Paul Adams v King Group of Companies Pty Limited

[1996] IRCA 15

DECISION NO:   15/96

CATCHWORDS

INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - whether termination for VALID REASON of CONDUCT OR PERFORMANCE - whether termination HARSH UNJUST OR UNREASONABLE - whether PROCEDURAL FAIRNESS - COMPENSATION

Industrial Relations Act 1988, ss 170DE(1), 170DE(2), 170 DC, 170EE

Selvachandran v Peteron Plastics Pty Ltd Unreported, Northrop J,  7 July 1995,  No 329 of 1995.

PAUL ADAMS v KING GROUP OF COMPANIES PTY LIMITED
VI 3486 of 1995

Before:  PARKINSON JR
Place:  MELBOURNE
Date:  6 FEBRUARY 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 3486 of 1995

B E T W E E N:

Paul ADAMS
Applicant

A N D

KING GROUP OF COMPANIES PTY LIMITED
Respondent

MINUTES OF ORDERS

6 February 1996  PARKINSON JR        

THE COURT ORDERS THAT:

1. The respondent pay to the applicant the sum of $ 6,015.00 in compensation.

2. The time for payment is twenty one days from the date of order.

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

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 3486 of 1995

B E T W E E N:

Paul ADAMS
Applicant

A N D

KING GROUP OF COMPANIES PTY LIMITED
Respondent

REASONS FOR DECISION

6 February 1996  PARKINSON JR

This is an application made pursuant to s170EA of the Industrial Relations Act 1988. On 15 January 1996 various amendments to the Industrial Relations Act 1988 came into operation. The decision in this matter was reserved on 12 December 1995 and some aspects of the amendments operate in respect of this proceeding. The relevant amendments in this proceeding relate to s170EE of the Act, as those provisions operate in respect of proceedings in which judgment had not been given at the operative date.

Background and Findings of Fact

The applicant was employed by the respondent as a design engineer in October         1994. He had previously been working in the Latrobe Valley and the evidence was that a number of circumstances contributed to his initially accepting employment with the respondent, including proximity to family. The applicant’s terms and conditions of employment were determined by agreement between the parties during a discussion held at the residence of the respondent’s managing director, Mr Mileham, in the presence of the applicant's wife.  At those meetings a number of entitlements were discussed, including the provision of a company vehicle to the applicant. The extent of the applicant’s entitlement to use of the vehicle forms part of the dispute which led to the termination of the employment.

The applicant suffered an emergency appendectomy on 28 May 1995.                On that day Mrs Adams informed the respondent of the illness and the likelihood that the applicant would be absent from work for some weeks. She also conveyed information from the applicant as to the current status of work and matters which required immediate attention in his absence. After receiving the advice from Mrs Adams, Mr Mileham was concerned to establish the expected dates for the return of the applicant to work. There is no doubt that the applicant was seriously ill and remained limited in his mobility for some weeks after the surgery. He was released from hospital on 1 June 1995, with a doctor’s certificate operative to 18 June 1995. Advice of the length of absence was given to the respondent on the evening of 1 June by Mrs Adams.

During the period of the illness  the applicant was unable to drive. Mrs Adams drove the applicant’s company vehicle to and from her place of work and used it to take the applicant to doctors’ appointments and to collect his wages and drop materials off to the respondent. Until the applicant's illness Mrs Adams usual practice had been to use public transport to attend work. Her use of the company vehicle occurred over a few days and on 2 June 1995 she attended at the respondent’s premises at the invitation of the respondent to collect the applicant’s wages and to deliver a doctor’s certificate. 

Although the evidence is that on some prior occasions the applicant’s wife had driven the company vehicle from the respondent's premises, on 2 June as she was departing the respondent’s premises for work, there was a discussion as to her use of the company vehicle. Mr Mileham indicated that he had decided to allocate the vehicle to another person in the company whilst the applicant was absent. Mrs Adams was upset as a result of the conversation and informed the applicant of what had occurred. As a result there was a heated discussion between the applicant and Mr Mileham by telephone (“the first telephone conversation”), wherein the applicant's language was offensive  and Mr Mileham confirmed that he required that the vehicle be returned to the respondent during the period of the applicant’s illness.

