FEDERAL COURT OF AUSTRALIA INDUSTRIAL LAW - alleged UNLAWFUL TERMINATION - whether VALID REASON – CONDUCT – whether employee given opportunity to defend himself – conduct not known to employer at time of termination. Industrial Relations Act 1988 (now Workplace Relations Act 1996) - ss 170DC, 170DE, 170DF, 170EA, 170EDA. Cosco Holding Pty Ltd v Thu Thi Van Do (unreported Federal Court No. 1353 of 1997, Full Court, 4 December 1997). Qantas Airways Limited v Cornwall (unreported Federal Court No. 865 of 1998, Full Court, 24 July 1998). Sherman v Peabody Coal Ltd (unreported Federal Court No. 140 of 1998, Moore J, 27 February 1998). Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. EOIN MICHAEL DOUGLAS-SMITH –v- AQUIP MACHINERY WI 1069 of 1997 R.D. FARRELL JR PERTH 25 September 1998 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIADISTRICT REGISTRY WI 1069 of 1997 BETWEEN: EOIN MICHAEL DOUGLAS-SMITH Applicant AND: AQUIP MACHINERY Respondent COURT: RD FARRELL JR DATE OF ORDER: 25 September 1998 WHERE MADE: PERTH THE COURT DECLARES AND ORDERS THAT: 1. The respondent terminated the employment of the applicant in contravention of section 170DE(1) and 170DC of the Workplace Relations Act 1996 ("the Act"). 2. The respondent pay to the applicant within 21 days the sum of $32,000 as compensation pursuant to section 170EE of the Act less any amount payable to the Commissioner of Taxation pursuant to the Income Tax Assessment Act 1936 and actually paid. 3. The respondent pay to the applicant within 21 days the sum of $12,595.09 for commissions due and not paid, less any amount payable to the Commissioner of Taxation pursuant to the Income Tax Assessment Act 1936 and actually paid. Note: Settlement and entry of orders is dealt with in Order 36 of the FEDERAL COURT OF AUSTRALIA Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIADISTRICT REGISTRY WI 1069 of 1997 BETWEEN: EOIN MICHAEL DOUGLAS-SMITH Applicant AND: AQUIP MACHINERY Respondent COURT: RD FARRELL JR DATE: 25 September 1998 PLACE: PERTH REASONS FOR DECISION This is an application under Section 170EA of the then Industrial Relations Act 1988, now known as the Workplace Relations Act 1996 ("the Act"). The application is for compensation arising from the alleged unlawful termination of the employment of the applicant, Mr Eoin Douglas-Smith ("Mr Douglas-Smith") by the respondent, Aquip Machinery ("Aquip"). Mr Douglas-Smith also seeks payment of commission he contends is outstanding. The parties agreed that this claim for commission should be dealt with under the Court's accrued jurisdiction. Brief Factual Overview Aquip Machinery is the business name of Wyndermere Pty Limited. The business is an agricultural machinery dealership servicing the eastern wheat-belt of Western Australia. Its head office is based in Narembeen; a country town located approximately 280 kilometres east of Perth. Mr Michael Woodley was both Managing Director and part owner of Aquip. His focus was on Aquip's sales performance. On 18 June 1996, Mr Woodley engaged Mr Don Repacholi as General Manager, to focus on administrative issues. Mr Douglas-Smith had worked for Aquip for a three-month period in 1994 on a "contract" basis. He was then invited by Mr Woodley to commence full time employment with Aquip in January 1995. He was employed as an equipment salesperson and was initially based at Narembeen. Later, in about September 1995, Aquip opened an office at Bruce Rock, a country town approximately 40 kilometres northwest of Narembeen, which was staffed by Mr Douglas-Smith and an assistant, Mrs Sherryl Bow. Having heard the evidence I am satisfied that, over time, a personality conflict developed between Mr Douglas-Smith and Mr Woodley. The cause of this conflict is not clear. Mr Douglas-Smith has suggested that Mr Woodley became threatened by Mr Douglas-Smith's high level of performance. Mr Woodley contends that he became impatient with Mr Douglas-Smith's lack of performance. One of the matters that irked Mr Woodley was the fact that in about May 1996 Mr Douglas-Smith began a relationship with Ms Janine Parsons. Ms Parsons was the former wife of an Aquip client, and worked in a travel agency in York. York is a town 180 kilometres west of Narembeen. The conflict between Mr Woodley and Mr Douglas-Smith came to a head in early September 1996. In August, Mr Woodley travelled to the United States leaving Mr Repacholi, the recently employed General Manager, in charge. While Mr Woodley was away, arrangements were made to staff an Aquip stand at the annual Dowerin Machinery Field Days, which is perhaps the most significant agricultural machinery marketing event in Western Australia. The town of Dowerin is about 230 kilometres northwest of Narembeen. Aquip's representatives were required to be in Dowerin over two days, and in the past had travelled back to their homes for the intervening night. For one of the representatives, this was a round trip of more than 600 kilometres. It was proposed that they should instead stay over in York; there was no accommodation available in Dowerin and York is about 110 kilometres away. Mr Repacholi says that it was Mr Douglas-Smith's idea, while Mr Douglas-Smith attributes the idea to Mr Repacholi. In any event, Mr Repacholi, who had been left in charge in Mr Woodley's absence, approved the proposition. Mr Douglas-Smith contacted Ms Parsons who, in her capacity as a travel agent, found accommodation for the Aquip representatives in York. Mr Douglas-Smith stayed with Ms Parsons. Mr Woodley returned from the United States in late August or early September 1996. When he learned on Tuesday 3 September 1996 of the accommodation arrangements that had been made for the Dowerin Field Days, he was furious. A heated telephone conversation followed between Mr Woodley and Mr Douglas-Smith. The conversation ended abruptly. Following that conversation, Mr Woodley delegated Mr Repacholi to obtain Mr Douglas-Smith's resignation. Mr Repacholi travelled to Bruce Rock on Thursday 5 September 1996 to meet with Mr Douglas-Smith for that purpose, but was unsuccessful. The next day, Mr Woodley, Mr Repacholi and Mr Douglas-Smith met to discuss the possibility of Mr Douglas-Smith agreeing to leave his employment. In the context of that discussion, there was discussion of the extent of the commissions properly due and owing to Mr Douglas-Smith by Aquip. Ultimately, Mr Douglas-Smith, after calling a solicitor for legal advice, resolved not to resign. Then, by letter from Mr Repacholi headed "Termination Agreement" and dated 6 September 1996, Aquip advised Mr Douglas-Smith that: "Resulting from previous discussions and in accordance with our employment agreement dated 5th December '93, please be advised that Aquip Machinery require to conclude this agreement effective immediately. Aquip Machinery are prepared to renumerate you with two (2) weeks salary in lieu of notice. Additionally Aquip are prepared to finalise commissions and superannuation due plus the balance of any annual leave owing. To comply with our employment agreement, Aquip require you to sign the prepared confidentiality agreement as presented to you Thursday 5th September '96, together with the return of all documents, memos, note books, business cards and any other material belonging to the Company." The letter gave no reasons for the termination, which was clearly not by agreement, notwithstanding the letter's heading. Neither, Mr Douglas-Smith contends, had any reasons been given in the earlier discussions. Mr Douglas-Smith was required to hand over the keys to the Bruce Rock office and his motor vehicle at the conclusion of that meeting, and his employment ended immediately. Contentions Section 170DE(1) of the Act provides that: "An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service." Section 170EDA(1) places the onus on Aquip to prove that it had such a valid reason. Section 170DC also requires that: "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." When it filed its Notice of Appearance after Mr Douglas-Smith initiated these proceedings, Aquip summarised the reasons for the termination of his employment somewhat obscurely as "Non-compliance and other matters". Eventually, when required by an interlocutory order of the Court, Aquip provided a summary of the facts upon which it intended to rely. According to that document, Mr Douglas-Smith was dismissed for the following reasons: · Dishonest use of a Motorcharge card and a dishonest explanation of that use; · Failure to comply with an instruction to advise a client of a particular matter ("the Negri Incident"); · Selling equipment without the authorisation of the owner and claiming a commission on that sale ("the Bailey Incident"); · Deceptively obtaining the approval of Mr Woodley for a sale without having disclosed a relevant condition for that sale (ie the granting of a particular warranty) ("the Paini Incident"); and · Misuse of a company telephone. Aquip was thus contending that it had valid reasons, connected with Mr Douglas-Smith's conduct, for terminating his employment. Surprisingly, the events arising from the Dowerin Field Days and their aftermath were not nominated as being among those reasons until late in the proceedings. Mr Woodley, in his evidence, was somewhat hesitant about enumerating the reasons for Mr Douglas-Smith's dismissal. He nominated the fuel issue, Mr Douglas-Smith's sub-standard performance in selling harvesters, and his personal telephone calls. Mr Repacholi also nominated the fuel issue and the personal calls, as well as the Bailey and Negri incidents. The meaning of the term "valid reason" has been considered by the Full Court of this Court, in Cosco Holdings Pty Ltd v Thu Thi Van Do[1]. That case concerned terminations for a reason purportedly based upon the operational requirements of a business. The construction placed on the provision by the Full Court was narrow in its ambit. A majority of the Full Court held that: "...a reason for termination ...may be valid even if the termination ...may be regarded as unfair. In other words, fairness, reasonableness or justice, as regards the employee, is not the realm of discourse with which 'valid' is concerned... In the statutory context with which we are concerned, the primary work of 'valid' is to exclude the reasons listed in s 170DF(1) [which prohibits various listed reasons, including union membership or non-membership, race, disability, age etc]. If there are other reasons for which an employee may not lawfully dismiss an employee, then equally, no doubt, such a reason would not be a 'valid' reason. Additionally, perhaps, the word 'valid' may serve to emphasise that the reason must be genuinely connected with the employee's capacity or conduct or genuinely based on operational requirements. In our view... it has no wider operation." Northrop J, the other member of the Full Court, gave the term a similarly narrow construction, holding that: "To be a valid reason, the reason must be lawful in the sense of not being prohibited, and genuinely must be based on those operational requirements [or, presumably, genuinely connected with the employee's capacity or conduct]. The word 'valid' is used as an adjective qualifying the word 'reason' and is used in the sense of sound, defensible or well founded with respect to the foundation, namely the operation requirements of the employer [or, again presumably, with respect to the connection with the employee's capacity or conduct]" The decision in Cosco has recently been affirmed in Qantas Airways Limited v Cornwall[2], another Full Court case, this time dealing with a valid reason connected with an employee's conduct. In applying the observations of the Full Court in Cosco to a case dealing with conduct rather than operational requirements, I am also assisted by decision of Justice Moore in Sherman v Peabody Coal Ltd[3]. After noting that he had been referred during the hearing to the decision