Pak Hon (Patrick) Lau v Winra Pty Ltd T/A Oxford Technologies Australia

[2010] FWA 5188

[2010] FWA 5188

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Pak Hon (Patrick) Lau
v
Winra Pty Ltd T/A Oxford Technologies Australia
(U2009/14010)

SENIOR DEPUTY PRESIDENT HARRISON SYDNEY, 16 JULY 2010

Application for unfair dismissal remedy - arbitration.

[1] This decision concerns an application made by Mr Lau under s. 394 of the Fair Work Act 2009 (the Act). Mr Lau asserts that he has been unfairly dismissed. In particular, he submits that the termination of his employment with Winra Pty Ltd was harsh, unjust and unreasonable. 1 Winra Pty Ltd trades as Oxford Technologies Australia. In this decision I will refer to it as Winra or the Employer.

[2] This application has proceeded before me by way of a hearing. This was due to the fact both parties insisted the application should proceed in that manner although, as it transpired, I found it difficult to ensure each of them observed the usual approach and procedures which are the features of a hearing. Mr Burgen, a part owner and Sales Manager, represented Winra and he participated by way of a video link to Melbourne. Prior to the hearing the Applicant had indicated that an interpreter was required and that he would have his wife act as his advocate. It only became apparent to me at the commencement of the hearing that the interpreter was principally for the Applicant’s wife and, to a lesser extent, for him. It also soon became apparent that the Applicant’s wife had limited understanding of the nature of the matters in issue and her English was not adequate for her to competently represent her husband. Similarly, it became apparent that the Applicant’s understanding of English was both considerably better than his wife’s and not such that, in my opinion, he required the assistance of an interpreter.

[3] Both the Applicant and Mr Burgen clearly held strong views about their respective positions and neither would make any concession to the other on any of the evidence or submissions one or the other led. Some of the documentation each sought to rely upon was prepared by persons who were not called nor able to be called to give evidence nor be cross-examined. As neither party was represented I allowed each to refer to a wider scope of documentation than would have normally been acceptable. However, despite the many and varied issues that were referred to, the key reasons relied upon by the Employer to justify the dismissal of the Applicant and the Applicant’s response to those reasons were clear.

[4] Had I been able to avoid making any finding as to witness credit in this matter I would have done so. It is a finding I strive to avoid having to make if at all possible. Regrettably it has been necessary for me to do so in order to consider whether or not certain explanations given by the Applicant were credible and acceptable. I did not find the Applicant a reliable witness and his evidence was unconvincing. His answers and explanations were at times contradictory and he frequently “side-stepped” questions asked of him. 2 Where there is a conflict between the Applicant’s and the Employer’s evidence I have preferred that of the Employer.

[5] I should also indicate that after the completion of the hearing I reviewed the transcript and documentary evidence and was concerned to ensure that both parties understood there may be no further opportunity for a hearing. An email was sent by my chambers to each of them confirming that they had both indicated they did not seek any further hearing and had asked me to consider the matter on the exhibits and submissions received. I indicated I had reviewed the transcript and considered the matter further and decided to ask them to confirm that neither of them sought any further hearing nor any opportunity to cross-examine the other or to make any final submissions. If they wished to do so I would provide them with a further short hearing. I also recorded a list of the exhibits marked in the hearing and identified a number of documents subsequently sent by email to my chambers and which, subject to any objection, I intended to also accept as evidence and mark as an exhibit. Neither party commented on the documents that had been marked nor the ones subsequently received and each asked that I decide the matter on the evidence and submissions then before me. I should record that I have marked the additional documents received from the Applicant as exhibits A4 and A5 and those received from Winra as R6, R7 and R8.

[6] I now record the findings I have made on the evidence. The business of the Employer is the manufacture and sale of chemical products and formulations. It operates in both the Australian and overseas markets. Of particular relevance to this application is its activities as a distributor and manufacturer of dyestuff and specialty chemicals for the textile and related industries. One of the textiles of particular relevance is denim. A dye known as sulphur black is used in the production of denim textile goods.

[7] The applicant was employed by Winra as a result of its purchasing a business which produced sulphur black. He commenced employment in May 2007. His position was described as International Business Development Manager. The position description provides detail of what that role entails but it is sufficient for the purposes of this decision to note that his responsibility was for the sales and marketing of chemical products and dyestuffs to the textile, leather, paper and specialty industries. His work was primarily in respect to the overseas market. Expert technical advice to customers was also part of his role.

[8] A written employment contract between the Applicant and Winra was in evidence. It comprised three documents, an employment contract, a position description and an employee confidentiality deed. The documents are signed by the Applicant and Mr Wagner, a Director of Winra and Mr Burgen. The date the documents were signed is not clear.