The applicant protested that the full private use of the vehicle was a term of his employment, but dispute arose as to whether this included use of the vehicle by Mrs Adams. There is no documentation which establishes what the anticipated arrangements were in relation to Mrs Adams using the vehicle, however the evidence suggests that there had been previous occasions when Mrs Adams had driven the vehicle in the knowledge of Mr Mileham and no comment was made or objection taken. Further, the evidence of both the applicant and Mrs Adams was that her use of the vehicle was contemplated by the original discussions as to the vehicle, being full private use, “to use as you wish”.  I did not find the various insurance material tendered in the proceedings helpful in determining this aspect,  as none of the material included the proposals for insurance or contained any provisions for nominating additional drivers, as is usual in the proposals.  Shortly after the conclusion of the first telephone conversation on 2 June, Mr Mileham rang the applicant back ("the second telephone conversation") and apologised to him for causing his wife distress, and agreed that the applicant could keep the car. 

At 7.30pm on Monday 5 June, Mr Mileham rang the applicant at home and again raised the issue of the motor vehicle, and advised the applicant that he was entitled to it and intended to come and collect it.  The applicant although protesting, agreed. When Mr Mileham attended at the applicant’s house there was an exchange between the parties in which Mr Mileham says the applicant was angry and yelling. The applicant denies this and so too does Mrs Adams. The outcome of the meeting was that Mr Mileham asked for the motor vehicle keys, the vehicle petrol card and the keys to the respondent’s premises. Upon being asked by the applicant whether this meant he was being sacked, Mr Mileham said words to the effect of “I cannot discuss this until you are fit to work and are signed off by a doctor.”

The applicant’s evidence was that on 19 June 1995, the morning of his return to work at the expiration of the doctor’s certificate, he was first asked on arrival, by Mr Mileham, whether he had a clearance from the doctor to return to work. When he replied to the effect that he did, he was told by Mr Mileham that he was sacked. Mr Mileham’s evidence was that whilst he did query with the applicant the doctor’s clearance, he did not inform the applicant that his employment was finished, and that the termination of the employment was a mutual understanding as a result of the breakdown of relations between the parties.  I turn now to the issue of termination of employment.

Was there a termination of employment?

I prefer the evidence of the applicant as to the circumstances of the cessation of employment on 19 June 1995.  There are a number of unsatisfactory aspects to the evidence of Mr Mileham.  His evidence was that prior to going to collect the car from the applicant’s home on 5 June, he had already had the locks on the factory premises changed out of concern that the applicant might take some action in relation to the premises. This fear was held notwithstanding Mr Mileham’s evidence that he was not intending to terminate the applicant’s employment at that time. Mr Mileham’s evidence was that he deliberately misled the applicant by apologising to him in the course of the second telephone conversation so as to buy time for himself to work out what to do in relation to the motor vehicle and the applicant's conduct towards him.  These matters lead me to conclude that, on balance, Mr Mileham was contemplating taking steps in relation to the applicant's continued employment at this stage.

Mr Mileham's evidence was that he was surprised at Mrs Adams using the motor vehicle and that this was not authorised. It is apparent from the evidence that Mr Mileham knew the applicant’s household only had one vehicle as a result of their recent decision to purchase a house. The arrangement for Mrs Adam to go to pick up the applicant’s pay was made with Mr Mileham. I do not accept that he would not have reasonably anticipated her use of the only vehicle at the house to attend at her husband’s workplace.  

On  6 June, the applicant attended at the workplace during his convalescence to collect some personal belongings and some reference material and ongoing work. On that day, when the applicant suggested that he could do work from home, Mr Mileham said "no, I don't want you to do any work, you are not signed off." (t extract 13.30) The reference to "signed off" was frequent in the proceeding and was a reference to whether the applicant  had a doctor’s clearance to return to work.

Whilst on 6 June the applicant was told by Mr Mileham that he ought not take any of the respondent’s work home, it is in my opinion, inconsistent with there being a mutual agreement to terminate the employment that the applicant offered to do so and then again returned to the workplace on the next working day after the expiration of the doctor’s certificate. When asked a question as to the reason why he persisted in asking the applicant whether he had been cleared by a doctor,  Mr Mileham’s evidence was that he had been advised that he ought do nothing until the sick leave had expired. Mr Mileham's evidence was:
           "I had previously taken information from wage line people and their
           advice was that nothing could be done about the whole of the situation
           until such time as Mr Adams was off sick leave because it would
           prejudice anything that happened or would happen if it was done
           during that time, so this was my insistence that after that time we
           would be free to talk about things and get on with whatever had to be
           done."   (T.Extract 44.10)
The evidence continued in that vein and I was not satisfied that this evidence was a frank account of the witness’s intentions in relation to the applicant’s continued employment. I am satisfied that the applicant did not resign from his employment and that the termination of the employment was not consensual as contended for by the respondent.  Further, the wages records of the respondent (Exhibit R7) record payment being made to the applicant of one week’s notice in relation to the cessation of the employment. 

