Nicolson v Heaven & Earth Gallery Pty Ltd

[1994] IRCA 43

IN THE INDUSTRIAL ELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY  Matter No VI 656/1994

B E T W E E N:  PAUL TERRENCE HUNT

AND:

STA TECH ENGINEERING PTY LTD (T/AS BOYD STEEL)

COURT:                   J.A. RYAN, Judicial Registrar
PLACE:  MELBOURNE
DATE:  23 September 1994

REASON FOR JUDGMENT

TERMINATION, APPLICATION AND RESPONSE

The respondent terminated the employment of the applicant as a Welder on 27 May 1994. The respondent claims shortage of work in a seasonally linked industry led to the termination. The applicant claims the termination resulted from a somewhat complex set of circumstances involving a disputed debt to a third party.

There was a debt. It is disputed. The industry does experience shortage of work. The facts require detailed analysis.

On 6 June 1994 the applicant sought the remedies of re-instatement and compensation alleging unlawful termination. In his supporting affidavit, the applicant expressed the belief that the termination was unlawful because he was provided with a reduced redundancy payment by what he described as the "fraudulent use of an expired and unclear agreement". He also described the agreement as "old and already honoured" and he alleged the real reason for his termination was not redundancy. He seemed to be suggesting that his termination was associated with an intention to obtain payment from him in respect of a disputed debt to a third party and he alleged the obtaining of such payment "was based on extreme prejudice".

On 27 June 1994 Alan Thomas Esmore, the major director and owner of the respondent company, filed an affidavit indicating that the applicant's employment was terminated solely for the reason of shortage of work. He denied that the termination was motivated by the reasons alleged by the applicant. He denied prejudice or fraud and stated that the monies deducted from the termination pay were pursuant to a written authority relating to a debt to another business for repairs to the applicant' s motor vehicle and were irrelevant to the application for remedy for alleged unlawful termination of employment.

On 15 August the applicant filed a second affidavit this time with the benefit of advice from his solicitors.

He reiterated his belief that the termination of his employment by the respondent was unfair because the sum of one thousand one hundred and eleven dollars ($1,111.00) was unlawfully deducted from his termination entitlements. He described this deduction as the amount of an account rendered to him some six months before the date of his dismissal by a third party associated with the employer and he described that amount and that account as the subject of a genuine dispute. Indeed, his evidence at the

trial and the evidence of his wife, Helen Hunt, demonstrate the amount and the account are still very much the subject of dispute.

The applicant in paragraph 3(b) in his second affidavit of 15 August, expressed his belief as follows:

"The true reason for my termination was not redundancy but the existence of the dispute over the said account, which is not a valid reason connected with my capacity or conduct".

The applicant also alleged that the true reason (for termination) was not given to him and he was not given the opportunity to answer before termination.

He also submitted, in the affidavit and through counsel at the trial, that even if the reason for termination was redundancy, which was denied, the procedure for selection and implementation of that redundancy was, in all the circumstances, harsh, unjust and unreasonable.

THE DISPUTED ACCOUNT FOR MOTOR VEHICLE REPAIRS

The account for $ l, 111.00 is identified in at least three exhibits tendered at trial being exhibits "A3", "A4" and "R2".

Exhibit "A3" is a handwritten statement dated 27 May 1994. It is on the letterhead and bears the logo of the respondent STA Tech Engineering Pty Ltd (T/As) Boyd Steel). The statement reads as follows:

"27/15/94 I hereby state that Paul Hunt on termination of employment, left the premises with $ l, 111.00 (eleven hundred and eleven dollars) less than his payment figure, due to an authority signed by himself for payment for repairs by an associate company, to his motor vehicle Nissan registered number EOR484. A copy of this authority is with Paul and the original in our care signed Alan T. Esmore Director".

Exhibit "A4" is St Arnaud Apex Service Station Receipt No.11782. It is also dated 27 May 1994 and is also signed by Alan T. Esmore and acknowledges that the sum of one thousand one hundred and eleven dollars ($ l, 111.00) was received with thanks from Paul Hunt by what as described in the receipt as "Boyd cheque".

Exhibit "R2" is an Apex Service Station computer generated customer file for an account customer namely the applicant who is described therein as Mr. Paul Hunt c/o Boyd Steel. This account file includes an invoice of 10 November 1993 for one thousand and forty five dollars ($1,045.00) and an invoice of 13 December 1993 for sixty six dollars ($66.00). It is undisputed and quite clear that the two invoices total $1,111.00 and relate to repairs to the applicant's motor vehicle.