[9] A number of provisions of the contract were referred to by both parties. The main provisions of relevance to this application are those concerning confidentiality and the intellectual property of the Employer. Reference in particular was made to the following clauses of the employment contract:

• Clause 4 which provides that the Applicant would not, without written permission of the Employer, be engaged in any activities other than in connection with the business conducted by the Employer.



• Clause 18 is a confidentiality clause in which the Applicant acknowledged that a number of items were valuable and confidential property of the Employer and included “designs, formulae, inventions, circuits and discoveries”



• Clause 19 which deals with intellectual property



• Clause 23 provides that any property of the Employer is to be returned to it upon termination of employment



• Clause 24 which is a post-termination competition restriction providing that the Applicant would not make public or divulge to any persons any information concerning the business or canvas or solicit any person who in the previous 12 months was a client or customer of Winra.

[10] The employee confidentiality deed records that the employee acknowledges a number of items as being valuable and confidential property of Winra and agrees to keep such items secure and confidential and not disclose them to any other person and, on termination, will sign a release and confidentiality deed.

[11] On 24 August 2009 Mr Wagner, a director of Winra received an email from “Hero” a person associated with a company referred to as “Welcome” which manufactured goods for Winra in Taiwan. He informed Mr Wagner that the Applicant had visited Taiwan during his holidays earlier that year and said he had wanted to work as a consultant for this company. It was said that for a period payments were made to the Applicant in his capacity as a consultant. It records that Hero was sorry for what he had done and had “cut off” his relationship with the Applicant.

[12] On 12 November 2009 the Applicant sent an email to “Simon” at a company called Tianjin Mastone Chemical Co. Ltd. (Mastone). The subject of the email was described as “batch sheet” and attached to it were two “Sulphur Black B4G Short Manufacturing Procedure” documents which contained the Winra formula and relevant procedures. It records numerous details including kilo input, the order in which certain steps would be taken, temperatures and ingredients. The documents relate to batches produced on production dates being 12 and 15 October 2009.

[13] On 17 November Winra became aware of the email referred to in the previous paragraph. The effect of it was that the Applicant had passed on formulae for sulphur black to Mastone, a company which was one of Winra’s competitors. The Applicant was not a person authorised by Winra to have access to this formula. It was a breach of his contractual obligation to pass it onto any person not the least a competitor.

[14] An interview was arranged to discuss this matter with the Applicant. It was held on 18 November 2009 and attended by the Applicant, Mr Wagner and Mr Burgen. In the interview the two emails referred to above being those dated 24 August 2009 and 12 November 2009 (and the two attached Short Manufacturing procedure documents) were discussed with the Applicant. The Employer’s allegations were put to the Applicant. The Applicant acknowledged that these emails were discussed in the termination meeting. He said that everything in the email of 24 August was inaccurate. He acknowledged that he had sent the email of 12 November together with attachments. He said that it was an honest mistake. He accepted it should not have been sent. He said he had been busy dealing with a number of phone calls and was in a hurry at the time. The Applicant accepted he had no permission from the directors of Winra to access this formula nor to pass it onto anyone.

[15] I accept the Employer’s evidence that had the Applicant sought permission to access this formula it would have been denied. The Applicant had obtained the formula from the companies manufacturer in Taiwan. This is the company where “Hero”, the initiator of the email 24 August 2009, works. It seems that the formula is known to a limited number of persons in Winra and that Hero had signed a secrecy agreement concerning it with Winra. He had released the formula to the Applicant who had asked him for it. Hero had done so in good faith believing it was appropriate to pass it on to a person in the position of the International Business Development Manager. Hero had apologised for doing so.

[16] The Applicant’s explanation that it was an honest mistake was not acceptable to the Employer. It considered his actions constituted a breach of his contract of employment and justified his dismissal. What he had done had the potential to cause the company significant financial loss.

[17] It seems that the content of the email 24 August 2009, although raised, was not a significant factor in the Employer’s decision to terminate the Applicant’s employment. The principal factor was the passing on of the Short Manufacturing procedure information to a competitor. That competitor produced a similar product but, according to Mr Burgen, it was an inferior product prior to them obtaining Winra’s formulations. Mr Burgen described the formulations as being “kept under a secrecy agreement, under lock and key”. 3

[18] As the question of the Applicant working in any capacity for a competitor during the time he was employed with Winra was not the reason relied upon by the Employer to dismiss him, I do not need to make a finding if in fact, he had inappropriately worked for either Welcome or Mastone during his employment with Winra.

[19] A letter was forwarded to the Applicant on 20 November 2009. In it the matters discussed in the meeting of 18 November 2009 were referred to. It records that the Employer had become aware that the Applicant had been transmitting its intellectual property to a third party and working on behalf of a competitor. It considered such conduct constituted a serious breach of the terms of the Applicant’s employment. It records that the matters had been discussed with him at the meeting and he had been provided with two emails which related to the allegations. The company had considered his response and had decided to terminate his employment. He would receive a payment in lieu of notice and his employment would cease as of 18 November 2009. He was asked to return various items of company property.

