Nettlefold v Kym Smoker Pty Ltd

[1996] IRCA 282

DECISION NO:   282/96

CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - appeal against order refusing compensation on the ground that the employee had failed to mitigate her loss - whether failure to mitigate established - whether genuine offer to re-employ made by the respondent - whether refusal of offer due to uncertain terms of the offer or the employee's decision to go into business on her own account

Matter No. NI 1278 of 1996

MARIA BECHARA v GREGORY HARRISON HEALEY  and GREGORY HARRISON HEALEY v MARIA BECHARA

von Doussa, Marshall & North JJ
Sydney
3 June 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY         No NI 1278 of 1996

BETWEEN:  MARIA BECHARA

Appellant

GREGORY HARRISON HEALEY

Respondent

AND BETWEEN:                 GREGORY HARRISON HEALEY

Cross Appellant

AND:  MARIA BECHARA

Cross Respondent

MINUTES OF ORDER

JUDGES MAKING ORDER         :    VON DOUSSA, MARSHALL &   NORTH JJ

PLACE ORDER MADE            :    SYDNEY

DATE ORDER MADE             :    3 JUNE 1996

THE COURT ORDERS THAT:

1. The appeal be dismissed.

1. No order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Industrial Court Rules.

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY         No NI 1278 of 1996

BETWEEN:  MARIA BECHARA

Appellant

GREGORY HARRISON HEALEY

Respondent

AND BETWEEN:                 GREGORY HARRISON HEALEY

Cross Appellant

AND:  MARIA BECHARA

Cross Respondent

Coram: von Doussa, Marshall & North JJ
Place: Sydney
Date : 3 June 1996

EX TEMPORE REASONS FOR JUDGMENT

von Doussa J:  This is an appeal from a judgment of Madgwick J.  On the review of a decision of a Judicial Registrar his Honour upheld two orders made at first instance, set aside a third order and varied a fourth order.

The Judicial Registrar had considered a claim for remedies for unlawful termination brought by the appellant. The appellant, a solicitor, had been employed by the respondent, who conducted a legal practice from a number of offices, from 4 May 1992 until Friday, 11 November 1994, when she alleged that she was dismissed.  Before the Judicial Registrar there was a dispute whether the relationship between the appellant and the respondent had, from 10 September 1993, been that of employer and employee or whether the appellant had been engaged during that period as a consultant. 

It was disputed before the Judicial Registrar, in the event that an employment relationship was established, that the appellant had been dismissed.  The respondent, on the contrary, asserted that the appellant had resigned.  Other issues that arose concerned the non payment of PAYE taxation, the non payment of superannuation, as required by law if the applicant were an employee, and non payment of holiday pay.  Whatever the relationship, it was undisputed that from 10 September 1993 the respondent had not deducted and separately paid taxation as if the appellant were a PAYE employee.

The Judicial Registrar held that an employer and employee relationship existed and that the appellant had resigned.  Orders were made dealing with the matters of unpaid holiday pay, and the issue of superannuation.

Upon the matter coming on for hearing before Madgwick J the parties indicated that they did not wish to recall any of the witnesses.  His Honour was invited to review the matter and form his own conclusions upon the documentary evidence and oral evidence that had been led before the Judicial Registrar.  In his reasons for judgment, Madgwick J points out that there appears to be reason to doubt the credit of both of the witnesses in some respects and there were no clear findings on some critical issues about credit by the Judicial Registrar.  Notwithstanding this difficulty his Honour, on the information before him, felt able to make a series of findings of fact.  The employer and employee relationship was no longer in dispute.  His Honour after considering the evidence from each of the parties about the events which happened on 11 November 1994, held that the employment was terminated by the respondent; there was no resignation.  A cross-appeal challenging that finding has been filed in this Court but counsel for the respondent has indicated that he does not wish to proceed with that cross-appeal in the event that the appellant's appeal otherwise is to fail; a result that we think must occur on the material before us.

His Honour, having found that the employment was terminated, held that there was no lawful reason for the termination. That conclusion is not now challenged. That then raised for consideration what remedy should be awarded. After canvassing the evidence, his Honour held that the applicant had, in a practical sense, failed to mitigate her loss because she had been offered re-employment on Sunday, 13 November 1994, an offer which she peremptorily refused. Rather than seek to be re-employed, either upon the terms offered by the respondent, or on other terms, his Honour held that the applicant had decided to go into private practice on her own account. There was no warrant to award compensation and accordingly the decision of the Judicial Registrar to dismiss the application under s.170EA of the Industrial Relations Act 1988 was upheld. His Honour made consequential findings about holiday pay and the superannuation to which it is not necessary for us to make further reference.

The grounds of appeal are confined to the decision that there had, in a practical sense, been a failure by the appellant to mitigate her loss.  It is pleaded that his Honour erred in exercising his discretion not to award compensation; in having found that reinstatement was practicable; and in having found that the applicant failed to take reasonable steps to mitigate her damages.

As argued before this Court, the issue on the appeal became entirely one of fact, namely, whether a bona fide and meaningful offer of re-employment had been made by the respondent to the applicant on Sunday, 13 November 1994.  Counsel for the appellant contended that the discussion that occurred on Sunday, 13 November 1994, did no more than put forward an ambiguous offer to return to the state of affairs that had existed immediately prior to the termination.  That is, to a state of affairs that had uncertainty about the status of the applicant, in particular whether she was an employee or a consultant, and which in turn gave rise to uncertainty as to whether she would be entitled to practise as required by the respondent under the conditions attaching to her practising certificate.  It was argued that an unequivocal offer to return to work as an employee on clearly specified terms was necessary before the failure to accept the offer could amount to a failure to mitigate.

