Garrett v Avco Financial Services Ltd [1995] IRCA 306

C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - CLAIM OF UNLAWFUL TERMINATION - NEGLIGENCE IN HANDLING CASH - BREACH OF COMPANY POLICY - BREACH OF SENSIBLE BUSINESS PRACTICE - TERMINATION REASONS VALID. Industrial Relations Act 1988, S.170DE, S.170EA GARRETT v AVCO FINANCIAL SERVICES LTD No. VI-1707/95 Before: Ryan JR Place: Melbourne Date: 4 July 1995

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY MATTER NO VI-1707/95 B E T W E E N: GARRETT Applicant AND: AVCO FINANCIAL SERVICES Respondent MINUTES OF ORDER Judicial Registrar Ryan 4 July 1995 THE COURT ORDERS THAT: The application is dismissed. 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 VICTORIA DISTRICT REGISTRY Matter No VI-1707/95 B E T W E E N: PAUL ROBERT GARRETT Applicant AND: AVCO FINANCIAL SERVICES Respondent BEFORE: RYAN JR PLACE: MELBOURNE DATE: 4 JULY 1995 REASONS FOR JUDGMENT (EX TEMPORE) APPLICATION FOR REMEDY FOR UNLAWFUL TERMINATION The applicant claims that his employment by the respondent was unlawfully terminated by the respondent on 8 February 1995. On 24 October 1994, the respondent's Regional Manager, Sydney Cabban, issued an employee warning notice which is exhibit R1. The notice was issued to the applicant in his capacity as Manager of the respondent's Cranbourne office. Exhibit R1 relevantly reads as follows: Avco Financial Service Limited, Employee Warning Notice. Employee, Paul Garrett, Cranbourne Branch. Reason for this warning, unsatisfactory performance, breach of company rules. Details: Issued in conjunction with employee Dishonest Information dated 17.10.1994. Paul was involved in an incident which involved the mishandling of Company Funds, resulting in a loss to the Company of $2,886.00. The management practices employed by Paul in this instance are totally unacceptable. A further breach of this offence will result in immediate termination. Employee counselled on correct handling of company cash. Employee to re-read cash drawer policy by 11.11.1994 and advise DM (i.e. District Manager). The applicant signed this warning acknowledging receipt of the warning and the warning was also signed by the District Manager, Sydney Cabban. It is dated 24 October 1994. On Friday, 7 October 1994, the applicant quite contrary to Company policy and to sensible business practice, arranged for a Leongatha agent to transport receipts, cash and cheques in a sealed envelope to a third person at Korumburra. The third person was an acquaintance of the applicant but had no connection whatsoever with the respondent company. The applicant picked up what was purported to be the sealed envelope on Saturday, 8 October in Korumburra. He did not check the contents on taking delivery of the envelope. He states he put the envelope in his briefcase and opened it in the Cranbourne office on Monday, 10 October and that over $2880 in cash was missing. The Court accepts the sum actually missing was $2886. A police investigation followed but at this stage no action has been taken in respect to the possible theft or misappropriation of money. Following oral counselling and the written warning of 24 October 1994, the applicant re-read what is described as the "cash drawer policy" and acknowledged in evidence that he did so. He also acknowledged on oath that he was familiar with a five page written policy extract the first, fourth and fifth pages of which are on Avco Financial Services letterhead and which extract was tendered as exhibit R2. Exhibit R2 deals with cash in hand policy and refers to the cash drawer, to responsibilities for cash and the fact that amounts in excess of $500 are to be placed in a safe or perma-vault. Exhibit R2 also deals with special deposits, late payments, cashing of cheques, balancing the cash drawer and the fifth page of exhibit R2 outlines the employers policy on all bank deposits. The applicant also gave evidence to the effect that from Friday, 7 October 1994 to Friday, 3 February 1995, he did not personally become involved in collecting cash, cheques and receipts from Avco dealers or agents but on Friday, 3 February 1995, he collected four envelopes purporting to contain certain receipts, cheques and cash; one from an agent in Wonthaggi and three from agents in Leongatha. The applicant swears that he observed the cash, cheques and receipts being placed in each envelope and he observed each envelope being sealed with tape. Again the applicant concedes that he did not at any time thereafter physically open these envelopes or check or in any way ascertain their contents but placed them in an unlocked briefcase and left the briefcase in his locked car while at football training in Korumburra on the evening of Friday, 3 February 1995. The briefcase was left over night in his bedroom at his residence in Somerville. Again on the Saturday morning while he was at a gymnasium in Cranbourne, the briefcase was stated to be locked in his car, (that is the briefcase was in his car and his