FEDERAL COURT OF AUSTRALIA Emmerson v Housing Industry Association Ltd [1999] FCA 500 INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - unlawful termination - prohibited reason - onus of proof - whether employment terminated for reasons including 'temporary absence from work because of illness or injury' - employment contract - breach of contract - summary dismissal - implied term to act fairly and in good faith and to maintain relationship of confidence and trust - unconscientious dealing - loss and damage - remedy - compensation - loss of leave and termination entitlements - loss of bonus and commission - adverse effect on ability to obtain alternative employment - pain shock and humiliation. Workplace Relations Act 1996 ss170CK, 170CQ Industrial Relations Act 1988 ss170DF, 170EDA Conciliation and Arbitration Act 1904 s5(4) Johns v Gunns Ltd (1995) 60 IR 258 - followed; Stojanovic -v- The Commonwealth Club Ltd (Industrial Relations Court of Australia, unreported, 8 December 1995) - followed; General Motors Holden Pty Ltd -v- Bowling (1976) 12 ALR 605 - cited; Burazin v The Blacktown City Guardian (Industrial Relations Court of Australia, (Full Court) unreported, 13 December 1996) - applied; Brackenridge -v- Toyota Motor Corporation (Australia) Ltd (1996) 67 IR 162 - cited. PETER EMMERSON -v- HOUSING INDUSTRY ASSOCIATION LTD V 49 of 1999 JUDICIAL REGISTRAR RYAN MELBOURNE 27TH APRIL 199 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 49 OF 1999 BETWEEN: PETER EMMERSON Applicant AND: HOUSING INDUSTRY ASSOCIATION LTD Respondent JUDICIAL REGISTRAR: RYAN JR DATE OF ORDER: 27 APRIL 1999 WHERE MADE: MELBOURNE ORDERS THE COURT: 1. declares termination of the applicant by the respondent has breached s170CK(2)(a) of the Workplace Relations Act 1996; 2. imposes a penalty of $10,000.00 pursuant to s170CR(1)(a); 3. directs that the penalty be paid to the applicant; 4. orders compensation under Division 3 of the Workplace Relations Act 1996 for breach of s170CK(2)(a) in the sum of $21,703.00; 5. directs Counsel for the applicant to submit draft Minutes of Orders which encompass orders 1 - 4 above and provide for damages as specified in paragraph 70 of these reasons for loss of ability to obtain alternative employment, sick leave, commission, pain, shock and humiliation and provide calculations of the value of long service leave entitlements and termination entitlements under the 1995 Instrument as outlined in general terms in paragraph 70 of these reasons; 6. proposes final orders be settled in Chambers from the draft Minutes of Orders as soon as practicable. 7. directs interest on the statutory compensation; sick leave entitlements; termination entitlements under the 1995 Instrument; long service leave entitlements; commission; and the award for pain shock and humiliation at 12.3% per annum from the date of termination of employment to be included in draft Minutes of Orders. 8. orders costs reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 49 OF 1999 BETWEEN: PETER EMMERSON Applicant AND: HOUSING INDUSTRY ASSOCIATION LTD Respondent JUDICIAL REGISTRAR: RYAN JR DATE: 27 APRIL 1999 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The Application This is an application under s170CP of the Workplace Relations Act 1996 alleging that the respondent, as employer, unlawfully terminated the employment of the applicant, as employee. 2 The applicant seeks: · a declaration that the respondent has breached s170CK(2)(a) and (f); · penalty under s170CR; · payment of the penalty to him; · compensation; · damages and/or equitable damages in the accrued and associated jurisdiction. 3 The employment On 8 April 1997 the applicant was appointed as Area Manager (Central and Northern Victoria), Housing Industry Association. An advertisement for the position stated that the "Housing Industry Association .... represents over 9,000 members of the housing industry .... (builders, manufacturers, suppliers, &c.) ........ applicants should have representation experience, perhaps with an industry supplier, be familiar with the industry and be able to absorb an intensive training period." 4 The primary roles for an area manager were recruitment of new members to the Association and support of existing members. The applicant also said that business with local government and the media were important. 5 On 3 February 1995 the applicant signed an individual employment agreement commencing 1 February 1995. In February 1996 he took over as area manager based at Geelong and by letters dated 11 and 28 June 1997 he was advised that he "had been appointed .... effective from 11 June 1997 (to) the position of regional membership services manager". Regional membership services managers were really very similar to area managers with more emphasis to be placed initially on service of existing members and less emphasis on recruitment of new members. 6 The effect of the letters of 11 and 28 June 1997 are very much in dispute and will be dealt with in more detail later. 7 On 1 June 1998 the applicant was advised by memorandum that · "on 1 July 1998 all staff of HIA will be receiving an additional contribution of 1 per cent of their salary to their nominated superannuation fund." · "a Group Life And Salary Continuance Plan, which only covers staff in Victoria and Tasmania, is due to expire ..... HIA will not be renewing this policy on 30 June 1998, in line with the letters of appointment and the practice in all other states." 