of the Full Court in Cosco, Justice Moore analysed that decision thus: "It may be accepted that the matters raised by s 170DE(1) do not call for consideration of notions of fairness, reasonableness or justice. However, the reason for the termination must be a valid one. As Northrop J pointed out in Cosco, in adopting observations he had earlier made in Selvachandran v Peteron Plastics Pty Ltd[4], the adjective "valid" should be given the meaning of sound defensible or well founded. While it is not entirely clear whether that element was viewed by Lindgren and Lehane JJ as a necessary element in the concept of "valid reason" their Honours did note: "Additionally, perhaps, the word "valid" may serve to emphasise that the reason must be genuinely connected with the employee's capacity or conduct or genuinely based on operational requirements". after having referred to the need for the existence of a genuine foundation. Any notion of genuine connection must, in my view, involve notions of proportionality. I say that because it is unlikely that Parliament intended any aspect of the conduct of an employee established on the evidence that was perceived by the employer as warranting termination would demonstrate or establish a valid reason. Such an approach would denude the expression "valid reason" of any meaning. (My emphasis)" In Qantas Airways Limited v Cornwall, the Full Court similarly acknowledged that: "…conduct is not committed in a vacuum, but in the course of the interaction of persons and circumstances, and the events which lead up to an action and those which accompany it may qualify or characterise the nature of the conduct involved." I will therefore consider each of the elements of Mr Douglas-Smith's alleged conduct with which Aquip contends the reasons for his dismissal were connected. In relation to each allegation, I will make findings as to: · whether the conduct occurred as alleged; and if so · whether the decision to dismiss Mr Douglas-Smith was genuinely connected with that conduct. The second question will require me to have regard to notions of proportionality. I will also consider, for the purposes of Section 170DC, whether Mr Douglas-Smith was given, and reasonably should have been given, an opportunity to defend himself against the allegations that he engaged in that conduct. Alleged Failure To Act with Due Respect to the Employer Counsel for the respondent, in his closing address, referred for the first time to the heated telephone conversation between Mr Douglas-Smith and Mr Woodley on 3 September 1996 as a ground for the dismissal. Given the evidence of its own witnesses, Aquip could not credibly deny that the telephone conversation was a significant factor in Mr Woodley's decision to bring about Mr Douglas-Smith's departure. At the time of the conversation, Mr Woodley was angry in the belief that Mr Douglas-Smith had caused Aquip to adopt a course that Mr Woodley would never have countenanced. He assumed that Mr Douglas-Smith was motivated by the desire to stay with Ms Parsons. Given Mr Repacholi's approval of the proposal, however, Aquip does not now contend that any role of Mr Douglas-Smith in the decision to stay at York constituted a valid reason for the termination of his employment. Aquip does contend, however, that Mr Douglas-Smith's conduct in the course of the telephone call with Mr Woodley amounts to grounds for Mr Douglas-Smith's dismissal. The content of the telephone call is in dispute. The three witnesses who gave evidence on the matter were the two participants – Mr Woodley and Mr Douglas-Smith – and Mr Repacholi, who says he was near Mr Woodley at the time and was able to overhear the conversation. The consensus on the evidence was that Mr Woodley initiated the call. Mr Woodley says he complained to Mr Douglas-Smith about the stay over at York, because the cost of accommodation and meals from the arrangement exceeded the savings in fuel. He pointed out that Mr Douglas-Smith, as an experienced employee with Aquip, was aware that the usual practice was to travel home each night. He claims that Mr Douglas-Smith eventually responded by telling him to "go and get fucked". Mr Woodley took exception to this, finding it offensive. Mr Douglas-Smith says that the telephone call was his first contact with Mr Woodley since the latter's return from the United States. He recalls Mr Woodley beginning the conversation by saying he was not very impressed with what happened at Dowerin. When Mr Douglas-Smith asked what he was talking about, Mr Woodley said he was referring to Mr Douglas-Smith having organised a night in York at Aquip's expense to stay with "that fucking Parsons girl". Mr Douglas-Smith concedes that he responded that Mr Woodley should get his "fucking facts right" before speaking to him like that. He says that Mr Woodley's response was to say "you're out of a job – I'm on my way over" and hang up the telephone. Mr Douglas-Smith telephoned back immediately, asking Mr Repacholi what was going on. Mr Douglas-Smith could hear Mr Woodley fulminating in the background. Mr Repacholi said he would talk to him later. Much was made of who hung up first and whether Mr Douglas-Smith literally told Mr Woodley to "fuck off". These are, in my view, marginal issues. By the end of the conversation, both men were very angry. It is unlikely that either has a clear recollection of exactly what was said. On his own account, Mr Douglas-Smith reacted heatedly to Mr Woodley's call. He concedes that his final outburst included bad language. For his part, Mr Woodley agrees that he was angry, though he disputes that he swore. As it happens, Mr Repacholi found himself in a position to give evidence that broadly supported Mr Woodley's account. He says he was sitting at the same desk as Mr Woodley and that Mr Douglas-Smith was speaking sufficiently loudly to be overheard through the telephone. Mr Repacholi felt able to recall the conversation with a remarkable level of certainty. This is particularly surprising given that when I asked Mr Woodley how Mr Repacholi knew what had happened during the telephone call, he answered "I told him". Mr Repacholi recalls that Mr Douglas-Smith told Mr Woodley during the telephone conversation that Mr Repacholi had authorised the stay at York. He adds that Mr Douglas-Smith told Mr Woodley that if he didn't know the facts then he should "fuck off", and that both phones were smashed down on the receivers. He denies that Mr Woodley swore during the conversation. Mr Repacholi agrees that Mr Woodley wanted to drive immediately to Bruce Rock to dismiss Mr Douglas-Smith, but says he talked Mr Woodley out of acting hastily. Mr Repacholi also agrees that Mr Douglas-Smith rang back to speak to Mr Repacholi soon after, being concerned about the conversation. Mr Repacholi, whose primary concern was to calm things down, told him simply to get on with his work. As I have noted, regard must be had to questions of proportionality when assessing an employee's conduct. I must also have regard to Mr Douglas-Smith's interaction with Mr Woodley and the surrounding circumstances, including the events that lead up to Mr Douglas-Smith's outburst. The first of these circumstances is the fact, as I find it, that Mr Douglas-Smith was being reproached by Mr Woodley for something that was not, in any meaningful sense, his fault. I accept, on balance, that the impetus for the decision that the three Aquip agents stay at York did not come from Mr Douglas-Smith. He saw Ms Parsons on a weekly basis already, and did not need to manufacture opportunities to see her. In any event, he could have made a private arrangement to stay over in York; it was Mr Repacholi's and the other agent's accommodation that resulted in expense to Aquip. There was no advantage to Mr Douglas-Smith to propose that they all stay at York. Mr Douglas-Smith's only omission might have been a failure to warn Mr Repacholi of Mr Woodley's strong feelings on the issue, assuming Mr Douglas-Smith could have anticipated Mr Woodley's over-reaction. The second circumstance is my finding that Mr Douglas-Smith was provoked by Mr Woodley's abusive reference to Ms Parsons. It was agreed that Mr Woodley was angry when he made the call and his disapproval of the relationship was evident in the course of his evidence. I accept Mr Douglas-Smith's account of that part of the telephone conversation. I note that at one point in his evidence, Mr Repacholi said: "…when Woodley was further informed [about Dowerin] then things got a little bit out of hand, certainly on that phone call." This comment reinforced my impression that Mr Woodley's intemperate reaction to the Dowerin accommodation arrangements contributed to "things getting out of hand". In the circumstances, Mr Douglas-Smith's heated response did not constitute a valid reason for the termination of his employment. As for the differences in the evidence of the content of the conversation, I am not satisfied that the conversation was other than as Mr Douglas-Smith recounts it. However, I would not have found either account of the conversation to constitute a sound, defensible or well founded reason for the dismissal in all the circumstances. Credibility I will make some brief general comments at this point on credibility. The key witnesses were Mr Douglas-Smith, Mr Repacholi and Mr Woodley. There were other peripheral witnesses relevant to particular issues, but these three witnesses provided the narrative of Mr Douglas-Smith's recent employment history and the events surrounding his dismissal. Mr Repacholi and Mr Woodley did not hear each other's evidence. Mr Douglas-Smith heard their evidence and that of Aquip's other witnesses before he gave his evidence. Mr Douglas-Smith had also given evidence on his use of the fuel card in other proceedings before giving evidence in this case. As will be apparent as I canvass the evidence on the issues below, Mr Douglas-Smith's evidence often conflicts with that of other witnesses. His evidence conflicts not merely with the evidence of Mr Woodley and Mr Repacholi, but also with the evidence of other witnesses, including on some occasions his own witnesses. These are all matters to which I have given considerable weight in assessing whether Mr Douglas-Smith's evidence should be preferred to that of other witnesses where the facts are in dispute. Even so, having heard all the evidence and after placing due emphasis on the objective factors in support of the various accounts, I have found myself clearly preferring Mr Douglas-Smith's evidence on most occasions. Mr Woodley's evidence was relatively brief and blunt. He did not seek to hide his antipathy to Mr Douglas-Smith and Ms Parsons. His attempts to articulate the reasons for Mr Douglas-Smith's dismissal were unconvincing. There was often a reluctance to admit matters that were eventually beyond dispute. The manner in which Mr Woodley gave his evidence was consistent with Mr Douglas-Smith's contention that he had been dismissed for personal reasons unrelated to his performance and that Aquip had assembled an assortment of justifications for the dismissal after the fact. Mr Repacholi's evidence was more thoroughly tailored to suit Aquip's case. Again, matters were initially denied which in due course had to be conceded. Mr Repacholi's memories of matters detrimental to Mr Douglas-Smith's case were unusually detailed, while his memory of similar incidents involving other employees was hazy. One was conscious that his position with Aquip was dependent on Mr Woodley's good favour. It was also notable that Mr Repacholi was involved in some of the incidents that were the subject of the evidence. In allocating the blame for those incidents to Mr Douglas-Smith, he was absolving himself. In contrast, Mr Douglas-Smith's evidence was given in a very convincing and coherent manner. This was acknowledged to some extent by Counsel for Aquip, who effectively submitted that I should