Ms Christine Mcillwain v Northern Territory Water Ski Association
[2019] FWC 8606
•19 DECEMBER 2019
| [2019] FWC 8606 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Ms Christine Mcillwain
v
Northern Territory Water Ski Association
(U2019/7714)
COMMISSIONER SIMPSON | BRISBANE, 19 DECEMBER 2019 |
Application for an unfair dismissal remedy.
Application for unfair dismissal remedy – Employee engaged as Club Manager – Allegations of deliberate misconduct – No willful or deliberate misconduct or dishonesty – No valid reason for dismissal – Termination was unfair.
[1] On 12 July 2019 Ms Christine Mcillwain made an application for unfair dismissal remedy against Northern Territory Water Ski Association Limited (the Respondent).
[2] Ms Mcillwain commenced employment as the Club Manager of the Respondent on 6 April 2008 and was provided a letter dismissing her with immediate effect on 28 June 2019. Ms Mcillwain was paid 5 weeks in lieu of notice.
[3] Ms Mcillwain did not seek an order for reinstatement but an order for compensation. At the time of dismissal Ms Mcillwain said she was earning $1,695.45 per week whereas the Respondent said the amount was $1,692.31 per week.
[4] It was not in dispute that the Respondent is a small business and that the Small Business Fair Dismissal Code applied. It said it had 5 employees at the time of termination.
[5] At a directions hearing on 2 September 2019 I set the matter down for hearing in Brisbane on 16 and 17 October 2019 with the parties to appear by video link from Darwin. Ms Mcillwain was directed to file submissions and evidence on jurisdiction and merits by 20 September, and the Respondent by 4 October.
[6] On 20 September Ms Mcillwain’s representative, Mr Matarazzo, filed Form 51 applications seeking orders for Ms Burnett, a former Bookkeeper with the Respondent, and Mr Muchinguri and Ms Huynh, both auditors who had previously worked with the Respondent’s auditor BDO, to give evidence before the Commission. Form 52 applications seeking orders for production of documents were also filed. The Respondent opposed the orders.
[7] After considering the applications and submissions orders for attendance and production were issued.
[8] At the hearing on 16 October Ms Mcillwain was represented by Mr Matarrazo and the Respondent was represented by Mr Gurr with Mr Paul Winter.
[9] Ms Mcillwain filed a witness statement made up of 266 paragraphs with 12 attachments that was admitted into evidence. 1 Ms Mcillwain said she was 54 years of age at the commencement of her employment with the Respondent on 6 April 2008 and was 65 at the time of her termination.
[10] Ms Mcillwain’s evidence included that she had previously run hotels 2 and apart from her general managerial duties she attended to all functions and also other general duties.3 Ms Mcillwain gave evidence that she drew on her years of experience including in the hospitality industry in the Northern Territory to take the Respondent from a total revenue of $890,000 in 2007 to 1.6 million dollars a year in revenue.4
Small Business Code
[11] The Respondent has sought to argue it has complied with the Small Business Fair Dismissal Code. It is accepted that this case did not involve summary dismissal so that part of the Code does not apply.
[12] The part of the Code headed ‘Other Dismissal’ pertains to circumstances where a warning has been issued, and a reasonable chance provided to the employee to rectify the problem. This is not such a case as no warning was issued and the instance of the alleged conduct is the same conduct ultimately relied upon to terminate Ms Mcillwain. On that basis it could not be said that the ‘Other Dismissal’ part of the Code has been complied with. The question must then turn to whether the dismissal was harsh, unjust or unreasonable.
Background to Ms Mcillwain’s employment
[13] Ms Mcillwain said as the Club Manager she reported to and was directly employed by the Committee, and she engaged the bar staff and groundsmen. 5 Ms Mcillwain said that Club Bookkeeper Ms Delma Burnett was engaged by the Committee and worked closely with the Treasurer, the Auditor and herself.6
[14] Ms Mcillwain claimed that in the year prior to her employment by the Respondent, the Respondent had a total revenue of $890,000 and was heavily in debt. 7
[15] Ms Mcillwain gave evidence that on her employment she attracted weddings to the venue, and obtained high profile bands for concerts. Ms Mcillwain said 2008 saw an increase in revenue to over one million dollars, over 20% in one year. 8
[16] Ms Mcillwain claimed that through her diligence and stewardship the Respondent was granted a one million dollar loan in 2010 and new buildings were opened in December 2010. 9 Ms Mcillwain gave further evidence that under her stewardship the Respondents revenue increased to 1.6 million dollars by 2012.10
[17] Ms Ms Mcillwain gave evidence that in these years she worked far in excess of her contracted 38 hours a week. Ms Mcillwain said the Respondent ran without a President for 2 years and she found herself being the ‘go to person’. 11
[18] Ms Mcillwain said Ms Burnett was contracted to take over the Respondent’s full accounting system several years ago. Ms Mcillwain said Ms Burnett attended to all data input for income and expenses, attended to wages and accounts payments, payroll, accounts payable and receivable, BAS, superannuation, bank reconciliations, money transfers, and internet banking. 12
[19] Ms Mcillwain said that she worked closely with Ms Burnett on bar related expenses and income and the payroll for bar employees and yardmen.
[20] Ms Mcillwain said Ms Burnett, Mr Gurr and herself, and for quite a long time previous Secretaries Ms Moira Stronach and Ms Carol Kerr, were signatories on accounts and any two were required to sign off on transactions. Ms Mcillwain said she never signed into a bank account ever. Ms Mcillwain said she was always reviewing MYOB and utilising information from the accounting system to assist with her actual/budget report for the Treasurer. 13
[21] Ms Mcillwain’s evidence was to the effect that Mr Gurr was not generally available to look over paperwork. Ms Mcillwain said she lived in Darwin and Mr Gurr lived and worked in Western Australia, and returned to Darwin every couple of months. Ms Mcillwain said between October 2018 and when she was suspended, her only recollection of attending a meeting with Mr Gurr was the committee meeting of October 2018.
[22] It was put to Ms McIllwain that she had access to Mr Burgess the Secretary and Mr Elliott the President however she disputed that proposition.
[23] Ms Mcillwain said that Ms Burnett prepared everything for auditing and liaised with the auditors for the end of year financials. Ms Mcillwain said the past two years audits were completed by Gareth Muchinguri and Lynh Huynh of BDO and they also completed the Grant audit in October 2018. 14
[24] Ms Ms Mcillwain said that she did the stock takes with a representative from their auditor’s office and with the asset register. Ms Mcillwain said she was assisted by both Ms Burnett and the auditors when required.
[25] Ms Burnett said she commenced employment with the Respondent in 2012 and her role included entering wages, reconciling bank accounts and superannuation. Ms Burnett said that invoices were paid from the main overdraft bank account.
Cyclone Marcus
[26] Ms Mcillwain said Cyclone Marcus hit Darwin on Saturday 18 March 2018. Ms Mcillwain said a massive tree was in the pool and damaged the small pool. Further the large metal stage had blown into the bar and was a twisted wreck halfway up the club and there was broken glass. 15 Ms Mcillwain said she believed the insurance claims would have been in excess of $200,000. Ms Mcillwain claimed no one from the Committee came to help clean up. Ms Mcillwain said she lost her own house in the Cyclone.16
Westpac Operating Account
[27] Ms Mcillwain said that the working account for the Respondent was an overdraft account with Westpac and that was what was used for everything including ski fees, deposits for functions, bar tabs, boat shed fees and all other revenue. Ms Mcillwain said the committee from 2012 onwards was applying for grants and as far as she knew all grant money including the grant that was central in this matter were paid into that account.
[28] Ms Ms Mcillwain said the wages were also paid out of that account and the bookkeeper Ms Burnett paid power and water accounts and other accounts for purchases out of this account. Ms Mcillwain said Coca Cola and CUB drew money from that account themselves through direct debit.