8 There is evidence that from that date until early September the applicant and other regional managers disputed the discontinuance of the employer funded Life and Salary Continuance Plan. I accept that evidence. It is relevant evidence in terms of an assertion by the respondent that the applicant and his manager colleagues accepted certain proposed employment arrangements and accepted the arrangements by their conduct. 9 Statement of Claim and Defence. A Statement of Claim was filed on 23 February and a Defence on 13 April. The Claim and the Defence refer to an initial employment agreement of April 1987 as "the Agreement" and an individual employment agreement as "the 1995 Instrument". 10 The Claim and Defence also deal with the letters of 11 and 28 June 1997 which the respondent asserts constituted an agreement and employment arrangements which superseded and replaced earlier agreements and arrangements. 11 The applicant denies that the letters of 11 and 28 June 1997 constitute a new employment agreement and denies that he or his colleagues accepted the changes which the respondent sought to make through these letters. I have generally followed the description or titles given to the 1987 and 1995 agreements and will henceforth refer to the initial employment agreement as "the 1987 Agreement", the April 1995 individual employment agreement as the "the 1995 Instrument" and the letters of 11 and 28 June 1997 as "the 1997 Arrangements". 12 The respondent admits the applicant was originally employed upon terms set out in a letter dated 8 April 1987 ("the 1987 Agreement"). However, the respondent denies that the 1987 Agreement was merely supplemented by a written individual employment agreement signed by the parties in February 1995 ("the 1995 Instrument"). The respondent's position is that all prior employment contracts and arrangements were superseded and replaced by the 1995 Instrument and that that instrument was itself superseded by the 1997 Arrangements. 13 The respondent admits that the applicant's job title was changed from area manager to membership services manager and that he was transferred from Bendigo to Geelong in early 1996. In fact, the respondent in paragraph 5 of the Defence admitted paragraph 6 of the Statement of Claim which reads: "In or about 1996 the applicant was transferred to the Geelong region on the same terms and conditions as he previously held under the Agreement." 14 However, the "Agreement" in paragraph 6 of the Statement of Claim is clearly the 1987 Agreement and the respondent's purported admission that "the applicant was transferred to the Geelong region on the same terms and conditions as previously held under the (1987) Agreement" is inconsistent with and contradicts the respondent's assertion in paragraph 3 of the Defence that all prior employment conditions, contracts and arrangements were superseded by the 1995 Instrument. I have treated the respondent's concession in paragraph 5 of the Defence as an intended assertion, not accepted by the applicant, that the applicant was transferred to the Geelong region on the terms and conditions which the respondent claims then applied, namely the terms and conditions in the 1995 Instrument. 15 The revision of quotas from September 1998. A meeting on 4 September 1998 between the Victorian membership services managers, their new Director, John Gaffney, and the Business Management Development Manager, Warwick Duncan, triggered a series of events which led to the termination of the employment of the applicant by the respondent on 12 October 1998. 16 On 19 February 1998 Mr Gaffney's predecessor as Victorian Director, Caroline Lloyd, wrote to the Victorian membership services managers. Her memorandum (Exhibit A14) reads as follows : "To: Membership Services Managers cc: Shane McCartin Andrew Martin From: Caroline Lloyd Date: 19 February 1998 Subject:` 1998 Recruitment Targets ---------------------------------------------------------------------------------------------- Following recent advice from National Office, the following recruitment targets have been set for 1998: Rino Di Giovanni 30 per month Peter Le Boeuf 25 per month Stephen Donaghey 8 per month Peter Emmerson 8 per month Lynn York 8 per month Given the challenge associated with this task, Andrew Martin is working with AON and HOW representatives with a view to providing you with quality new prospect lists, as soon as possible. In addition, the new services borchure (sic) should be available within about four weeks. In the meantime, please advise your requirements for the current brochure in the event that a reprint is required. Please note that given that we are half way through the first quarter, it is proposed to calculate the Membership Services Managers quarterly bonuses on the basis of their achievements of the targets they have been working on till now. As usual, this will be calculated on a pro-rata basis. Given the above, I am sure there will be plenty to discuss at the next staff meeting (date to be advised). Carolyn Lloyd Director: Victoria" 17 Messrs Di Giovanni and Le Boeuf are metropolitan managers and their recommended targets were much higher than their country or regional counterparts. The applicant and Messrs York and Donaghey were in charge of the three country regions. 18 The applicant and Mr York gave evidence for the applicant. Messrs Gaffney and Duncan gave evidence for the respondent. There is considerable conflict between the evidence of the applicant and Mr York on the one hand and Messrs Gaffney and Duncan on the other. 