take account of the special communication skills Mr Douglas-Smith had developed as a salesperson when assessing his credibility. When assessing credibility, it has been my practice to place limited weight on any subjective impressions I have formed based upon the demeanour of witnesses. I have done so recognising the limited reliability of such assessments when compared to other more objective factors. In this case, however, the demeanour of the witnesses, together with the inherent plausibility of Mr Douglas-Smith's account, have generally outweighed in my mind other factors which would in most cases have led to another conclusion. The Alleged Dishonest Misuse of a Motorcharge Card and Dishonest Explanation of that Misuse I have held that the catalyst for dismissal, the telephone conversation, was not a valid reason for the termination of Mr Douglas-Smith's employment. I must therefore now consider whether any of the other factors cited by Aquip as grounds for dismissal amount to a valid reason. The most serious issue raised by Aquip is the alleged misuse by Mr Douglas-Smith of a company "Motorcharge" card to purchase fuel from a Bruce Rock service station for his private use. Many months after the dismissal, Aquip referred this allegation to the Police, who charged Mr Douglas-Smith with two counts stealing petrol to the total value of $178.00. During the hearing of this matter, Mr Douglas-Smith had been convicted of those charges by a Magistrate of the Court of Petty Sessions sitting in Corrigin. He appealed the conviction to the Supreme Court of Western Australia. The appeal was heard after the conclusion of this hearing. The Supreme Court set aside the Magistrate's conviction and made an order for costs in favour of Mr Douglas-Smith. This information was bought to this Court's attention by means of notice of motion filed by the solicitor for the applicant. Had the conviction not been overturned, Aquip could have sought to rely on the doctrine of res judicata[5]. As it is, I must consider the allegations relating to Mr Douglas-Smith's use of the fuel card based upon the evidence led in this court, and applying the relevant civil onus, which rests on Aquip[6]. Aquip led evidence in support of a specific finding that Mr Douglas-Smith bought petrol with the card for personal use on at least two separate occasions, ie Sunday 30 June and Sunday 21 July 1996. Aquip also invited me to infer that Mr Douglas-Smith engaged in this practice more frequently. Before considering this evidence, it is appropriate to consider first the context in which the conduct is alleged to have occurred. Mr Douglas-Smith's contract of employment does not refer to the use of fuel cards. It does however provide that "a fully maintained Company vehicle will be provided". There is no reference to the use to which that vehicle could properly be put in the contract, or in any other documentation before the Court. Nor was there any written policy as to the use of the fuel card, which was introduced by Aquip some months after Mr Douglas-Smith was employed. After initial denials by Mr Woodley and Mr Repacholi, it was eventually conceded that an informal policy was in place whereby Aquip permitted the reasonable private use by its employees of their company vehicles. There was evidence of numerous specific examples of such use. It seems that the concept of "reasonable private use" was elastic. It extended to visits to Perth. Sometimes employees did not maintain a private car. Mr Anton Barry, Aquip's accountant, did not have a private car for several years. Mr Woodley concedes that Mr Douglas-Smith did not have a private car at one stage; Mr Douglas-Smith says this was for several months in the first half of 1996. Mr Woodley says he did not complain because he did not believe Mr Douglas-Smith was over-using the company car. Another employee was permitted to take the car for his holidays. Mr Woodley and Mr Repacholi then contended that employees were required to seek permission if they wished to use their company cars for personal use. If this was the case, it was not made clear to Mr Barry, the accountant. He says he was never told he had to ask to take the company vehicle to Perth, though he made it his practice to do so. I accept Mr Barry's evidence on the matter. An extract from the cross-examination of Mr Repacholi is instructive: "Now, what is reasonable private use? Going to Perth almost every month on personal business; would that be a reasonable private use of the motor vehicle? ---Well, see again, there are circumstances. I mean, if it is necessary for a sales person to come down on Friday afternoon to tie up a matter with a supplier - - -… Well, shall we say in the question solely for personal reasons? ---Well, okay. If it's solely for personal use there would be a requirement to have some permission to do that, yes. What about once a month or so, to go to Perth on personal business? Would that be all right? ---Well, this is the sort of thing we are trying to get out of the business. Is it not all right. Are you saying it is not all right? ---Well, in my opinion, no; it's not all right." This is hardly a confident articulation of a clear-cut company policy. An analogous position arose in relation to the purchase of food from service stations using the fuel card. Mr Woodley did it, for example, when buying breakfast for the sales team during their sales meetings. Mr Douglas-Smith agrees that if the sales team wanted a drink or a snack when refuelling they would get one. He says it was rare and believes it showed up as a separate item on the accounts. He described it as "common knowledge". Mr Hutton claims that Mr Douglas-Smith sometimes also purchased other items, such as cigarettes, drinks or snacks and that "most of it went down as petrol". I note that there are sometimes small purchases listed as "oil". Mr Hutton apparently went along with this ruse, on the understanding that it would render the accounts tax deductible. The fuel card records reveal that another of the sales representatives spent $49 on food on Saturday 29 June 1996. Mr Repacholi says he has no doubt "it went on", but again explains that "This is a part of our case of trying to stop it. … We were trying to cut this sort of thing out." If a sales representative was comfortable as at 27 June 1996 to have $49 clearly charged to his fuel card as food, that would tend to suggest he was unaware that he was doing anything wrong. It is not unusual in these days of salary packaging for employees to enjoy the unrestricted use of a motorcar and fuel card. Of course, one of the implications of such arrangements is the employer's liability to pay Fringe Benefits Tax. It may be that the potential increased application of Fringe Benefits Tax to the use of the car discouraged Aquip from adopting a more formal policy. Mr Douglas-Smith indicates that the impression left with the employees was that they could use the car as they wished as long as it could be treated by Aquip as business use for tax purposes. This informal policy potentially afforded employees considerable latitude. Aquip did not object in practice to Mr Douglas-Smith using the company car, with company fuel, for private use. It purports, however, to object to Mr Douglas-Smith using the same company fuel in his own car for any private use whatsoever. One can appreciate that Mr Douglas-Smith may not have anticipated such an objection, had he in fact used the fuel card to refuel his own car as Aquip alleges. The position is further confused because Mr Douglas-Smith used his own car, from time to time, for company use. I accept that Mr Repacholi was employed to take a tighter rein on Aquip's administrative procedures and the costs of running the business. He could quite properly have introduced more formal and stricter policies and standards about the use of the company vehicles and fuel cards. Having done so, Aquip would have been entitled to enforce those standards. On the evidence, however, Mr Repacholi had not introduced any change to the prevailing standards at the time of Mr Douglas-Smith's alleged conduct. As I have noted, Aquip specifically allege that Mr Douglas-Smith bought petrol with the fuel card for his personal use on two occasions. The Motorcharge records indicate that: · on Sunday 30 June 1996, 104 litres of unleaded petrol was purchased for $87.27 using Mr Douglas-Smith's fuel card from the Shell Service Station in Bruce Rock; and · on Sunday 21 July 1996, 109 litres of unleaded petrol was purchased for $91.47 using Mr Douglas-Smith's fuel card from the Shell Service Station in Bruce Rock. There are two notable features to these purchases. They are the quantity of fuel purchased, and the timing of the purchases. The quantity of fuel purchased on each occasion was more than a single fuel tank could accommodate. Mr Douglas-Smith drove a Holden Commodore provided to him by Aquip and a Ford Falcon, which was his private vehicle. Mr Hutton's estimate of the company car's fuel capacity was about 63 litres. Mr Douglas-Smith says in reality both cars took about 68 litres, and could be filled to 74 litres, if some time was taken to squeeze in the last few litres. There was speculation that the Falcon was an ex-police pursuit vehicle, and that it would therefore have a greater fuel capacity. Mr Douglas-Smith rejected this proposition, and there was no direct evidence to the contrary. Mr Douglas-Smith carried two jerry cans with him, each with a 20-litre capacity, in order to have more flexibility in his sales travels between country towns and after hours. Mr Paul Hutton, the service station proprietor, confirms that he was aware of at least two occasions when Mr Douglas-Smith filled the two jerry cans with fuel using the fuel card. I accept that the quantity of fuel purchased is explained by Mr Douglas-Smith's practice of filling the jerry cans as well as the fuel tank. The only other explanation considered by Mr Douglas-Smith was the possibility that more than one refuelling may have been recorded on a single voucher. He says Mr Hutton sometimes adopted this practice, making a note of a purchase so that it could be processed on the next occasion. Mr Douglas-Smith says Mr Hutton did this when it was busy to avoid keeping waiting customers who might otherwise avail themselves of the services of the Caltex station over the road. Mr Woodley acknowledged that some service stations had a practice recording several purchases on one voucher. He recalled that in the case of another sales representative, there have been occasions when he has had a number of "fills" treated as one transaction. However, Mr Hutton emphatically denies that his service station ever writes up more than one purchase on a voucher, or that the signing of a voucher was ever held over until a second refuelling. Given that Mr Douglas-Smith has no specific recollection of either purchase representing two transactions, I have therefore discarded this possibility. As to timing, Mr Douglas-Smith took three weeks' annual leave between 28 June 1996 and 22 July 1996. Aquip allege that both fuel purchases took place during Mr Douglas-Smith's holidays, and that Mr Douglas-Smith was improperly using Aquip's fuel card to buy fuel for his own car to use for his own private purposes. Mr Douglas-Smith denies these allegations. Concerning the first purchase, Mr Douglas-Smith denies that he was at Bruce Rock on Sunday 30 June 1998; he says he was in Perth with Ms Parsons all day, returning to York with her that evening. He accepts that the Motorcharge voucher is completed and dated in his own handwriting, but concludes that he must have been mistaken as to the date. He believes the voucher must have been for fuel purchased for the company car and the jerry cans at some time in the preceding week. An impressive chain of evidence was led documenting Mr Douglas-Smith's whereabouts that weekend. One notable omission was the lack of