FEDERAL COURT OF AUSTRALIA INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - complaint of UNLAWFUL TERMINATION OF EMPLOYMENT - VALID REASON - CONDUCT AND PERFORMANCE - OPPORTUNITY TO RESPOND - employee in small workplace not responding to performance inadequacies - relationship breaking down - whether valid reason to terminate. Workplace Relations Act 1996 (Cth.) STEVENS v PHILLIPS & STONE (T/AS CATERCO PTY LTD) VI 1367 of 1997 BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 11 AUGUST 1997 IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VI 1367 of 1997 ) GENERAL DIVISION ) BETWEEN: MARK ANDREW STEVENS Applicant AND: PHILLIPS & STONE (T/AS CATERCO PTY LTD) Respondent JUDGE: MURPHY JR PLACE: MELBOURNE DATED: 11 AUGUST 1997 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application is dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VI 1367of 1997 ) GENERAL DIVISION ) BETWEEN: MARK ANDREW STEVENS Applicant AND: PHILLIPS & STONE (T/AS CATERCO PTY LTD) Respondent JUDGE: MURPHY JR PLACE: MELBOURNE DATED: 11 AUGUST 1997 REASONS FOR JUDGMENT The provisions of the Workplace Relations Act 1996 (Cth) ("the Act) are to be applied in a practical manner in actual workplaces where each of the parties involved is treated fairly. The approach to the application of the provisions of the Act will differ to some extent with the size of the relevant workplace. Here this was a very small workplace. Mr Paul Germano and Ms Julie Germano were working directors and husband and wife. The applicant was one of four employees. In a small workplace evidence as to performance and conduct matters relating to events in the workplace has substantial weight because in that small environment each employee knows what the other is up to at any particular time. An example of this is whether the applicant would, in general, down tools at 5.00 pm and leave. The applicant denied this. Mr Dennis Stevens and Mr Kozak supported the evidence of Mr and Ms Germano that this was in effect the position. Unless the evidence of the non-principal witnesses is to be rejected as inherently unreliable, it is likely that the truth is that generally the applicant would leave at 5.00 pm on the dot. I find that he did. The witnesses. The four principal protagonists are the applicant and Ms Janine Pitt, and Mr and Ms Germano. Both counsel have addressed on various inconsistencies in the evidence as to the various events. The Court has heard from other more minor players. The most important of these were Mr Dennis Stevens, who remains employed as a storeman, and Mrs Knight. Mr Kozak and Mr Rowe, also employees, and Mr Cosgrove, a former employee, gave evidence. Their evidence was only marginally relevant as to events. The evidence of the respondent's contract accountant, Mr Gary Brown, was also of marginal relevance. The evidence. The evidence of the four principal witnesses was the subject of major conflicts. They cannot have all been correct in their evidence. When faced with conflicting oral evidence courts look to documentary evidence that may provide some contemporaneous corroborating account. Here the major corroborating evidence was a diary (Exhibit R5) which was kept by Mr and Ms Germano. It had been kept on the instructions of VECCI. I ruled it admissible as a business record. To the extent that it was kept on advice it requires close scrutiny on the basis that it is potentially self-serving. Having looked at it closely, and discounting for its self-serving nature, I am satisfied that to the extent that it records events it sets out the most likely contemporary account of what actually happened. It certainly does not bear the hallmarks of being fabricated. The two witness I am satisfied that the Court is entitled to fully rely on were Mrs Knight and Mr Dennis Stevens. Mrs Knight produced the information to Mr Germano which triggered the events leading to this proceeding. I am satisfied the applicant disparaged his employers to her and also assisted in the provision of some financial details about the business to her. I reject the applicant's evidence that this was a two way conversation between friends. Mrs Knight thought that the material conveyed was significant enough to raise with Mr Germano. While I accept that Mr Germano did not at any stage tell the applicant that it was Mrs Knight who he had been speaking to, I am satisfied that the applicant knew the allegations against him were of disparaging the respondent. He did so because I find as a fact that he made the comments alleged by Mrs Knight in her evidence. That includes the comment about the receipt, and the comment about the business. This is a significant finding in the narrative because I accept Mr Germano's evidence, as he recorded in the diary, that he raised with the applicant the question of his attitude to his employer on 20 September. I accept the evidence of Mr and Ms Germano that the applicant responded with denials and was unresponsive. This set the pattern which continued. The pattern led to a warning session on 14 October and a formal letter on 17 October. By then the parties were in the trenches. They had entered the trenches a few days earlier when a new employee, Mr Rowe, had been engaged. I accept that he was told that the respondent was having a problem with one of its employees. Mr Germano denied this but I am unable to accept his evidence on this point. He was having trouble with the applicant. That is why Ms Germano told the applicant one night that she did not want Mr Rowe falling into his bad habits by leaving on the dot of 5.00 pm and not being a team member. I am satisfied that the applicant knew that this was what in fact the respondent required at that workplace but he did not wish to play by those rules. The state of the relationship at that point generated the warning letter of 17 October. When he received that letter the applicant knew that his employer was losing confidence in him. He had already told Mrs Knight that. On 17 October Mr Germano recorded that he said this to the applicant: "I told Mark I wasn't happy with his attitude to [the respondent] - we were happy with his work but he had a bad attitude that was affecting the company and its staff (mostly stated before). He will have to improve his attitude or face the consequences. He can take the letter home and read it or sign it now. He refused to sign it. A lot was said, - we told him about the details of a previous meeting - "the snake affair" where a customer told us about Mark telling them that he would "shove it