David John Perrin v Des Taylor Pty Ltd [1995] IRCA 78

CATCHWORDS INDUSTRIAL LAW - Termination of employment - alleged contravention of s170DC - measure of compensation Industrial Relations Act 1988, s 170DC No. NI 576 of 1994 DAVID JOHN PERRIN v DES TAYLOR PTY LTD MOORE J SYDNEY 10 MARCH 1995

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 576 of 1994 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: DAVID JOHN PERRIN Applicant AND: DES TAYLOR PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 10 March 1995 ORDER OF THE COURT THE COURT: 1. Declares that the termination of the applicant's employment contravened s170DC of the Act. 2. Orders the respondent to pay the applicant $9,500 compensation. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 576 of 1994 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: DAVID JOHN PERRIN Applicant AND: DES TAYLOR PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 10 March 1995 REASONS FOR JUDGMENT This is a review under s377 of the Industrial Relations Act 1988 ("the Act") of the exercise of a power of a Judicial Registrar in relation to an application made under s170EA of the Act by Mr Perrin ("the applicant") whose employment by Des Taylor Pty Ltd ("the respondent") was terminated on 8 July 1994. The applicant appears in person and the respondent is represented by counsel. I have treated this as a hearing de novo though I do so without the benefit of any argument on the issue. Both the applicant and the respondent relied on the transcript of evidence before the Judicial Registrar though each sought to supplement before me the evidence given before the Judicial Registrar by sworn statements and affidavits. While the application does not identify the alleged contravention of Part 3 of Division VIA of the Act, from submissions the applicant made it is likely that it is claimed that the termination was in contravention of s170DC and s170DE. The respondent accepted that this was the case it had to meet. The remedy initially claimed and pressed during the review was for compensation. The facts are generally uncontentious though there were some facts in issue. The respondent carries on business as a motor dealer and trades as Bellbowrie Motors. The dealership sold, at the relevant times, Saab, Volvo, Nissan and Suzuki vehicles. The applicant was employed in the spare parts section of the business and his duties generally were to take orders for spare parts and procure them from suppliers. It was a job that appears to have required an understanding of the components in the vehicles sold by the respondent and the duties could involve advising mechanics on the parts that might be necessary to repair a vehicle. The applicant commenced this employment on 23 March 1992. He had, at that time, 15 years experience in the sale of spare parts. The applicant initially worked under the supervision of a Mr Ron Willman. However by early 1993 a Mr Ross Bruce became increasingly involved in a supervisory capacity in the spare parts section. By April or May 1993, Mr Bruce was not satisfied with the work being performed by both Mr Willman and the applicant and on 11 May 1993 Mr Bruce sent a note to Mr Perrin to the effect that there had been complaints about the service being provided by the spare parts section and, by clear implication, there was a need for the applicant to perform to a higher standard. In evidence before the Judicial Registrar, Mr Bruce said that he had then had a discussion with the applicant about some of the complaints that had been made. The applicant's performance appears, thereafter, to have improved and in a staff report prepared by Mr Bruce in June 1993 there was, on balance, a fairly positive account of the applicant's performance. The report noted positive changes in his attitude and level of enthusiasm. By October 1993, Mr Bruce believed there was a need to again write a note to the applicant to say that his level of service and attention to duty had dropped and again, impliedly, asking the applicant to improve his performance. Mr Bruce also gave evidence before the Judicial Registrar of having discussed these matters with the applicant. In late October 1993 Mr Bruce prepared for the applicant a job description setting out the applicant's duties. In December 1993 Mr Des Taylor, the principal of the business, told the applicant of his perception that the applicant did not have the business's clients as a number one priority and if he, the applicant, could not keep them happy, "we can't keep you here". In April 1994 an incident occurred involving the ordering of a spare part for a Saab motor vehicle owned by a friend of Mr Taylor. There were a number of accounts of what occurred though I do not see the divergence in the evidence as material. It is sufficient that the applicant accepted at the time, and continues to accept that he made a mistake in not ordering a part he should have. Later that month, on 28 April, Mr Bruce sent the applicant another note about his performance. It again recited concerns about his performance and again clearly implied that the applicant should improve his performance. It concluded by saying: "Please, DAVID I am asking you to consider your future and give us your best shot." While this may have been intended to convey the possibility of dismissal, it fell short of a clear and unambiguous statement that this would be the consequence of the applicant not satisfying Mr Bruce that his performance had improved. Mr Bruce also informed the applicant orally of his concerns. In an affidavit he said: "After that incident, I again met with David and gave him a letter dated 28 April 1994, a copy of which is annexed hereto and marked "D". I spoke with David