INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2173 of 1994 B E T W E E N FRANK FERRUCCIO CHARLES NIERO Applicant A N D SAINSBURY NOMINEES PTY LTD t/as SAINSBURY HOMES Respondent Before: Judicial Registrar Staindl Place: Melbourne Date: 7 July 1995 REASONS FOR JUDGMENT On 12 May 1995 the Applicant's claim pursuant to s 170EA of the Industrial Relations Act 1988 (the Act) was listed for hearing before the Court. Mr Stuckey, Counsel for the Respondent, raised a preliminary issue in that he argued that the matter had been compromised as between the parties. In order to deal with this argument it is convenient to set out a brief chronology of events relevant to the case. 19 September 1994 The Applicant was employed by the Respondent as an architectural draftsperson. 3 November 1994 The Applicant's employment was terminated by the Respondent. 9 November 1994 The Applicant filed an application in this Court pursuant to s170EA. 5 December 1994 The matter was referred for conciliation in the Australian Industrial Relations Commission. 10 January 1995 Following conciliation terms of settlement were drawn up between the parties. The terms provided that the Respondent pay an amount of money to the Applicant in compensation. (I was not told of this amount). No time period was provided for this payment. 11 January 1995 The Applicant wrote to the Respondent requesting that the payment be made within 14 days. 17 January 1995 Commissioner Larkin of the Australian Industrial Relations Commission signed a letter addressed to the Court advising that this matter had been settled by conciliation. 16 February 1995 The Applicant's solicitors wrote to the Respondent seeking that the Respondent honour the settlement. 16 March 1995 The Applicant's solicitors wrote to the Court seeking that the matter be relisted. A letter was sent to the Respondent advising it that the Applicant sought that the matter be relisted. 11 April 1995 The matter was listed at a Directions Hearing before the Court when it was set down for hearing. 12 May 1995 The matter was listed for hearing. The Respondent argues that there had been accord and satisfaction between the parties constituted by the terms of settlement, with the result that a breach of the terms by the Respondent entitled the Applicant only to sue on the settlement for breach of its terms. Mr Stuckey referred me to the case of Fraser v Elgen Tavern Pty Ltd [1982] VR 398. He pointed out that in that case there had been a term of settlement that provided for "time to be of the essence". There was no such term in the present case and hence it was argued that there was a binding agreement between the parties constituted by the terms of settlement. It seems to me that the essential question to be asked is whether the settlement provided for the Applicant to accept payment of a sum of money ($x), or to accept a promise of payment of $x. In fact the Applicant accepted the performance of the act of payment by the Respondent: this was reflected in the terms of settlement. The Applicant did not accept a promise by the Respondent to pay $x. The Respondent was only to be released from this action upon payment of $x. This is what Murphy J called an "executory obligation" in Fraser's case (at page 404). The original action remains on foot since the Applicant has elected to accept the Respondent's repudiation of the terms of settlement. The terms then lose any significance. It remains for me to explain what constitutes the Respondent's repudiation of the terms of settlement. In my view the amount of money which was due pursuant to the terms became payable immediately following the signing of the terms. Where no period of time is specified during which the money is to be paid then there is no stay as to the payment of the money. However, even if it could be said that the money became payable within a reasonable time following 10 January 1995 (the day of "settlement") then a reasonable time has long since elapsed. There was no suggestion that there was a tender of the money even up to the date of hearing. Accordingly, I advised the parties at the hearing that I ruled against Mr Stuckey's submission. These are the reasons for that ruling. I add that, given the history of this matter, I was satisfied that it was not appropriate to again refer the matter to conciliation pursuant to section 170EC(b). Evidence on the Merits Sainsbury Nominees Pty Ltd (trading as Sainsbury Homes) is a builder of project homes. It constructs display homes and then enters into contracts to build homes based on the display homes. Purchasers frequently require changes to the actual homes on display, whether it be by way of the addition or deletion of particular rooms or alterations to the dimensions of rooms. Such alterations require amendments to the master plan of a particular home. This work was the sort of work predominantly performed by the applicant although I am satisfied that on occasions the applicant was called upon to do considerably more than this in the way of design work. The Applicant is an architectural draftsperson with some 28 years experience in the architectural field. Prior to commencing with the respondent he had worked predominantly in areas of work other than residential design, although throughout his career he did some residential work. However he had been largely unemployed for the 18 months before commencing work with the respondent. The respondent had experienced an increase in sales of display homes in about August - September of 1994. Accordingly, a decision was made to employ an additional draftsperson (one was already employed by the respondent). The applicant commenced work on 19 September 1994 following an interview with Mr Gary Mepstead, a director of the respondent. He was to be paid a salary of $27,500.00 p.a. On 2 November 1994 the applicant made various enquiries concerning his rate of pay. He was informed that his salary should have been higher than what it was due to the design work that he was doing. I accept that he was unable to contact Mr Mepstead by telephone on that day and accordingly wrote a note to Mr Mepstead. A copy of this note was tendered in the proceedings and states that the minimum award rate for a senior design draftsman is $29,816.64 p.a. In the note the applicant states