[29] Ms Mcillwain said while access to the account changed over the years, Ms Burnett, Mr Gurr and herself were the only persons she understood who had access to or were signatories to the account. Ms Mcillwain said she thought Ms Stronch who was a former member of the committee also had remained as a signatory to the account.
[30] Ms Mcillwain said persons with access to the account were issued a Token/Dongle which generated a number that was used to pay wages. Ms Mcillwain said Ms Burnett, Mr Gurr and herself each had a Token/Dongle however she never did anything on the account and she gave her Token/Dongle to Ms Burnett, and Ms Burnett did everything required with her own Token/Dongle and Ms Mcillwain’s Token/Dongle. Ms Mcillwain said she never accessed a bank account at the Respondent in the 11 years she worked at the Respondent.
[31] Ms Mcillwain was challenged during the hearing about the appropriateness of giving her Token/Dongle to Ms Burnett, and that she had not been authorised to do so. Ms Mcillwain did not have a clear answer to this however her evidence was generally to the effect throughout the hearing that she did not have anything to do with the bank accounts throughout her employment and Ms Burnett looked after that. Ms Mcillwain said the invoices for payment to be made by Ms Burnett who worked for half a day a week would be left in her in tray by Ms Mcillwain, or emailed to Ms Burnett and this indicated her authorisation to Ms Burnett to make payments. Ms Mcillwain said in tough times Ms Burnett and herself would go through the invoices and decide which would be paid and which could wait. Ms Mcillwain accepted that she did not have the authority of the committee to give her Token/Dongle to Ms Burnett.
[32] Ms Burnett said in her evidence that Ms Mcillwain was present when Ms Burnett made payments. Ms Burnett said Ms Mcillwain gave her the dongle/token three or four years ago and said she knew what to do with. Ms Burnett was asked if she thought it was a dangerous situation to have that control and she replied no, but was concerned how it would be received by others. Ms Burnett said she did not raise this with Ms Mcillwain.
[33] Ms Mcillwain said before the commencement of Ms Burnett as bookkeeper the President and Treasurer took care of all administration and payments and the President was also nominated on the account. Ms Mcillwain said the bookkeeper’s responsibilities came from the committee not herself.
[34] Ms Mcillwain said she was never given any specific instructions on how to operate the account and gave evidence she was never given any instructions concerning the treatment of grant funding in the bank account. Ms McIllwain said every wet season the accounts would be drained and that was how the Respondent was run.
[35] Ms Burnett said that the main account was often in overdraft especially during the wet season, and bills would continue to be paid from the account during such periods. Ms Burnett agreed monies from grants and for paying bills could not be distinguished in the account. Ms Mcillwain said the committee was aware at the end of every month from the financial reports produced by the Treasurer how the Respondent stood financially.
[36] Mr Gurr was asked if he ever explained how the account was to be used and which funds could be used. He said he didn’t do that and that Ms Mcillwain instructed the bookkeeper.
Grants
[37] Ms Mcillwain said that when a Committee person or the Water Sports Development Officer applies for a grant on behalf of the Respondent they stipulated on the application where the funds were to be deposited. Ms Mcillwain said that the body releasing the funds sends a remittance advice advising the amount that is being deposited to the club. 17
[38] Ms Mcillwain said that like all data input taken from bank statements Ms Burnett inputs data to the appropriate code and from there it shows on the profit and loss statement. Ms Mcillwain said after that it shows on the actual/budget for the month and this spreadsheet is used all year to the close of the financial year. 18
[39] Ms Mcillwain said that grants have changed a little over the immediate past years (2016 and 2017) and caused some confusion with assets missed off the register and the manner in which the companies received their payment on job completion.
[40] Ms Mcillwain said that Ms Burnett and herself were not always aware of applications being submitted by the Committee. Ms Mcillwain said that it was raised in the audit in 2017 that a copy of every application should be given to the office staff to keep on file so that they could cross check the payments.
[41] Ms Mcillwain said the Respondent obtained grants in 2012, 2013, 2014 and 2015 and she believed 2016. Ms Mcillwain said they were applied for by committee members and signed off by a committee member.
[42] Ms Mcillwain confirmed in her evidence that the Westpac bank account identified in Schedule 1 of the Major Grant Funding Agreement between the Northern Territory Government and the Respondent that was produced subject to an Order of the Commission was the same bank account described as the Respondent’s working or operating account. Ms Mcillwain said to her knowledge all grant funding from 2012 onward went into the operating account and the decision for the grant funding to be paid into the operating account was not made by her and she indicated must have been made by the committee member applying for the grant.
[43] Ms Mcillwain was asked why the grant money was paid into an operating account and she responded that she was not on the committee and that was a governance or committee decision.
[44] Ms Mcillwain was asked if she could distinguish what monies were grant monies and which were general operating monies and she responded not once the money goes into the account. Ms Mcillwain said that she might bank $160,000 per month from the bar, and $4,000 from deposits and $2,000 from memberships and it is not possible to distinguish it once it goes into the account.
[45] Ms Mcillwain said that the Water Sports Development Officer obtained a grant in 2017 for equipment for $7000 and she knew that went into the account because at audit time Ms Burnett and herself had to request from the Water Sports Development Officer the invoices so the auditors could see what the grant was all about.
[46] Ms Mcillwain said that in 2017 the auditors requested that a hard copy of all grants be kept in the office for the bookkeeper to add equipment to the assets register to work out what it was for. Ms Mcillwain said she did not know what was being applied for and was not given copies of the grants.
[47] Ms Mcillwain said Mr Gurr emailed her some information about the most recent grant so she would know what it was about for the purposes of the asset register. Ms Mcillwain was asked if she was ever given instructions about what expenditures were to be made out of the operating account, or any documented protocols and she said no.
[48] Ms McIllwain accepted during her evidence that she managed the process to obtain a grant for Chinese signage for the Respondent.
[49] Mr Gurr accepted in his evidence that he signed the Major Grant Funds application and that he asked the Northern Territory Government to put the money into the operating account.
[50] Mr Gurr said that the grant required unspent funds to be withheld and the funds were expended in full and not entirely on the grant. Mr Gurr was asked why the committee did not put the grant funds into a separate account and he answered it was a working account.
Refurbishment of Pool/discussions with Department of Attorney General late October 2018/Audit of part period of grant
[51] Ms Mcillwain said in her oral evidence that when Mr Gurr was making an application for grants she would assist by getting quotes. Ms Mcillwain said that the committee had reconsidered whether a swimming pool contractor that had been considered to undertake repair work on the pool was the right choice. Ms McIllwain said the committee decided to seek other quotes and she contacted the pool contractor and discovered that he could not perform the work until after the wet season anyway.
[52] Ms Mcillwain said she then rang the Attorney Generals Department and spoke to ‘Melanie’ who from other material appears to have been Melanie Henggeler from the Department, to find out when the grant had to be fully acquitted, and was advised that this was not until the end of May 2019. Ms Mcillwain said she thought this was good as the Respondent would still have time to seek different quotes and have the pool fixed within the timeframes of the grant.
[53] Ms Mcillwain said while she was talking to Ms Henggeler, Ms Henggeler told her that the grant had to be acquitted part way through which Ms Mcillwain said she was unaware of. Ms Mcillwain said she believed this conversation with Melanie took place in late October 2018.
[54] Ms Mcillwain said she then contacted the Respondents auditor’s because the grant had to be acquitted part way through, and Ms Burnett found invoices and got everything together for the auditors and the auditors prepared the independent auditors report and the report was sent to Ms Mcillwain with the Job Profit and Loss Statement and the accompanying document headed “Project Funds Usage Certificate”. Ms Mcillwain said she then signed this documentation.
