Roswitha Margaret Soltwisch v Didco Pty Ltd
[1995] IRCA 319
•19 July 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA
DISTRICT REGISTRY
No. WI 1387 of 1995
B E T W E E N
ROSWITHA MARGARIT SOLTWISCH
Applicant
A N D
DIDCO PTY LTD
Respondent
Before: Judicial Registrar Millane
Place: Perth
Date: 19 July 1995
REASONS FOR JUDGMENT
This is an application for the payment of compensation pursuant to Division 3 Part VIA of the Industrial Relations Act (the Act). It is contended by the Applicant that on 28 February 1995 her employment as a Property Manager with the Respondent was unlawfully terminated.
The Respondent company conducts a real estate business which, amongst other things, involves it in the management of client properties. The Applicant was employed with the Respondent from 14 June 1993 to 28 February 1995. By November 1994 she had been promoted to the position of Senior Property Manager at the Respondent’s Shelley office on a salary of $33,500 per annum. Her duties were described by the Respondent as including looking after landlord properties and ensuring proper tenant selection, collection of rents, maintenance of properties and the proper keeping of records.
Whilst it was conceded by the Respondent that the Applicant’s salary comprised $28,400 pay plus car expenses of $5,200 per annum, there was a dispute as to how the court should treat the payment of the car allowance; that is to say whether it should be treated as a salary sacrifice or merely the payment of car expenses. On the evidence (see Exhibits A1 and A2) it is apparent that the Applicant was offered a total sum as salary and received both her normal pay and a non-taxable allowance paid weekly. Tax was deducted from the normal pay by the Respondent giving the Applicant a nett weekly payment as well as the allowance. On this evidence I am satisfied that the car allowance forms part of the remuneration payable to the Applicant and for the purposes of calculating any entitlement she has to compensation under the Act her remuneration was $33,500 per annum as alleged by her as at the date of termination.
Facts
Some months prior to her termination the Applicant was given a mobile telephone for use and to enable her company to give after hours service to clients. There is no evidence that such use was restricted in any way.
Nicholas Varga (Varga) is a Director and shareholder of the Respondent company and deposed to some sixteen years experience as a real estate salesman with nine and half years as an owner of the Respondent business. He alleged that from approximately 16 January 1995 he took over the checking of the company’s accounts coming into the offices. On or about 16 February he saw a telephone account for the Applicant’s mobile telephone. He sought to query some of the items on that account and sent the account to the Respondent’s Shelley office where the Applicant worked. The account had a notice attached asking “Rose who is 5933387?”. A further note was attached and addressed to the Administration Manager, Marie Hart (Hart), asking her to check with the Applicant as to whom the telephone number belonged. Varga’s interest was aroused because the account showed a number of long calls to a particular telephone number. Hart corroborated Varga’s evidence to the extent that she recalled receiving the account with notes attached and, because she has a daughter living in the same telephone area as the number queried, immediately formed the view that the calls to this number were probably personal calls. Hart gave evidence that it was part of her job to check accounts and calls made and, from time to time, to charge the amounts to the landlord accounts. Because she was certain the calls queried were personal calls and, further, because she had had what she described as “the odd fall out on accounts” with the Applicant, she rang Varga and told him that she preferred him to take up his query with the Applicant himself. There is no evidence that Hart told Varga that she believed the calls were personal calls. Accordingly, I accept Varga’s evidence that when he met with the Applicant on 16 February 1995 to query the account he did not have any preconception that the calls were personal rather than client calls.
Both parties agree a meeting occurred between the Applicant and Varga on 16 February 1995 at Varga’s request. The Applicant contends that he handed to her the account at that meeting and said “Who the hell does 5933387 belong to?”. She gave evidence that she was shocked by this because there had been no suggestion that the mobile telephone could not be used privately. She was also embarrassed by the knowledge that the number referred to was her daughters. Her contention is that at all times she intended to pay for the personal calls once invoiced for them, even though she had never previously been invoiced for calls by her employer. Notwithstanding this intention, instead of telling Varga that the number was her daughter’s and that she would pay for the calls, she immediately said “It could be an owner - I’ll have to check”.
Varga denied using the words “Who the hell is 5933387?”. Having accepted his statement that he was not aware of the Applicant’s prior personal use of the telephone it is more probable than not that he entered the meeting and said as he alleged “Who does this number belong to?”. At that time he was not angry and indeed both parties agree that he accepted the Applicant’s initial explanation and instructed her to copy the account and see Hart to arrange for the landlord to pay the account. In instructing her Varga also commented that it was not profitable for the company to manage the property if it was to pay the cost of these calls.