19 The applicant and Mr York are adamant that Mr Gaffney gave direct and unequivocal advice to the membership services managers at the meeting on 4 September. They both say that Mr Gaffney: · set minimum recruitment quotas or targets of 12 per month to be achieved within three months; · made a statement to the effect that "anyone who tells you the quotas are eight (per month) is lying" (or is a liar) (the applicant's recollection) or "anyone who told you the recruitment quota is eight does not know what he is talking about or is wrong" (Mr York's recollection); · gave an ultimatum that if the targets were not achieved in three months "he would get someone who could do it" (York's recollection) or "if not achieved in two to three months you will be replaced" (applicant's recollection); · expressed the view that regional/country membership services managers should be phased out; · assured the managers that they would be provided with support to achieve the targets but that such support would not be in place for six months. 20 Mr Duncan conceded that Mr Gaffney mentioned the change in targets from 8 to 12 at the meeting on 4 September but he said that he could not recall · any reference to a minimum of 12 or a three month period or lead-time to achieve the increased quotas; · any reference to quotas of 8 as "lies" or "wrong"; · any specific reference to support in obtaining raised quotas; · any expression of view by Mr Gaffney that "if he had his way regional membership services managers would be phased out". 21 It is interesting to note that Mr Duncan, while unable to recall Mr Gaffney referring to "phasing out regional membership services managers", responded in cross-examination that it was possible that Mr Gaffney expressed such a view. 22 Mr Gaffney: · denied that he put a minimum of 12 on the increased quotas; · stated that he had indicated at the meeting that "a plateau of 8 was unacceptable and that the regional managers had to go to 12"; · denied that he stated that the applicant or any other regional manager who was unable to meet the quota in two or three months would be replaced; · responded to the proposition that he had said "anyone saying that the quotas are 8 is telling lies" variously as follows: "I can't say I said that." "That is not my recollection." "I do not think (the word) lies was used." · stated he did not recall using words to the effect that "if the managers could not reach the targets in three months he would find someone who could do it" · described the proposition of 12 recruited members a month in three months as "a three month partnership to see if the membership services managers could get to the targets." 23 In general, the applicant and Mr York were assessed as impressive and direct witnesses with a good recollection of events. 24 Mr Duncan was a less impressive witness. He professed a poor recall of the events at the meeting on 4 September. 25 Mr Gaffney was less impressive again. Some of his evidence was conflicting and contradictory. On 30 September 1998 he reported by e-mail to Canberra on the meeting on 4 September. He admits his report to Canberra was prepared while events were fresh in his memory. His e-mail report (Exhibit A6) reads as follows: "From: Gaffney, John Sent: Wednesday, 30 September 1998 11.06 To: Goodwin, Shane; Bulling, Jennifer; Williams, Vicki Cc: Duncan, Warwick Subject: RE: Peter Emmerson On Friday 4th Sept Warwick and I met with the MSMS as a routine meeting. In addition new recruiting targets were laid out as the minimum and the instruction given that these had to be achieved within the next 3 months as per our new approach settled with Jennifer. This caused considerable concern with the MSMS with Lynn York making the running on complaining about the resources provided to the MSMS to enable targets. At the conclusion of the meeting the MSMS were pretty pissed off and left the building relatively quickly. We have since had negative reaction from all the MSMS except for RINO. John Gaffney" 26 The e-mail of 30 September: · confirms the new recruiting targets as minimum targets; · refers to the "instruction given that these had to be achieved within the next 3 months"; · describes the membership services managers in terms which suggest that all of the managers, with the possible exception of Mr Di Giovanni, were upset at the meeting on 4 September. 27 Each of these statements conflicts with Mr Gaffney's sworn evidence at trial. At trial neither he nor Mr Duncan would concede that the regional managers were upset at the meeting on 4 September. When pressed, Mr Duncan thought one or two of the managers expressed concern and Mr Gaffney maintained that Mr York was the only manager to express real concern. 28 Applicant on sick leave Monday 7th September to dismissal Monday 12th October. The applicant gave evidence of his distress when he left the meeting on Friday 4 September. The following is an extract from notes of his evidence. It is not a verbatim extract from transcript: "I was ropable. I left immediately. I went home frustrated and agitated. I had chest pains early on Monday morning. I went to the doctor. An ECG showed no heart damage. The doctor counselled me. He gave me a week off. About 10.30 am I rang Warwick Duncan and told him of my incapacity. I sent a certificate to Warwick." 