[55] Ms Mcillwain said the documents which she had signed were emailed to her by Gareth or Lynn from the Respondent’s auditors BDO. Ms Mcillwain’s evidence was to the effect that the documentation was all prepared for her by the auditors based on the material provided to BDO and she simply signed the documents prepared by BDO. Ms Mcillwain said she signed the declaration concerning the acquittal because it had to be sent into the Attorney General's Department by the end of October. The documents were admitted into evidence. 19 There is some discrepancy about whether the documents were in fact sent to the Department in late October or early November or only on 3 February 2019.
[56] Ms Linh Huynh, an employee of BDO, gave evidence subject to an order to attend. Ms Huynh that she was involved in the auditing process for the Grant including the documents for the audit of grant funds for the period ending 31 October 2018. Ms Huynh confirmed that she prepared the document signed by Mcillwain concerning the report to the Department for the period ending 31 October. 20 Ms Huynh said she simply updated a template document.
[57] Mr Gareth Muchinguri, an auditor employed by BDO gave evidence subject to order to attend. He agreed that he was involved in finalising the independent audit report for the Grant and he was the manager in charge of the engagement however the partner signed off on the audit report. Mr Muchinguri accepted that the document signed by Ms Mcillwain would have been prepared by BDO.
[58] Mr Muchinguri said the profit and loss statement was from the MYOB system and the financial statements came from the Respondent and the audit looked at the invoices and receipts from MYOB.
[59] Ms Mcillwain said she thought Mr Gurr emailed the documents to the Department and she thought she also sent it to Melanie before filing the hard copy. Her oral evidence was that she thought this was in November. Ms Mcillwain said that even though she had been sent a reminder to have the audit done, the Department did not follow up that it had not been received.
[60] The Project Usage Certificate signed by Ms Mcillwain certified that the project funds provided by the Northern Territory Government had been used for the agreed purpose, and further certified that:
(a) Grant funding received was spent for the purpose of the project and in accordance with the funding agreement, and that the Association has complied with the funding agreement;
(b) The unexpended portion of the grant funding is available for use within the next reposting period; and
(c) The Statement of Income and Expenditure for the project presents the financial transactions fairly in all material respects; in accordance with applicable accounting standards and other professional reporting requirement and is based on proper accounts and records.
[61] The Job Profit and Loss Statement for the Major Grant Program Application prepared by BDO and provided with the Project Usage Certificate set out that the total grant income was $60,345.00, $27,276.73 capital expenses had been expended, and the remaining unexpended funds amounted to $33,068.27.
[62] It was put to Ms Mcillwain that as she received regular profit and loss statements from Ms Burnett she had to know that the Respondent was not profitable at the time she signed the Certificate and provided the documentation to the Department indicating that the unexpended grant money was available.
[63] Ms Mcillwain said that she did not have access to the bank accounts and she accepted that she was given the profit and loss statements. It was put to Ms Mcillwain she must have known that there were insufficient funds in the account. Ms Mcillwain replied that in October 2018 there were sufficient funds, and indicated that the committee know how the Respondent is tracking financially.
[64] Ms Burnett said she did share the balance of the operating account with Ms Mcillwain. Ms Burnett believed the balance of the account in October 2018 would have been in the negative and referred to Cyclone Marcus.
26 November 2018
[65] A document was provided to the Commission in the form of an Independent Auditor’s Report signed by C Taziwa, a Partner of BDO, and dated 26 November 2018, providing an opinion to the members of the Respondent and the Department that BDO had audited the Income and Expenditure Statement of Major Grant Funding for the period ending 31 October 2018 and the Project Funds Usage Certificate.
[66] The opinion included that:
1. The Income and Expenditure Statement presents fairly the financial transactions for the period ending 31 October 2018 in accordance with the Major Grant Funding Agreement and applicable Accounting Standards and based on proper accounts;
2. Subject to limitations imposed by the size and nature of the Association, there are adequate financial controls being maintained;
3. The Association has the ability to meet the Program’s statutory obligations in relation to taxation, insurance, employee entitlements and the lodgement of statutory returns;
[67] The Independent Auditors Report included that management is responsible for preparation and presentation of the financial report, and that management is responsible for assessing the Association’s ability to continue as a going concern, disclosing as applicable, matters relating to going concern, and Directors are responsible for overseeing the Association’s financial reporting process.
Jan/Feb 2019 Investigation concerning storage of beer
[68] In material provided to the Commission dated 3 October 2019 that was six pages in length with attachments and later adopted by Mr Gurr as evidence, 21 it was said that in January 2019 it came to the attention of the committee that cartons of beer were not being stored in accordance with security requirements on licensed premises. The Respondent said that an investigation was undertaken during which Ms Mcillwain was not forthcoming about stock handling practices.
[69] Ms Mcillwain said that on 23 January she received a call to attend a meeting and bring a witness. Ms Mcillwain indicated her witness was Russell Temple and Lorna Scott for Mr Burgess.
[70] It appears from the evidence of Mr Gurr that Ms Mcillwain did not respond on this issue after being invited and the matter remained unresolved. From Ms Mcillwain’s material it appeared on 5 February and 13 February 2019 NT Law requested information from Mr Burgess.
[71] Ms Mcillwain also said that on 5 February that she received a text message from Mr Gurr which she provided with her statement and read as follows:
“Rick started something I know he will regret now. “Don’t start fires Rick you can’t put out without damaging others and yourself” I’ve deliberately stayed out of this Christine as this witch hunt on you is flawed and is not addressing the obvious glaring issues we have.”
[72] Ms Mcillwain said she understood Mr Gurr was upset with what Mr Burgess was doing. Ms Mcillwain provided a series of text messages exchanged between Mr Gurr and herself between on 15 and 17 February which appear on their face to indicate Mr Gurr was not supporting an investigation into the conduct of Ms Mcillwain at that time.
[73] Neither party appeared to place any significant emphasis on this issue and it appeared to have just been overtaken by later events. On that basis I do not intend to afford it any weight in the determination of the matter.
3 February 2019 sending information to Attorney General Department
[74] Ms Mcillwain said in February 2019 ‘Matthew’, the Water Sports Development Officer who had applied for a grant, sent an email to the committee and herself advising that he was told by the Department the grant application he made would not be progressed until the Major Grant funding audit had been received by the Department.
[75] Ms Mcillwain said on 3 February she immediately found hard copies on the file and scanned and emailed the acquittal to Melanie from the Attorney General’s Department and copied in Mr Gurr because she wanted Mr Gurr to know she had attended to it. Ms Mcillwain said as she had spoken to Melanie in late October 2018 she thought the matter had already been attended to and the material had been sent by herself or Mr Gurr. Ms Mcillwain said Melanie did not follow up on the matter and Ms Mcillwain said she thought the material had been sent to the Department in October 2018 however she said she attended to it on 3 February 2019 because she thought it needed to be done.
[76] The Respondent produced an email from Ms Mcillwain sent to Ms Henggeler at 9.32am on 3 February 2019 regarding the matter.
19 and 20 February 2019
[77] The Respondent said that it came to the attention of the Committee that a grant received from the Northern Territory Government had not been handled in accordance with the requirements of the grant recipient, and that a notice of grant acquittal attesting that the grant funding had been spent for the purpose for which it had been provided had been signed and lodged by Ms Mcillwain with the Government.
[78] The Respondent asserted that approximately $30,000 which had been explicitly earmarked for specific projects had been misappropriated and Ms Mcillwain misrepresented information to the Department of Attorney General and Justice regarding the status of grant funds.
[79] The Respondent submitted that the mismanagement and false acquittal of a Grant by Ms Mcillwain meant much needed repairs and maintenance supposed to be carried out by virtue of the Grant could not be undertaken and the ability of the Respondent to receive essential grant funding in the future had been seriously and irrevocably damaged and the Respondent was facing profound financial difficulty as a result.
