr Smith in relation to his termination” (a matter conceded by the respondent) a proper assessment of s.392(2)(c) requires a determination of the period of time the appellant would have remained employed by the respondent had the respondent afforded him procedural fairness.

[13] Mr Smith’s submission on this point is referred to above at paragraph [7]. The respondent submitted that it was “highly unlikely that the appellant would have been employed for a further period of 2 weeks”. 10

[14] Mr Smith was dismissed from his employment on 25 March 2015. However, Mr Smith had not been at work since 26 February 2015, having commenced a period of workers compensation leave on that date. The respondent couriered to his home correspondence notifying him of the termination of his employment.

[15] At no time between when the appellant was on leave and the termination of his employment (during which time the respondent conducted an investigation into the use of the fuel card) did the respondent provide Mr Smith with an opportunity to respond to the allegation that he had misused the fuel card. Had the respondent provided Mr Smith with this opportunity it seems, more likely than not, that he would have provided the same response to the allegation as he did in his application for an unfair dismissal remedy. In his application for an unfair dismissal remedy Mr Smith said he did not deny the use of the fuel card for personal use but that his manager was aware of it.

[16] In the circumstances, it would have been necessary to provide Mr Smith with a reasonable opportunity to respond. Noting the response that Mr Smith would likely have provided it would then have been necessary for the respondent to investigate Mr Smith’s claim and speak to the manager identified by Mr Smith. The investigation would not have changed the finding that Mr Smith misused the fuel card, but in order to allow the investigation to be undertaken we are satisfied that Mr Smith would have continued in employment beyond 25 March 2015. In affording Mr Smith an opportunity to respond and allowing time for a proper investigation we find that Mr Smith’s employment would have continued for a further 3 weeks.

[17] The evidence before the Commissioner was that 1 weeks’ pay was $1,371.23 (inclusive of the applicant’s base rate and commissions). However, in submissions before us the respondent asserted that in the 6 months prior to the termination of his employment Mr Smith earned $33,635.16. On that calculation Mr Smith’s average weekly salary per week was $1293.66. Three weeks’ salary is therefore between $3880.98 (based on the respondent’s submission in this appeal) and $4,113.69 based on the evidence before the Commissioner. For the reasons stated below at paragraph [22] it is not material which figure is correct.

Remuneration earned: s.392(2)(e)

[18] It is next necessary to consider the remuneration earned by an appellant since the dismissal with reference to the evidence.

[19] In the Primary Decision the Commissioner noted that Mr Smith had been paid “…a week in lieu of notice”.

[20] The evidence before the Commissioner was also that within a week of the cessation of his employment with the respondent the applicant commenced employment with Melville Mazda. Mr Smith’s evidence was that he “was there for just over two weeks”. In the material before us Mr Smith submitted that he “earned in 3 weeks … $4,500”.

[21] The 1 weeks’ notice paid on termination and the 3 weeks of earnings with Melville Mazda means that, after the termination of his employment with the respondent, the appellant earned income for 4 weeks.

[22] Noting that we have found that the appellant would have been employed for a further 3 weeks after the termination date, what is apparent from the above analysis is that in the three-week period after the termination of his employment the appellant experienced no economic loss when compared to what he would have earned had he remained in employment during that period (i.e. in the 3 weeks after his employment was terminated).

Income likely to be earned: s.392(2)(f)

[23] It is next necessary to consider the income to be reasonably likely earned by the appellant between the time of the making of the order for compensation and the actual compensation with reference to the evidence. However, noting that the termination occurred on 25 March 2015, the primary decision was issued on 21 October 2015 and the passage of time since the hearing and determination of this appeal this criterion is not a relevant consideration.

Other matters: s.392(2)(g)

[24] It is next necessary to consider whether a contingency applies based on the evidence. If it is found that a contingency is relevant we must then find whether it is appropriate or not appropriate in the circumstances that a contingency should be applied. If a contingency does apply we must decide whether to increase or reduce the amount of compensation to be ordered based on the contingency and apply an appropriate percentage amount.