29 Mr Duncan conceded that he was aware of the applicant's illness from "about 7 September" and that he received a medical certificate on 7th September faxed to him on that date. In cross-examination he said that while he could not recall a telephone call from the applicant on 7th September he recalled a telephone call from him "during that week" and he himself telephoned the applicant "during that week". He admitted: · receiving medical certificates and facsimile up-dates from the applicant on a weekly basis; · contacting the applicant's medical practitioner and discussing with him the words "stress reaction". 30 Motor Vehicle Policy (Tools of Trade) Conditions of Use. While the applicant was on sick leave, (he puts the date about mid September), he states he received a memorandum (Exhibit A4). The memorandum is from Nicole Hinton of the respondent's head office in Canberra. It is dated 1 September. It is addressed to the applicant and reads as follows: "Memorandum 79 Constitution Avenue Canberra ACT 2612 .... To: Peter Emmerson - VIC cc: From: Nicole Hinton Date: 1 September 1998 Subject: Motor Vehicle Up Date ___________________________________________________________ Our records reflect that HIA does not have a current "tools of trade - conditions of use" agreement on file for your vehicle. We are also in the process of up dating our motor vehicle registrar (sic) details. Can you please assist by completing the below information & signing the attached agreement. Please return these documents by 11 September 19998. Registration No: ................................. Renewal Date: ................................. Make: ................................ Model: ................................. Colour: ................................. Year of Manufacture: ................................. If you have any questions please contact me at the National Office on 02 62451350. Kind regards Nicole Hinton Payroll Administrator" 31 Attached to or enclosed with the memorandum is a document headed: "Housing Industry Association Ltd Motor Vehicle Policy - MVP01 HIA PROVIDED MOTOR VEHICLES (TOOLS OF TRADE) CONDITIONS OF USE" 32 It seems that the document (Exhibit A3) is what Ms Hinton describes in her memorandum as "the conditions of use agreement" and is the document to which she referred when she wrote in her memorandum dated 1 September 1998 "can you please assist by .... signing the attached agreement." 33 Motor Vehicle Policy MVPO1 is stated at the foot of the first page to be "Policy effective from August 1997, updated December 1997". 34 The first two paragraphs suggest that it is a conditions of use motor vehicles policy to be sent to HIA employees when they are supplied with leased vehicles. 35 The first two paragraphs read as follows: "You will have just received a new HIA vehicle supplied by CBFC Fleet Lease. This vehicle is provided under a three (3) year /120,000 km operating base. The HIA is providing fully maintained vehicles to some employees to enable them to discharge their duties. These vehicles are available for private use by the employee. They form part of a larger fleet of similar vehicles managed by the HIA and are subject the following conditions of use:" 36 Ten numbered conditions of use are then set out. Conditions 1, 4, 6, 7, 9 and 10 are of no particular relevance and refer in order to transfer and replacement, reporting of damage, modifications, fuel card, traffic and parking violations and display of HIA signage. 37 Condition 2 indicates that servicing, registration, maintenance and tyres are provided as part of the operating lease. It is interesting to note that the lease and the registration of the applicant's allocated vehicle were not renewed from about 1 September 1998. It is not clear why the respondent did not take steps to renew the lease and therefore the registration of the vehicle. The applicant discovered the lease had not been renewed when he booked the car in for replacement of a tyre on 12 October 1998. His evidence was not contested and is that the supplier of the tyre (Bob Jane Tyres Geelong) advised him on 12 October that the registration had expired on 3 September. The applicant stated that he took a cab home, telephoned his solicitors, and was advised by them that he had been dismissed that day. The respondent called no evidence to explain the non-renewal of the lease which appears to have expired on or about 1 September 1998. 38 Conditions 3, 5 and 8 are of significance and are as follows: "3. The vehicle must be kept clean and in good working condition at all times. It is the driver's responsibility to ensure that all scheduled services are undertaken." "5. The vehicle is for use by HIA employees. The only other authorised driver of the vehicle is the partner of the employee in the following circumstances: · The partner is over 25 years of age; · The partner's use of the vehicle is restricted to use outside of business hours; and · The partner's use of the vehicle should be limited to minor and incidental occurrences. Any extended private travel must have the employee in attendance." "8. The vehicle should be made available for use by other HIA employees during business hours to carry out HIA business." 