[80] Emails exchanged between Mr Gurr and Mr Elliott and copied to other members of the committee dated 19 and 20 February 2019 were provided to the Commission. It is apparent from the emails that Mr Elliott was querying whether there was a way to access statements that show the approximate $27,000 in outgoings from the $60,000 grant and what had happened to the remaining approximately $33,000. Mr Elliott also foreshadowed the suspension of Ms Mcillwain given the information available.
[81] The email from Mr Gurr to Mr Elliott at 8.51pm on 19 February indicated that the total cash on hand and money available to the limit of the overdraft was $8,384 dollars. It is notable that the email from Mr Gurr to Mr Elliott includes the following:
“
• ……………….
• It is very difficult to track then how this money was expended as this particular account is used almost daily (both credits and debits) as it is the working account, the original $60,345 payment though has never left that account in one single lump sum, which suggests in the short period I have reviewed all account statements today, it would appear this grant has been used since received for the ongoing financial obligations of the clubs operations, but it is not evident that much more has occurred with the monies yet.
• ……………..”
[82] A separate document headed ‘Notice of Intention to Commence Investigation’ and dated 19 February 2019 was prepared by Mr Elliott for the attention of the committee and advised that Mr Elliott had been made aware of allegations of serious misconduct by Ms Mcillwain, including misuse of money in connection with the grant, and misrepresenting the Respondent’s financial position to the Department. The Notice proposed a number of actions/recommendations including that a full investigation be commenced, an independent investigator be appointed, Ms Mcillwain be suspended, and an interim Manager be appointed.
[83] Mr Gurr said in his oral evidence that after checking the account in February the balance of the grant required under the grant conditions was not available. Mr Gurr said the document submitted to the Department was a false document and Ms Mcillwain had full knowledge of what was going on, and was aware the account was in the negative.
[84] Mr Gurr said Ms McIllwain had delegated responsibilities and assumed responsibility to carry out the conditions of the grant.
25 February 2019 Suspension of Ms Mcillwain
[85] On 25 February Ms Mcillwain was suspended on full pay.
2 March 2019
[86] Ms Mcillwain provided a further text message dated 2 March 2019 received from Mr Gurr which read as follows:
“Hello Christine, I’m sorry for not being able to talk, but I have been barred from it. They honesty have no idea what their doin, this charade and chooks running around…as you already know the assoc. is in dire financial condition and nobody is really addressing that their all busy putting fires out. I don’t know what to do but I so know the way its going there is going to be a problem very soon as we have no money and owe so much more everywhere.”
[87] Ms Mcillwain said she understood from the text message Mr Gurr had been told not to talk to her and Mr Gurr was aware the Respondent was in financial difficulty and he didn’t know what to do.
5 March 2019
[88] Correspondence dated 5 March 2019 was sent by Mr Elliott on behalf of the Respondent to Ms Mcillwain including the following allegations:
“Dear Christine
Invitation to disciplinary meeting
i. It is alleged that between 26 June 2018 and 19 February 2019 you wilfully and deliberately engaged in acts of dishonesty involving the funds received from our NT government Community Benefit Fund grant. Specifically it is alleged that within the timeframe specified above, approximately $30,000 has been misappropriated which had been explicitly earmarked for specific projects, as specified and dictated by our grant application to the NT government. If substantiated, this allegation is considered serious misconduct under the Fair Work Regulations. Such conduct is inconsistent with the continuation of your employment and has the potential to cause serious and irreparable damage to the reputation, viability or profitability of the Northern Territory Water Ski Association’s business.
ii. It is alleged that on 3 February 2019 you wilfully and deliberately engaged in an act of dishonesty as a representative of this organisation. Specifically it is alleged that submitted (sic) a letter to the Department of Attorney-General and Justice stating that the “grant funding received was spent for the purpose of the project and in accordance with the funding agreement” and that the “unexpended portion of the grant is available for use,” despite your knowledge at the time that this was not the case. If substantiated, this allegation is considered serious misconduct under the Fair Work Regulations. We note that this could also be considered a crime, in misrepresenting information to the Department of Attorney-General and Justice regarding the status of the grant funds. Such conduct is inconsistent with the continuation of your employment and has the potential to cause serious and irrevocable damage to the reputation, viability or profitability of the Northern Territory Water Ski Association’s business;
If proven these matters may result in the termination of your employment without notice.
Prior to a decision being made, and to enable a full and detailed investigation of this matter, we request your attendance at a disciplinary meeting which has been specifically convened to provide a suitable opportunity for you to provide a response to these particular allegations.
The disciplinary meeting is to be conducted at 1.30pm on Wednesday, 13 March 2019 at Darwin Ski Club, 20 Conacher Street, Fannie Bay NT.
You are expected to make every effort to attend this meeting and are placed on notice that the Northern Territory Water Ski Association reserves the right to make a determination in your absence if you fail to attend the meeting for whatever reason.
The Northern Territory Water Ski Association confirms a representative of Employsure will be present at the meeting. The role of the Employsure representative is to facilitate the meeting and ensure procedural fairness.
The Northern Territory Water Ski Association will have responsibility for the conduct of this meeting, together with any resulting decision which is to be made.
You are of course welcome to bring a support person to this meeting should you choose.
All matters and information relating to these allegations are confidential and you are directed not to discuss them with any other person without my express prior consent. Any failure by you to maintain confidentiality may lead to disciplinary action.
If you have any enquiries in relation to this matter, please contact me at ………….
Yours sincerely
Dean Elliot
President
On Behalf of the Committee of the Northern Territory Water Ski Association”
[89] Ms Mcillwain said in oral evidence she received this letter on 8 March. An investigation report in April appears to confirm the letter was not provided to Ms Mcillwain until 8 March 2019.
6 March 2019 Application for an order to stop bullying
[90] On 6 March 2019 Ms Mcillwain filed an application with the Fair Work Commission 22 alleging bullying against Mr Rick Burgess, the Secretary, and Mr Dean Elliott, the President of the Respondent.
[91] The alleged bullying as described in the application was as follows:
1. Failure to supply requested and promised material.
2. Refusing to acknowledge my legal representative and continually contacting me.
3. Continual refusal to advise what I have been accused of.
4. Continual phone contact with staff members and a builder who was employed by our insurance company to perform work at the club after the cyclone. All of these came to me for support or clarification.
5. This occurred over a 4 week period.
6. Improper handover leaving me feeling at risk to claims of theft.
7. Concerns for staff due to improper handover.
8. Concerns for myself and staff due to break in coincidence or not?
[92] In the application for an order to stop bullying Ms Mcillwain described having to seek medical assistance to cope with the stress and described her claimed symptoms.
[93] Ms Mcillwain set out the remedy she sought from the application for a bullying order as including the tabling and resolution of the accusations, the recording of a meeting on 23 January be given to her as promised, the Committee take a more active role with the Club grounds, general maintenance, the pool, assistance with social media, website and IT issues.
[94] Ms Mcillwain said she also made an application for Workcover around this time.
13 March 2019
[95] The 13 March meeting did not proceed as Ms Mcillwain said she was unfit for work.
21 March 2019
[96] On 21 March Ms Mcillwain provided a medical certificate stating that she was unfit for work.
25 March 2019
[97] On 25 March 2019 further correspondence was sent to Ms Mcillwain signed by Mr Elliot on behalf of the Committee noting the 13 March meeting did not proceed. The 25 March correspondence contained exactly the same allegations as contained in the correspondence of 5 March and also included the following:
“…………
To assist, the Association will be requesting you provide a written response to the allegations. You are expected to make every effort to respond to the allegation in writing by close of business 31 March 2019. We wish to reiterate to you that the Association reserves the right to make a determination should you fail to respond to the allegations for whatever reason.