[20] I note the termination letter refers to the Applicant “working on behalf of a competitor”. As I noted in the preceding paragraph, this was not the ground relied upon before me as being the valid reason the Employer had to dismiss the Applicant.

[21] Subsequent to the Applicant’s termination of employment additional information about him was received by Winra. This information confirmed its view that the Applicant had been passing on confidential information to a competitor and obtaining financial reward from it. An email to Mr Bruerton dated 10 December 2009 from a work colleague “Tennyson” advised him that the Applicant may be working for Mastone.

[22] The Employer tendered a copy of a business card showing the Applicant as being the “Marketing Director” of Mastone. I find that the Applicant had commenced employment with Mastone. The exact date is unclear but appears to be a date very close to the date of his dismissal by Winra. During a trip to Asia, subsequent to the Applicant’s dismissal, a director of Winra was advised that the Applicant was handing out this business card to Winra’s clients and selling products in competition with Winra’s.

[23] The Applicant initially denied that he was working for Mastone and then subsequently explained that if he was then it should not be a problem as the products he was selling were not in competition or not confidential. His explanation was not at all convincing and I accept the Employer’s evidence referred to in the previous paragraph.

[24] I refer again to the contractual documents. This is not the occasion nor is it necessary for me to interpret the documents and constraints contained in them. That would be a matter for a court of law. At the very least the Applicant has breached his contractual obligations to Winra in the manner in which he dealt with valuable and confidential property of the Employer. I would have made this same finding in the absence of the written contractual documentation.

[25] At the time of the hearing the Applicant was consulting a psychologist. A copy of a receipt for services rendered by a clinical psychologist on 27 November 2009 and 14 January 2010 was tended by the Applicant. The Applicant said he suffered from depression which was caused by his unfair dismissal.

[26] In light of the foregoing findings I now turn to consider the provisions of s.387 of the Act. However, before doing so, I should note that at the conclusion of the hearing I referred to this section of the Act. I indicated to the parties that my then view was that the issue of whether there was a valid reason seemed to be the only one addressed by them. I said that on the evidence it seemed that neither party wished to say anything about the considerations in ss.387(b) through to 387(g). I invited them to address those provisions if that was not the case. In the subsequent documents that were filed by the parties neither of them addressed any of the consideration in these subsections.

[27] I now turn to each of the provisions of s.387. They are the criteria I must take into account when considering if the Applicant’s dismissal was harsh, unjust or unreasonable.

(a) whether there was a valid reason for the dismissal related to the Applicant’s capacity or conduct (including its effect on the safety and welfare of other employees

The Employer did have a valid reason to dismiss the Applicant. He obtained confidential formula in a secretive and unacceptable way and passed that formula onto a competitor. I do not accept the Applicant’s explanation that it was an honest mistake.

The Applicant also asserts that the Employer’s motivation in dismissing him was that he was “too expensive” and it had manipulated his dismissal so as to get rid of him. He says this was as a consequence of business declining during 2009. There is nothing in the evidence that suggests this formed any part of the Employer’s motivation. I accept the Employer’s evidence that they have engaged another person in a similar position to the Applicant and on a similar salary.

(b) whether the Applicant was notified of that reason

The Applicant was advised of the Employer’s reason.

(c) whether the Applicant was given an opportunity to respond to any reason related to his capacity or conduct

The Applicant was given an opportunity to respond.

(d) any unreasonable refusal by the Employer to allow the person to have a support person present to assist at any discussions relating to dismissal

This consideration does not arise. The Applicant did not seek to have any such support person.

(e) if the dismissal related to unsatisfactory performance - whether the Applicant had been warned about that unsatisfactory performance before the dismissal

This consideration does not arise. The dismissal was not for unsatisfactory performance.

(f) and (g) the degree to which the size of the Employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal

Neither party addressed these considerations. I have considered them and, in my opinion, the procedures followed by Winra were fair and acceptable.

(h) any other matters that FWA considers relevant.

No party addressed this consideration. I have taken into account the Applicant’s submissions about his service with Winra, his success in his dealings with clients in the industry and his current ill-health.

Conclusion

[28] I have weighed each of the findings referred to in this decision. I am not persuaded the dismissal of the Applicant was harsh, unjust or unreasonable. I am not satisfied he was unfairly dismissed. The application is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

P. Lau on his own behalf.

G. Burgen for Winra Pty Ltd T/A Oxford Technologies Australia.

 1   Section 385(b)

 2   See for example PN175-207 and PN222-253

 3   PN165

Printed by authority of the Commonwealth Government Printer

<Price code C, PR999271>