Pouw, William v Strasburger Enterprises (Properties) Pty Ltd
[1997] FCA 877
•19 AUGUST 1997
FEDERAL COURT OF AUSTRALIA
INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION -
JURISDICTION - whether binding settlement - whether agreement finalised - VALID REASON - CONDUCT and PERFORMANCE - whether employee’s stock control and financial accounting methods at required standard - significant discrepancies and stock losses in audits beyond acceptable level - whether termination capricious -
COSTS - whether steps taken or failed to be taken by the other side in the proceedings resulted in there being an incurring of additional costs - whether
any step attributable solely to one or the other party -
Workplace Relations Act 1996 ss170DC, 170DE(1), 170EA, 170EHA
Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371
POUW -V- STRASBURGER ENTERPRISES (PROPERTIES ) PTY LTD
VI 1092 of 1997
PARKINSON JR
MELBOURNE
19 AUGUST 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) VI 1092 of 1997
)
GENERAL DIVISION )
B E T W E E N: William POUW
Applicant
AND: STRASBURGER ENTERPRISES
(PROPERTIES) PTY LTD
Respondent
JUDICIAL REGISTRAR : PARKINSON
PLACE : MELBOURNE
DATED : 19 AUGUST 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application made pursuant to Section 170EA of the Workplace Relations Act 1996 be dismissed.
No order be made as to costs.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) VI 1092 of 1997
)
GENERAL DIVISION )
B E T W E E N: William POUW
Applicant
AND: STRASBURGER ENTERPRISES
(PROPERTIES) PTY LTD
Respondent
JUDICIAL REGISTRAR : PARKINSON
PLACE : MELBOURNE
DATED : 19 AUGUST 1997
REASONS FOR JUDGMENT
This is an application made pursuant to Section 170EA of the Workplace Relations Act 1996.(‘the Act’) On 30 May, 1997 a binding settlement was alleged to exist in the proceedings. I ruled that no binding settlement of the proceeding had been reached between the parties and reserved my reasons. My reasons for so ruling are that I am satisfied that it was a term of the agreement between the parties that the formal terms of settlement be executed and by deed. No such execution of the terms occurred and I am not satisfied that there was a final or binding settlement as a consequence. Nor am I satisfied that the parties were at one as to the terms of the settlement and consequently I am not satisfied on the material before the Court that any agreement was finalised. I am satisfied that the parties were progressing negotiations as to terms. I turn now to consider the evidence in these proceedings and my findings as to fact.
The applicant was employed by the respondent as the manager of its convenience store operation, located at Sandown. The respondent operates the convenience store under the trading name ‘Quix’ and is part of the Mobil Group of Companies. The applicant’s duties included stock control, financial management and reporting and supervision of staff and sales. The Quix stores sell supermarket items, hot foods, together with petrol sales. The stores operate 24 hours per day, 7 days per week.The applicant commenced employment with the respondent on 11 September, 1995. He was initially employed as a Trainee Manager, receiving in house management training at Blackburn and then working at the Narre Warren and Karingal stores as a Trainee Manager. He was appointed Manager of the Sandown Quix Store in May, 1996. His employment was terminated on 12 December, 1996.
The respondent contends it had valid reason for the termination of the employment based upon the work performance and conduct of the applicant. It contends that the applicant’s stock control and financial accounting methods were not at the standard required and that despite attempts to resolve the problems arising in the stock control of the store, the applicant did not reach the standard required by the respondent. It further contends that discrepancies as to cash management, which were discovered by the respondent after the termination of the employment, make any order for reinstatement or compensation, in all the circumstances, inappropriate.
The basis for the concern of the respondent was that significant discrepancies, ie. stock losses, appeared in the inventory audits undertaken by the respondent’s internal store Auditor, Ms. Ciappara. The capacity of Ms Ciappara as an auditor was challenged by the applicant’s counsel, on the basis that she had no auditing qualifications and that her audit result in relation to one item revealed an initial failure to account for an item subsequently found to exist. The evidence of Ms. Ciappara was received by the Court, not as expert evidence, but as evidence of the processes and procedures undertaken by the respondent in its financial management and controls. Whilst Ms. Ciappara had no tertiary financial management qualifications, she had extensive experience with and knowledge of the respondent’s internal accounting procedures and stock control methods. I accept the evidence of Ms. Ciappara as accurate and accept that her evidence and the documents which she identified, properly identified the deficiencies in stock management at the Sandown store.