……………”
[98] Ms Mcillwain confirmed that she received this correspondence.
29 March 2019
[99] On 29 March 2019 Mr Antony Downs, of NT Law wrote to the Respondent 23 on behalf of Ms Mcillwain including the following:
“Dear Sir
Re: Christine Mcilwain
I refer to your letters to my client dated 5 March and 25 March 2019.
In your letter of 25 March you request that my client respond by 31 March 2019 which is a Sunday. Further, you request a response nothwithstanding that she is totally unfit for work as stated in the certificate dated 21 March 2019. Your ongoing badgering of my client whilst unfit for work is causing her great distress and angst.
Further, I am instructed that you have, at no time, enquired as to her wellbeing and the only communications she has received from you are requests for her to respond to the vague and undetailed allegations made against her.
In an attempt to respond to your letter and the purported allegations I ask that you provide the following further information and documents.
1. The information requested of your Mr Burgess in my letters dated 5 and 13 February 2019. I am instructed that your Mr Burgess has taken the view that he does not need to communicate or respond to me and continued to communicate directly with my client.
2. Further details and particulars of the alleged incident that occurred between 20 June 2018 and 19 February 2019 including;
a. When my client misappropriated the $30,000;
b. How the misappropriation occurred; and
c. Details of the grant that you refer to in your letter.
3. Further details and particulars of the alleged incident on 3 February 2019 including;
a. Copies of all emails and correspondence relied upon in asserting the purported conduct of my client ;
b. Copy of the letter sent to the Attorney-General and Justice; and
c. All correspondence received from the Attorney-General and Justice.
4. All committee agendas, minutes and financials from January 2017 to date.
5. All bank statements held and operated by the club from January 2017 to date.
6. The audit report provided by BDO in relation to grants completed around September 2018.
7. The club audit reports conducted by BDO including the most recent report provided around November 2018.
8. All financials for the 2017 and 2018.
9. All current past and present policies relating to my clients employment.
On receipt of this information I shall take instructions from my client and respond as necessary.
This letter is not to be construed or taken in any way as any form of admission of the allegations against her.
My client reserves all rights including producing this letter as and when she sees fit andf necessary.
Should you have any queries I can be contacted on ………….
I look forward to hearing from you and receiving the documents and information requested.
Yours faithfully
Antony Downs”
11 April 2019
[100] Produced in the material provided by the Respondent was correspondence dated 11 April 2019 from Mr Elliott on behalf of the Respondent to Mr Downs of NT Law which included responses to his nine separate requests as follows:
“1. This matter does not form part of the current investigation however I believe you are now in receipt of this information.
2. We request that you provide reasons of why you require further information. Please be reminded we are still waiting for Ms Mcillwain (the Employee) to respond to our multiple requests for a response to correspondence we have sent her. Please see the attached for copies of the aforementioned correspondence.
The further details and particulars you request cannot be provided at this time as the purpose of the disciplinary hearing is to examine the response of the employee to the allegations. No decision has yet been made regarding the allegations, as they have not been discussed with the employee. Funds were used outside the parameters of the funding agreement – it was reported to the board by the treasurer and the grant is the Community Benefits Fund Grant.
3. We are happy to accommodate this request.
4. We question why this is relevant and respectfully decline to provide the requested information as obtained.”
[101] The Respondent said in its written submissions that Ms Mcillwain engaged a legal practitioner who requested of the Respondent voluminous amounts of irrelevant documentation and caused the Respondent inordinate amounts of work in exchanging correspondence.
[102] The evidence at the hearing indicated the bulk of what was requested by Ms Mcillwain’s lawyer was never provided by the Respondent.
15 April Final Investigation Report
[103] The Respondent produced a document to the Commission titled “Final Investigation Report File EMP31910/01073226 C.MCILWAIN 15/4/19”.
[104] The Final Report noted that Mr Mansfield, the Vice President of the Respondent, obtained a quote for restoration of the pool consistent with the project plan and on 19 February 2019 Mr Gurr advised the committee that the funds received as part of the Community Benefit Fund were no longer available in the accounts and that Ms Mcillwain had told Mr Gurr she had used the money for the pool recoating “to keep the club going” in paying bills, and further that Ms Mcillwain stated that she was waiting until “we had money back” to do the pool works.
[105] The Final Report included that at the time of Ms Mcillwain providing this advice that Mr Gurr confirmed with Westpac that there was $8,384.00 in expendable funds held with the account, far short of the minimum figure which should be represented (including the unexpended grant money to the amount of $33,068.77).
[106] The Final Report included in its findings that Ms Mcillwain willingly and deliberately engaged in dishonesty by utilising funds from the Community Benefit Fund Grant to pay for operational and wage expenditure, outside the terms of the funding agreement, and wilfully and deliberately engaged in the act of dishonesty be certifying and submitting documentation to the Department that was fake and misleading. It appears from the evidence this report was never disclosed to Ms Mcillwain.
7 May 2019 Conference concerning application for an order to stop bullying
[107] A second conference was conducted before the FWC in connection with the s.789FC application for an order to stop bullying. Ms Mcillwain claimed that Respondents sought to have the application dismissed and the Commission indicated that the Respondents should produce to Ms Mcillwain the documents she sought concerning the allegations against her. 24
7 June 2019
[108] The Respondent submitted that on 7 June 2019 the Respondent offered to enter into a Deed of Release with Ms Mcillwain under which Ms Mcillain would resign and in return the Respondent would make an ex gratia payment of 4 weeks’ pay and outstanding entitlements.
24 June 2019
[109] The Respondent submitted that Ms Mcillwain had not worked for the Respondent since 24 February 2019 but had been fully paid while investigations were undertaken and proffered opportunities to respond to the Committee’s concerns were repeatedly ignored.
[110] The Respondent submitted that as it had to pay Ms Mcillwain in absentia for four months, it has been unable to afford to employ a replacement full time manager.
[111] The Respondent submitted that the Committee of Management lost all trust and confidence in Ms Mcillwain.
[112] The Respondent submitted that it resolved that it was “fair all round” to provide full statutory payment in lieu of notice because of the passage of time awaiting responses from Ms Mcillwain, and defending Ms Mcillwain’s other claims.
[113] Mr Gurr said in his oral evidence that there was no summary dismissal and Ms Mcillwain was on full pay for four months and Ms Mcillwain was given opportunities to respond to the allegations. Mr Gurr said the Respondent had no option after its investigation and it had no confidence in Ms Mcillwain going forward. Mr Gurr said the Respondent decided given the evidence it had and the Northern Territory Government asking where the money was to dismiss Ms Mcillwain.
[114] Mr Gurr was asked about his evidence concerning the Northern Territory Government. He said that there were phone calls from Ms Hellinger about when the Respondent would acquit the grant.
[115] Mr Gurr was asked if the matter had been reported to the police. He said that it had been decided not to take it further at this stage.
[116] The termination letter 25 included the following:
“Dear Christine
Termination of your Employment
I am writing to you about the termination of your employment with the Northern Territory Water Ski Association.
The President of the Association Mr. Dean Elliot wrote to you to invite you to respond to our serious concerns with your conduct inconsistent with your continuing employment recently. You were advised that, should you not respond, your employment would be terminated with notice. This was despite our view that we were entitled to sever your employment summarily.
We have decided to terminate your employment due to serious misconduct involving loss of the Association’s property and funds, and a loss of trust and confidence in you as an employee.
Based on your length of service, your notice period is five weeks. In lieu of receiving that notice, you will be paid the equivalent period of 5 weeks at $1,692.31 per week less the required taxation obligations. Your employment will end immediately.
You will also be paid your accrued entitlements including superannuation up to and including your last day of employment.