again for some 30 odd minutes and said, "Look, Des is furious. We have spoken before about you not following up orders and not keeping clients informed. It's not good enough. You're going on holidays, you'd better have a hard think about your position here. You have to lift your game. As I said after that last incident, Des is not happy"." From 29 April 1994 to 30 May 1994 the applicant went on leave. Initially the applicant had wanted to go on leave for four weeks to travel overseas. However the illness of the applicant's mother shortly before he was to take the leave meant he could not travel. The applicant offered to defer taking the leave but the offer was not taken up by the respondent. During this period of leave a younger person was employed in the spare parts section. The applicant suggested in these proceedings that a decision had been taken at this time to dismiss him and the declining of the offer to defer taking the leave coupled with the employment of the younger person was consistent with it having been taken. However, I accept the evidence given by both Mr Bruce and Mr Taylor that the decision to dismiss was not actually made until a week before the dismissal took place. However counsel for the respondent conceded at the commencement of the hearing that consideration had been given to the possibility of the applicant being dismissed for some time before the decision was actually taken. I infer that the respondent saw the applicant's period of leave as a time to employ someone to ascertain how the parts section would operate without the applicant if a firm decision was made to dismiss him in due course. When the applicant returned from leave he worked for a further period of six weeks. Mr Bruce's account of what happened in that period is as follows: "When David returned from holidays, it was apparent that he was no more motivated and, again, customers began to complain regarding the slow delivery of parts that had been ordered. I spoke with Des Taylor concerning David Perrin and, on 8 July 1994, I terminated David's employment." Of importance, in my opinion, is that neither Mr Bruce or Mr Taylor gave the applicant an opportunity to deal with the complaints they had received which appear to have been the events that precipitated the decision to dismiss. On 8 July 1994 the applicant's employment was terminated. Section 170DC provides: "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." It is clear that the decision to terminate the applicant's employment was prompted, at least in part, by the view Mr Bruce formed of the level of the applicant's performance after he returned from holidays. I have already set out Mr Bruce's evidence that "customers began to complain" and that the applicant was "no more motivated". These matters were not raised with the applicant prior to the decision being taken to terminate his employment nor before his employment was terminated a week later. In my view, s170DC required the respondent to raise with the applicant these matters before terminating his employment. It is not, as counsel for the respondent suggested, a technical requirement. Its purpose is at least twofold. It is to give the employee the opportunity to demonstrate that the allegations have no foundation in fact or they should not be viewed as reflecting on the employee's capacity. In the present case, the applicant may have been able to show that the complaints about slow delivery of parts had no factual foundation or that there was an explanation for their slow delivery that did not relate to any want of effort on his behalf. A second purpose of s170DC is that an employee with whom an allegation has been raised may be able to persuade the employer that, while the allegation is of substance, there are factors that should persuade the employer not to terminate the employment. They may be extenuating personal circumstances or they may involve undertakings about future conduct. The rights of an employee to be consulted before dismissal now embodied in s170DC are not novel: see Gregory v Philip Morris Ltd (1988) 80 ALR 455 at 473, Wheeler v Philip Morris Ltd (1988) 97 ALR 282 at 306, Bostik (Australia) Pty Ltd v Gorgevski (1) 1992 36 FCR 20 at 35 and Byrne v Australian Airlines Ltd (1994) 120 ALR 274 and in the United Kingdom: see Spencer v Paragon Wallpapers (1976) IRLR 373, Williamson v Alcan (UK) Ltd (1978) ICR 104, W Weddel & Co Ltd v Tepper (1980) ICR 286. In Bostik, supra, Gray J, when discussing a requirement of an award that a dismissal not be harsh, unjust or unreasonable said at 35: "Although the procedural requirements of the clause will vary according to the circumstances, they are intended to be real. An employer genuinely investigating an allegation of misconduct or neglect of duty, or some other act or omission which might provide a ground for dismissal, is required to carry out a proper investigation, and not merely to go through the motions. The employer is required to ascertain whether there are any mitigating factors, either associated with the alleged ground for dismissal, or arising from the employee's past record and future prospects. It is not intended that an employer should be able to substitute a court proceedings for its own investigation, ie, to overcome procedural deficiencies by establishing to the satisfaction of the court that the dismissal concerned would not be harsh, unjust or unreasonable on substantive grounds." It follows that, in my opinion, the respondent has contravened s170DC. The applicant appears also to allege a contravention of s170DE(1). If that is so, then s170EDA operates so as to treat the termination as having contravened s170DE(1) unless the employer proves that, apart from s170DE(2), there