evidence from either party as to the service station's opening hours on Sundays. Nevertheless, in practical terms, it seems highly improbable that Mr Douglas-Smith could have purchased petrol in Bruce Rock that day. While it strikes me as surprising that a sales person would confuse so significant a date as the end of the financial year, it is the more likely of the two possibilities. It is at least equally possible, in principle, that the fuel was purchased in the days following 30 June, rather than the days before it. However, Mr Douglas-Smith believes that he was not in Bruce Rock in the week after 29 June 1996, and is certain that he travelled north from Perth early on the morning of Wednesday 3 July 1996. He purchased a new mobile telephone on Saturday 29 June1996. The billing records for that telephone show calls originating from "Perth" at various times of the day from 30 June to 2 July 1996. Mr Douglas-Smith explained in his evidence that calls from York were shown as originating from "Perth" on the account. There was evidence that the mobile telephone network did not extend to Bruce Rock at that time. While the telephone records do not rule out the possibility that Mr Douglas-Smith travelled briefly to Bruce Rock from York during those days, I am persuaded to accept Mr Douglas-Smith's recollection to the contrary. The fuel card records show that in the twenty days preceding 30 June 1996, Mr Douglas-Smith had purchased: · 44 litres on Monday 10 June 1996; · 54 litres on Tuesday 18 June 1996; and · 89 litres on Tuesday 25 June 1996 (which would have included at least one jerry can). Mr Douglas-Smith gave evidence that his sales activity increased towards the end of that month, which is as one might expect. It is not unreasonable to accept that the fuel purchased on Tuesday 25 June had been used up by the end of that week. Mr Douglas-Smith could have refuelled the company car and jerry cans at the end of that week, eg on Friday 28 June or Saturday 29 June 1996. The company car had not been running smoothly and it was due to be taken to Aquip's Narembeen workshop for repairs while Mr Douglas-Smith was on leave. Mr Douglas-Smith travelled throughout the state during his holidays in his private car. However, the evidence indicates that his company car was not ready for him on his return. The repair records indicate that it was still being worked on as at Monday, 22 July 1996, and may not have been completed until as late as 6 August 1996. Mr Douglas-Smith's recollection is that it was not ready until about Thursday, 25 July 1996. While Mr Douglas-Smith's last official day at work was Friday 28 June 1996, telephone records from the Bruce Rock office support his evidence that he was in the Bruce Rock office on Saturday 29 June 1996. Similarly, Mr Douglas-Smith says that while his formal date of return was Monday 22 July 1996, he spent time in the office on Sunday 21 July 1996 catching up on developments in his absence. The telephone records, which are incomplete, do not assist on that point. Mr Douglas-Smith agrees that he used the fuel card to refuel his private car and the jerry cans on Sunday 21 July 1996. He says he did so because the company car had not returned from its repairs and he had decided to use his private car for his work until it returned. He believes he refuelled his private car again two days later. Mr Woodley has no recollection of Mr Douglas-Smith using his own car after his holidays. However, given that he did not have his company car at least for the Monday, I accept Mr Douglas-Smith's evidence on this point. Mr Douglas Smith had in the past used his private car for company purposes, and contends that Mr Woodley agreed with his doing so if the company car was not available. Mr Woodley says he does not recall this. On the occasions when he refuelled his private car with the fuel card, Mr Douglas-Smith noted the registration of his company car on the vouchers. He says Mr Woodley told him to do so, because it would avoid having to explain the position for tax purposes. Mr Hutton's evidence that Mr Douglas-Smith used the Motorcharge card to pay for fuel for the Falcon "only once or twice" is consistent with Mr Douglas-Smith's evidence. Mr Douglas-Smith says he used the fuel card to refuel his private car on Sunday 21 July and Tuesday 23 July 1996. Mr Hutton freely conceded in the course of his evidence to this Court that he was not too sure of the exact dates. Mr Douglas-Smith says that, including previous occasions when he used the Falcon for work purposes, he would have refuelled the Falcon with the fuel card five or six times in all. Mr Douglas-Smith denies Aquip's allegation that he was dishonest with respect to his use of the fuel card. I accept, however, that he took full advantage of the latitude he believed was available to him given Mr Woodley's relaxed attitude to the use of the company car and the fuel card. Counsel for Aquip sought to demonstrate that an analysis of fuel card and log book records dating back to October 1995 which were available to the Court indicated that Mr Douglas-Smith's fuel purchases fell into a pattern indicating private use. For example, large quantities of fuel would sometimes be purchased before and after a weekend, suggesting that much of the fuel purchased on the Friday had been used over the weekend, presumably for private purposes. This analysis was not conclusive, and the records relied upon were not necessarily complete. However, Mr Douglas-Smith admitted that he sometimes used the company car to travel to see Ms Parsons in York on the weekends. During the early months of 1996, he freely concedes that he sometimes drove to Perth in the company car, which was his only car at the time. He also admits he used the fuel card to buy food, albeit rarely. I can accept, however, that he was prepared to stretch the flexibility of Aquip's informal policy to what he saw as its outer limits, at least until his conversation with Mr Repacholi. There was only part of Mr Douglas-Smith's evidence which, on balance, I am unable to accept. During his cross-examination, he was asked about the jerry cans that were filled on a date shortly before 30 June, and again on 21 July 1996. It was put to Mr Douglas-Smith that he was unlikely to have had the need to use the fuel in the jerry cans for work purposes in the period between those fuel purchases. While he did not pretend to recall it, he maintained that he would have used the fuel in the jerry cans during his last week at work before his holidays. Mr Douglas-Smith looked uncomfortable during this evidence. He claims he left the empty jerry cans at the workshop near Aquip's Bruce Rock office. He says he collected them to refill them on 21 July. It is difficult to explain the mistake in the date unless the voucher was completed on a date very close to 30 June. If the jerry cans were refuelled on a date close to 30 June it is difficult to accept that they would have been emptied so quickly. I am prepared to accept that it was more likely than not that Mr Douglas-Smith used the fuel in the jerry cans for private purposes. I find on balance that he either took the full jerry cans in his private car on his holiday travels or used the fuel in the jerry cans to top up his private car before leaving. Ms Parsons did not rule out the possibility that there might have been jerry cans in the private car during the holiday, though she did not specifically recall them. One can understand how Mr Douglas-Smith might have adopted that course of action. He might have seen advantages in having the use of the jerry cans during the holidays, given the amount of travel he had planned. Given that Aquip had not objected to him taking the company car to Perth, and permitted other employees to use their company car on holidays, it may not have seemed a significant matter to use the fuel in the jerry cans in his private car. If it were accepted that Mr Douglas-Smith's conduct in the use of the fuel card was potentially sufficient to constitute a valid reason for dismissal, the further question to be considered is whether in fact the decision to dismiss Mr Douglas-Smith was genuinely connected with that conduct. The evidence suggests otherwise. According to Mr Repacholi, the issue of Mr Douglas-Smith's use of his fuel card first came to his attention on receipt of a particular Motorcharge statement. The statement was for the period ending 31 July 1996, and is stamped "Paid 05 AUG". Mr Repacholi believes that it did not come to his attention until about 15 August 1996. He had commenced work at Aquip on 18 June 1996. Mr Woodley was in the USA during August. Mr Repacholi noticed that Mr Douglas-Smith's purchases of fuel seemed unusually high. He noted that a particular purchase was for more than 100 litres of fuel. He decided to seek an explanation from Mr Douglas-Smith. Mr Repacholi says at the time he was not suspicious of Mr Douglas-Smith, and that his enquiry was not elaborate. Mr Douglas-Smith explained that he carried two twenty-litre jerry cans in the car to extend his travelling range, and surmised that the purchases in question included refilling the cans. Mr Douglas-Smith recalls such a conversation in August. Mr Douglas-Smith says he understood Mr Repacholi to have accepted his explanation. Mr Repacholi claims that he thought Mr Douglas-Smith's explanation strange, but decided to check further before raising the matter with Mr Douglas-Smith again. Mr Repacholi claims that he later learned from Mr Hutton, the proprietor of the Bruce Rock service station, that Mr Douglas-Smith refuelled his private car using the Aquip fuel card. Mr Repacholi does not specify when he learnt this. Mr Repacholi says he then raised the matter with Mr Woodley, reporting to Mr Woodley his strong belief that Mr Douglas-Smith was stealing fuel. He describes a face to face discussion, which could only have happened after Mr Woodley returned from the United States at the end of August 1996. Mr Repacholi says that they decided that they would not do anything about the matter at that stage, but agreed that Mr Repacholi would make it clear to Mr Douglas-Smith that it had to stop. They also agreed that Mr Repacholi would keep an eye on the accounts from then on. Mr Repacholi says he then spoke again with Mr Douglas-Smith, probably on the telephone. Mr Repacholi claims to have told him they were not happy about his excess use of fuel and his use of the fuel in his private car. He says he added that it was a matter of great concern and that Mr Douglas-Smith's job would be on the line. He cannot recall Mr Douglas-Smith's response. Mr Douglas-Smith denies any such conversation occurred. Mr Repacholi says the matter was then "put on the back burner". Mr Repacholi explained that it was not his policy to sack people. He preferred to help them work through their problems until their performance improved, because it is expensive to train replacement employees. In the event, Mr Repacholi concedes that he did not notice a problem with future fuel statements. Mr Woodley also concedes that he was not aware of any unusually large purchases of fuel by Mr Douglas-Smith after it had been raised by Mr Repacholi. In fact, the next fuel statement would not have arrived until early to mid September 1996, at or after the date of Mr Douglas-Smith's dismissal. Mr Hutton recalls Mr Repacholi approaching him about Mr Douglas-Smith's use of his fuel card and querying him about apparently excessive fuel purchases. He told Mr Repacholi which vehicles the fuel went into. Mr Hutton does not know whether Mr Douglas-Smith was still employed when Mr Repacholi approached him. Mr Repacholi was initially certain that it was before Mr Douglas-Smith's dismissal, though he later seemed somewhat equivocal. Mr Hutton initially placed this approach "towards the end of August, early September 1996", but conceded he was unsure of the timing. He later estimated that the approach