[25] Neither party made any submissions about what contingencies should apply. Having regard to the evidence we are not satisfied that any contingency should be applied in this matter.

Viability: s.392(2)(a)

[26] Although the respondent was provided with the opportunity to do so it did not make any submissions about whether an order for compensation would affect the viability of the DVG’s enterprise. We find that an order for compensation would not affect its viability.

Length of service: s.392(2)(b)

[27] It is next necessary to consider whether the length of the appellant’s service with the respondent should affect the compensation to be ordered.

[28] The evidence before the Commissioner was that Mr Smith’s period of service with the DVG was 9 months.

[29] We have decided that the relatively short period of service rendered by Mr Smith should not affect the amount of compensation to be ordered

Mitigating efforts: s.392(2)(d)

[30] It is next necessary to consider whether the appellant has taken steps to mitigate the loss suffered as a result of the dismissal; this requires an assessment of whether the appellant has acted reasonably in the circumstances. 11

[31] The evidence before the Commissioner was that Mr Smith said he had applied for 12 jobs since the cessation of his employment. On the evidence we find that Mr Smith took steps to mitigate the loss of his employment.

Misconduct: s.392(3)

[32] The Commissioner found that there was a valid reason for termination. Noting that that finding has not been disturbed on appeal it is necessary for us to make a finding about whether Mr Smith engaged in misconduct and whether any misconduct by Mr Smith contributed to the dismissal.

[33] We are required to make such a finding so that we can determine, under s.392(3) of the Act, the amount by which the compensation ordered under s.392(1) should be reduced on account of any misconduct.

[34] The conduct which founded the valid reason for termination was conduct which could be characterised as misconduct. The respondent came to the reasonable conclusion based on the evidence before it that Mr Smith had misused the fuel card. Having considered the evidence that was before the Commissioner we are satisfied that the appellant misused the fuel card and that it constituted misconduct. Any amount of compensation to be paid to Mr Smith should be reduced by 50% by reason of that misconduct.

Shock, Distress: s.392(4)

[35] An amount of compensation cannot include a component for shock, humiliation or distress.

Compensation cap: s.392(5)

[36] Finally, it is necessary to reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the appellant, or to which the appellant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or the high income threshold immediately prior to the dismissal.

[37] The high income threshold immediately prior to the dismissal was $133,000.

[38] It was submitted before us that the amount Mr Smith would have earned, or to which Mr Smith was entitled, for the 26 week period immediately prior to the dismissal was $33,635.16.

[39] Consequently, any amount of compensation to be ordered would not exceed the compensation cap.

Conclusions

[40] For the reasons given in the Permission to Appeal Decision we were satisfied that it was in the public interest to grant permission to appeal in respect of the Commissioner’s compensation order.

[41] For the reasons above we were satisfied that we should uphold the appeal and quash the Commissioner’s compensation order because the discretion of the Commissioner was miscarried when he failed to consider the factors in s. 392 of the Act. We therefore allowed the appeal and quashed the decision and order of the Commissioner.

[42] Also for the reasons above, having now assessed the compensation question in accordance with the criteria in s.392 of the Act, we have decided to award no compensation.

[43] An Order to the effect will be issued with this decision.

VICE PRESIDENT

Appearances:

Mr Smith for himself.

Mr Ballucci on behalf of DVG.

Supplementary submissions:

Respondent, 22 April 2016.

Appellant, 28 April 2016.

 1  [2016] FWCFB 1795.

 2  [2015] FWC 6900.

 3  [2013] FWCFB 431.

 4   (1998) 88 IR 21.

 5   Print S5109.

 6   Appellant’s submissions, 28 April 2016, paragraph M.

 7  [2015] FWCFB 873.

 8   Ibid, [27].

 9  [2015] FWC 6900, [43].

 10   Respondent’s submissions, 22 April 2016, paragraph I.

 11   Biviano v Suji Kim Collection PR915963 at [34].

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