39 The respondent places great importance on the motor vehicle policy (Tools of Trade) Conditions of Use and particularly on Condition 8. In a letter of 12 October 1998 (the termination letter, Exhibit R5) Mr Gaffney: · stated "I made it clear in my letter of 30 September 1998 that failure of Mr Emmerson to contact HIA forthwith concerning the return of this vehicle would, in HIA's view constitute wilful misconduct of a kind which would justify summary dismissal"; · drew attention to the motor vehicle policy and specifically to condition 8; · alleged that a copy of the motor vehicle policy was attached to "that Letter of Appointment" (ie the letter of 11 June 1997, Exhibit A2); · referred to and repeated the claim allegedly made to the applicant's solicitors in Mr Gaffney's letter of 30 September that "the failure of Mr Emmerson to contact HIA forthwith concerning the return of this vehicle would in a HIA's view constitute wilful misconduct of a kind which would justify summary dismissal"; · described the conditions in the policy, and specifically condition 8, as "quite definite and unambiguous"; · asserted that "there is no justification for Mr Emmerson's continuing refusal to carry out lawful directions to contact HIA and to make arrangements to return the HIA's vehicle while he is on sick leave". 40 Mr Gaffney gave evidence in cross-examination that he had assumed that a copy of the motor vehicle policy had been attached to the letter to the applicant dated 11 June 1997 or had gone out "a few weeks later in a separate mailout". Mr Gaffney responded to questions from the Court by indicating that "it was a long time ago" but that he "had a memory" of a copy of the policy going out shortly after the letter of 11 June 1997. 41 No evidence has been produced of a motor vehicle conditions of use policy in existence at or about 11 June 1997 which could have been "attached" to the letter of 11 June 1997, or which could have gone out shortly thereafter "in a separate mailout". 42 No policy prior to that allegedly effective August 1997 updated December 1997, has been produced and there is no believable evidence of any version of the policy provided to the applicant until the December 1997 version was sent to him with Ms Hinton's memorandum dated 1 September 1998. Furthermore, the applicant has sworn, and the Court accepts, that that version was received in mid-September 1998 after the applicant had gone on authorised sickleave on 7 September 1998. 43 In the circumstances the Court is forced to conclusion that Mr Gaffney's "memory" of a separate mailout of an earlier version of what was to become the December 1997 HIA provided motor vehicles (Tools of Trade) Conditions of Use policy is a reconstruction. The Court has also reached the inevitable conclusion that there was no copy of such a policy sent to the applicant prior to the December 1997 version received by him in mid-September 1998. The Court likewise concludes that the termination of the applicant's employment while stated to be justified by the alleged misconduct of the applicant was not validly based on misconduct. The applicant had not been provided with the policy on which the charge of misconduct had been based. 44 Given these conclusions it is unnecessary to go into greater detail in support of a finding that the termination of the applicant's employment was not based on misconduct of a kind which, if established, might have provided valid grounds for summary termination. However, it is necessary to further examine the circumstances of the termination to determine whether the respondent has discharged the onus of satisfying the Court that the applicant's employment was not terminated by the respondent for reasons which included temporary absence from work because of illness or injury and/or physical or mental disability. Furthermore, examination of the circumstances of the termination of employment are also necessary to determine whether the applicant has discharged the onus of establishing breach of contract (paragraph 18 of the Statement of Claim) and/or unconscientious dealing by the respondent with the applicant (paragraph 20 of the Statement of Claim) and loss and damage flowing from breach of contract (paragraph 19 of the Statement of Claim) and/or loss and damage flowing from unconscientious dealing (paragraph 22 of the Statement of Claim). 45 Has the respondent established that the reasons for the dismissal did not include the reason that the applicant was temporarily absent from work because of illness? Has the respondent established that the reasons for the dismissal did not include the reason of the physical or mental disability of the applicant? One or both of these questions must be addressed in determining whether the respondent has discharged the difficult onus which flows from allegations of breaches of s170CK(2). The respondent has conceded that the applicant's employment was terminated at the initiative of the employer. Given that concession, and given the allegations of breach of s170CK(2), it would not be sufficient for the respondent to establish that the reason for dismissal was the misconduct of the applicant. I have found that the alleged misconduct of the applicant was not a valid reason for his dismissal, but even if misconduct or any other stated or unstated reason constituted valid reason for termination of the employment, the respondent has to establish a negative, namely that the reasons for dismissal did not include the reason that Mr Emmerson was temporarily absent from work because of illness or did not include a reason of the physical or mental disability of the applicant. 46 As Northrop J said in Johns v Gunns Ltd (1995) 60 IR 258: "A mere denial may not be sufficient. All the facts and circumstances of the case have to be considered." 