was a valid reason or reasons. In a case such as the present, where one or both parties appears in person and the factual and legal issues are not clearly defined, it can be difficult to ascertain what is really in issue and what is conceded to be correct, particularly on issues of fact. On one view of the evidence as a whole and the submissions made, the applicant in these proceedings accepted that complaints had been made about his performance by customers but that he was doing his best and the standard of performance the respondent required of him was never made clear. However it is by no means obvious that the applicant concedes that as a matter of fact complaints were made, that the complaints arose from his failure to perform his duties or that the incidence of complaint was as high as the respondent alleges. These questions may be of significance in determining whether the provisions of s170DE have been contravened. However in view of the conclusion I have reached about what flows from the contravention of s170DC it is unnecessary for me to determine conclusively whether s170DE was also contravened. Both the applicant and the respondent made submissions on what flowed from a contravention of s170DC. Both proceeded on the basis that any remedy that might be awarded was appropriately compensation. Counsel for the respondent referred to observations of Wilcox CJ in Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 126 ALR 233 at 247: "If I had reached the question of compensation, I would have assessed it on the basis that the procedural irregularity deprived Mr Nicolson of a chance of retaining his employment. However, I would not have awarded him a large sum." That case concerned the dismissal of a shop assistant in contravention of s170DC. His Honour went on to indicate that it was, on the evidence, unlikely that the employee concerned would prove suitable in the position in the longer term. In this case I am not able to form the same positive conclusion. It must be accepted that both Mr Bruce and Mr Taylor had, on several occasions over a relatively long period, formed the view that the applicant's performance of his duties was less than satisfactory. It is thus possible that they would have continued to view the applicant's performance as unsatisfactory resulting in his eventual dismissal though in conformity with the provisions of Div3 of PtVIA of the Act. However it must also be accepted that when Mr Bruce raised with the applicant his unsatisfactory performance in April or May 1993, the applicant's performance improved to a point where Mr Bruce, on balance, appears to have viewed the applicant's performance as satisfactory. Had s170DC not been contravened in July 1994 there is a real possibility that the applicant would have been able to satisfy Mr Bruce that his performance would improve as it had earlier done between April and June 1993. Indeed it is clear from the terms of a reference Mr Bruce gave the applicant that Mr Bruce thought reasonably highly of the applicant and even if the reference overstates Mr Bruce's real opinion, the fact that he was prepared to write it indicates a positive disposition towards the applicant. The conduct of the respondent in contravening s170DC resulted in the applicant losing employment that, apart from the contravention, he might have remained in for some period of time. During the final submissions the applicant referred to settlement discussions and I understood him to make a comment suggesting that he had been offered reemployment to settle his application. The nature of that employment and its terms was not made known and no reliance was placed on this apparent unwitting revelation of the applicant by counsel for the respondent. Accordingly it is a matter I should disregard. Section 170EE(3) requires the Court to have regard to the remuneration the employee would have received or would have been likely to have received if the employer had not terminated the employment. I do not accept the submission of counsel for the respondent that the statutory limits found in s170EE(3) and (4) on the amount that the Court might award by way of compensation indicates a range where the statutory limit is to be seen as the maximum amount to be awarded only in the most grievous or serious contravention of a provision in Div3. The purpose of those provisions is no more than to limit the jurisdiction of the Court so as to preclude awards of compensation in excess of those amounts. That view is consistent with the legislative history of s170EE which was enacted by the Industrial Relations Reform Act 1993 containing no limit on the amount of compensation that might be awarded but was amended to introduce the limits found in s170EE(3) and (4) by the Industrial Relations Amendment Act (No. 2) of 1994. In my opinion the applicant is entitled to a substantial and not nominal amount of compensation. He has been dismissed from employment of a type that he has generally been engaged in for eighteen years in contravention of s170DC. He is 51 years old. His salary was, on average, approximately $410.00 per week gross. Making some allowance for the possibility that the applicant would have been lawfully dismissed during the period following his termination because his work was unsatisfactory, I decide that the applicant should be awarded $9,500 compensation for the loss of employment arising from the unlawful termination and I so order. I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore. Associate: Date: 10 March 1995 Litigant in Person: Mr D. Perrin Counsel for the Respondent: Mr P. Coleman Solicitor for the Respondent: Fishburn Watson O'Brien Date of hearing: 21 February 1995 Date of judgment: 10 March 1995