WAGE DEDUCTIONS FOR EARLIER MOTOR VEHICLE REPAIRS

In his affidavit of 27 June and in his evidence of 15 September, Mr. Esmore asserted that the deduction of $1,111.00 from the applicant's termination payment of $2,467.40 was irrelevant to the application for remedy for alleged termination of employment. However, it is undisputed that:

( 1 )        Mr. Esmore is the major director of both the respondent company and T.P. Esmore
and Son Pty Ltd (trading as St. Arnaud Service Station)

  

(2)          the applicant authorised significant repairs to his motor vehicle on or about 22 March
1993

  

(3)the work was carried out at the Apex Service Station and invoiced in the sum of $1,089.50  ..

(4)         on 24 March t 993, two days after the invoice was raised, the applicant signed an
agreement which was on the letterhead of the respondent company and contained no
reference to St. Arnaud Service Station. This agreement is Exhibit "A2" and is in the
following terms

  
  
  

"24-3-94
Mr. Paul Hunt Nissan EOR484

I agree to pay two hundred dollars part payment and fifty dollars per week for repairs to my car.

This and any monies owing may be deducted from monies owed me by Boyd Steel signed P.T. Hunt and per Boyd Steel".
Underneath the words "per Boyd Steel" there appears a signature which may contain the surname "Esmore". It is not the signature of Mr. Esmore as contained in exhibits "A3" and "A4". It may be the signature of Mrs. Esmore who at that time was involved in preparation of both the respondent's accounts and Apex Service Station accounts but nothing turns on that.

(5)          after an initial payment of $200.00 on 26 March 1993, $50.00 was deducted weekly
from the applicant's wages until 12 October 1993 with a final payment of $42.50 on
4 November 1993 some six days before the invoice $1,045.00 which comprised the
major part of the disputed account or $1,111.00. There were also payments of
$150.00 on 21 May 1993, $200.00 on 30 June 1993, and $33.00 on 12 August 1993.
Furthermore, work to ensure the vehicle obtained a road worthy certificate was
invoiced on 20 August 1993 in the sum of $292.50 and paid off by the wages
deduction method of $50.00 a week and on 30 April 1993 an invoice of $43.50 was
recorded in the account and paid off by the wages deduction method.

  
  
  
  
  
  
  
  

It is quite obvious from the applicant's customer file account (Exhibit "R2.") that the account was cleared with a final payment of $33.00 on 12 August 1993 and re-activated eight days later on 20 August 1993 with the roadworthy certificate repairs of $292.50 and the account cleared again with a final payment of $42.50 on 4 November 1993.

NO WAGE DEDUCTIONS FOR DISPUTED ACCOUNT

It is significant to note that while the respondent relies on the authority of 24 March 1993 (Exhibit "A2") to justify the large deduction of $1,111.00 from the applicant's termination payment on the day of termination (27 May 1994), no payments were ever made by the applicant after the $I,I 11.00 account was generated primarily from 10 November 1993. Indeed, no payments were ever made after the discharge of the earlier debts on 4 November 1993.

This failure to continue payment is not consistent with the first paragraph of the agreement of 24 March 1993 but it is consistent with the undeniable fact that the final account of $1 ,111.00 was vigorously disputed by Mr. and Mrs. Hunt and it is also consistent with the applicant's position, which is that Exhibit "A2", the agreement of 24 March 1993, did not apply to the disputed $I,I I 1.00 and did not authorise or justify the deduction of that sum from the applicant's final termination payment of $2,467.40.

SEASONAL DEMANDS - HARVEST PEAK AND WINTER TROUGH                Some early history provides a background leading up to the termination.

The respondent company is one of three in St. Arnaud which is involved in the metal industry. All three companies serve the rural industry. Farmers inevitably have-seasonal demands and manufacturing companies catering to such demands often have seasonal peaks and troughs. There was

evidence of the effect of the seasonal demands particularly on the respondent company and on a rival or competitor, R.K. Macey. The third company, Goldacres, has a more diverse base which probably insulates it to some degree from seasonal ebb and flow. However, the respondent's business is closely limited to farming demands. The major products are silos, associated equipment, field bins, tractors and fuel tanks. There is no doubt that work peaks at harvest time and dips in winter.

THE ESMORE PURCHASE OF BOYD STEEL

The Esmores are St. Arnaud locals of long standing. The family has been involved in the motor industry for many years and has conducted a family business based on T.P. Esmore and Son Pty Ltd (T/As St. Arnaud Apex Service Station). Related companies are Apex Bus Company Pty Ltd and Bewley Automobiles Pty Ltd.