The evidence of Ms. Ciappara was that the discrepancy levels were beyond those usually experienced at the respondent’s stores and in excess of the margin for discrepancy of 1.2% allowed for by the audits. Three audits of the Sandown Store were conducted in each of September, October and November of 1996. (Exhibits R14, R15 and R16). The stock variance report of 4 September, 1996 showed a preliminary stock to invoice discrepancy of $9,461.00. This was a variance of 7.5 %. The evidence of Ms. Ciappara and Mr. Pupillo, the Regional Manager, was that a variance of 1.2% stock to invoice was recognised as being an acceptable variance level.
The respondent, by its Regional Manager, Mr. Pupillo, discussed the September audit result with the applicant and discussed measures which could be taken by him to address the problem of such a high variance level and a number of recommendations were made by Mr Pupillo in this regard. The store was put on what was described as ‘Maximum Financial Control’. This involved a more frequent auditing of the store and more stringent financial control required by the manager. By letter dated 4 September, 1996, (Exhibit R1), the applicant was advised by Mr Pupillo of the specific expectations as to his future management of the store.
On 30 September, 1996, after the preliminary audit results had been confirmed, the applicant was provided with a letter advising him of the confirmed stock loss amount of $10,230.00 or 7.33% of the store sales.(Exhibit R2) In that letter it was confirmed with the applicant that the level of tolerance for stock loss in inventory company wide was 1.2%. In that letter the applicant was warned that if his position did not in the next six weeks come within expectations, his position as store manager would be reviewed. I accept that such a letter is, on any ordinary reading, a letter warning the applicant that his continued employment was in jeopardy.
On 18 October, 1996 a further audit identified a further significant discrepancy of $4,291.00 or 5.3% of sales. A further letter was written to the applicant advising that such a result was unacceptable.(Exhibit R3) In this letter each of the areas of concern to the respondent in terms of the audit was specified. A further meeting to discuss the audit was to take place after the audit results had been confirmed.
On 24 October, 1996 a meeting took place between the applicant and Mr. Pupillo, as to the October audit. At that meeting Mr. Pupillo reiterated that the inventory loss was unacceptable and required an immediate improvement. The applicant was advised in writing that he had 30 days to improve the management of the store to the stage where his stock losses came within the toleration level of 1.2%. He was advised that, if this improvement did not occur, his employment would be terminated. Attached to the letter was a further action plan for the management of the store.(Exhibit R4) The action plan, drafted by Mr Pupillo, set out various steps to be taken by the applicant and a timetable for implementation.
On 5 December, 1996 a further audit was undertaken and a stock to invoice discrepancy of $1,142.00 identified. This was a shortfall of 2.2% of stock to sales. Having received these results Mr Pupillo decided to terminate the employment of the applicant and a meeting was arranged to take place on 12 December, 1996, after the results of the audit had been confirmed. The evidence of Mr Pupillo is that at the meeting he went through the last audit results and asked the applicant to respond. This was not contradicted by the evidence of the applicant. The employment was terminated on 12 December, 1996.
The applicant contends that, having regard to his education level, it was unreasonable of the respondent to expect him to be able to undertake the financial management regimes required of a store manager. It is further contended that the applicant had inadequate training in this regard. I do not accept that this is so. It is apparent, from cross examination, that the applicant had previously been employed in restaurant management at manager level and had completed management training courses in the food or hospitality industry.
Further I am satisfied that the applicant received extensive training by the respondent in the management of stores, both in a formal training environment and on the job as a trainee manager, prior to commencing as manager at the Sandown Store. I am also satisfied that the applicant had adequate opportunity to raise any difficulties he encountered or any areas where he was unable to understand proper procedure.
The applicant’s evidence was that he raised with Mr. Pupillo a number of reasons which would account for the poor audit performance of the store. His explanation was that another employee was taking stock of the respondent, that there was a computer problem causing different reports as to stock variance and that the internal security camera was inadequate to enable proper detection of pilfering in the store. The substance of the applicant’s evidence is that the control of stock and cash management procedures in the store were matters which were beyond his control, either because of training inadequacies or because of inadequate computer or security processes.