It is contended by Varga that the Applicant’s explanation at the meeting went further than she suggested in her evidence in chief. First he alleged that she responded to his query without any hesitation whatsoever and, secondly, she made the positive assertion that the number belonged to a landlord who always paged her and expected her to return the call. Varga was adamant that there was no qualification in the Applicant’s response to the effect that the number “could” have been a landlord’s number. I accept his evidence on this point as his subsequent instructions are consistent with a belief that it was a landlord’s expense to be charged to the appropriate account.
The meeting ended with the Applicant photocopying the account, going home, highlighting the personal calls and making out a cheque for $56.41 in favour of her employer.
Shortly after the meeting Varga informed Hart that he had directed the Applicant to arrange to bill the landlord for these expenses. It was then that Hart told Varga that the number was the Applicant’s daughter’s number and confirmed this by reference to the Applicant’s teledex.
Varga does not work at the Shelley office but attends at various times. On the following morning he attended the office and, at approximately 9.15 am, the Applicant asked to meet with him. She alleges she told Varga some of the calls were personal and that she did not then have a telephone at home. She gave him her cheque which was accepted by him and when he said “You admit that you lied to me?” she alleges she said “Yes”.
Varga agreed he accepted the cheque however he was uncertain as to whether he was told that the Applicant did not have a home telephone number at that stage. It was his belief that he was told this on the date he terminated the Applicant’s employment. Varga alleges that when at first he queried the Applicant as to why she had told him the number was a landlord’s number, she denied saying this. After being pressed on this matter only then did she agree that she had lied on the previous day. Because of this behaviour Varga told the Applicant that she had breached his trust. Further, that he had had doubts in the past about her lying and asked her to put herself in his position because he did not think that he could trust her in the future. He also told her that “her position” was in jeopardy and that he would have to consider the matter further. In substance the Applicant in cross examination agreed that Varga responded in the manner described by him. Both parties agreed that Varga also told the Applicant that if the Applicant had disclosed to him that the number was her daughter’s telephone number, he would have treated the matter differently. In other words, it was not the case that the Respondent was concerned by the employee making personal calls, it was her misconduct in blatantly lying to Varga which raised doubts in his mind as to whether she had previously lied to him concerning a number of past difficulties in the management of certain property files.
Between 17 February 1995 and 28 February 1995 it is the evidence of Varga that he took time to check at least six property files handled by the Applicant which were the subject of dispute between the Respondent and the owners. Very early in the proceedings Ms Lee representing the Applicant objected to the admissibility of certain evidence regarding complaints about the handling by the Applicant of a number of the files referred to. In so far as Varga was unable to adduce direct evidence from relevant witnesses as to many of the matters alleged the Applicant’s objection was sustained. Nevertheless, I am satisfied and have accepted Varga’s evidence that he did consult the files identified by him and having consulted those files rightly or wrongly formed the view that the Applicant had not been truthful concerning complaints raised in those matters and, such view coupled with the telephone account incident led to a decision on 27 February or 28 February to terminate the Applicant’s employment on 28 February 1995.
Termination
A meeting was arranged on 28 February 1995 at which it is agreed Varga terminated the Applicant’s employment by giving her one week’s pay in lieu of notice and asked her to leave immediately, which request she complied with. The Respondent accepts that because of her eighteen months service the Applicant was, pursuant to s170 DB of the Act, entitled to two weeks notice and acknowledges that an appropriate order should be made for damages for one week’s compensation; namely $644.23.
Whilst there is some degree of difference in the parties’ account of Varga’s final words to the Applicant, it would be fair to say that they agree that he reiterated the matters to do with the telephone account and the fact that the Applicant had lied to him. Further he told the Applicant he could not trust her and could not work with her in the future because he would not be certain that she was being truthful. Although he again referred to doubts he had had about her truthfulness in the past he did not specifically refer to the files he had consulted in deciding to terminate her employment. The Respondent does not dispute that he did not on the occasion of the termination of the Applicant’s employment give the Applicant the opportunity to explain the matters raised vis-a-vis her past conduct. However, it is contended by the Respondent that the Applicant was given that opportunity when the occasions arose previously and on each of those occasions the Respondent had given the Applicant the benefit of the doubt. Following the telephone account incident and his review of the earlier incidents Varga formed the view that he had been wrong and that the Respondent had been lied to by the Applicant on these occasions.
Valid Reason
Ms Lee contends that of itself the incident whereby the Applicant deliberately lied to her employer does not provide a valid reason for termination of her employment, such as is required by section 170DE(1) of the Act.
The reason given at termination and proffered in court is that the Applicant lied to the Respondent about at least one matter if not a number of matters relevant to her employment contract. From this I understood the Respondent’s case to be that the Applicant’s behaviour amounted to misconduct in that it breached her implied duty of good faith and because of this provides a prima facie case for saying that there was a valid reason for termination. The fact that the incidents of alleged dishonesty in the past were not all substantiated at hearing does not override the evidence that there was at least one instance of deliberate lying which was substantiated and should be construed as misconduct.