The present proprietor of the business, Alan Thomas Esmore, appears to have purchased Boyd Steel in March 1991. The company had gone into receivership in 1989 and Mr. Esmore seems to have achieved the 1991 purchase after some lengthy negotiations between 1989 and 1991.

THE APPLICANT'S WORK HISTORY
The applicant has been a resident of the Swan Hill for twelve years. He has spent the greater part of his twenty years working life in sheet metal work especially in welding. He has no trade qualifications and for that reason he is classified as a welder, second class. However, he has reasonably extensive experience in electroplating, dipping, boat building, wood work machine operation, welding in the construction industry, in a power station and in silo manufacture in Swan Hill, fast with R.K. Macey and then with the respondent, Boyd Steel, and since his May termination from Boyd Steel on a casual basis again with R.K. Macey.
The applicant commenced full-time work with Boyd Steel in 1985 and was retrenched in 1990 when the company, under earlier ownership, was in financial trouble. At that time, he received a redundancy payment. He was recruited back to Boyd Steel by Mr. Esmore on 23 November 1992. In late April he went on leave and travelled to Queensland and New South Wales with his wife and three children.
THE 1994 REDUNDANCIES

On Tuesday 3 May, while the applicant was away, Keith Little, the Production Manager of Boyd Steel, called a meeting of staff and advised them that due a downturn in work it would be necessary to roster holidays, perhaps introduce four day week and also reduce staff.

On Monday 9 May a sheet metal worker, G. Reid, was given notice and retrenched on Friday 13 May.

On Monday 16 May, the applicant returned to work. At about 3:00 p.m. he was called into the office by Mr. Little and told that because of a lack of work he was to be retrenched effective from close of business on Friday 27 May.

On Monday 6 June, W. Leaford, was advised that due to a lack of work he would be retrenched effective Friday 10 June. He was given extra work to Friday 17 June and was re-employed on casual spray painting from Tuesday 2 1 June to Friday I July when he completed his employment with the respondent.

A cleaner, i. Reid, was retrenched because of lack of work on Tuesday 7 June. He was apparently close to retirement age and appears to have been quite happy to finish immediately without working out any period of notice.

Both the applicant and Mr. Little gave quite detailed evidence as to skills and experience of thirteen welders, five sheetmetal works and five process workers. Monthly staff levels on the factory floor from May 1991 to September 1994 confirm that each year there has been some reduction of staff in winter. Silo sales tend to peak in November.                 ..

4

FINDINGS

While I am troubled with the possibility that the applicant's selection for redundancy might have been motivated in part by the opportunity which could thus be presented to Mr. Esmore to re-coup a disputed debt, I have concluded that the evidence at the trial does not support the charge of a termination engineered for that purpose.

There is some evidence that before the applicant left for his holidays in late April Mr. Esmore had been seeking, through Mr. Little, to pursue the debt but I am prepared to accept on the basis of the evidence before me that Mr. Little decided to retrench the applicant and that Mr. Esmore was not informed until after that decision was communicated to the applicant on 16 May.

I have concluded that soon thereafter Mr. Esmore resolved to collect the disputed debt and that he sought to justify the deduction from the applicant's redundancy payment by relying on the 22 March 1993 agreement, Exhibit "A2".

While I accept that the redundancy was genuine, I do not accept that the deduction of the$1,111.00 was in any way authorised by way of the agreement, Exhibit "A2". The agreement was drawn for a specific purpose, the March 1993 repairs of the applicant's motor car. The agreement was extended to a minor account of $43.50 invoiced 30 April 1993 and to road worthy certificate repairs of $292.50 invoiced 20 August 1993. The agreement was never extended with the consent of the applicant to the vigorously disputed debt of $1, 111.00 and the agreement was never drawn with the latter debt in contemplation.

There is nothing in the loose but broad wording of the second paragraph of the agreement which can trigger the adoption of the agreement and the extension of it to the disputed debt in the absence of adoption by and consent from the applicant.

Counsel for the respondent cited Inspector J.C. Trauro and Sec Plating Pty Ltd (1990) 32AILR 211; AWUV Kelly (1918) 12CAR 269; Tasmanian Steamers Pty Ltd and Lang (1938) 60CLR 111.

However, the circumstances here are readily distinguishable. This is not a case of assignment of debt. This is not a case where the right to withhold monies exists and has been legitimately exercised. As in the Tasmanian Steamers case, I find that if the $1,111.00 if recoverable by T.P. Esmore & Son Pty Ltd (T/As) St. Arnaud Apex Service Station, and that is of course vigorously disputed by Mr. and Mrs. Hunt, then recovery requires the initiation of legal action elsewhere.