47 His Honor was dealing with the immediate predecessor of s170CK, namely s170DF of the Industrial Relations Act 1988, but the provision is substantially unaltered. 48 Moore J also considered the onus on the employer under s170DF and s170EDA of the Industrial Relations Act 1988 in Stojanovic -v- The Commonwealth Club Ltd (Industrial Relations Court of Australia, unreported, 8 December 1995). At 20, referring to the proscribed reasons in s170DF(1) which are the proscribed reasons in s170CK(2) of the Workplace Relations Act 1996 he said: "Thus the proscribed reason need not be the only reason. Section 170EDA requires the employer to establish either that if a proscribed reason is alleged, that was not the reason, or if a number of reasons are alleged, including a proscribed reason, the proscribed reason was not one of the reasons." 49 His Honor adopted a formulation of the onus on the employer approved by the High Court of Australia in General Motors Holden Pty Ltd -v- Bowling (1976) 12 ALR 605 and expressed by Mason J when addressing s5(4) of the Conciliation and Arbitration Act 1904, an earlier predecessor s170DF and s170CK. At 617 Mason J referred to the onus on the employer of establishing affirmatively that it was not actuated by the reason alleged in that case in the charge laid under s5. He held that the consequence was that the employee, in order to succeed, was not bound to adduce evidence that the employer was actuated by that reason, a matter peculiarly within the knowledge of the employer. He found the employee was entitled to succeed if the evidence was consistent with the hypothesis that the employer was so actuated and that hypothesis was not displaced by the employer. He said: "To hold that, despite the subsection, there is some requirement that the prosecutor brings evidence of this fact is to make an implication which, in my view, is unwarranted and which is at variance with the plain purpose of the provision in throwing on to the defendant the onus of proving that which lies peculiarly within his own knowledge." 50 In this case the applicant seeks a declaration that the respondent has breached s170CK(2)(a) and (f). His hypothesis is that the employer, through Mr Gaffney, was actuated in dismissing him by his temporary absence from work due to illness and/or by his physical or mental disability. Counsel for the applicant asserts the evidence is consistent with either or both of these hypotheses and that neither hypothesis has been displaced by the respondent. 51 In considering the possible and indeed likely actuation of the employer and in considering whether the evidence is consistent with the employer, through Mr Gaffney and possibly other decisionmakers, being actuated by the temporary absence of the applicant due to illness, I have considered all of the evidence, including evidence in relation to: · the 1987 Agreement; · the 1995 Instrument; · the 1997 Arrangements; · the rejection by the applicant and his colleagues of the changes proposed in the 1997 Arrangement; · the provision of a motor vehicle to the applicant when first appointed in 1987 and the Conditions of Use established for the vehicle; · the fact that the applicant and the respondent signed the 1995 Instrument; · the fact that the applicant did not sign or ever agree to the 1997 Arrangements; · the fact that no motor vehicle policy was included in the 1997 Arrangements; · the fact that the motor vehicle policy eventually provided to the applicant in mid-September 1998 was never signed by the applicant and was only provided to him while he was on sickleave and at most, a few weeks before the termination of his employment; · the minimum quotas of 12 members a month to be recruited by each country based regional membership manager; · the requirement, which I find Mr Gaffney imposed, that the quotas be achieved within three months; · the view, which I find Mr Gaffney expressed, that, if he had his way, the country based managers would be phased out; · the uncontradicted evidence of Mr York that before the membership services managers meeting on Friday 2 October 1998 he asked Mr Gaffney whether he had heard from Peter (the applicant) and Mr Gaffney replied to the effect that he had not heard from the applicant and said "I don't know if he is sick or setting us up to roll us over"; · the medical certificates and certificates of capacity provided by the applicant; · the discussion between Mr Duncan and the applicant's treating medical practitioner about the term "stress reaction"; · the reliance, expressed in writing by Mr Gaffney, that the motor vehicle policy had been attached to the letter to the applicant dated 11 June 1997; · the reliance, on the motor vehicle policy and the assumed provision of the policy to the applicant on 11 June 1997 to conclude that the applicant was guilty of misconduct and had failed to comply with reasonable and lawful directions from the employer. 52 I have taken account of the written advice to Mr Gaffney from the applicant's solicitors on 28 September 1998 that: · the applicant was at that time temporarily incapacitated for employment by reason of a work-related medical condition; · the applicant intended to serve the respondent with a claim for compensation pursuant to the Accident Compensation Act 1985; · Mr Duncan had threatened the applicant with summary dismissal if he failed to hand over the company vehicle, mobile telephone and facsimile machine; · for the convenience of the company the applicant was prepared to return the mobile telephone and facsimile machine for temporary use during his absence; · the motor vehicle was part of the applicant's salary package and as such the applicant was entitled to continued use of it during the course of his employment; · the applicant's intention was confirmed as an "intention to return to active employment upon receipt of a medical clearance"; · the wish of the applicant that "this dispute with respect to the motor vehicle be resolved as expeditiously as possible". 