Accordingly, I am satisfied on the evidence that there was at least one valid reason for terminating the Applicant’s employment, which reason permits the conclusion that the Respondent has discharged it’s burden of proof under section 170EDA.
Of the six files consulted by Varga and relied upon by him in saying that he formed the view that the Applicant had lied to her employer on employment matters on previous occasions, only three were the subject of direct evidence or admissions by the Applicant.
The first was a property at Willeton formally owned by Jack True (True) and managed by the Respondent’s company for some nine or ten years. After the Applicant took over the management of True’s property there was a falling out and True took the property management and ultimately its sale from the Respondent. The allegation is that after tenants vacated the property a large hole was noticed in the ceiling. True gave evidence that he was not happy with the service he was getting from the Applicant, who had told him she was too busy to look at the ceiling. He was obliged to keep ringing her to ask her to inspect it. Eventually True arranged a meeting with the Respondent’s General Manager, Gary Cooper, and the Applicant at the Respondent’s office. During this meeting True alleged that the Applicant told him she had inspected the property. However, when pressed, he then said that she had been to see the property and had been unable to gain access. This was even though True had given her permission to enter the property and had arranged with the tenants for her to do so. According to True, the Applicant contradicted her earlier statement by saying that in any event there was no point in going around to the property because there was an inspection due in the following week. True concluded from this that she had lied when she said she had been to the property. As a result True alleges he then said “Someone is telling lies and it’s not me”. According to True the Applicant was not happy when he said this and “huffed and carried on ...” and again said there was no point in going around because there was to be an inspection in the following week.
In cross examination the Applicant denied True was dissatisfied with her performance in the management of the property and denied that he made the statement at the meeting that someone was telling lies and it was not him. True was an independent witness and I have no reason to reject his evidence on all these matters. Varga’s evidence was that all the complaints were recorded in the files and that is how he came to know of these matters. On the evidence, I am satisfied that Varga interpreted the Applicant’s conduct in relation to this file as conduct where she had not acted honestly and this led to the loss of the client after many years of what True described as good service until the Applicant took over the file. Even if these matters were not contemporaneously known to Varga when he terminated the Applicant’s employment they are clearly relevant to the question of whether the termination was harsh, unjust or unreasonable and any expectation of security of employment the Applicant may have entertained.
A second property in Rossmoyne was the subject of complaints which led to Varga calling a meeting at his office with the owners during which meeting the owners alleged that, amongst other things, the Applicant had failed to return numerous calls by them to her. Varga gave evidence that this complaint, as well as others, were put to the Applicant at that meeting. In cross examination the Applicant admitted that there were complaints about the condition of the property, but at first did not recall any complaints from the owners about her returning at least six calls and further denied that they had made any complaints at that meeting about her professionalism in not returning those calls. In so far as Varga has given specific evidence of this particular complaint at that meeting I have accepted his evidence and further accept that by the date of termination he had cause to be concerned that the landlords may have been justified in their complaint and that the Applicant had not been truthful.
In cross examination the Applicant conceded in respect to another property at Applecross that she had been accused by R. Lombardo, the Respondent’s franchisee at the Applecross office, of lying in her dealings with the owner of that property who happened to be Lombardo’s father-in-law. The Applicant denied the substance of this allegation then and at hearing. The Respondent did not call direct evidence to prove the substance of this allegation, however, I am satisfied that this was an issue which Varga referred to in deciding on a previous occasion the Applicant may have acted dishonestly in her employment.
Section 170DC
In this court there are now many decisions clearly adopting Chief Justice Wilcox’s succinct analysis of the obligations arising pursuant to this section where he says in his decision in Nicolson v Heaven and Earth 126 ALR 233 at page 243 -
“The paragraph does not require any particular formality. But this does not mean that it is unimportant or capable of profunctory satisfaction. Section 170DC carries into Australian labour law a fundamental component of the concept known to lawyers as “natural justice” or, more recently, “procedural fairness”. The relevant principle is that a person should not exercise legal power over another, to that person’s disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case.”
Dealing only with the telephone account allegation relied upon as a valid reason for termination, on the evidence it cannot be said that the Applicant was denied the opportunity to explain or defend her conduct. However, the other allegations and earlier conduct were never specifically brought to the Applicant’s attention either on 17 February or at the date of termination. The Respondent argues that the other allegations or prior conduct had by 17 February 1995 been the subject of discussion and that the Applicant had already been given an opportunity to defend herself. Since the employer had accepted her earlier explanations she had clearly been successful in convincing the employer that her version of events was accurate. In this case the later event has caused the employer to reconsider it’s acceptance of the Applicant’s explanation of conduct which involved allegations that she had lied about certain matters to do with the client files. It is the loss of the opportunity to defend herself against the conclusion drawn by the employer in respect to these earlier matters after the employer reviewed these files which transgresses the notion of procedural fairness contained in section 170DC.