was within four to six weeks before he signed a statutory declaration for Mr Repacholi on the matter. The declaration was signed on 17 October 1996, so that it is more likely than not that Mr Repacholi approached Mr Hutton after Mr Douglas-Smith's dismissal on 6 September 1996. In the circumstances, I am satisfied on either account that Mr Douglas-Smith's dismissal was not genuinely connected with Mr Douglas-Smith's alleged conduct in relation to the fuel card. Even on Mr Repacholi's evidence, it was decided that Mr Douglas-Smith would be warned about the matter, rather than dismissed. It is likely that this course was adopted in recognition of the ill-defined standards that had been applied by Aquip up to that point as to the use of the fuel card. It was appropriate, if Aquip wanted to tighten those standards, that Mr Repacholi raise the matter with Mr Douglas-Smith and "draw a line in the sand". However, even of Mr Repacholi's account, they later dismissed him without his ever having crossed that line. In conclusion, I am not satisfied that Mr Douglas-Smith's use of the fuel card could be regarded as conduct capable of founding a valid reason for his dismissal, given the lack of clarity in Aquip's policy as to its use. Further, I am satisfied that the dismissal was not genuinely connected with that conduct. The Negri Incident Mr Douglas-Smith concluded a sale for a Holden Rodeo utility with J Negri & Co on Wednesday 26 June 1996, just before he was due to take annual leave. Mr John Negri wanted a Holden Rodeo with a "T & L" tray body. The tray requirement was written on the offer to purchase. In the course of writing up the offer, Mr Douglas-Smith had sought from Mr Repacholi and been provided with the cost of the T & L tray. At a sales meeting in Corrigin early on the morning of Friday 28 June 1996, Mr Woodley pointed out that Aquip no longer dealt in T & L trays. Mr Woodley claims that Mr Douglas-Smith had been told this at a previous sales meeting. Mr Douglas-Smith says the meeting was the first he had heard of it. I accept Mr Douglas-Smith's evidence, as there seems little reason for Mr Douglas-Smith to have deliberately made difficulties for himself by knowingly writing up an order for equipment that Aquip did not stock. Mr Woodley gave Mr Douglas-Smith specific instructions to go out to Mr Negri with a brochure for Unicorn Transport, an alternative supplier, and explain the problem before taking his holidays. It was effectively necessary for Mr Douglas-Smith to persuade Mr Negri to agree to vary the offer to purchase to accept a Unicorn tray body. Mr Douglas-Smith attempted to contact Mr Negri on Friday 28 June 1996, calling into his farm. This was convenient because Mr Negri's farm was on the road between Mr Douglas-Smith's residence and the Bruce Rock office. Mr Negri was not in, so Mr Douglas-Smith left his business card, with a note asking Mr Negri to contact him. Mr Douglas-Smith explained the situation to Mrs Sherryl Bow, who is described by Mr Douglas-Smith as "the de facto office manager" and by Aquip as the "parts clerk" or "receptionist" at the Bruce Rock office. He made arrangements for her to fax Mr Negri the details. He had located photographs of the unicorn tray and names of other farmers in the area that had them. It transpired that Mr Negri's facsimile machine was not turned on. Nor did he answer his telephone. Mr Douglas-Smith visited the farm again the next morning on the way to the office, but found his card still there. He checked and noted that Mr Negri's private car was gone, and concluded that he was away for the weekend. Mr Douglas-Smith left a note for Mrs Bow explaining what she needed to do to follow up on the matter. He considered it appropriate to leave the matter with Mrs Bow. He explains that Mrs Bow was a woman of considerable responsibility and maturity, being over fifty years of age, with considerable experience in the machinery and farming business. He departed on his holiday that afternoon. Mr Douglas-Smith adds that he telephoned the Mrs Bow on Monday 1 and Tuesday 2 July 1996. Mrs Bow assured him on the Tuesday that she had succeeded in contacting Mr Negri and explaining the situation to him, and that "everything was under control". Aquip contend that Mr Douglas-Smith did not meet his responsibilities in relation to this transaction. Aquip say that Mrs Bow did not have any authority to sign up deals and that, consequently, Mr Repacholi had to do everything necessary to finalise the deal. Mr Repacholi says that Mr Negri called into the Narembeen office on about Wednesday 3 July 1996 and that Mr Repacholi asked him: "…had Eoin called in to discuss the matter of the Unicorn body. Mr Negri informed me he had not and that – I proceeded to explain to John Negri the benefits and otherwise of a Unicorn body and Mr Negri agreed without any complaint at all to change his offer to purchase from what was written, which was a T & L Engineering body to a Unicorn body… he didn't have any hesitation at all in changing his mind about that." Mrs Bow was not called to give evidence. Mr Repacholi's evidence, as opposed to the conclusions Aquip draw from it, is not inconsistent with Mr Douglas-Smith's account. Mr Repacholi went on to handle the transfer of the trade-in vehicle and the hand-over of the new vehicle in Mr Douglas-Smith's absence. Mr Douglas-Smith had made no arrangements about these matters. He indicates that he would not normally have had to handle those matters in any event. In a memorandum prepared by Mr Repacholi in August 1996, he raised three matters with Mr Douglas-Smith, the third of which was: "John Negri's deal on the New Holden Rodeo 4x4. We need to know why you did not approach John Negri about the tray body and your explanation as to who was to complete the transaction during your holidays. Prepare explanation why no written instructions were available to complete the deal." The other two matters were satisfactorily resolved. With the Negri matter, Mr Repacholi maintained that it was not appropriate to leave the matter for Mrs Bow to follow up. In his view, it was appropriate for another member of the sales team to have been briefed with the details of the transaction. He recalls Mr Douglas-Smith to have responded that he wouldn't have been entitled to earn a commission on the vehicle in any case, as he did not have a dealer's licence to sell motor vehicles, as distinct from machinery. I accept that the view taken at the time by Mr Repacholi on behalf of Aquip was not unreasonable. The Negri incident was obviously regarded as a serious enough matter to raise with Mr Douglas-Smith. It was relevant to the assessment of commission on the sale. However, the incident was not regarded at the time as sufficiently serious to jeopardise Mr Douglas-Smith's ongoing employment. It was not the subject of a warning. Even had it been, there was no evidence of any similar problems with Mr Douglas-Smith's later performance. I am satisfied, therefore, that the decision to dismiss Mr Douglas-Smith was not genuinely connected to his conduct in relation to this transaction. The Bailey Incident An issue arose from the sale by Mr Douglas-Smith of an air seeder to W.E. & L.J. Bailey, which included the trade-in of their old seeder. The original sale negotiations were conducted between Mr Douglas-Smith and Mr Greg Bailey. Greg Bailey died soon after the deal was concluded. His father, Mr William Bailey, who had been in retirement, took over the running of the farm. Given the option by Aquip, Mr Bailey chose to proceed with the purchase. Mr Bailey then had to decide whether to buy new "seeding boots" for the new seeder, or have the old seeding boots designed for the old machine modified to fit the pipes of the new machine. The original offer to purchase was silent on this point, and Mr Douglas-Smith concedes that it had been "left up in the air". Mr Bailey left the matter unresolved. Mr Douglas-Smith then received an attractive offer to purchase the old machine the Baileys had traded in, on the condition that it came with the old boots. He approached Mr Bailey in about January 1996, while he was in the middle of the sheep shearing. In a discussion outside the shearing shed, Mr Douglas-Smith says he offered Mr Bailey the opportunity to buy the new boots at a discount and personally offered to fit them himself. He says he secured Mr Bailey's agreement to purchase them. The new boots were ordered. Mr Bailey was billed for them and paid the bill. Mr Douglas-Smith sold the trade-in to the purchaser, with the old boots. Mr Douglas-Smith went out to Bailey's farm on a Sunday in early February and took all the old boots off the cultivating bar and put them in a pile. The purchaser took possession of the trade-in from Mr Bailey's farm and laid claim to the old seeding boots. Mr Bailey says he did not regard the old seeding boots as part of the trade-in, but allowed the purchaser to take them. Subsequently, there were considerable difficulties fitting the new boots, due to manufacturing defects. There were also some difficulties with wiring up the new seeder to the tractor. In the event, these difficulties were still being resolved when the seeder was out in the paddock ready to commence seeding. After seeding, a disgruntled Mr Bailey submitted an account to Aquip seeking compensation for the value of the old seeding boots and the other problems with the new seeder. Eventually, on Friday 23 August 1996, Mr Repacholi and Mr Douglas-Smith met with Mr Bailey to discuss the matter. There is some dispute as to how this came about. Mr Repacholi says that he raised the matter with Mr Douglas-Smith, that Mr Douglas-Smith twice claimed to have had authority from Mr Bailey to sell the seeding boots, and that Mr Repacholi organised the meeting. Mr Douglas-Smith says that Mr Bailey's account eventually made its way to the Bruce Rock office and that he contacted Mr Repacholi, who then organised the meeting. For his part, Mr Bailey suggests the meeting happened spontaneously, when he happened to call in to the Narembeen office. Mr Douglas-Smith says that Mr Bailey essentially conveyed a general dissatisfaction about the seeder and the various problems that had arisen, and regret that he had purchased it. He complained about not having the old boots, at which point Mr Douglas-Smith noted that Mr Bailey had agreed in January that they could go with the trade-in. He says that Mr Bailey conceded this and that in doing so he reminded Mr Douglas-Smith that the agreement had taken place outside the shearing shed. Mr Bailey went on to complain about the other problems with the seeder. Ultimately, at the conclusion of the meeting, Mr Repacholi apologised to Mr Bailey and wrote out an Aquip cheque for $496.00 as compensation to resolve the matter. Mr Douglas-Smith describes it as an awkward and sad situation. He explains the decision to offer Mr Bailey the payment in terms of recognition of his unfortunate position, rather than the merit of his claim for compensation. He says that both he and Mr Repacholi were relieved at the time to have resolved the matter. Amendments to Mr Bailey's account indicate that $336.00 of this compensation was attributed to the seeding boots and the remaining $160 related to the wiring of the new seeder. Mr Douglas-Smith arranged for Mr Bailey to give evidence on his behalf. Then, at the last moment, Mr Bailey was not called by the applicant. He was then called by Aquip instead. The reason for this change became apparent as, in his evidence, Mr Bailey denied ever having agreed with Mr Douglas Smith to relinquish the old boots or purchase the new boots. For his part, Mr Repacholi says that Mr Douglas-Smith conceded during that meeting that he didn't have authority to sell the boots. Again, Mr Douglas-Smith's account is contradicted by two witnesses. Even so, I find it more plausible. I do not in doing so impugn the integrity of Mr Bailey. The events