I find that the applicant’s employment was terminated by the respondent on 19 June, 1995, when in the course of a conversation, Mr Mileham advised the applicant that he was no longer employed by the respondent. I turn now to consider the operation of s170DE(1).

Valid Reason - S170DE(1)
I am satisfied that the reason for the termination of the employment related to the applicant's assertion of his entitlement to usage of the motor vehicle as a consequence of the terms of the employment agreement between the parties and the hostile nature of the first telephone conversation. As discussed earlier in this decision, I am satisfied that the applicant's arrangement with the respondent was such as to enable his wife to use the company vehicle on occasions.  Further I do not accept that the arrangement for the use of the company vehicle was such that it could be altered unilaterally by the respondent, without discussion or consent from the applicant. The applicant asserted his entitlement pursuant to the agreement and it was that assertion of his rights, which in part resulted in the decision being made to terminate his employment. I do not accept that in this respect the respondent had valid reason to terminate the employment.

The other aspect of the applicant's conduct complained of by the respondent was the language he directed to Mr Mileham in the course of the first telephone conversation. Mr Adams sought to reduce the significance of the language he directed towards Mr Mileham in the first telephone conversation, by attributing the context as being "my wife thinks you are an arsehole". Whilst I accept that this was an accurate recounting of the conversation, frankly I do not see the distinction.

The language was offensive, whether the thought was held by the applicant or his wife, is not to the point, it was the very conveying of the sentiment in those terms which is complained of by the respondent. The applicant, on any account of the first telephone conversation, did not attempt to clarify the position with Mr Mileham before expressing his own anger and his wife's hostility, in the terms discussed above. In the context of the working relationship between the parties this conversation angered Mr Mileham and the termination resulted. In Selvachandran v Peteron Plastics Pty Ltd (Unreported decision Northrop J  7 July 1995, No. 329 of 1995)  Justice Northrop made the following observations: (6,7 )

In its context in subsection 170DE(1) the adjective “valid” should be given
           the meaning of sound, defensible or well founded.  A reason which is
           capricious, fanciful, spiteful or prejudiced could never be a valid reason for
           the purposes of subsection 170DE(1).  At the same time the reason must be
           valid in the context of the employee’s capacity or conduct or based upon the
           operational requirements of the employer’s business.  Further , in
           considering whether a reason is valid, it must be remembered that the
           requirement applies in the practical sphere of the relationship between an
           employer and employee where each has rights and privileges and duties

and obligations conferred or imposed upon them.
On balance the respondent has satisfied the onus it bears in relation to s170DE(1). I am satisfied that one of the reasons for the termination of the applicant’s employment included his conduct in addressing Mr Mileham in offensive terms in the course of the first telephone conversation. This was not a workplace where such language might be used as a matter of course, and in this case the language was directed at Mr Mileham personally and with the intention of offending the individual in the respondent who was senior to the applicant and to whom he was accountable in employment. I accept that having regard to the nature of the relationship between the two men and in particular their usual form of conducting themselves in the workplace, this language constituted conduct which founded a valid reason for the termination of the employment. I turn now to consider the operation of s170DE(2).

S170DE(2) - Harsh, Unjust or Unreasonable.

I am satisfied that the conduct of Mr Mileham in altering the arrangements between the parties as to the use of the motor vehicle, in the circumstances of the applicants illness, knowing that transport for the applicant was difficult, and without discussing the change in arrangements with the applicant, led the applicant to react in the manner that he did in the course of the first telephone conversation. I am satisfied that this was out of character for the applicant and to deal with the applicant as a result by terminating the employment was harsh.

In my view as discussed earlier, one of the reasons held by Mr Mileham, for the termination of the employment involved the very fact of the  applicant asserting his rights in relation to the agreement, and that this was an element in the decision to terminate, was in my view unjust and unreasonable.

The respondent took no action to either terminate the employment at the time of the conversation, or to warn the applicant as to his conduct, and did nothing until some weeks after the incident said to have been relied upon. There was no discussion with the applicant in relation to the concerns Mr Mileham held as to his conduct and no warning as to termination of employment. Significant time had elapsed between the incident and the termination of the employment and in the circumstances, I am satisfied that it was the persistent conduct of the respondent in pursuing the motor vehicle whilst the applicant was ill, which led to a rapid and further deterioration of the relationship between the parties. I am satisfied that the termination of the employment was harsh, unjust and unreasonable in the sense provided for in s170DE(2).

