Shields v Carlton & United Breweries (NSW) Pty Ltd

[1999] FCA 377

Eric Shields v Carlton & United Breweries (NSW) Pty Limited [1999] FCA 377
No. NG 1108 of 1998
Number of pages - 7
Industrial Law
(1999) 168 ALR 311

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

RYAN, MOORE AND MARSHALL JJ

Industrial Law - termination of employment for alleged misconduct - relevance of evidence of employer's condonation of similar acts of misconduct in the past - whether setting aside of findings of fact at first instance questioned on appealentails conclusion that no valid reason existed - employee's opportunity to respond to allegations - whether extends to opportunity to raise extenuating ircumstances or other mitigating factors.

Industrial Relations Act 1988 (Cth) ss170DC and 170DE.

Perrin v Des Taylor Pty Ltd (1995) 58 IR 254, applied.

Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, referred to.

Aitken v Construction, Mining, Energy, Timberyards, Sawmills & Woodworkers Union of Australia (WA Branch) (1995) 63 IR 1, applied.

Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144, applied.

SYDNEY, 3 March 1999 (hearing), 8 April 1999 (decision)

#DATE 8:4:1999

Appearances

The Appellant appeared in person.

Counsel for the Respondent: Mr R J Buchanan QC with Mr R F Crow

Solicitor for the Respondent: Tillyard and Callanan

THE COURT ORDERS THAT:

1. That much of the order of Wilcox J of 13 October 1998 dismissing the application by Eric Clarence Shields under s170EA of the Industrial Relations Act 1988 (Cth) be set aside.

   2. The respondent pay the appellant the sum of $931.25 by way of compensation within 21 days of the date of this order.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

RYAN, MOORE AND MARSHALL JJ

1. This is an appeal by Mr Shields from a judgment of a single judge of the Court given on 13 October 1998 dismissing the appellant's application for relief in respect of what was alleged to have been the unlawful termination of his employment by Carlton and United Breweries (NSW) Pty Limited ("Carlton") on 2 February 1996.

2. Mr Shields alleged that his employment had been terminated in breach of s170DC and s170DE(1) of the Industrial Relations Act 1988 (Cth) ("the Act"). The judgment of the learned primary judge was given in a review under s 377 of the Act of a decision of a judicial registrar of the Industrial Relations Court of Australia.

3. The judicial registrar held that the termination of Mr Shields' employment had not been for a valid reason and had thereby contravened s170DE(1) of the Act. The judicial registrar also held that the termination had been in breach of s170DC of the Act which provided as follows:

An employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless:

(a) the employee has been given the opportunity to defend himself or herself against the allegations made; or

(b) the employer could not reasonably be expected to give the employee that opportunity.

BACKGROUND FACTS

4. Mr Shields was employed by Carlton as a sales manager. Carlton is a significant brewing company. It had a commercial relationship with Guinness Australia Pty Ltd ("Guinness"). As a consequence of that relationship Carlton seconded certain of its employees, including Mr Shields, to Guinness. The incidents which led to the termination of Mr Shields' employment took place at a Guinness sales conference on Lindeman Island in late January and early February 1996. The behaviour of Mr Shields at the conference which led to his termination occurred at and following a Gala Conference Dinner on the evening of Thursday, 2 February 1996. Another Carlton employee, Mr Nicholls the Area manager for Queensland who was implicated in the same incidents, resigned from Carlton's employ on 5 February. The senior Carlton employee at the conference seems to have been Mr Frize, the Area Manager assigned to the Guinness account. A detailed description of the conduct engaged in by Mr Shields and Mr Nicholls is contained in the first passage from the reasons of the primary judge which is quoted below.

VALID REASON

5. The learned primary judge concluded that the termination of Mr Shields' employment by Carlton had not been in breach of s170DE(1) of the Act.

6. His Honour's principal findings of fact in relation to this issue are to be found in the following passage:

In relation to the matter of valid reason, it seems to me almost beyond debate that the employer had a valid reason for terminating Mr Shields' employment.

Although Mr Shields was employed by CUB, he had been seconded to the service of Guinness Australia Limited, with whom CUB apparently had a commercial relationship. The Lindeman Island conference was a Guinness conference. Mr Shields and another seconded employee, Tony Nicholls, behaved in a disgraceful fashion at this conference. There is some dispute about details of their behaviour but the overall picture is clear and undisputed. There was a dinner on the Thursday night. It seems everybody in attendance at the dinner consumed considerable quantities of alcohol. Certainly, that was true of Mr Shields. He had multiple drinks before, during and after the dinner.