happened some considerable time ago, and I can accept that he never agreed to relinquish the old boots. I find it unlikely that Mr Douglas-Smith would have taken the risk of ordering a thousand dollars worth of special boots, suitable only for that machine, if there were a risk that Mr Bailey would not agree to accept them. I find it still less likely that Mr Bailey would have paid for the boots had he not been satisfied at the time that he had agreed to purchase them. For his part, if Mr Repacholi decided with Mr Douglas-Smith to pay compensation to Mr Bailey on behalf of Aquip where no concrete grounds for that payment existed. He may have been required to justify that payment at some point. It is not surprising that he would now favour an account of the incident which provides him with a basis for having so acted, and places responsibility with Mr Douglas-Smith. I should finally observe that, when Mr Bailey agreed to purchase the new boots, Mr Douglas-Smith appears to have presumed that the agreement included an agreement to relinquish any claim to the old boots, so that the old seeding boots could form part of the trade-in and be on-sold. This assumption was not logical. When Mr Douglas-Smith had agreed a price for the trade-in with Greg Bailey, he had contemplated that possibility that the old boots would be needed for the new machine. The old boots could not therefore have been included in the price of the trade-in. However, it was understandable that Mr Douglas-Smith equated Mr Bailey's acceptance of the new boots with him abandoning any claim to the old boots, given that he had no further use for them. I am not satisfied that Mr Douglas-Smith's conduct in relation to this transaction was a matter of legitimate and genuine concern to Mr Repacholi. Further, it again does not appear to have been regarded at the time by Mr Repacholi as jeopardising Mr Douglas-Smith's employment. There is no evidence, for example, that it was not the subject of a warning. The Paini Incident Mr Douglas-Smith gave a one-year "50/50 warranty" on an order for a second-hand John Deere tractor that was sold to A. & S.F. Paini on 30 May 1996. Aquip contend that this was done without Aquip's approval. Subsequently, the machine broke down, forcing Aquip to honour the warranty at a cost of $2,665.84, paying half of the repair costs. Aquip ceased to rely on this incident as a reason for Mr Douglas-Smith's dismissal when it became apparent during the hearing that Aquip did not become aware of Mr Douglas-Smith's alleged conduct until after his dismissal. Aquip now contend only that the incident gives rise to a counterclaim against Mr Douglas-Smith's claims for commission. The only documentary evidence is the Offer to Purchase completed for the transaction by Mr Douglas-Smith. The relevant order book had duplicate copies of offers to purchase. Generally, the white top copy, which is completed in ink, is taken by the customer. The second yellow copy, which is completed by carbon paper, remains in the book for reference by the sales representative. It seems that usually the books are in triplicate and a third pink carbon copy is provided to the head office for its records. In the absence of the pink copy, a photocopy of the yellow copy had to be made for head office. The customer's copy for the Paini transaction was not tendered, but it was common cause between the parties that it included a reference to the warranty. Mr and Mrs Paini gave evidence that this was written on their copy at the time the Offer to Purchase was originally drawn up. However, no carbon copy of that notation appears on the yellow copy. Nor does the photocopy, which was forwarded to the head office, contain any reference to the warranty. A notation concerning the warranty was written in ink on the yellow copy in the book. This notation must have been made by Mr Douglas-Smith after the head office photocopy was created. Further, at the time when the reference to the warranty was noted on the customer copy, the carbon must have been removed or blocked, because all the other details on the customer copy, including Mr Paini's signature, show through on the carbon copy and photocopy. The question arising is whether the difference in the copies was an innocent oversight or a deliberate attempt by Mr Douglas-Smith to conceal from Mr Woodley the fact that the warranty had been given. Mr Woodley claims he was not aware of the warranty, because the paperwork submitted to Aquip's head office did not refer to it. Under the usual procedure, before Mr Douglas-Smith could agree the terms of a sale with a customer, he was required to discuss the proposed terms with Mr Woodley. In the course of that discussion, Mr Woodley would prepare a "workout sheet" for the deal in order to satisfy himself that it was commercially advantageous. Any proposed warranty would properly have been discussed at that time, together with other relevant matters such as the value of any trade-in. The offer to purchase would have been based on the deal workout sheet. Mr Douglas-Smith says that Mr and Mrs Paini had purchased another second-hand John Deere tractor some months before and had been given a 50/50 warranty. They sought a similar warranty for this transaction. He says he discussed the proposed warranty with Mr Woodley in the usual way while they were settling the purchase and trade-in prices to be quoted. According to Mr Douglas-Smith, Mr Woodley gave his stock response that, as a John Deere dealer, he stood behind John Deere machinery. Mr Douglas-Smith says that Mr Woodley approved the warranty on most John Deere machinery, unless it was really old and dilapidated. Mr Douglas-Smith thus regards himself as having been specifically authorised by Mr Woodley to offer the 50/50 warranty on the tractor. Mr Woodley says he would not have approved the deal, given the age and condition of the tractor. Mr Douglas-Smith suggests the tractor was similar in age and condition to the tractor purchased earlier by Mr and Mrs Paini. I note it was a different model and was about 20 percent cheaper. It is possible, however, that the price difference was due to it being a smaller model, rather than an indication of any lesser condition. Unfortunately, Aquip were unable to locate the workout sheet for the transaction. Mr Woodley and Mr Repacholi say it is unlikely that the workout sheet would have included any note of the warranty. Mr Douglas-Smith says he then discussed the proposed terms of the deal with Mr Paini on the telephone, that Mr Paini agreed, and that Mr Douglas-Smith went out to their farm to sign them up. He met Mr and Mrs Paini away from their house and drew up the offer to purchase at his car. Mr Douglas-Smith gave Mr Paini the white copy and put his papers away. Mr Paini then pointed out that there was no reference to the warranty, so Mr Douglas-Smith took Mr Paini's copy and noted the warranty at the bottom. Obviously, no carbon copy was made of that note. Mr and Mrs Paini gave evidence about the circumstances in which the Offer to Purchase was drawn up and signed. Mrs Paini's recollection seemed clearer. She recalls that they were loading up feed sheep at the time, away from the house and that it was a windy day. She allows for the possibility that there may have been some mistake with completing the papers. However, she rules out the proposition that anything was added to their copy of the offer to purchase on another occasion. Mr Paini insists that the warranty was written on the offer to purchase when he signed it. However, his recollection seemed less reliable. He gives the impression that they were seated at home when the documentation was completed. He talks of them having coffee afterward. It may be that he is confusing the circumstances in which the two tractors were bought. In addition, I formed the impression that he was reluctant to admit to anything that he saw as possibly jeopardising their entitlement to the warranty. Mr Douglas-Smith later noted a reference to the warranty on the yellow copy, having already sent a photocopy to head office. This must have been done in the normal course, because the warranty did not become an issue until after Mr Douglas-Smith was dismissed, by which time he had no access to the yellow book. He concedes that the lack of any reference to a warranty on the photocopy was a clerical error on his part. Mr Douglas-Smith says he did not think anything of it, and that he would have had no doubt that Mr Woodley would remember the warranty and honour it. There were points in Mr Douglas-Smith's evidence on this matter which it appeared to me he might be resorting to reconstruction in an attempt to explain the documentary evidence. I accept that at the time, it may not have appeared significant, and it is likely that he therefore has little recollection of how the oversight came about. His evidence was consistent with Mrs Paini's recollection, which he had had the opportunity to hear before giving his evidence. It does not follow that there is anything sinister about his conduct. He argues that he wouldn't have stuck his neck out by pretending someone had a warranty when they didn't, because it would have been suicide. Even allowing for the commission he would have earned on the sale, it does seem an extraordinary risk for someone in his position to have taken. I conclude, therefore, that it is more likely that the warranty was authorised by Mr Woodley, and that the failure to note it on the office photocopy was a mere oversight. The Alleged Misuse of a Company Telephone. Aquip say that Mr Douglas-Smith made 33 telephone calls to Ms Parsons in York during the period 6 May to 29 June 1996 to the value of $68.00 and that these calls appeared not to be work related. They also say that these calls were made during work hours from the Bruce Rock office of Aquip. The time involved was negligible. There was no evidence that particularly strict standards as to personal calls were applied within Aquip. Indeed, it was a term of Mr Douglas-Smith's employment contract that 90 percent of his home telephone account was paid by Aquip, which presumably could include a significant proportion of personal calls. There was even some evidence that, after Mr Douglas-Smith installed a second telephone line and purchased a fax machine, Aquip began meeting his entire home telephone account. Mr Barry has no knowledge of any change in Mr Douglas-Smith's entitlements in this regard, but concedes that Aquip may have neglected to seek Mr Douglas-Smith's 10 percent contribution. Mr Woodley also concedes that Aquip may have been meeting 100-percent of Mr Douglas-Smith's home telephone bills, albeit without authorisation. Again, the notional requirement of a ten-percent employee contribution was apparently related to Aquip's liability for Fringe Benefits Tax. I accept that Mr Woodley agreed that Mr Douglas-Smith need not in practice continue to make that contribution. Aquip no longer relies on this matter as a valid reason for Mr Douglas-Smith's dismissal, but only as a set-off against his claims for commission. It would have been difficult to establish that the dismissal was genuinely connected with what was, in all the circumstances, a trivial matter. I formed the impression that Mr Woodley's real objection was to the recipient of the calls rather than their cost. Mr Douglas-Smith offered at the time to repay the cost of the personal calls. It seems from the supporting documentation that $68.00 was deducted from his termination payment to meet that cost. Mr Douglas-Smith said in his evidence that he was left to pay the final home telephone bill following his dismissal, much of which had been incurred in business calls for Aquip, without reimbursement. That amount is not, however, quantifiable on the evidence before me. Mr Douglas-Smith's General Performance I should finally refer to Mr Woodley's evidence that he was dissatisfied with Mr Douglas-Smith's