………………………
Yours sincerely
Paul Gurr
Public Officer and Treasurer
Norther Territory Water Ski Association”
[117] Ms Mcillwain submitted that the instead of allowing the determination of the application for an order to stop bullying the Respondent terminated her.
[118] Ms Mcillwain said she did not believe any of the material requested by her lawyer in correspondence of 29 March to the Respondent was produced to her before her dismissal.
Hamark 2017 Memorandum of Understanding
[119] Ms McIllwain was shown a document during her evidence which was headed ‘Memorandum of Understanding’ signed by Ms Mcillwain and Mr Temple of Hamark Holdings on 20 April 2017. 26
[120] Ms McIllwain was asked whose authority she had to sign the MOU and she said she had signed documents for every promoter the Respondent had worked with. Ms Mcillwain accepted that she did not have the authority of the committee to sign the document. Ms Mcillwain went on to say that she was given authority as Manager to run events when she was first appointed and all of the promoters she had worked with over the years had contracts. It was put to Ms Mcillwain that since her suspension Mr Temple from Hamark had approached the Respondent claiming the Respondent owned substantial outstanding amounts.
[121] Ms Mcillwain accepted that the Respondent owed Hamark money but challenged the question of the size of invoices. Ms Mcillwain was asked why the invoices from Hamark were not on the profit and loss statements or debitors and creditors lists. Ms Mcillwain queried that you would enter an invoice that was not credible. Ms Mcillwain was asked if she had shown the MOU to anyone else and she said she didn’t know.
[122] The MOU appeared to pertain to performances to be staged at the Respondent’s premises and provided for Hamark providing artists, production, promotion and advertising, security and site management.
[123] It was put for Ms Mcillwain that the matter had never been raised before and it was being now raised for the first time 5 months later. The Respondent submitted that Ms Mcillwain had failed to raise the matter with the committee. The Respondent said the matter first came to light on 5 March 2019 when the Respondent was dealing with Hamark.
[124] The Respondent did not put to Ms Mcillwain any of the invoices said to have been received from Hamark.
Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct?
[125] In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”27 and should not be “capricious, fanciful, spiteful or prejudiced.”28 However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.29
[126] Where a dismissal relates to an employee’s conduct, the Commission must be satisfied that the conduct occurred and justified termination.30 “The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.”31
[127] The Respondent says the Committee obtained information that both property and funds of their small, not for profit Incorporated Association have been mismanaged and misappropriated.
[128] The Respondent maintains that Ms Mcillwain was provided a number of invitations and opportunities to meet with the Associations voluntary Committee of Management, to respond verbally and in writing to allegations of serious misconduct, to pay restitution, and to address the Committee’s concerns by any means of her choosing.
[129] The Respondent submits that Ms Mcillwain never responded to the Committee, apart from lodging two workers compensation claims and a claim to the Fair Work Commission in March 2019 to cease bullying which was dealt with in conciliation.
[130] The Respondent says it had strong grounds for summarily dismissing Ms Mcillwain for serious misconduct, however with the passage of time providing opportunities to respond and awaiting responses from Ms Mcillwain or her representatives which never eventuated, the Committee determined it was fairer all round to adhere to the Small Business Fair Dismissal Code.
[131] The Respondent submits that Ms Mcillwain was a Full Time paid Manager of the Associations premises, possessions, staff, equipment and finances. The Respondent said the Committee members are all voluntary.
[132] The grant application was completed by Mr Gurr and the Grant Funding Agreement was signed by Mr Gurr, not Ms Mcillwain. The Funding Agreement included an ‘Agreement and Declaration’ section. In that section Mr Gurr confirmed that he, as the applicant, would be required to meet the eligibility criteria as authorised in the Community Grants Program Guidelines.
[133] On review of the Respondent’s bank statements provided for the operating account it is apparent that the balance of the account was subject to significant fluctuation. For example on 15 October 2018 the account was $33,362.65 in credit, whereas about two weeks later on 31 October 2018 it was $38,972 in debit.
[134] The operating account had an overdraft facility of $80,000. It is apparent from the bank statements that in the years 2017 and 2018 it was commonly the case that the Respondent utilized a substantial proportion of the overdraft facility at different times and would subsequently return to a credit balance. It appeared the Respondent’s income varied substantially in connection with wet and dry seasons. It is also apparent that in 2019 up to the point of the hearing the Respondent has not returned to a credit balance as it has done in previous years and when the value of the unexpended portion of the grand monies was added, the available overdraft was sitting near the limit of its overdraft facility.
[135] It seems from the evidence that compliance with the requirements of the Grant Funding Agreement was not the sole responsibility of Ms Mcillwain but was a collective responsibility shared with the committee and particularly Mr Gurr as Treasurer because of his role in connection with the grant.
[136] The evidence supports the conclusion that the practice of the grant funding being deposited in the operating account as directed by Mr Gurr from the information he provided to the Department was in keeping with what had been the custom and practice at the Respondent for grants generally for some time. It would seem given Mr Gurr’s role as Treasurer, and as the applicant for the Grant funding, and as the signatory to the Funding Agreement, he would share the same if not greater accountability for failure to comply with the requirements of the Grant Funding Agreement as did Ms Mcillwain. This is particularly the case where it appears Ms Mcillwain was following a custom and practice that had been used for some years of having grant funding deposited into the Respondent’s operating account and not having the grant monies separated from other money in the operating account.
[137] The evidence of Ms Mcillwain which was not seriously challenged was that the limit of her active involvement in the grant itself was obtaining quotes for the performance of work in connection with the grant money.
[138] I am not satisfied on the basis of the evidence that Ms Mcillwain engaged in willful or deliberate misconduct or dishonesty in connection with the Community Benefit Fund as determined by the Respondent. There is no doubt the practice adopted by the Respondent of having a grant of $60,000 deposited into a general account used for all financial transactions inward and outward with no measures in place to treat the grant funds separately was ill advised and probably made it impossible from the beginning to comply with the Funding Agreement. However on the evidence the Respondent had always adopted this approach. Ms Mcillwain was merely continuing with the same poor practice.
[139] I am also not satisfied that Ms Mcillwain willfully or deliberately sought to mislead the Department concerning the unexpended portion of the grant monies available for use. It was unwise for Ms Mcillwain to have signed the certificate without checking the bank account balance as appears to have been the case, however it was her evidence that when the overdraft facility was included the Respondent had sufficient funds to cover the unexpended portion of the grant.
[140] I am inclined to accept Ms Mcillwain’s evidence that she believed the documentation prepared by BDO, based on information provided to it by Ms Burnett and herself, was accurate. Whilst it was also never clearly established one way or the other, I am also inclined to believe Ms Mcillwain’s evidence that she at least believed that the audit material had been sent to the Department in October or November of 2018, even if it was not actually sent until 3 February 2019. It follows from this conclusion that Ms Mcillwain believed that on 3 February 2019 she was forwarding documentation that pertained to the period to 31 October 2018.
[141] The obvious difficulty with Ms Mcillwain’s view that the information she provided to the Department was accurate, including the Certificate that she signed, is that of course the intent of the Grant Funding Agreement was that the unexpended funds themselves should be available which was clearly not the case as the operating account was in deficit. However as previously stated, Mr Gurr applied for the grant and signed the Funding Agreement and had responsibility for ensuring compliance with the Funding Agreement. While I accept that it was wrong of Ms Mcillwain to rely on the overdraft facility in determining whether unexpended funds were available, I accept that she believed that she could.
[142] Schedule 1 of the Funding Agreement signed by Mr Gurr clearly identified the Westpac Operating account as the approved account for the purpose of receipt of the grant funding. Mr Gurr as Treasurer would have, or should have been aware that the account he authorised the grant funding to be deposited into was the Respondent’s general operating account.