Mr Shields and Mr Nicholls were critical of the disc jockey responsible for playing music at the party. This person was a young man, aged 21 years, who had been in the job for only a few days. Mr Shields and Mr Nicholls apparently abused him over a lengthy period and, at the end of the evening, there was a very threatening scene. It may be, as Mr Shields claims and the disc jockey himself suggested in evidence, that Mr Nicholls was the major perpetrator of this misconduct. Nonetheless Mr Shields was part of it. He supported Mr Nicholls' conduct.

Unfortunately Mr Shields and Mr Nicholls' objectionable behaviour did not stop there. They went back to the room Mr Shields shared with another employee. He was asleep. They woke him up by lying on him. They then went off to the swimming pool, either completely naked or naked from the waist down. Other members of the conference party were at the swimming pool, apparently clothed. Both Mr Shields and Mr Nicholls disported themselves around, and in, the pool either totally naked or, at the most, wearing only a T-shirt. They were reproved by a senior Guinness officer, who pointed out there were women present, but they ignored his instruction to put on some clothes.

After leaving the pool, it being then something like 4 am, Mr Nicholls and Mr Shields wandered around the resort naked. They exposed themselves to a female receptionist and made a noise outside the room of another guest, someone who was not involved with the Guinness party. She came to her door to ascertain the cause of the noise and found herself confronted by the two naked men.

I appreciate the two men were intoxicated. To that extent, it might be said they were not their normal selves. But I think one only has to set out this short history of what happened to make the point this was conduct which could not be regarded as acceptable in people whose job it was to promote the good image and reputation of Guinness Australia and, indirectly, their employer CUB.

7. Mr Shields, who appeared in person on the appeal, made several submissions challenging either the way the primary judge dealt with the evidence or the findings he made by reference to it. First Mr Shields submitted that the primary judge erred by not having viewed for himself a particular videotape recording which had been before the judicial registrar and which showed, Mr Shields submitted, Carlton executives engaging in grossly improper behaviour at a conference in 1991. Mr Shields contended that the videotape evidenced a culture among similar employees of Carlton which had been tolerated by the employer and that, accordingly, his employment should not have been terminated for behaviour which reflected the same culture.

8. It was conceded by Mr Shield's counsel, before the primary judge, that what was recorded on the videotape was not "of the same order of behaviour as Mr Shields at Lindeman Island". Mr Shields complained on appeal that the concession ought not to have been made. According to the description of the contents of the videotape, recorded in the transcript below, the behaviour depicted was solely that of employees of Carlton and involved conduct which did not impinge on any outsiders. That makes it conduct of a different character to the conduct of the appellant which affected at least a receptionist and a guest at the resort who had no connection with Guinness. Another point of distinction is constituted by the fact that Mr Shields was, at the time, one of several Carlton employees who had been seconded to Guinness to assist with sales promotional activities. In this context it is to be remembered that the evidence discloses that, before the acts of misconduct that led to his dismissal, Mr Shields had been very firmly warned by Mr Plews, the General Manager for Guinness, to behave himself that evening.

9. Secondly, Mr Shields put in issue several of the findings of the primary judge. He challenged the finding that he, Shields, had woken his room mate by lying on him. He submitted that the relevant conduct had been that of Mr Nicholls. However, it is clear from the evidence that Mr Shields had been with Mr Nicholls at the relevant time and did not attempt to restrain or dissuade him from such conduct. Even if Mr Shields had been blameless in this aspect of a drunken frolic, other conduct, which the primary judge imputed to the appellant (as it was conceded by Mr Shields it was open to the primary judge to do on the evidence) was in our view more than sufficient to provide a valid reason for the termination of the appellant's employment.