general level of performance. In contrast, Mr Douglas-Smith gave evidence of working extraordinarily long hours and covering great distances in the course of his work. He contends that there was no criticism of his performance as a sales representative until these proceedings. His performance, he says, was never questioned formally or informally. He pointed out that Mr Repacholi's administrative practices are such that one might have expected him to have dealt with any such concerns relatively formally, by way for example of written warnings. Mr Repacholi complained that, while Mr Douglas-Smith generated some turn-over, his costs were too high and his margins too low. The costs referred to were fuel costs and personal telephone calls. As an example of the margin issue, my attention was drawn to one transaction where Mr Douglas-Smith only received a third of his commission because the margin was too low. In response, Mr Douglas-Smith simply pointed out that every transaction had to be authorised in advance by Mr Woodley, so that by definition, he had to approve all margins. He also complained that Mr Douglas-Smith concentrated on a very good existing client base and was not expanding Aquip's market. Rather, he was merely "picking the eyes" out of the sales region allocated to him. Mr Douglas-Smith contends that a large percentage of the deals he made were new clients. He noted that some of Mr Woodley's "pet clients" also began to approach him about sales, which he didn't think "went down too well". One source of objective evidence was the accountant, Mr Berry, who gave evidence of Mr Douglas-Smith earning the highest commission of any of the sales representatives. One would have expected the calculation of commissions to be related to performance. There was no documentary evidence of persistent shortcomings in Mr Douglas-Smith's performance. There was some evidence that Mr Woodley had begun hectoring him at recent sales meetings, beginning with Mr Repacholi's first meeting on Friday 28 June 1996. However, that behaviour is as consistent with Mr Woodley's general antipathy to Mr Douglas-Smith as it would be to any objective shortcomings in his performance. Mr Douglas-Smith describes it as a general rudeness and irritability, which was not expressed by reference to his performance. While Mr Repacholi described continual questioning of Mr Douglas-Smith's performance and deals by Mr Woodley at sales meetings, Mr Repacholi would have attended very few of these sales meetings. First Mr Douglas-Smith and then Mr Woodley were absent for most of time between Mr Repacholi's arrival in mid-June and Mr Douglas-Smith's dismissal in early September. I note that Mr Woodley resumed responsibility for Mr Douglas-Smith's sales region after his dismissal. I also note that in the final discussions with Mr Douglas-Smith on 5 and 6 September 1998, Aquip were seeking Mr Douglas-Smith's signature to an exclusion agreement, which would have prevented him working with a competitor. I am therefore not satisfied on the evidence before me that Mr Douglas-Smith's sales performance was generally sub-standard. Whether Aquip had a Valid Reason to Terminate Mr Douglas-Smith's Employment Having considered the various grounds relied upon by Aquip and the evidence in support of those grounds, I am not satisfied that Mr Douglas-Smith's employment was terminated for reasons genuinely connected with his conduct concerning: · His use of the fuel card; · The Negri Incident; · The Bailey Incident; or · Mr Douglas-Smith's general performance. Rather, I find that these matters were raised later in an after the fact attempt to justify the dismissal. I find that the real reason for the dismissal was the antipathy between Mr Woodley and Mr Douglas-Smith, which culminated in the telephone call between them. For the reasons I have discussed earlier, I do not regard Mr Douglas-Smith's part in that call as constituting a valid reason for his dismissal. I therefore find that Aquip have breached Section 170DE of the Act. Whether Mr Douglas-Smith was given an Opportunity to Defend Himself It is not necessary for me to decide whether Aquip was also in breach of Section 170DC of the Act. However, I will briefly record my findings as to the meetings between Mr Douglas-Smith, Mr Repacholi and Mr Woodley in the days before his dismissal. Mr Douglas-Smith maintains that he was given no work-related reason for his dismissal during these discussions. Mr Woodley denies this. Mr Woodley says that the decision to dismiss Mr Douglas-Smith was made on the day before he and Mr Repacholi went to see Mr Douglas-Smith ie 5 September 1996. He discussed the dismissal with Mr Repacholi to try to "do things the right way". Mr Repacholi visited Mr Douglas-Smith for about an hour that Thursday, 5 September 1996. He says he went over to Bruce Rock to ask Mr Douglas-Smith to resign. The tone of the meeting was amicable, as it was not Mr Repacholi's intention to upset Mr Douglas-Smith unnecessarily. Mr Repacholi recalls raising the Bailey incident, the Negri incident and the fuel issue with Mr Douglas-Smith during this meeting, as reasons for requesting his resignation. His personal use of the office telephone was also raised. The Dowerin accommodation arrangements were discussed, but not the telephone call. Mr Douglas-Smith denies that Mr Repacholi raised any work-related matters. He says that Mr Repacholi identified Mr Woodley's personal differences with him as the reason why he would have to go, because Mr Woodley would make no effort to resolve them. Mr Repacholi produced a document that included a term that Mr Douglas-Smith could not work within a 100-kilometre radius of Bruce Rock. Mr Douglas-Smith refused to sign it, despite Mr Repacholi's undertaking in return to "pay you up and give you a good reference". They then discussed the terms on which Mr Douglas-Smith might consent to such an agreement. They could not agree terms. On Mr Douglas-Smith's account, Mr Repacholi sought to present himself at this meeting as an "honest broker" between Mr Woodley and Mr Douglas-Smith. Such an approach is to be expected, given the difficult negotiating task confronting Mr Repacholi. Somewhat ominously, Mr Repacholi concluded the meeting by advising Mr Douglas-Smith, "I hope you realise from now on I just have to do my job". Mr Repacholi says that he and Mr Woodley returned the next day to try again to reach an amicable termination of Mr Douglas-Smith's employment. Mr Repacholi claims that the Bailey and Negri incidents, the fuel and the telephone use were again raised at this meeting, but that the Dowerin issue and the telephone conversation between Mr Douglas-Smith and Mr Woodley were not raised. Nothing new was raised as to the reasons for the termination. They spent much of the time discussing the calculation of commissions. Mr Woodley doesn't recall the fuel issue or the personal telephone call issue, general lack of performance, or the heated telephone conversation being raised at the final meeting. His evidence left the impression that the reasons for the dismissal were not discussed, at least within his hearing. Mr Douglas-Smith again emphatically denies that any reasons for dismissal were discussed. Mr Douglas-Smith recalls that Mr Woodley said very little. They produced another termination agreement and calculations concerning Mr Douglas-Smith's entitlements. Mr Repacholi initially and persistently sought to deny that they were dismissing him, until Mr Woodley finally confirmed that he was "sacked". When asked the reason, he responded that there was no reason and that he didn't have to have a reason. This outburst apparently caused Mr Repacholi some consternation. Mr Woodley and Mr Repacholi deny that Mr Woodley made any such statement. Mr Douglas-Smith says that at the time he was primarily focused on ensuring he received all of his entitlements. Not being satisfied with their calculations, he would not sign the document. He telephoned a solicitor who reinforced his determination on that point. He refused the cheque they had prepared for the termination payment. They then relieved him of his car and his office keys and escorted him from the building. Again, I prefer Mr Douglas-Smith's account of the events on these days to that of Mr Repacholi and Mr Woodley. Mr Repacholi, when giving evidence as to the matters raised with Mr Douglas-Smith at these meetings, appeared to be having mental recourse to his checklist of reasons for dismissal rather than to any actual recollection of the discussion. Commissions Before turning to the assessment of the compensation due to Mr Douglas-Smith because of his unlawful termination, I will deal with his claims for non-payment of commissions. Many of the claims for commission were resolved during the course of the hearing. Aquip conceded that, assuming they prevailed on the disputed commissions, they still owed Mr Douglas-Smith $7,112.59 in commission. However, they sought to offset various cross-claims against that amount, namely: · The costs of the fuel allegedly misused by Mr Douglas-Smith, ie $178.00; · The cost of Mr Douglas-Smith's personal telephone calls from the Bruce Rock office, ie $68.00; · Mr Douglas-Smith's outstanding contributions to 10 percent of the cost of his home telephone account ie $281.00; · The cost to Aquip of honouring the Paini warranty, ie $2,655.84; · The cost of compensating Mr Bailey ie $496.00; and · The holiday pay and leave loading paid out to Mr Douglas-Smith to which Aquip claim he was not entitled, given that they maintain they would have been entitled to dismiss him summarily for misconduct. Given my findings to this point, few of these counterclaims can succeed: · At best, Aquip may have been entitled to retrospectively recoup the $33.50 paid for the 40 litres of fuel in the jerry cans used by Mr Douglas-Smith over the holidays after clarifying the limits on the use of the fuel card; · The $68.00 cost of Mr Douglas-Smith's personal telephone calls from the Bruce Rock office have already been deducted from his termination payment; · I have found that Mr Woodley waived Mr Douglas-Smith's contributions to the cost of his home telephone account; · I have found that Mr Woodley approved the Paini warranty; · While Mr Douglas-Smith may have borne some responsibility for Mr Bailey's complaints, Mr Repacholi was aware of the situation at the time, and there was no indication at that time that Mr Douglas-Smith would be personally responsible for any part of the cost of compensating Mr Bailey; and · Having elected not to dismiss Mr Douglas-Smith summarily, Aquip could not have reversed the position, even had I found that there was misconduct which would have justified summary dismissal, which I have not. Aquip therefore owe Mr Douglas-Smith at least $7,079.09 in Commission, plus anything to which he is entitled under the disputed claims. By the closing submissions, only five claims for Commission remained in dispute. They were in relation to: · The Negri Transaction; · The Header World Transaction; · The Murdoch Transaction; · The Cole Transaction; and · The Metcalf Transaction. Mr Repacholi had stressed the need for the sales representatives to complete the sales in order to earn their commissions. In a memorandum dated Thursday, 4 July 1996 to Aquip's Branch Managers and Sales Department on the subject of sales and Commission, Mr Repacholi said: "Subject: SALES/COMMISSION As discussed at previous sales meetings-commissions may not be paid on a sale of a product until the following documentation is completed and processed by this office... (1) The offer to purchase (OTP), together with an appraisal (if necessary) have been correctly completed and signed. (2) The workout sheet is completed and accurate. (3) The deposit in the form of cash, cheque or trade has been received from the customer and deposited, giving Aquip full and legal right to that trade. (4) The ordering of special products (if not in-stock) to complete the sale are followed through to the satisfaction of conditions of the customer's signed order. (5) All documentation is received at this office with written advice of the sale of any special requirements etc... (6) Advice has been given to service departments (preferably written) on arrival of product, pre-delivery instructions. Advice given to service department about any special requirement as listed on the customer retail order. (7) Customers are briefed on delivery dates, handover procedures, warranty conditions, etc etc (sic). (8) Customer is satisfied with product and delivery. (9) Customer receives a follow-up call (phone or visit) within a suitable time following delivery. (10) Aquip is satisfied with transaction. Note: I will personally follow-up direct with customers to check performance of many sales. D. Repacholi General Manager" Mr Barry says that, as a rule, Mr Douglas-Smith's was good at completing the relevant paperwork. Even Mr Woodley concedes that Mr Douglas-Smith was the best of the sales representatives at completing his paperwork. Dealing first with the Negri transaction, which was discussed above, I accept that Aquip are entitled to withhold part of the commission, because the transaction was not completed when Mr Douglas-Smith left to take leave. It may be that his delegation of the outstanding matters to Mrs Bow rather than another sales representative was an attempt on his part to preserve his entire commission. In any event, Mr Repacholi had to finalise that transaction, or at least supervise its finalisation. I do not accept, however, that Mr Douglas-Smith is due nothing in commission for that transaction. Accordingly, I will order that he be paid half the relevant commission on the Negri transaction, which I understand to be $186.00. Another disputed commission related to the Header World transaction. Mr Woodley claims that Header World is a long-standing client of Aquip and that its purchases of trade-in machines are on a wholesale basis. He explains that, because the transactions have no margin built in, no commission is payable. Mr Barry, the accountant, has no specific recollection of why commission was not paid on this transaction. His best recollection as to the instructions he was given by Mr Woodley was that the deal was not handled to Mr Woodley's satisfaction. The relevant transaction occurred while Mr Woodley was in the United States. Mr Repacholi referred the enquiry from Mr McDonald of Header World to Mr Douglas-Smith. There was no indication to Mr Douglas-Smith that the position was to be any different concerning commission. Mr Repacholi would not necessarily have been aware of any special arrangements for Header World. I accept that Mr Douglas-Smith spent time liasing with Mr McDonald on the telephone, sending him facsimiles, negotiating a price and ultimately getting a signed offer to purchase. Mr Douglas-Smith was dismissed before the machine could be picked up and paid for. It was not disputed that the transaction proceeded to completion. It was put to Mr Douglas-Smith that the deal had already been negotiated by Mr Repacholi and that all Mr Douglas-Smith did was the paperwork associated with the Offer to Purchase. Mr Douglas-Smith denied that. It is difficult to see why, if Mr Repacholi felt able to negotiate the transaction, he would have felt unable to write up an Offer to Purchase. It was also put to Mr Douglas-Smith that equipment was sold to dealers at wholesale prices. He responded that there was enough margin in the deal to more than pay his commission. He disputed that the machinery was usually sold to dealers at cost. His belief was that Aquip would always try to get a ten-percent margin on the "bare stock value" of a trade in. He explained that harvesters were particularly saleable. Concerning that particular transaction, his recollection is that the price Aquip had paid for the machine as a trade-in was very low. Aquip were therefore able to sell it to a dealer at a "wholesale" price that left a good profit. Mr Repacholi approved the transaction. Mr Douglas-Smith pointed out that the margin would be on the deal work out sheet for the transaction. Aquip did not tender that document. On the evidence before me, I accept Mr Douglas-Smith's account. Given the failure to produce the workout sheet, I infer it would not have assisted Aquip's defence to the claim. As Mr Douglas-Smith's inability to complete the supervision of the transaction was for reasons beyond his control, I find that he is entitled to the whole of the commission on the transaction, which I understand to be $3,260.00. With regard to the other disputed commissions, Aquip contends that Mr Douglas-Smith did not complete the sales in the Cole, Metcalf and Murdoch transactions. Mr Woodley signed up the offers to purchase for two of the deals. He maintains that he also performed the follow-up work, such as arranging deliveries. Accordingly, Aquip contends that Mr Douglas-Smith is only entitled to 50-percent of the commission for those transactions. Mr Woodley's evidence is that he did at least 50-percent of the work on the Metcalf deal himself. There was other direct evidence about the Metcalf transaction. Mr Ian Metcalf says that Mr Douglas-Smith made three visits to his farm to persuade him and his partner to buy a new harvester. When they went into Narembeen to sign up for the harvester, Mr Douglas-Smith was not there, so Mr Woodley signed him up. It took about fifteen minutes. Mr Metcalf recalls specifically telling Mr Woodley that as far as they were concerned Mr Douglas-Smith had sold them the harvester. He says Mr Woodley acknowledged that that was the case. Ironically, they did this because they had previously been caught up in a dispute about commission between Mr Woodley, who had sold them a machine, and Aquip's previous owner. Afterwards, Mr Douglas-Smith attended the farm to check they were happy with the new harvester and resolve some small problems with it. When this proposition was put to Mr Woodley, he responded that he was constantly coaxing Mr Douglas-Smith to go and see Mr Metcalf, and he believed that they came into the showroom to see the harvester, not Mr Douglas-Smith. He also spent some time showing them over the harvester. On this evidence, I can so no basis upon which Mr Douglas-Smith could properly be denied the full commission, which is $2,400.00. Mr Woodley says he did 90-percent of the work on the Cole deal, visiting their farm and meeting with them at the dealership to discuss the deal before signing them up. Mr Barry believes that Mr Cole came to Narembeen and spoke to Mr Woodley on the deal. Mr Douglas-Smith gave evidence of the steps he took to persuade Mr Cole to purchase the machine in question. He says he called on Mr Cole three or four times and provided him with old promotional literature on the relevant model from his own collection. He had appraised the trade-in and quoted Mr Cole prices for the purchase and the trade-in. He maintains that the only part Mr Woodley played in the transaction was to sign Mr Cole up when Mr Cole went into the Narembeen dealership with the intention of purchasing the machine. Mr Douglas-Smith believes Mr Cole may have hoped to negotiate a higher price for his trade-in from Mr Woodley, but says that the deal went through as he had quoted. There was no independent evidence as to whether additional negotiations took place between Mr Cole and Mr Woodley to conclude the agreement. No workout sheets were tendered. Had there been any alteration of the terms originally quoted by Mr Douglas-Smith it would presumably have been possible to demonstrate that. Mr Douglas-Smith's account was the more detailed and convincing and I accept his evidence concerning this transaction. Accordingly, I find him entitled to the entire commission, which I understand to be $1,740.00. Mr Woodley says that he negotiated the Murdoch transaction and that Mr Douglas-Smith merely signed Mr Murdoch up. Mr Woodley claims to have done 80-percent of the work on that deal. He also complains that Mr Douglas-Smith authorised some repairs to the machine at Aquip's expense, so that Mr Douglas-Smith did a less favourable deal than Mr Woodley had originally negotiated. Mr Barry's recollection is that Mr Woodley claimed half of the Murdoch commission because "he had been speaking to Mr Murdoch about this equipment." Mr Douglas-Smith agrees that Mr Woodley dealt with Mr Murdoch concerning the history of the tractor that was the subject of the deal. Mr Douglas-Smith complains that the only reason this was necessary was because Mr Woodley had not completed the necessary paperwork concerning the tractor's history. Nevertheless, on the evidence before me, I am not satisfied that Mr Woodley did not make a significant contribution to the negotiation of the eventual transaction. Mr Douglas-Smith has therefore not satisfied me that he is entitled to more than half of the commission in relation to this transaction, which I understand to be $450.00. In conclusion, therefore, Aquip concede that, given my findings as to their counterclaims, they owe Mr Douglas-Smith $7,079.09 in commissions. I have also found that he is due and additional $186.00 and $3,260.00 for the Negri and Header World transactions respectively. My findings that he should receive the full commissions on the Metcalf and Cole transactions mean that he is also due an additional $1,200.00 and $870.00 to the commission conceded by Aquip on those transactions. The total commission due to Mr Douglas-Smith is therefore $12,595.09. Compensation Mr Douglas-Smith's contract of employment guaranteed him a minimum of $50,000 a year. In his previous years employment he had earned approximately $80,000 each year. Mr Douglas-Smith understandably contends that, had he remained in employment, he would have earned more than the $32,000.00 statutory minimum compensation in the ensuing six months. After his dismissal, he has worked for his own company. His company's net earnings before tax in the six months after his dismissal was about $7,000.00, which he is content to have attributed to him as sole shareholder as dividends, though he has received no wage or earnings from the company. He has sold his house since his dismissal and has been living on his savings. The proceeds from this sale should not be taken into account as they would have been available to him if he had remained in his employment. On the evidence before me, therefore, I am satisfied that Mr Douglas-Smith's loss of income resulting from his dismissal is in excess of the statutory limit and will therefore order that Aquip pay compensation up to that limit of $32,000.00. Conclusion I therefore order that the respondent pay to the applicant within 21 days the sum of $32,000.00 being compensation for the breach of Section 170DE of the Act and the sum of $12,595.09, for commissions due and not paid. I certify that this and the preceding forty three (43) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar RD FARRELL Associate: Dated: 25 September 1998 Counsel for the Applicant: Mr R Burgio Solicitor for the Applicant: Hoffmans Counsel for the Respondent: Mr M Paterson Solicitor for the Respondent: Picton - Warlow & Co Date of Hearing: 23, 24, 29 July 1, 2, 3 & 5 September 1997 Further Submissions: 10 February 1998 Date of Judgment: 25 September 1998 [1] Unreported, Federal Court Judgment No. 1353 of 1997, Northrop, Lindgren and Lehane JJ, 4 December 1997. [2] Unreported, Federal Court Judgment No. 865 of 1998, Burchett, Cooper and Finn JJ, 24 July 1998. [3] Unreported, Federal Court Judgment No. 140 of 1998, Moore J, 27 February 1998. [4] (1995) 62 IR 371 [5] ie literally "a thing adjudicated". The doctrine of res judicata, put broadly, requires that the decision of a court in one proceedings binds other courts with respect to the subject of those proceedings. [6] Section 170EDA(1)(a) of the Act.