Harsh, Unjust Or Unreasonable
The lack of procedural fairness afforded the Applicant in the termination process is relevant to the question of whether the termination was harsh, unjust or unreasonable. So too are mitigating factors such as the Applicant’s approach to Varga the day after the meeting on 17 February 1995 when she proffered a cheque in full payment for the personal calls made and eventually conceded that her explanation on the previous day had been a lie. There is no evidence that this employer acted in an oppressive way or had given the Applicant any reason to think that it was against her employment interests to immediately tell Varga that the calls were personal expenses and offer a cheque for payment. In context the Applicant’s claimed shock and embarrassment when confronted with the account is difficult to understand because there is no apparent reason for this other than the guilt associated with making long and expensive personal calls on her employer’s telephone.
The employer contends that this Applicant was in a position of trust as a Senior Property Manager. The property rental business is a core business and problems such as those experienced by True which led him to withdraw his property from the Respondent threaten the Respondent’s business. Mutual trust is an important aspect of the employment contract and, in all the circumstances, I am not prepared to say that the employer acted harshly, unjustly or unreasonably in terminating the Applicant’s employment. What did occur amounted to a procedural irregularity which deprived the Applicant of the opportunity to retain her employment by further explaining the matters relating to the earlier files and defending herself against the further allegations of lying. However, the evidence now demonstrates that if the employer had acted in compliance with section 170DC it is likely that it could have brought her employment to an end sooner rather than later.
Mitigation
The Applicant gave evidence that she had not sought employment since termination of her employment because of her embarrassment in having to tell prospective employers, if they enquired, that her last employment was terminated for lying to her employer. Ms Lee submitted that it was appropriate for the Applicant to await the outcome of the hearing so that she could approach employers on the basis that she had been unlawfully terminated. Such a submission ignores the uncontested fact that the Applicant was dismissed for deliberately lying to her employer. No finding of this court can alter that fact and if asked by a prospective employer what the reason was for her termination the Applicant cannot avoid this explanation. Moreover, it would be inappropriate for this court, in dealing with compensation claims rather than reinstatement claims, to appear to endorse an approach that suggests Applicants can decline to test the employment market pending the determination of the proceedings, particularly where the facts central to a reason for termination are admitted. Accordingly I am unable to find that the Applicant’s failure to seek further employment is reasonable in all the circumstances.
Remedy
I have concluded on the evidence that reinstatement is not practicable. It was submitted by the Respondent that if the termination was found to have been procedurally unfair the court should limit its assessment to no more than one month’s remuneration. I accept that submission and taking into account the amount paid by way of compensation in lieu of notice I assess appropriate compensation to be $1,288.64 and propose to make an order for this sum together with an order for damages in the sum of $644.23.
THE COURT ORDERS THAT within 21 days of the date of these orders:
The Respondent pay to the Applicant compensation in the sum of $1,288.64.
The Respondent pay to the Applicant damages in the sum of $644.23.
I certify that this and the preceding fifteen (15 ) pages are a true copy of the reasons for judgment of Judicial Registrar Millane.
Associate:
Dated: 19 July 1995
Solicitors for the Applicant: Messrs Birman & Ride
Representative for the Applicant: Mr E. Lee
Representatives for the Respondent: Mr D.J. Jones
Chamber of Commerce & Industry of Western Australia
Date of hearing: 7 July 1995
Date of judgment: 19 July 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA
DISTRICT REGISTRY
WI 1387of 1995
B E T W E E N
ROSWITHA MARGARIT SOLTWISCH
Applicant
A N D
DIDCO PTY LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Millane 19 July 1995
THE COURT ORDERS THAT within 21 days of the date of these orders:
The Respondent pay to the Applicant compensation in the sum of $1,288.64.
The Respondent pay to the Applicant damages in the sum of $644.23.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - MISCONDUCT - deliberately lied to employer - PROCEDURAL FAIRNESS - HARSH, UNJUST OR UNREASONABLE - MITIGATION - awaiting the outcome of the hearing before seeking employment.
Industrial Relations Act 1988 ss.170DC, 170DE(1) and (2)
CASES: Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 126 ALR 233
ROSWITHA MARGARIT SOLTWISCH -V- DIDCO PTY LTD
No. WI 1387 of 1995
Before: Judicial Registrar Millane
Place: Perth
Date: 19 July 1995
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