up my arse" - that the customer had heard the bookkeeper telling Mark we put money in our pockets etc. Mark has an attitude problem." The Rubicon was crossed in the incident on 18 October. Mr Dennis Stevens is perhaps the most dispassionate witness as to what happened. I am unable to accept the totality of the accounts of each of the other three principals. I accept that the applicant, to use Mr Stevens' words, "flew the coop" over the incident. I am satisfied that early in the incident Ms Germano did say that she had no obligation to sign the cheque. I am satisfied that the applicant then cried "discrimination" and Ms Germano had offered to sign it. At this point the applicant acted unreasonably and provocatively by using the words "you're gone! I've got you." Mr Stevens confirms that he said this. It is probable that Ms Germano, flustered by what happened, sought to retrieve the cheque from the applicant by grabbing his shirt. To describe this as an assault or false imprisonment was provocative. I accept that the applicant did call her a "[expletive deleted] bitch". Mr Dennis Stevens supports the proposition that he used this term about her, and frequently made comments that he did not like either Mr or Ms Germano. I am satisfied that the weight of fault over the incident is attributable to the applicant. His overall response to what I am satisfied was a clerical oversight was disproportionate and is consistent with the "attitude problem" that Mr Germano had been discussing with him the day before. In a conversation on 21 October both parties put their cards on the table. Mr Germano invited the applicant to his solicitor's office the next morning. The invitation was to sort it out. The applicant declined. I have earlier found that the weight of fault in the cheque incident was on the part of the applicant. His actions in failing to adopt a conciliatory approach to Mr Germano at this point made the cessation of the employment relationship inevitable. This was confirmed when the applicant wrote his letter of reply dated 2 November (Exhibit R4). Rather than being conciliatory he sought to inflame the matter by accusations in the letter of unprofessional conduct, assault, false imprisonment and harassment. The next event in the chronology was the question of out-of-date stock. I accept that the applicant denied responsibility for the Murray Goulburn butter. I do not accept that he gave the explanation that he advised Mr Germano about it and invited him to check the STD records. I accept that when this matter was discussed there was an exchange about whether the applicant would be dismissed. That was when the applicant called Mr Germano a "smart arse". Another warning letter followed. On 14 November the icecream cones were found. I do not accept Ms Germano's account that she did not actually engage in a specific search for out of date stock. The fact that she in fact checked the stock is an indication of her own state of mind at that stage that the applicant's attitude and performance had deteriorated such that it was affecting the business. This is consistent with the evidence of Mr Dennis Stevens, Mr Brown and Mr Kozak that relations between the parties had broken down, there was tension, and the applicant's performance was below what it had been. As Mr Germano said: "in the week before 22 November we were not speaking to him and he was not speaking to us." On 20 November Ms Germano recorded in her diary: "Mark is not answering the telephone. He walks in and out at starting time and doesn't acknowledge anyone. He also does the same at lunchtimes." The applicant acknowledged in his own evidence that in the final two weeks the relationship had broken down. The termination. On 22 November the applicant was called in. The applicant was given a final opportunity to respond to the respondent's position. I regard it as significant that the applicant did not attempt to elaborate in his defence. I am satisfied that even on his own account there was some substance in the matters that had been in the earlier written warnings. He had been given an opportunity as early as 21 October to have a discussion to sort the matter out. He had not taken that opportunity. The situation had become intolerable. He knew why it was intolerable: it was intolerable because he was not prepared to play his part in an attempt to repair it. On 21 October and 13 November he had explicitly said to Mr Germano "you will have to sack me." It is recorded in the diary. That, combined with his failure to make any acknowledgment of fault in relation to the cheque incident, and in relation to the matters raised in the first counselling session on 21 September and the second discussion on 17 October, meant that by 22 November the mutual relationship of trust and confidence between the parties had broken down. I am unable to accept the submission that the respondent was merely going through the motions with its warnings. It was more than that because the matters raised in the counselling sessions and the warnings did relate to real incidents. The applicant's aggressive and unco-operative denials were real responses on his behalf. They triggered the inevitable next stage of the breakdown in what was a very small workplace. That the position had become intolerable was supported by the evidence of Messrs Kozak, Dennis Stevens and Brown. Those three witnesses cannot all be wrong. They are supported by Mrs Knights. By 22 November the respondent had to act. I do not accept that it acted capriciously in that conclusion. It had to act because for its two working directors, Mr and Ms Germano, it had become intolerable. The conclusion that it reached was not after a capricious process or one that was not based on real events. The applicant had adequate opportunity to dissuade the respondent from its conclusion that the employment relationship had broken down. He did not respond in that way but rather dared the respondent to act - which it did. I am satisfied that the respondent had a valid reason to dismiss the applicant. He was not denied procedural fairness. The application will be dismissed. ORDER : 1. The application is dismissed. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar Murphy. Associate: KAREN HALSE Dated: 11 August 1997 Counsel for the Applicant: MS R DOYLE Solicitor for the Applicant: RYAN CARLISLE THOMAS Counsel for the Respondent: MR P HARRIS Solicitor for the Respondent: WARREN GRAHAM & MURPHY Dates of Hearing: 30 & 31 JULY, & 11 AUGUST 1997 Date of Judgment: 11 AUGUST 1997