Although I have found the redundancy genuine, nevertheless I find the termination harsh, unjust and unreasonable. The applicant is described and accepted by Mr. Esmore as a good worker. He is widely experienced in all welding tasks undertaken by the respondent. No discussions were held with the applicant and he was provided with no meaningful information. (See Gibbs and City of Altona (I 988) 42IR255).

There was no exploration of any possible alternative with the applicant prior to the ultimate step of dismissal (see Gregory and Philip Morris (1988) 80ALR455 at 473).
There was no proper investigation of the facts and consultation with the employee about those facts and their possible consequences (see Byrne v Australian Airlines Limited and Frew and Australian Airlines Limited (1990) 52IR10 per Beaumont and Heerey JJ at 37 and Gray J at 63).
The case of Kevin Beshara and Budget Couriers Equity Management, a decision of the Employee Relations Commission of Victoria in full session on 22 July 1993 is particularly apposite.

At page 10 of that decision of the Commission stated

"In approaching matters alleging that a dismissal is harsh unjust or unreasonable, it is not enough for an employer to establish that the circumstances are one of a genuine redundancy. The dismissal must be tested against substantive and procedural fairness. It is insufficient for an employer to raise the aegis of a genuine redundancy as a wand against this Commission

intervening where the circumstances in which the redundancy was imposed are otherwise harsh unjust or reasonable. The obligations to consult, to provide adequate notice and to apply objective selection criteria in determining which employee is to be made redundant are factors in determining whether a dismissal was harsh unjust or unreasonable. The concept of "industrial fair play" is to be observed by both parties to a contract of employment and the need to make employees redundant does not absolve employers from this general principle. A failure by an employer to ensure that these principles are followed may lead to a finding characterising a dismissal as harsh unjust or unreasonable and to consequential orders. The fact that an employer has complied with the strict notice and severance payment provisions of the standards established in the Termination Change and Redundancy cases ((1984) 8 IR 34; (1984) 9 IR 115; 2 VIR 36) will not necessarily dissuade the Commission from intervening to provide a remedy where a dismissal on the grounds of redundancy comes within the statutory criteria of s.42( 1 ) of the Employee Relations Act 1992".

These observations are also applicable to Division 3 of Part VIA of the Industrial Relations Act 1988 and in particular sections 170 DE, 170EA and 170 EE.
Having found the termination harsh, unjust and unreasonable I consider reinstatement the most effective remedy with some compensation for lost income.

MINUTES OF ORDER 23 SEPTEMBER 1994

RYAN J.R.

THE COURT ORDERS

(1)         That the applicant be re-instated by the respondent to the position occupied by him
immediately prior to the termination or to a position which is substantially the same
as that occupied by him prior to the termination

  
  

(2)    That the re-instatement to take effect from Monday 26 September 1994.

(3)         That the applicant, at his election, may take leave without pay on any day or days in
the week commencing 26 September 1994 to meet any commitments already made
including any commitments to casual employment with R.K. Macey in the week
commencing 26 September 1994.

  
  
  

(4)         That the respondent pays to the applicant the amount of $2,840.27 being
compensation for remuneration lost by the applicant and an amount of $1,158.18
being the difference between the amount due to the employee on termination and the
amount paid to the employee on termination.

  
  
  

Having regard to the fact that a redundancy payment was made I do not propose to make any order as to continuity of employment.

The compensation ordered takes account of seventeen weeks since termination at a basic weekly rate of $372.60 plus an underpayment of $1,158.18 on termination reduced by income from Job Search and R.K. Macey.

Despite the difficulties of the termination, the action in this court and the disputed motor repairs account I consider re-instatement practical. I have no reason to believe Mr. Esmore or Mr. Hunt are anything but honourable men. The business is now moving into the busy period of the year and it has

been conceded that the applicant is a good worker, no complaint has ever been made in relation to his work and when he was terminated it was clearly indicated to him that he would be approached if work became available later.

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

I certify that this and the preceding 6 page(s) are a true copy of the Reasons for Judgment of Judicial Registrar Ryan.

Date  :           Friday 23 September 1994.
Appearances:
Counsel for the Applicant  :           F. Harris
Solicitor for the Applicant  :           Cornwall Stodart  ‑
Counsel for the Respondent                :           Brace Shaw
Solicitor for the Respondent                :           Rolf W. Breisch
Date of Hearing  :           15 September 1994
Judgment  :           Friday 23 September 1994