that he finds it hard to live on his income and "would like the award rate to be paid if possible". Before leaving work on 2 November the applicant left the note on Mr Mepstead's desk. Shortly before 5.00pm on the following day the applicant was called into Mr Mepstead's office. There is a conflict on the evidence as to the conversation which occurred. The applicant gave evidence that Mr Mepstead told him that he didn't appreciate him writing notes and he (the applicant) should have come to see him personally. Mr Mepstead allegedly then said that he (the applicant) may be experiencing difficulties at home with money but it was none of Mr Mepstead's business and that he was terminating him. Mr Mepstead gave evidence that he did not see the applicant's note until after he had made a decision to terminate his employment. He said he had made this decision on the basis of a downturn in business. It was only after he had asked that the applicant's pay be made up that he saw the applicant's note. During the meeting between the applicant and Mr Mepstead on 3 November, Mr Mepstead agreed that something was said about the note but couldn't be specific about the conversation. However it was apparently a coincidence that the applicant's employment was terminated shortly after Mr Mepstead read the applicant's note. I do not accept the evidence of Mr Mepstead on this point. I find that he had seen the applicant's note to him prior to arriving at the decision to terminate the applicant's employment and that the fact that the applicant wrote the note was a reason for the termination. This is not a valid reason for termination pursuant to section 170DE(1) of the Act. Accordingly the termination by the respondent of the applicant's employment was unlawful. Even if I were to accept Mr Mepstead's evidence about what occurred during the meeting on 3 November, it seems to me that the termination contravened the Act. I say this because even if it could be said that the respondent had established that the termination was due to its operational requirements, nevertheless the termination was harsh. On Mr Mepstead's own evidence there had been no consultation with the applicant regarding his termination and no alternatives discussed prior to termination. In my view this represents a failure by the respondent to accord fairness to the applicant in respect to his dismissal. See Jones v Department of Energy and Minerals (Unreported, Ryan J, 16 June 1995, VI94/527) and Quality Bakers of Australia Ltd v Goulding (Unreported, Beazley J., 23/06/95, RWIR, 142/94. Remedy The question of the appropriate remedy has caused me some difficulty in this case. I am acutely conscious that reinstatement is the primary remedy under the Act. However, when the applicant filed his application under the Act he sought compensation only, and not reinstatement. The day prior to the hearing of this matter the applicant notified the respondent that he now sought reinstatement. The respondent had not filled the applicant's position in the meantime because of what Mr Mepstead said was the decline in business. Although Mr Mepstead was pressed in cross-examination concerning the alleged downturn in business, I am satisfied that such a downturn has occurred (although perhaps not to the extent stated by Mr Mepstead). The fact that the applicant has not been replaced gives some support to this view. Given that the applicant only sought reinstatement comparatively recently and that his position has not been filled due to a business downturn, I find that reinstatement is impracticable. The question of what compensation, if any, that the applicant should receive is likewise difficult. Given my findings it seems to me unlikely that the applicant's employment would have continued for a lengthy time. However in my view it would have continued for several months. Doing the best I can in an assessment which is necessarily imprecise I think it would have continued for a period of 3 months. In my view, the remuneration the applicant would have received during this period of 3 months is the appropriate compensation to be paid to the applicant. Based on a salary of $27,500 this amounts to $6,875 together with superannuation contributions of $275. The superannuation contribution is based on the employer paying 4% of the applicant's salary to a superannuation fund pursuant to the Superannuation Guarantee (Administration) Act 1992. However at the time of termination the applicant was paid one week's pay in lieu of notice: this amount of $528.85 should be deducted from the compensation. I add one further point. In the proceeding before me there was some argument as to the appropriate wage rate to be paid to the applicant. This depended on his classification in an (expired) award of the Industrial Relations Commission of Victoria. The evidence in this case is not sufficiently detailed to enable me to make a finding on this issue. MINUTES OF ORDERS THE COURT ORDERS: 1. That the respondent pay to the applicant compensation of $6621.15 within 7 days. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment of Judicial Registrar Staindl. Associate: Dated: Solicitors for the Applicant: Ryan Carlisle Thomas Counsel for the Applicant: Tony Lawrence Representative for the Respondent: H. I. A., C/- Bob Dight Counsel for the Respondent: Scott Stuckey Date of hearing: 12 May 1995 Date of judgment: 7 July 1995 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - Accord and Satisfaction - VALID REASON - COMPENSATION. Industrial Relations Act 1988 ss.170DE(1), 170EA & 170EC(b). CASES: Fraser v Elgen Tavern Pty Ltd [1982] VR 398 Jones v Department of Energy and Minerals (Unreported, Ryan J, 16 June 1995, VI94/527). Quality Bakers of Australia Ltd v Goulding (Unreported, Beazley J., 23/06/95, RWIR, 142/94. FRANK FERRUCCIO CHARLES NIERO v SAINSBURY NOMINEES PTY LTD t/as SAINSBURY HOMES No. VI 2173 of 1994 Before: Judicial Registrar Staindl Place: Melbourne Date: 7 July 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2173 of 1994 B E T W E E N : FRANK FERRUCCIO CHARLES NIERO Applicant AND SAINSBURY NOMINEES PTY LTD t/as SAINSBURY HOMES Respondent MINUTES OF ORDERS Judicial Registrar Staindl 7July 1995 THE COURT ORDERS: 1. That the respondent pay to the applicant compensation of $6621.15 within 7 days.