[143] There was no evidence that Mr Gurr took any steps or gave any directions about the treatment of the grant money once deposited. Given the history of fluctuation in the general operating account balance which Mr Gurr should have been aware of, it must have been at least a foreseeable possibility to Mr Gurr that the account balance could fall below the sum total of the grant funds or the unexpended amount of grant monies, or even as in fact occurred, into a debit balance in reliance on the overdraft facility at some time during the life of the grant given the operating account was used for virtually all income and expenditure, and not just for the grant itself.
[144] Given all of those circumstances the Respondent was not entitled to lay the blame solely at the feet of Ms Mcillwain for what occurred. It appears that in deciding to terminate Ms Mcillwain, Ms Mcillwain became the scapegoat for a failing that was equally that of the committee itself in not ensuring proper oversight of financial practices within the operations of the Respondent, practices no doubt inherited from previous committees.
[145] The issue concerning Ms Mcillwain giving her Westpac Dongle to Ms Burnett that arose in the course of the hearing from Ms Mcillwain’s own evidence is a cause for concern. The Dongle was required for Ms Burnett to be able to authorize payments on the account as this required duel authority from two people. Ms Mcillwain’s actions undermined a protection in the Respondent’s financial system.
[146] However the evidence was also that Ms Burnett only worked for one half day a week and that Ms Mcillwain and Ms Burnett worked together and conferred over the bills to be paid. Ms Mcillwain’s actions were inappropriate, however the issue was not within the reasons for dismissal relied upon by the Respondent and arose from Ms Mcillwain’s own evidence. I am not satisfied that the issue itself was a valid reason for dismissal.
[147] In relation to the evidence concerning the Hamark MOU the Respondent did not seek to introduce the invoices it claimed to have received from Hamark since the suspension of Ms Mcillwain. Ms Mcillwain, questioned the validity of the invoices without having seen them. The Respondent did not raise any issues concerning the Hamark invoices with Ms Mcillwain prior to her termination despite it having become aware of the issue in March 2019 which was some months before the termination of Ms Mcillwain. The Respondent said it did not rely on the issue as a reason for termination, however appeared to raise the issue at the hearing for the purpose of submitting that it was just another matter that had come to its attention that had damaged its trust and confidence in Ms Mcillwain.
[148] Ms Mcillwain gave evidence that she had been given authority to deal with promoters since being employed as manager. However, while Ms Mcillwain did dispute the scale of amounts that Hamark claimed the Respondent owed it, Ms Mcillwain accepted the Respondent owed Hamark money. While the evidence put before the Commission concerning this issue is insufficient for the Respondent to be entitled to rely on it as providing it with a valid reason for dismissal, given the nature of the commercial relationship between Hamark and the Respondent it seems unusual and inappropriate that Ms Mcillwain had not brought to the attention of the committee the MOU or the nature of the arrangements she had entered into with Hamark. I will revisit this issue again below.
[149] Having weighed all of the evidence for all of the reasons set out above I am not satisfied that the Respondent had a valid reason for dismissal related to Ms Mcillwain’s conduct.
Was the Applicant notified of the valid reason?
[150] As I am not satisfied that there was a valid reason related to dismissal, this factor is not relevant to the present circumstances.32
Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct?
[151] As I have not found that there was a valid reason related to dismissal, this factor is not relevant to the present circumstances.33
Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal?
[152] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.
[153] There is no positive obligation on an employer to offer an employee the opportunity to have a support person:
“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”34
[154] I find that in all the circumstances the Respondent did not unreasonably refuse to allow the Applicant to have a support person present at discussions relating to the dismissal.
Was the Applicant warned about unsatisfactory performance before the dismissal?
[155] As the dismissal did not relate to unsatisfactory performance, this factor is not relevant to the present circumstances.
To what degree would the size of the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[156] The Respondent is a small business with only 5 employees and is run by a voluntary committee. Whilst the Respondent sought some assistance from an external consultant, it is apparent given the manner in which the Respondent dealt with the requests for more particulars from Ms Mcillwain’s lawyer and a lack of specificity in the serious allegations made against Ms Mcillwain that the size of the Respondent’s enterprise was likely to have impacted on the procedures followed in effecting the dismissal because it lacked internal expertise.
To what degree would the absence of dedicated human resource management specialists or expertise in the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[157] The Respondent did not have dedicated human resource management specialists or expertise in the Respondent’s enterprise. this likely impacted on the procedures followed in effecting the dismissal because the committee were volunteers and were not working in a paid capacity for the Respondent enabling the same level of resources to devote to the issues as would otherwise be the case.
[158] In all the circumstances, I find that the absence of dedicated human resource management specialists in the Respondent’s enterprise had an impact on the procedures followed in effecting the dismissal.
What other matters are relevant?
[159] Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.
[160] Ms Mcillwain is 65 years of age, her length of service with the Respondent was considerable and she will have difficulty obtaining employment of a similar nature in Darwin. The evidence also supports a finding that throughout the length of her employment, Ms Mcillwain had contributed to a growth in the Respondent’s operations and there was not a history of performance or conduct issues.
[161] I find that these factors weigh in favour of concluding that the dismissal was harsh.
Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable?
[162] I have made findings in relation to each matter specified in section 387 as relevant. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.35
[163] Having considered each of the matters specified in section 387 of the FW Act, I am satisfied that the dismissal of the Applicant was harsh, unjust and unreasonable because the Respondent did not have a valid reason resulting in the dismissal being unjust and unreasonable, and also harsh because of its consequences for Ms Mcillwain.
Conclusion
[164] I am therefore satisfied that the Applicant was unfairly dismissed within the meaning of section 385 of the FW Act.
Remedy
[165] Ms Mcillwain sought compensation and not reinstatement. Ms Mcillwain said she was earning $1,695.45 cents per week at the time of termination.
Remuneration that would have been received
[166] When calculating the remuneration that the Applicant would have received or would have been likely to receive if the Applicant had not been dismissed, the intention is to put the Applicant in the financial position he or she would have been in but for the unfair dismissal. Ms Mcillwain was 65 years of age at the time of termination. Ms Mcillwain said she would have remained in employment with the Respondent for another 2 years if she was not dismissed. Whilst Ms Mcillwain had been employed with the Respondent for a lengthy period there are a range of matters that raise the real prospect of Ms Mcillwain’s employment not continuing for a lengthy period. The Respondent is a small business in financial difficulty and Ms Mcillwain was the only permanent full-time employee.
[167] It is notable that in the period between her suspension on 25 February 2019 and her termination the Respondent did not fill her role. The relationship between Ms Mcillwain and the committee was also becoming quite strained even prior to the suspension. It is also apparent that the Respondent is experiencing serious financial challenges.
[168] In the course of closing submissions I invited submissions from the parties concerning compensation payments being made in instalments in the event I determined that Ms Mcillwain was unfairly dismissed and should receive compensation. Ms Mcillwain’s representative indicated that the Ms Mcillwain would be prepared to accept that.
[169] The Respondent submitted that whilst it didn’t provide any documents to state that the grant funds had been called for by the Northern Territory Government, they are well overdue and not in the account. The Respondent submitted that the grant guidelines had not been met and the Respondent didn’t have the funds to pay for it. As I understood the Respondent’s submission, if the $33,000 was taken out of the overdraft it would leave the Respondent with $2,000 to trade with.
[170] The Respondent submitted that once the funds are acquitted or paid back the Respondent is insolvent and it can’t pay its creditors back however it had means of slowly paying those creditors back.
[171] Given all of the above factors and particularly the parlous state of the Respondent’s finances I cannot be confident that the employment relationship would have lasted for a lengthy period. I will assess the period that Ms Mcillwain would have remained in employment as a further three months. Three months’ wages equals $1,695.45 multipled by 12 weeks resulting in an amount of $20,345.40.
[172] According to the termination letter Ms Mcillwain was paid five week notice at $1,692.31. This equals $8,461.55. Deducting that amount from $20,345.40 results in an amount of $11,883.85.