car was locked). The applicant swears that after he left the gymnasium on the Saturday morning he placed the envelopes, still unchecked and unopened, in the office safe at the Cranbourne office and that late on Monday, 6 February, an employee of the Cranbourne office, Leanne Eldridge, reported considerable money missing. The initial report was of a sum in the vicinity of $4000 missing, however the cash unaccounted for and therefore lost by the respondent was $2805. Again, a police investigation has led to no Court proceedings, at least not at this stage. The notice of termination of employment dated 8 February 1995 was exhibit R4 and relevantly reads as below. It is addressed to the applicant at 3 Baystone Drive, Cranbourne. It is dated 8 February 1995 and is headed "notice of termination of employment": "Dear Paul, This letter is to confirm that your employment with Avco Financial Services is terminated, effective today. This follows on from the meeting held earlier today between myself, Mark Huntingdon (Branch Operations Auditor) and yourself. The reasons for your dismissal are negligence in management and the repeated breach of Company cash handling policy, which originally resulted in a loss to the Company of $2886 and the issuing of an employee warning notice to yourself dated the 24th October 1994. As you are aware, the written warning notice clearly stated that any further breaches of policy would not be tolerated and would lead to your immediate termination. In light of the situation last weekend which resulted in a further loss to the Company of $2,805, Avco Financial Services Ltd has no alternative other than to terminate your services. Enclosed is a cheque for $8,401.15 representing four weeks pay in lieu of notice, plus accrued annual leave." The letter then outlines the break up of the termination pay and is signed "Syd Cabban, District Manager". I have no doubt that the applicant, even on his own version of events, on 3 February, 4 February and indeed, 6 February, flagrantly and carelessly breached the respondent's guidelines in respect of handling cash and also breached sensible business practice. I find that, even on the applicant's own version of events, termination was justified. However, I do not accept the applicant's claim that either before or after the October 1994 incident, he sought and failed to obtain adequate guidance on cash handling and specifically on dealer collections. Dealer collections inevitably involve cash handling and bring into force the respondent's procedures and policies on cash handling within and without normal operating hours. Furthermore, in terms of credibility, I note the written notes and sworn evidence of Messrs Cabban and Huntingdon and I do not accept that they conspired against the applicant and invented the applicant's reported claim on 6 February and 8 February, that he went from the gymnasium on 4 February to the cricket and thence to the office to place the envelopes in the safe. I accept the evidence of Cabban and Huntingdon and recorded in their separate notes of the interview on 8 February that in that interview the applicant confirmed what he had told Cabban by telephone on 6 February namely that after he left the gymnasium on Saturday morning 4 February he took the briefcase and the envelopes and went and played in a cricket match and that late on the Saturday afternoon he went to his Cranbourne office and put the envelopes in the office safe. In terms of degree of negligence in cash handling, that difference is of no great weight but it is very significant in terms of the applicant's credibility in general. The conclusion which has to follow from the applicant's evidence, if accepted, is that Messrs Cabban and Huntingdon have falsified what the applicant reported as his movements on Saturday, 4 February 1995. I do not accept this to be so. I find that the applicant's conduct justified termination and constituted serious misconduct. He failed to apply sensible business practice in a responsible position as Manager of the Cranbourne branch. He failed to apply the Company's policies. He failed to heed the earlier written warning. I find no breach of Division 3 of part VIB of the Industrial Relations Act 1988. I find that there were valid reasons for termination pursuant to S.170DE(1). I find that the termination was not harsh, unjust or unreasonable pursuant to S.170DE(2). I find that the applicant was given adequate opportunity to respond on 6 February 1995 and on 8 February 1995 and that there was no breach of S.170DC. The order of the Court is that the application under section 170EA of the Industrial Relations Act 1988 is dismissed. I certify that this and the preceding pages are a true copy of the Reasons for Judgment of Judicial Registrar Ryan. Associate : Date : 10 July 1995 Appearances: The Applicant : appeared in person Counsel for the Respondent : Mr Nicholas Green Solicitors for the Respondent : Madgwicks Date of Hearing : 3 and 4 July 1995 Judgment : 4 July 1995