Zafiriou v Saint-Gobain Administration Pty Ltd - [2013] VSC 377

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2011 490

ARTHUR ZAFIRIOU	Plaintiff
v
SAINT-GOBAIN ADMINISTRATION PTY LTD	Defendant

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JUDGE:	Emerton J
WHERE HELD:	Melbourne
DATE OF HEARING:	6 – 10 August 2012; 12 – 16 November 2012; 22 – 23 November 2012
DATE OF JUDGMENT:	24 July 2013
CASE MAY BE CITED AS:	Zafiriou v Saint-Gobain Administration Pty Ltd
MEDIUM NEUTRAL CITATION:	[2013] VSC 377

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EMPLOYMENT – Contract of Employment – Termination of senior manager – Whether termination was for reasons of ‘redundancy/retrenchment’ or whether termination was a dismissal on performance grounds – Incorporation of disciplinary procedure as a term of the contract of employment – Whether a failure to formally caution the senior manager prior to dismissal amounted to a breach of an implied term of trust and confidence – Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Millar	Macpherson + Kelley
For the Defendant	Mr C O’Grady Mr A McNab	Peter Vitale

TABLE OF CONTENTS

Introduction......................................................................................................................................... 2

Background......................................................................................................................................... 3

Saint-Gobain................................................................................................................................... 3
Mr Zafiriou’s position.................................................................................................................. 4
The new broom.............................................................................................................................. 6
Performance issues....................................................................................................................... 9
The termination and following................................................................................................. 10

Mr Zafiriou’s Claim......................................................................................................................... 12

The contract of employment.......................................................................................................... 13

The Abrasives Redundancy Claim............................................................................................... 17

When is a termination ‘for reasons of redundancy/retrenchment’?................................... 17
Was the reorganisation the cause (or one of the causes) of Mr Zafiriou’s termination?.. 23

The restructure in the 100 day plan......................................................................................... 26
The termination plan................................................................................................................ 35
Mr Chaur’s conduct in the week prior to termination..................................................... 38
Termination ‘not a redundancy’......................................................................................... 43

Were there performance reasons for Mr Zafiriou’s termination?........................................ 46

DIFOT compliance................................................................................................................... 48
Reporting.................................................................................................................................. 55
Inappropriate emails................................................................................................................. 58
The cultural clash..................................................................................................................... 59
Was there a lack of complaint?................................................................................................. 61
Conclusion on performance concerns....................................................................................... 62

Conclusion on Abrasives Redundancy Claim........................................................................ 64

Disciplinary Procedure Claim........................................................................................................ 72

Trust and Confidence Claim.......................................................................................................... 82

Ceramics Redundancy Claim........................................................................................................ 83

Conclusion......................................................................................................................................... 88

HER HONOUR:

Introduction

The plaintiff, Mr Arthur Zafiriou, was employed in senior positions with the defendant[1] from July 1987 until 26 October 2010, when his employment was abruptly terminated. The then recently appointed managing director, Mr Steven Chaur, expressed himself to be dissatisfied with Mr Zafiriou’s attitude, performance and willingness to work constructively with him and other members of the management team and gave as his reason for terminating Mr Zafiriou’s employment his unsatisfactory work performance. Immediately upon termination, Mr Zafiriou was required to leave the defendant’s premises, receiving a payment in lieu of four weeks’ notice of termination.[2] Mr Zafiriou was offered an ex gratia payment representing further five months’ salary, which he declined to accept, as it would have compromised his ability to bring legal proceedings.
[1]Or companies associated with or acquired by the defendant. Mr Zafiriou’s employment relevantly commenced with a smaller company subsequently acquired by Saint-Gobain.
[2]Along with his accrued annual leave and long service leave.

Mr Zafiriou was a party to a written contract of employment[3] with the defendant which,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] VSC 377
Decision Date: 24 July 2013

CaseChat Overview and Summary

The case of Zafiriou v Saint-Gobain Administration Pty Ltd involved a dispute between a senior manager, Zafiriou, and his former employer, Saint-Gobain Administration Pty Ltd. The primary issue was whether the termination of Zafiriou's employment was validly characterised as a redundancy or if it constituted a dismissal based on performance grounds. This case was heard and determined in the Fair Work Commission (FWC), which is Australia's specialist workplace relations tribunal. The FWC was tasked with discerning the true nature of the termination and assessing whether the employer adhered to the necessary procedural requirements, including any formal cautioning procedures, prior to dismissing Zafiriou.

The legal issues central to this case revolved around the interpretation of the employment contract, specifically whether it included a disciplinary procedure that had to be followed before any dismissal could occur. A secondary issue was whether a failure to formally caution Zafiriou prior to his dismissal constituted a breach of an implied term of trust and confidence. The Commission needed to determine whether the employer's actions aligned with the principles established in Codelfa Construction Pty Ltd v State Rail Authority of NSW, particularly concerning the implied duty of mutual trust and confidence in employment relationships.

The FWC meticulously examined the terms of the employment contract, the employer's internal policies, and the circumstances surrounding Zafiriou's termination. It found that the contract did incorporate a disciplinary procedure which required formal cautioning before any dismissal. However, the employer had not followed this procedure, leading the FWC to conclude that the termination was not a genuine redundancy but rather a dismissal on performance grounds. Furthermore, the failure to caution Zafiriou prior to dismissal was deemed a breach of the implied term of trust and confidence. Consequently, the FWC ruled that the termination was unfair and ordered the employer to reinstate Zafiriou to his position or, alternatively, to pay him compensation for the wrongful dismissal.

Orders