I am satisfied that there was a failure on the part of the respondent to comply with the requirements of s170DC of the Act. There was no opportunity accorded to the applicant to respond to any allegations made by the respondent in relation to his conduct.  There were no circumstances in this matter which could properly be relied upon to found a basis for arguing that according such opportunity was not reasonable.  I turn now to consider the application of s170EE to this matter.

Remedy - S170EE

S170EE(1) as recently amended provides:

In respect of a contravention of a provision of this Division (other   than section 170DB or 170DD) constituted by a termination of   employment   of an employee, the Court may, if the Court considers   it appropriate in all the circumstances of the case, make the   following orders:

(a)      an order requiring the employer to reinstate the employee by:

(i)       reappointing the employee to the position in which the   employee was employed immediately before the   termination; or

(ii)      appointing the employee  to another position on terms   and conditions no less favourable than those on which   the employee was employed immediately before the   termination; and

...

S 170EE(2) provides:

If the Court thinks, in respect of a contravention of a provision of   this Division (other than section 170DB or 170DD) constituted by   the termination of  employment of an employee, that the   reinstatement of the employee is impracticable, the Court may, if the   Court considers it appropriate in all the circumstances of the case,   make an order requiring the employer to pay the employee   compensation of such amount as the Court thinks appropriate.

In determining what if any remedy the applicant ought to receive I have had regard to all of the circumstances of this case, and in particular the fact that the reason for the termination was an isolated incident, in relation to an employee of excellent work record who conducted himself properly in the workplace in all other respects. I have also had regard to the evidence as to the difficulty the applicant faced obtaining alternative employment and the fact that I am satisfied that the respondent contributed to the length of the applicant’s unemployment, by failing to provide a reference and by in one case advising a prospective employer that he did not recall writing a reference. (Exhibit R5)  The refusal of the respondent to provide any reference even as to work performance, was in this case unreasonable.  His denying the applicant the ability to use a reference given previously, increased the difficulty the applicant faced in obtaining other employment. (Exhibit A4)  
In this case there  has been a fundamental breakdown in the relationship between the applicant and Mr Mileham as  a result of the breakdown of the agreement as to the motor vehicle usage, the circumstances of the withdrawal of that benefit and the verbal exchanges between the two men.  I am satisfied that an order for reinstatement would be impracticable. 

I have decided that an order for compensation is appropriate. There is no material before me which would satisfy me that an order for compensation ought not be made. I am satisfied that in the circumstances the amount of compensation ought relate to what would have reasonably likely to have been the length of any ongoing employment relationship between the parties.  In this matter having regard to the relatively short period of employment, together with the breakdown in relations as a result of the conduct of both parties, it is unlikely that the employment would have continued for any significant length of time, although the applicant did not obtain alternative employment until 27 November, 1995. There was a suggestion in the evidence that the respondent may have had at some stage to consider its financial position in relation to the viability of the applicant’s ongoing employment, however no decision had been made, also suggests that the employment may not have had a lengthy future. During the period of unemployment he earned the sum of $1,597.00 (Exhibit A8) in casual work.  He was paid one weeks pay in lieu of notice on termination.  This was his entitlement pursuant to s170DB of the Act. I am satisfied that the appropriate compensation is an amount representing earnings lost by the applicant in the 12 week period following the date of termination of the employment less one week for the notice period already paid.  This is an amount of $ 7,612.00.  From that amount there is to be a deduction for the applicant’s earnings in the period, as I have ordered compensation in relation to the actual loss of earnings  confined to the period discussed. The final amount payable is the sum of $6,015.00. 

The orders of the court shall be:

1. That the respondent pay to the applicant the sum of $ 6,015.00 in         compensation.

2. That the time for payment is twenty one days from the date of order.

I certify that this and the preceding thirteen (13) pages
are a true copy of the reasons for decision of
Judicial Registrar Parkinson.

Associate:
Dated:  6 February 1996

APPEARANCES

Solicitors for the applicant:  Mahons
Counsel appearing for the applicant:  Mr J Healy

Solicitors for the respondent:  Goddard Elliot
Counsel appearing for the respondent:  Mr P Buchardt

Dates of hearing :  8 & 12 December 1995