I accept the evidence of Mr Pupillo that no such explanations were given to him by the applicant at the occasion of the interview after the first unsatisfactory audit taking place or at any other occasion. I also accept the evidence of Mr. Mathew Clark, the Information Systems Administrator, as to there being no malfunctions of significance with the computer systems operating for either invoice reconciliation or cash systems in the store. As to the allegations against the former staff member, the evidence is that the staff member concerned had ceased to be employed in the store some weeks after the applicant commenced as manager. The stock deficiencies continued for the entire time of the applicant’s employment. If they had been attributable to the former employee, they would have been likely to have significantly reduced after that employee left the employment. They did not. There was no evidence of any positive steps being taken by the applicant to remedy any of the matters complained of by him as making management of the stock difficult. No steps were taken by him as to the camera being turned to face the fridge. This matter was never put to Mr. Pupillo as having been raised by the applicant with him and as stated earlier in this decision, I am satisfied that Mr Pupillo’s evidence of the content of the conversations held with the applicant in September and October was accurate.
I am satisfied that the respondent has established that its processes were reasonable and that there was no aspect of the requirements of the applicant as manager of the store which was unreasonable or oppressive having regard to the systems operated or the applicant’s level of skill or training. I do not accept that the applicant’s education level is a basis for finding that the expectations of the respondent as to store management were unreasonable. This aspect of the submission on behalf of the applicant suggests a finding that the applicant was in any event generally unsuitable for the employment.
Having regard to the above matters I am satisfied that the respondent had valid reason for the termination of the applicant’s employment, based upon the applicant’s work performance. I am satisfied that the actions of the respondent in terminating the employment was sound defensible and well founded in the sense discussed by Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. I am also satisfied having regard to the many opportunities given to the applicant to improve the position, together with the assistance provided by the respondent in this regard, that the termination of employment was not implemented capriciously. I am satisfied that the applicant did not perform his duties as manager of the store with the skill and capacity required, and that his work performance did not improve to a level which was adjudged reasonably by the respondent to be satisfactory.
As to the operation of s170DC of the Act, I am satisfied that the respondent has complied with its obligations arising from this provision. For a significant period of time prior to the termination of the employment the applicant was on notice as to the concerns of the respondent as to his work performance. These concerns were expressed in written form and I am satisfied each of them was provided in writing to the applicant. Whilst at the time of the termination interview the applicant’s final payment had already been made up, having heard Mr. Pupillo, I am satisfied that had the applicant provided or wished to provide a further explanation as to the matters of concern, he did have the opportunity to do so, prior to the termination of employment being effected by the respondent.
In view of my finding as to valid reason, there is no necessity, in the context of remedy, for a consideration of the matters arising from the discrepancy alleged by the respondent to exist in relation to cash transactions conducted or controlled by the applicant.
I am satisfied that there has been no contravention of ss170DE(1) or s170DC of the Act and consequently the application brought pursuant to s170EA of the Act will be dismissed.
COSTS - VARIOUS APPLICATIONS
During the course of the proceedings applications were made pursuant to s170EHA(1) for orders as to costs. It was submitted by both the respondent and the applicant that steps taken or failed to be taken by the other side in the proceedings resulted in there being an incurring of additional costs. Principally under contest were the circumstances surrounding an alleged settlement and a failure to execute a settlement. The failure of the settlement, the subject of earlier consideration in this decision, resulted in the adjournment of the proceedings on an occasion where the hearing was listed to proceed. In the circumstances of the confusion as to settlement, I am not satisfied that the conduct of the applicant in not attending the hearing, on the occasion of 30 June, 1996, was unreasonable having regard to his belief that the matter had settled. As to the other dates, I am not satisfied that there was any step attributable solely to one or the other party in the proceedings which would warrant an order for costs being made pursuant to 170EHA(1) of the Act. I decline to make any order as to costs.
I certify that the preceding eight (8) pages
are a true copy of the Reasons for Judgment of
Judicial Registrar Parkinson.
Associate :
Dated : 19 August 1997
APPEARANCES
Counsel for the Applicant : Mr. A. McDonald
Solicitors for the Applicant : McDonald Murholme
Counsel for the Respondent : Ms. L. Fleming
Solicitors for the Respondent : Corrs Chambers Wesgarth
Dates of hearing : 30 May, 2 & 13 June 1997
0
0
0