Rodney Hodgson and H.E Deipenau Pty Ltd

[1994] IRCA 163

CATCHWORDS

INDUSTRIAL LAW - Termination of employment - insurance company refusing to insure truck driver - whether a valid reason for termination - compensation - loss of earnings.

Industrial Relations Act 1988, ss.170DE and 170EE.

RODNEY HODGSON -v- H. E. DEIPENAU PTY LTD

NO. VI 1229 of 1994

Before:  STAINDL JR

Place:    MELBOURNE

Date:          16 December 1994

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1229 of 1994

BETWEEN:

RODNEY HODGSON
Applicant

AND

H. E. DEIPENAU PTY LTD
Respondent

MINUTES OF ORDER

16 December 1994  Judicial Registrar Staindl

THE COURT DECLARES:

That the termination of the Applicant’s employment by the Respondent contravened Division 3 of Part VIA of the Industrial Relations Act 1988.

THE COURT ORDERS:

1. That H. E. Deipenau Pty Ltd pay to the Applicant compensation of $16,000.00.

2. Stay of 21 days.

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

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1229 of 1994

BETWEEN:

RODNEY HODGSON
Applicant

AND

H. E. DEIPENAU PTY LTD
Respondent

REASONS FOR JUDGMENT
(Delivered Ex Tempore - Revised from Draft Transcript)

16 December 1994  Judicial Registrar Staindl

Rodney Hodgson (the “Applicant”) was employed as a truck driver in late 1987 by H.E. Deipenau Pty Ltd (known as “the company”). He continued in that employment until July 1994, when his employment was terminated by the company. He issued proceedings against H.E. Deipenau on 29 July 1994, alleging that the termination of his employment was contrary to Division 3 of Part VIA of the Industrial Relations Act. By consent, at the commencement of the hearing of this matter, the name of the Respondent was amended to H.E. Deipenau Pty Ltd. Ms Campton of counsel appeared for the Applicant and Mr Lacy of counsel appeared for the Respondent company.

The Applicant's case was that he had been dismissed for failing to disclose to the company that his driving licence had been suspended in 1991 for a period of 3 months and that he had continued to drive throughout this period.  He denied that his licence had been so suspended and ultimately this was not in issue.

The Respondent alleged that the Applicant's dismissal was because its insurer refused to insure any vehicle being driven by the Applicant and, therefore, it was obliged to dismiss him.  It is necessary to consider the background to this matter.

Background

On 11 June 1994 the Applicant was booked for speeding in the area of Kalkallo on the Hume Highway.  It was alleged that his speed was 127 kilometres per hour.

As a result of this charge the company received a notice requiring it to fit what is known as a speed limiter to the vehicle being driven by the Applicant.  This would ensure that that vehicle could not travel at a speed in excess of 100 kilometres per hour.  The Applicant denied that he was travelling at this speed.  Mr Robey, the company's manager, gave evidence that he trusted the Applicant and because of the Applicant's denial decided to investigate the matter.  His investigations raised the possibility that the Applicant had in fact been travelling in neutral gear down an incline on the highway.  It was recognised by all that this was an unsafe practice.  Mr Robey then conducted further investigations into the Applicant's driving history.

He was told over the telephone that the Applicant had three other convictions for speeding and that the Applicant's licence had been suspended for 3 months in 1991.  He was also told that there were three outstanding warrants against the Applicant.  Mr Robey conveyed this information to the company's insurance brokers who advised that there may be some concern with the insurer accepting liability for any accident involving a truck being driven by the Applicant.  The insurers, National Transport Industries, in fact stated that it would refuse to accept liability for a truck driven by the Applicant.  Accordingly the Applicant was dismissed.

On 1 July 1994 the Applicant was told by Mr Robey that the company would have to let him go.  There was some dispute about what was actually said during this conversation, but I find that Mr Robey did in fact say that the Applicant was being dismissed because its insurer would not insure any vehicle being driven by the Applicant.  However, in the course of discussions with the Applicant on that day Mr Robey told the Applicant that a reason for the dismissal was due to him having had his licence suspended for 3 months in 1991 and for having driven during that period.  The Applicant immediately denied this allegation and I am satisfied that there is no substance in the allegation.

Mr Robey's information had come via a telephone conversation from a contact within VicRoads.   Mr Robey was adamant that he was entitled to rely on such information and the decision was made to dismiss the Applicant once this information was forwarded to the insurers (and with the decision of the insurers not to insure following almost inexorably).  At no stage prior to the Applicant being told that he was dismissed was he given a chance to answer the allegations.

It was submitted by Mr Lacy that the company had carried out a reasonable investigation prior to the company dismissing the Applicant.  He referred me to the case of Gregory v Philip Morris 24 IR 397 where Jenkinson J, says at page 398:

“The question whether the termination was unreasonable is, I think, one of fact.  This question requires a determination, by reference to moral values and prudential considerations current in the community, of what the tribunal of fact thinks a reasonable employer in the circumstances would have decided to do at the time when the respondent terminated the appellant's employment.”

Wilcox and Ryan JJ, at page 413 of that decision say this:

“The question whether a dismissal is harsh, unjust or unreasonable must be determined in the light of the facts as they appear at the relevant time.  We accept that, if the relevant facts are not clear, it is the obligation of an employer bound by a provision such as clause 6(d)(iv) to establish those facts before dismissing an employee; cf the observation of Lord Mackay of Clashfern in Smith v Glasgow District Council [1987] IRLR 326 at 329:

‘As a matter of law a reason could not reasonably be treated as sufficient reason for dismissing Mr Smith when it had not been established as true, nor had it been established that there were reasonable grounds upon which the special committee could have concluded that it was true.’”