In the course of argument counsel for the appellant indicated that he did not seek to dispute, as a matter of general principle, his Honour's statement that in a practical sense there is a duty upon an employee whose services have been terminated to mitigate his or her loss.  That concession having been made, the issue of fact we have identified emerged as the issue in the appeal.

It is clear on the evidence that the respondent and the appellant had an unusual relationship up until 11 November 1994.  Civilities that might normally be expected in an employer and employee relationship at times had not been respected; strong language had been used between them on occasions.  On one occasion when the respondent had used strong language, the appellant's response had been to seek to gain from the respondent an increase in her salary.  It was against the background of their unusual relationship that his Honour had to consider the events that happened on 13 November 1994.

It is undisputed that the respondent telephoned the appellant and sought to have her return to the practice that she had been running for him, it being clear to both sides that there would be considerable disruption to that practice in the days following if the applicant were not to return.

His Honour concluded:

"...the primary remedy under the Act is re-instatement.  Where, as here, in my opinion, this was offered in good faith two days after the unlawful termination by Mr Healey and, as I see it, it was not impracticable for Ms Bechara to have accepted it or to have negotiated an acceptable variation of the offer, then, not having so accepted it, or taken reasonable steps to see it come to fruition, in my view, it is not appropriate that she be awarded any compensation.

The reasons for those factual conclusions are these.  The applicant was an intelligent and capable young solicitor of above average appreciation of her own worth, as well as fortitude.  She would, in my view, have been quick to see that, as of the 13th, she was in a good bargaining position, since the respondent had shown his need and/or conciliatory attitude in telephoning her.  It is quite clear to my mind that she appreciated that the respondent wanted her back, was undertaking to sort out the tax problems and was in a position of some special need to her services.  Nevertheless, she declined further to discuss returning to work with him.  She preferred, as I have said, to set about immediately going into practice on her own account."

It will be noted that his Honour has found that there was a bona fide offer made of re-employment, and that reinstatement was practicable.  Those findings it is said are wrong because his Honour erred in not requiring a greater degree of specificity in the terms of the offer.  It is clear, however, when the cross-examination of the appellant is considered, that the appellant at all times both asserted and believed that her employment status was that of employee.

One of the matters that had caused friction between the appellant and the respondent had been the respondent's failure to give the appellant a taxation group certificate for the period 10 September 1993 to 30 June 1994.  The appellant throughout had asserted her entitlement to the group certificate, and prior to 13 November 1994 the respondent had indicated that he would seek to remedy his failure to supply it.  By 13 November 1994 he was no longer asserting that the appellant's status had been other than that of an employee.  It is true that he later raised as a defence to the claim for unlawful termination that the appellant had been a "consultant" from 10 September 1993, but this was not the stand he was taking at the time of the termination, and in the days immediately following.

In the appellant's own words, when she was telephoned on Sunday, 13 November 1994, the respondent said that she could come back to work and he wanted her back and that:

"We can fix up everything, just come back."

and later:

"...you could have gone back to work on the Thursday; correct?---I wouldn't have gone back to work.

I understand what you are saying.  You were determined not to go back; is not that right?---That's right.

Even if he had given you a group certificate on the Monday morning at 8.45 you would not have been in the office at 9 o'clock; correct?---That's right."

That evidence justifies the conclusions reached by his Honour that there was an offer made.  The precise terms of the offer were not then spelt out, but it was plain that it was to return as an employee on terms at least no less favourable than had hitherto been in place.  Significantly, the cross-examination indicates that the appellant's reason for rejecting the offer of re-employment was not the vagueness or ambiguity of its terms, but a decision on her part that she would not, in any circumstances, go back to work as she had made a decision to go into practice on her own account.  That was a decision which she had already taken some steps to implement in that on the afternoon of Friday, 11 November 1994, she had discussed with an officer of the Law Society of New South Wales the lifting of a restriction on her practising certificate.

The conclusions reached by his Honour are factual conclusions.  We have listened carefully to the submissions of counsel for the appellant, but in our view there is no reason to doubt the findings that his Honour made; they are clearly based on the evidence that was before the Court.

In our opinion, the grounds of appeal advanced on the appellant's behalf fail, and the appeal should be dismissed.

It is unnecessary for this Court to consider the further issue mentioned by his Honour in his judgment, namely whether in the event that compensation was appropriate, it would be relevant to consider what would have been an appropriate period of notice had the employment not been terminated in the circumstances in which termination occurred.  That is not an issue which arises on this appeal, and it is an issue about which we say nothing.

[After hearing argument on an application for costs by the respondent...]

The Court is not persuaded that this is a proper case to exercise the power under s.347 of the Industrial Relations Act, and the application for costs is declined.
Marshall J. I agree.
North J. I agree.

I certify that this and the 8
  preceding pages are a true
  copy of the Reasons for
  Judgment of the Court.

Associate:

Dated:

Counsel for the appellant  : Mr S Galitsky

Solicitor for the appellant     : M T Bechara & Co.

Counsel for the respondent : Mr M J Neil QC with
   Mr A Tudehope

Solicitor for the respondent    : G H Healey & Co.

Date of hearing           : 3 June 1996