53 I have taken account of the written advice to Mr Gaffney from the applicant's solicitors on 1 October 1998 that: · the motor vehicle was a significant component of the applicant's package, was included as part of initial pre-employment negotiations and was referred to in the advertisement for the position published in the Age newspaper in March 1987; · the mobile telephone and the facsimile machine were to be delivered to the respondent on 2 October 1998; · medical certificates regarding the applicant's medical condition had been previously supplied; · further confirmation that "the stress condition of our client is such that he will be submitting a work cover claim". 54 Assuming adequate notice to the applicant of the proposed changed conditions of use of the motor vehicle allocated to him and assuming subsequent valid variation of the employment contract by provision of changed conditions for use of the motor vehicle, the question still needs to be asked as to why the respondent demanded that the applicant return the motor vehicle. The respondent asserts that the return of the vehicle was demanded because the applicant was absent from duty and the vehicle was required so that his duties could be carried out while he was absent. The respondent also asserts that the varied policy "clearly and unequivocally" provided for the respondent to demand the return of the vehicle. 55 The applicant was temporarily absent because of illness. The respondent knew he was absent and that the absence had been certified as temporary and due to illness and due to stress reaction. The respondent concedes that the applicant was on authorised sick leave. The respondent essentially terminated the employment because the applicant failed to comply with a direction to return the motor car. The respondent directed the return of the car because the applicant was absent from work. The absence was temporary and due to illness and the respondent had been informed accordingly. The conclusion seems inevitable that even if the varied conditions of use were incorporated into the contract of employment and "clearly and unequivocally" provided for the respondent to demand the return of the vehicle while the applicant was temporarily absent because of illness, neither of which assumptions are accepted, the respondent in terminating the applicant's employment included in the reasons for termination the temporary absence of the applicant due to illness. 56 However, it is not necessary for the Court to reach any such conclusion. I am not satisfied that the temporary absence of the applicant due to illness was not a reason for the termination of his employment. Accordingly, having regard to the combined effect of s170CK(2)(a) and s170CQ(1) find the termination was in contravention of the provisions of Division 3 of the Act. 57 It is not necessary to consider further the alternative hypothesis that the employer in dismissing the applicant was actuated by the physical or mental disability of the applicant or whether the respondent has displaced that hypothesis. 58 Breach of contract and of the duty to maintain a relationship of confidence and trust. The applicant claims that the actions of the respondent as set out in paragraphs 1- 17 of the Statement of Claim, including the dismissal of the applicant summarily for alleged misconduct, a dismissal effected in writing on 12 October 1998, were in breach of: · the 1987 Agreement; · the 1995 Instrument; · the respondent's duty to maintain a relationship of confidence and trust with the applicant. 59 The applicant also claims that these actions were: · calculated to destroy or damage the reputation of the applicant; · taken for reasons that included the applicant's temporary incapacity for work and/or his physical and mental disability. 60 The claim is based on the following assertions: · the 1987 Agreement and the 1995 Instrument governed the relationship between the parties and included provisions relating to settlement of disputes and termination; · the respondent wrongfully purported to change the terms of the employment without complying with the provisions of the 1995 Instrument through unilateral actions including: - advice by memorandum on 1 June 1998 that the Salary Continuance Plan referred to in the 1995 Instrument would cease on 30 June 1998; - immediate increase in the monthly quota for memberships advised on 4 September 1998; - the demands of 24 and 28 September 1998 for the return of the motor vehicle, the mobile telephone and the facsimile machine; - the written advice of 12 October 1998 of summary dismissal for alleged misconduct. 61 The applicant claims loss of: · salary and bonus from the date of termination; · accumulated sick leave; · entitlements under the Salary Continuance Plan; · long service leave entitlements; · the right to earn a bonus; · termination entitlements under the 1995 Instrument. 62 The applicant also claims: · damage to his ability to obtain alternative employment by reason of his summary dismissal on the grounds of alleged misconduct; · pain, shock and humiliation. 