Income earned
[173] Ms Mcillwain said she worked in another job for about 30 hours with another employer in a bookkeeping role. Ms Mcillwain said this was from around 16 September 2019 for three weeks and earned about $400 per week. Ms Mcillwain said that she was working 8 to 10 hours a week because that was what she was advised to do by her psychologists and psychiatrists to get her back into the workforce. Ms Mcillwain said she was on unemployment benefits for a number of weeks.
[174] I only intend to make any deduction equivalent to one week on account of this income as most of this income was earned after the expiry of a three month period after Ms Mcillwain’s termination. $400 dollars subtracted from $11,883.85 equals $11,483.85.
Income reasonably likely to be earned
[175] Ms Mcillwain said she does not see any prospect of getting other employment in the foreseeable future. I accept this evidence and make no further deduction on account of this consideration.
Efforts to mitigate loss
[176] Whether the Applicant has acted reasonably to mitigate their loss will depend on all the circumstances. Ms Mcillwain said it would be difficult for her to get other employment in Darwin in the industry at the moment, but as said she had applied for other work, and as stated worked for three weeks in a casual booking keeping role for 8 to 10 hours a week.
Contingencies
[177] I make no further deduction on account of contingencies.
Misconduct
[178] In determining the amount by which it is appropriate to reduce an order for compensation on account of misconduct, the Commission must consider, amongst other things, whether the Applicant engaged in misconduct and, if so, whether that misconduct contributed to the Respondent’s decision to dismiss the person. A Full Bench of the Commission has observed that, “[t]he section seems to require such consideration even if the FWC has found there was no valid reason for the person's dismissal.”36 However, the Full Bench goes on to say that, “if there was no valid reason for the dismissal we think that may be relevant to the FWC's decision as to the ‘appropriate’ amount by which to reduce the amount of compensation the FWC would otherwise order.”37
[179] I am satisfied that Ms Mcillwain’s conduct of sending the documentation to the Department which inaccurately purported that unexpended grant funds were available when that were not, contributed to the Respondents decision to dismiss her and, and despite having found it was not a valid reason to dismiss, is conduct which she must share responsibility for with the committee. I am also satisfied that the MOU Ms Mcillwain entered into with Hamark given the level of its importance to the Respondent was not a trivial matters and was a matter that she should have brought to the attention of the committee at the relevant time, and not doing so was inappropriate. On the basis of both these matters I have decided to make a further deduction of 25% as an appropriate amount. 25% of $11,483.85 is $2,870.96 resulting in a reduction in the compensation figure to $8,612.89.
Effect on viability of the employer
[180] Ms Mcillwain said she had not worked in the business since February 2019 so it was difficult to give evidence about the effect of an order on the viability of the business. The Respondent has submitted that an order for compensation will affect the viability of the Respondent’s enterprise. As the Commission observed in the context of earlier legislation, “where an employer seeks to rely on the circumstances referred to in s.170CH(7)(a) [which was in terms substantially the same as s.392(2)(a)], the employer must present evidence and/or argument as to the financial situation of the undertaking and the likely effect that an order for compensation would have on the viability of the undertaking...”38
[181] The Respondent has asked the Commission to infer an effect on viability from the material already before me regarding difficult economic and trading conditions. As stated previously by Deputy President Hamilton, “[s]uch an inference must not be simply ‘conjecture or speculation’39, and there must be facts which in my view make an effect on viability of the enterprise sufficiently probable. The existence of trading difficulties and a general submission that ‘any additional expense will certainly be a problem for the business’ is not a submission that the viability of the business will be affected or even that it will probably be affected. … A mere submission that difficulties for the business will occur is, with respect, not enough.”40
[182] As stated above, Mr Gurr gave evidence that if an order for compensation were made in favour of Ms Mcillwain that the Respondent would be placed in significant distress and it would probably result in foreclosure given that the Respondent had expended the overdraft to $40,000 and the potential repayment of unspent grant monies to the Northern Territory Government threatened to leave the Respondent with only $2,000 of funds to trade with.
[183] Mr Gurr also gave evidence that the Respondent had been barred from applying for any further grants until it had paid back the Northern Territory Government and that once the funds are acquitted or paid back the Respondent is insolvent and it can’t pay its creditors back but that the Respondent could pay its creditors back slowly.
[184] Finally, the Respondent submitted that the Commission should consider that the Respondent is a not for profit business who is providing a service to the community. As stated above, I invited submissions from the parties concerning compensation payments being made in instalments in the event I determined that Ms Mcillwain was unfairly dismissed and should receive compensation and Ms Mcillwain’s representative indicated that the Ms Mcillwain would be prepared to accept that.
[185] I have determined that a compensation figure of $8,612.89 should be paid to Ms Mcillwain by the Respondent but hold a genuine concern that an order that the Respondent pay that sum to Ms Mcillwain could cause the Respondent to be unable to met it debts.
Conclusion
[186] I have concluded that it is appropriate to make an order that the Respondent pay to Ms Mcillwain the sum of $8,612.89 in twenty six equal instalments of $331.26 taxed according to law and 9.5% superannuation contribution on each amount, payable on a weekly basis over a period of six months.
COMMISSIONER
Appearances:
Mr L Matarazzo of Lucio Matarazzo Pty Ltd on behalf of the Applicant
Mr P Gurr and Mr P Winter on behalf of the Respondent
Hearing details:
2019
16 October
Brisbane
Printed by authority of the Commonwealth Government Printer
<PR715466>
1 Exhibit 1
2 Exhibit 1 para 24
3 Exhibit 1 para 26-28
4 Exhibit 1 para 59
5 Exhibit 1 para 174
6 Exhibit 1 para 177
7 Exhibit 1 para 30 and 31
8 Exhibit 1 para 46
9 Exhibit 1 para 50
10 Exhibit 1 para 59
11 Exhibit 1 para 83
12 Exhibit 1 para 90
13 Exhibit 1 para 92, 93
14 Exhibit 1 para 95
15 Exhibit 1 para 121
16 Exhibit 1 para 129
17 Exhibit 1 para 136
18 Exhibit 1 para 138
19 Exhibit 5
20 Exhibit 5
21 Exhibit 7
22 Exhibit 2
23 Exhibit 3
24 Exhibit 1 para 253-254
25 Exhibit 4
26 Exhibit 6
27 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373
28 Ibid
29 Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685
30 Edwards v Justice Giudice [1999] FCA 1836, [7]
31 King v Freshmore (Vic) Pty Ltd Print S4213 (AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000), [23]-[24]
32 Chubb Security Australia Pty Ltd v Thomas Print S2679 (AIRCFB, McIntyre VP, Marsh SDP, Larkin C, 2 February 2000), [41]; Read v Cordon Square Child Care Centre [2013] FWCFB 762, [46]-[49]
33 Chubb Security Australia Pty Ltd v Thomas Print S2679 (AIRCFB, McIntyre VP, Marsh SDP, Larkin C, 2 February 2000), [41]; Read v Cordon Square Child Care Centre [2013] FWCFB 762, [46]-[49]
34 Explanatory Memorandum, Fair Work Bill 2008 (Cth), [1542]
35 ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357, [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [92]; Edwards v Justice Giudice [1999] FCA 1836, [6]–[7]
36 Read v Gordon Square Child Care Centre Inc [2013] FWCFB 762, [83]
37 Read v Gordon Square Child Care Centre Inc [2013] FWCFB 762, [83]
38 Moore v Highpace Pty Ltd Print Q0871 (AIRCFB, Boulton J, Watson SDP, Whelan C, 18 May 1998)
39 Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [39]
40 Beames v BDRP Falconer Pty Ltd PR916075 (AIRC, Hamilton DP, 28 March 2002), [49]
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