10. Mr Shields also challenged the primary judge's finding that he and Mr Nicholls had been "reproved by a senior Guinness officer, who pointed out that there were women present, but they ignored his instruction to put some clothes on." His Honour's finding in this regard is supported by the evidence of Mr Frize, a senior Guinness employee, who recalled that he had said to Mr Shields and Mr Nicholls: "Fellows, there are girls present. Put your clothes on." Ms Matthews, an employee of Guinness, confirmed Mr Frize's account in her evidence. Ms Matthews said, of Mr Shields, that "he did not cover himself up when John Frize told him to put his clothes on." Mr Frize also gave evidence that he told Mr Shields specifically to put his clothes on because women were present. Mr Shield's response was to tell Mr Frize to "fuck off". The evidence supports the finding that Mr Shields had been reproved by a senior Guinness employee in the manner described by the primary judge.

11. Mr Shields similarly challenged the primary judge's finding that Mr Shields and Mr Nicholls "exposed themselves to a female receptionist". Mr Nicholls gave evidence that he and Mr Shields had chatted to female staff at the resort in the reception area while naked. The primary judge was entitled to rely on that evidence to support the finding of fact to which we have just referred.

12. As we have already indicated, even if the disputed findings of fact about Mr Shields' conduct are put to one side, his admitted lapses from the standard of behaviour which Carlton, and Guinness, could reasonably expect in the circumstances, were sufficient of themselves to amount to a valid reason for the termination of his employment.

SECTION 170DC- OPPORTUNITY TO BE HEARD

13. In his reasons for judgment the learned primary judge explained as follows the events after the incidents at Lindeman Island, culminating in the termination of Mr Shields' employment:

Complaints were made after this wild night. When Mr Shields returned to Sydney at the weekend he had already been informed that Guinness Australia were going to ask CUB to terminate the secondment. On the Monday morning he was summoned to the CUB office at the Kent Brewery. After being kept waiting for some time, he was interviewed by two officers, Mr Alvin Freeman and Mr Haynes. They had already received instructions from the New South Wales manager of CUB, Mr Ryan, that they were to investigate the allegations that had been made and, if they found them established they were to terminate Mr Shields' employment. Evidence that these were the instructions comes from all three of those men, that is to say Mr Ryan, Mr Freeman and Mr Haynes. (emphasis supplied)

Mr Freeman and Mr Haynes carried out the interview. They put the various allegations to Mr Shields, as he concedes. He admitted most of the allegations, although not all of them. At the end of this interview Mr Freeman decided to terminate Mr Shields' employment and did so.

14. The primary judge expressed some concern about that part of his findings to which we have added emphasis and, later in his reasons observed:

The point that concerned me about the instruction given by Mr Ryan is that it did not seem to leave much room, if any, for consideration of any reasons Mr Shields might wish to put to the company for his non-dismissal, going beyond answers to the allegations. I have in mind any reference he might have wished to make to his record with the company, or any personal responsibilities or other factors. It is fair to comment in this regard that although Mr Shields had previously been warned about aspects of his performance, he had also won sales awards and, in some respects, had been a very good employee. However, I think there are two answers to my concern. The first is that Mr Shields was aware the company was taking the Lindeman Island incident extremely seriously and his job was at risk. He must have known that anything he wished to say as to why he should not be dismissed should be said to Mr Freeman and Mr Haynes at that time. He did not volunteer anything.

15. Mr Buchanan QC who appeared with Mr R F Crow for Carlton submitted that the primary judge was entitled to proceed on the basis that Mr Shields had known that his job was in jeopardy. He referred the Court to part of Mr Shields' evidence to the effect that Mr Freeman's attendance at a meeting was a signal that "someone's employment" was about to be terminated.

16. However, on the evidence, any attempt by Mr Shields to put to Mr Freeman and Mr Haynes anything in mitigation by reference to his good employment record or otherwise, would have been entirely ineffective because the instruction given by Mr Ryan to the interviewers had been to ask Shields about the allegations raised against him "and if substantially the allegations were found to be correct (there was)...no alternative but to separate".