“But provided that the employer discharges the obligation to investigate the facts a dismissal does not contravene the provision merely because it later appears that the true facts differed from those which appeared at the date of the decision to dismiss.”

These views may be contrasted with those of Gray J, in Byrne v Australian Airlines Limited and Frew v Australian Airlines Limited, reported at 52 IR 10. At page 63, His Honour in that case says:

“Plainly, it would be harsh, unjust and unreasonable to dismiss an employee for an offence which he or she had not committed.  In a proceeding in which a breach of the clause is claimed, the Court is required to determine whether, as a matter of fact, the cause which the employer advanced as a ground for dismissal existed.  The Court will determine that issue on the evidence before the Court, nor merely on the evidence available to the employer.  In determining that issue, the Court must inevitably take into account the credit of the various witnesses called.  As Gregory illustrated, the Court may even take into account facts which have occurred since the dismissal, in determining what possible developments ought to have been taken into account by the employer.”

In the present case I do not need to decide which approach is to be preferred, for even adopting the approach of Wilcox and Ryan JJ, in Gregory's case, I am not satisfied that the company discharged its obligations to establish the relevant facts prior to dismissing the Applicant.

The circumstances of this case demonstrate the importance of employees being given an opportunity to respond to allegations made against them.  Even though the information was gained from an apparently reputable and reliable source - the VicRoads computer - it was wrong.  The Applicant's denial of the allegation should have alerted the employer to investigate the matter further.  This is particularly so as Mr Robey, and in fact Mr Deipenau himself, regarded the Applicant as a trustworthy employee.

The explanation given by the Applicant for the error in the VicRoads records related to some charges being laid against him in 1991.  These charges included one that he refused to deliver up to police a speed detection device.  This normally carried a 3 month’s suspension of licence.  The Applicant informed the magistrate at the time that the device was not his and I infer that the magistrate accepted this explanation.  Accordingly the Applicant was placed on a bond to be of good behaviour for a period of 12 months.  This bond was discharged on 6 October 1992.

Evidence was called on behalf of the Respondent from Mr Galera, a representative of National Transport Industries.  He gave evidence that the most important factor in declining to accept the Applicant as a driver was the alleged suspension of licence for 3 months and the failure to disclose to the insurer such loss of licence.  Otherwise he would have accepted the Applicant as a driver.  Thus, if the company had properly investigated the matter and provided accurate information to the insurance company then it would not have refused to insure a vehicle being driven by the Applicant.

Two further points need to be made about the company's actions.  In the above discussion I have assumed that the company would have been entitled to dismiss the Applicant if the company's insurers had refused to accept the Applicant as a driver.  I do not accept that this follows.  Firstly, on the evidence there was nothing said to the Applicant to suggest that it was a condition of his employment that an insurance company should accept him as a driver.  And secondly, even if it could be said that the acceptance by an insurer of the Applicant as a driver was a condition of the Applicant's employment it seems to me that the company would need to make substantial efforts to obtain alternative insurance in any particular case.  In this case the company failed to do this.  There was nothing to suggest that any efforts had been made to obtain insurance from any other insurer.  It follows, therefore, that in my view the company does not have a valid reason for terminating the Applicant's employment.  I add that even if I am wrong about this and the company did have a valid reason, then in my view the circumstances of the dismissal are harsh, unjust and unreasonable.  These findings lead me to the question of a remedy.

Remedy

Since the Applicant's employment was terminated, the Respondent's business has been sold and this circumstance leads me to the conclusion that the reinstatement of the Applicant is impractical.  This was conceded by both sides.  The Applicant's employment was terminated on 1 July 1994.  It was agreed by the parties that the Applicant's loss of income between his date of termination and the date of hearing submissions in this matter is the amount of $15,549.  I also note that the Applicant's income is less in his current employment than it was with the Respondent company.  I make some small allowance for this although because of the lack of evidence on the point, I do not award a larger amount.  In the circumstances of this case I am prepared to award the total sum of $16,000 compensation to the Applicant.  I should add that this takes into account the inadequate notice given to the Applicant upon the termination of his employment when he was given two weeks pay in lieu of notice rather than four weeks.  (See subsection 170DB(2)).

One further matter needs to be addressed.  Although it was not fully argued, Mr Lacy submitted that I was limited to awarding compensation for the six-month period following termination of employment.  This, it was said, arose from the provisions of subsection 170EE(3).  I indicate that my preliminary view is that this subsection sets an amount of compensation able to be awarded.  That amount is set by the remuneration which the employee would have received (or have been likely to have received) in a six-month period.  The factors taken into account in ordering compensation need not be confined in temporal terms to the six month period following termination.  Nevertheless in the circumstances of this case I am satisfied that the amount of compensation to be ordered does not in fact exceed the amount which is referable to the Applicant's loss of income for the period 1 July 1994 to 1 January 1995. 

Accordingly, the order of the court is that the Respondent pay to the Applicant the sum of $16,000.  There will be a stay of 21 days in respect of that order.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of Judicial Registrar Staindl as recorded in the draft transcript and revised by the Judicial Registrar.

Associate:

Dated:               

Counsel for the Applicant:	Ms Campton
Counsel for the Respondent:	Mr Lacy
Dates of hearing:	16 December 1994
Date of Judgment:	16 December 1994