63 In the alternative the applicant claims that the actions of the respondent as set out in paragraphs 1 - 19 of the Statement of Claim constituted unconscientious dealing by the respondent with the applicant. The claim is based on the following assertions: · the respondent knew that it was bound by the terms of the 1995 Instrument and the 1987 Agreement; · it was inequitable and unconscionable to: - increase the quota for membership recruitment; - withdraw longstanding employment entitlements; - terminate employment entitlements without notice provided in the 1995 Instrument; - terminate employment for alleged misconduct when the applicant was asserting his entitlement under the 1987 Agreement and/or his contract of employment; - terminate employment when the respondent knew the applicant was not guilty of an act of misconduct justifying summary termination. 64 I have concluded that: · the respondent failed to properly investigate the employment contract applicable to the applicant; · the 1995 Instrument was still applicable and required termination on 14 weeks notice, there being no established grounds for a summary termination; · the applicant and his colleagues did not accept or sign acceptance of the 1997 Arrangements; · the letter of 11 June 1997 did not have a Tools of Trade policy attached. 65 The respondent failed to call Ms Lloyd to provide any documentation to contradict the evidence of the applicant and Mr York on the matters they say were discussed with them. 66 On the basis of the evidence and for the reasons outlined throughout these Reasons for Judgment, I find the respondent in breach of the 1987 Agreement and the 1995 Instrument. I find that the respondent has breached the duty to maintain a relationship of confidence and trust. 67 Penalty The applicant was a long-serving employee. He had received commendations for the standard of his work. He is 41 years of age. He is still unemployed although he has been seeking suitable employment since December 1998. The respondent has purported to dismiss him summarily for misconduct. 68 The circumstances are such that he is entitled to the maximum compensation available under Division 3 which in this case I assess at $21,703.00. 69 I also propose to impose the maximum penalty for breach of s170CK which is prescribed under s170CR(1)(a) as not more than $10,000.00 and I propose to order that the employer pay a penalty of $10,000.00 to the applicant. 70 For breach of contract I propose to order damages which take account of: · sick leave loss, which I assess at $10,768.02; · termination entitlements under clause 14 of the 1995 Instrument valued initially in calculations to be submitted in draft Minutes of Orders of Judgment; · long service leave entitlements valued initially in calculations to be submitted in draft Minutes of Orders of Judgment; · loss of commission over 5 years assessed at $3,000.00 per year, total $15,000.00; · damages equivalent to six months salary being additional compensation for damage to the applicant's ability to obtain alternative employment. I assess this damage as likely to flow from 12 months unemployed or substantially unemployed, but allow only an additional 6 months assessed at $21,703.00 because of the compensation order under Division 3 for the sum of $21,703.00. · modest damages in the sum of $4,000.00 for pain, shock and humiliation, modest because while certificates of "stress reaction" have been tendered, no expert medical and/or psychiatric evidence was tendered or called. I rely on the principles expounded in Burazin v The Blacktown City Guardian (Industrial Relations Court of Australia, (Full Court) unreported, 13 December 1996) and Brackenridge -v- Toyota Motor Corporation (Australia) Ltd (1996) 67 IR 162. ORDERS THE COURT: 1. declares termination of the applicant by the respondent has breached s170CK(2)(a) of the Workplace Relations Act 1996; 2. imposes a penalty of $10,000.00 pursuant to s170CR(1)(a); 3. directs that the penalty be paid to the applicant; 4. orders compensation under Division 3 of the Workplace Relations Act 1996 for breach of s170CK(2)(a) in the sum of $21,703.00; 5. directs Counsel for the applicant to submit draft Minutes of Orders which encompass orders 1 - 4 above and provide for damages as specified in paragraph 70 of these reasons for loss of ability to obtain alternative employment, sick leave, commission, pain, shock and humiliation and provide calculations of the value of long service leave entitlements and termination entitlements under the 1995 Instrument as outlined in general terms in paragraph 70 of these reasons; 6. proposes final orders be settled in Chambers from the draft Minutes of Orders as soon as practicable. 7. directs interest on the statutory compensation; sick leave entitlements; termination entitlements under the 1995 Instrument; long service leave entitlements; commission; and the award for pain shock and humiliation at 12.3% per annum from the date of termination of employment to be included in draft Minutes of Orders. 8. orders costs reserved. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Judicial Registrar RYAN. Associate: Dated: 27 April 1999 Counsel for the Applicant: MR M D MURPHY Solicitor for the Applicant: ABBOTT STILLMAN & WILSON Appearing for the Respondent: MR M PYERS of the Respondent Solicitors for the Respondent CHAMBERLAINS LAW FIRM Date of Hearing: 21 and 22 April 1999 Date of Judgment: 27 April 1999