17. As Moore J said in Perrin v Des Taylor Pty Ltd (1995) 58 IR 254 at 256-7:

A second purpose of s170DC is that an employee with whom an allegation has been raised may be able to persuade the employer that, while the allegation is of substance, there are factors that should persuade the employer not to terminate the employment. They may be extenuating personal circumstances or they may involve undertakings about future conduct. The rights of an employee to be consulted before dismissal now embodied in s170DC are not novel: see Gregory v Philip Morris Ltd (1988) 24 IR 397 at 415; Wheeler v Philip Morris Ltd (1988) 32 IR 323 at 346; Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20 at 35; 41 IR 452 at 466 and Byrne v Australian Airlines Ltd (1994) 47 FCR 300; 52 IR 10 and in the United Kingdom: see Spencer v Paragon Wallpapers [1976] IRLR 373; Williamson v Alcan (UK) Ltd [1978] ICR 104; W Weddel & Co Ltd v Tepper [1980] ICR 286. In Bostik, Gray J, when discussing a requirement of an award that a dismissal not be harsh, unjust or unreasonable said at 35; 466:

"Although the procedural requirements of the clause will vary according to the circumstances, they are intended to be real. An employer genuinely investigating an allegation of misconduct or neglect of duty, or some other act or omission which might provide a ground for dismissal, is required to carry out a proper investigation, and not merely to go through the motions. The employer is required to ascertain whether there are any mitigating factors, either associated with the alleged ground for dismissal, or arising from the employee's past record and future prospects. It is not intended that an employer should be able to substitute a court proceedings for its own investigation, ie, to overcome procedural deficiencies by the establishing to the satisfaction of the court that the dismissal concerned would not be harsh, unjust or unreasonable on substantive grounds."

18. See also Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681.

19. Although it is no longer open to an applicant under Part VIA of the Act to complain that the termination of his or her employment has been harsh, unjust or unreasonable, we consider that considerations of procedural fairness similar to those indicated by Gray J in Bostik inform the requirement in s170DC of the Act that the employee be given "the opportunity to defend himself or herself against the allegations made". This view was not shared by the learned primary judge as in his reasons, immediately after the passage last quoted, his Honour observed:

The other response to my concern, which is perhaps more pertinent, is that s 170DC did not require an employer to give an employee an opportunity to argue the case against dismissal. What the employer must do was specifically stated. The employer must give the employee "the opportunity to defend himself against the allegations made"; that is, to meet those specific allegations. No doubt, when this occurs, employees often offer reasons why, even if the allegations are made out, they should not be dismissed. However, I do not think an employer's failure specifically to invite that type of submission amounts to a contravention of s 170DC.

20. With respect to his Honour, whether or not it needs to be given by specific invitation, the opportunity of which s170DC speaks, as explained by Moore J in Perrin entails more than a chance to rebut the specific allegations of misconduct by the employer. It extends to an opportunity to put before the employer all those matters on which the employee may reasonably wish to rely as extenuating circumstances or as otherwise mitigating the consequences which might attach to the alleged misconduct if proved. So much, in our opinion, is comprehended by the word "defend". We consider that Mr Shields was not afforded an opportunity of that kind and, in that respect, Carlton was in breach of s170DC when it terminated his employment.

CONSEQUENCES OF BREACH OF s170DC

21. Given our conclusion that a breach of s170DC of the Act occurred, the next question for consideration is the remedy for the breach. In the circumstances of this case, that would be compensation. To assess the appropriate compensation it is necessary to consider how long the employment of Mr Shields would have lasted but for the termination in breach of s170DC of the Act. See Aitken v Construction, Mining, Energy, Timberyards, Sawmills & Woodworkers Union (1995) 63 IR 1, at 9 per Lee J and Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 at 154-156.

22. Even if Mr Shields had been provided with an opportunity to refer to mitigating factors and such matters had received due consideration by Carlton, the Court is of the view that his employment would probably have been terminated shortly after he had been accorded that opportunity. We consider it much more likely than not that, given the gravity of the conduct which the primary judge found to have occurred on the night in question, those entrusted with deciding Mr Shields' fate would not have been persuaded by his good sales record alone or in conjunction with his claim that Carlton had earlier condoned similarly offensive misconduct, to retain his services.

23. Accordingly, the Court determines that the compensation payable to Mr Shields should be an amount which reflects the time that would have been taken to give him a real opportunity to put whatever he wished to advance in mitigation and have those matters genuinely considered by Carlton. Any estimate of this kind must necessarily be imprecise but we believe the amount of compensation appropriate in the circumstances is one weeks' wages which, on the evidence, was $931.25.

24. For the reasons which we have just given, we shall order that:

1. That much of the order of Wilcox J of 13 October 1998 dismissing the application by Eric Clarence Shields under s170EA be set aside.

   2. The respondent pay the appellant the sum of $931.25 by way of compensation within 21 days of the date of this order.