Martin Vincent Appleby v Darbay Pty Limited [1995] IRCA 312

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1631 of 1995 B E T W E E N: MARTIN VINCENT APPLEBY Applicant A N D DARBAY PTY LIMITED Respondent REASONS FOR JUDGMENT - DELIVERED EX TEMPORE 6 July 1995 PARKINSON JR This is an application made pursuant to S170EA of the Industrial Relations Act 1988. The applicant also seeks damages for breach of contract in the accrued jurisdiction of the court. Particulars of the applicant's claim were provided to the solicitors for the respondent by the applicant's solicitors on 28 June 1995 (Exhibit A1). The respondent did not appear at the hearing of this matter. I am satisfied that the respondent had knowledge of these proceedings. On 4 July 1995 the solicitors on the record for the respondent in this matter, Trueman Dawson, corresponded with the solicitors for the applicant. The contents of that letter evinced an apparent intention to be present at the hearing of this matter this day (Exhibit A2). However there was no appearance for or on behalf of the respondent, and the court was not accorded the courtesy by its solicitors on the record of any explanation as to the failure to attend. Nor was any notice of ceasing to act, or any application to withdraw as required by the rules of court, filed by the respondent's solicitors. The court is satisfied of notice and determined to proceed to hear and determine the applicant's claims in the absence of the respondent. The applicant was employed as the manager of the respondent's bar which traded at Hawthorn in Victoria, under the name of Mickey Finn's. He was interviewed and employed by a director of the respondent, Mr Steven Haley. He commenced employment on 6 February 1994 and his employment ceased on 30 January 1995. His evidence was that the terms of his contract of employment included that he be paid $661.00 per week, together with superannuation at 4 per cent of gross salary and an entitlement to annual leave. The evidence in these proceedings was that the applicant worked long hours during the period of his employment. The average working week for him was between 50 to 60 hours. The applicant had responsibility for the operation of the premises, stock ordering and supervision of some 13 staff, including their rostering. The applicant's evidence was that in December 1994 and January 1995 there were occasions where the respondent failed to make any arrangements for the payment of the wages of the staff at the premises, including the wages of the applicant. His evidence was that it was usual for the director, Mr Steven Haley to attend at the premises and to distribute cheques to employees for wages on the Wednesday following the end of the pay week. The pay week ended on a Sunday. His evidence was that in respect of three pay periods to the second week of January 1995 there was no attendance by the respondent's officers to make payment to staff for their wages. The applicant made arrangements to pay the employees out of the bar takings for that period, however he did not make any payment to himself. He was left without wages for a three week period over Christmas and into the New Year. Notwithstanding this failure by the respondent to comply with a fundamental term of the contract the applicant, being a thoroughly decent employee, remained on duty and continued to perform his duties for the respondent. He was eventually paid outstanding wages. On the following week there were further discrepancies with the applicant's pay, which were only made up after enquiries being made by him. At about this time the applicant was introduced to a person described by another of the directors of the respondent as a time and motion expert. This person was authorised to access the financial and rostering records of the respondent, held by the applicant, and it is apparent from the evidence was a person acting with the authority of the respondent in her dealings with the respondent's employees. On 30 January 1995 the time and motion person attended at the premises and handed out the wages cheques to all of the employees of the respondent, except for the applicant. When the applicant enquired as to where his wages were, he was informed by the time and motion person that he was not going to be paid either his wages or his annual leave by the respondent. The applicant, having become frustrated by the continual breach of the contractual arrangements between them, decided to take positive steps to attempt to force the hand of the respondent and cause its officers to act properly and reasonably as directors of the company. He felt this was best done by providing written notice of resignation. This was done. This notice was due to expire on 6 February 1995. Before that notice expired, and before the matter had been discussed with the applicant pursuant to his specific request of the authorised agent of the respondent, the time and motion expert, the applicant was subjected to treatment initiated by the respondent which can only be described as an offensive and humiliating manner of terminating the employment of an employee. At approximately 7.30 pm on 30 January 1995 the applicant was informed by his wife that the Hawthorn Police had a matter which they wanted to discuss with him urgently. The police station being across the road from the premises, the applicant presented himself there. Upon attending, and after being asked for identification, he was told by a constable of police that the respondent's officers had contacted him, and that the applicant was required to hand over into the police officer's custody all property of the respondent and to remove himself from the respondent's premises forthwith. The applicant was asked whether he intended to make any trouble. The court is not at all clear how a constable of police gains authority as a police officer to take such action on behalf of the respondents, however the applicant complied with the instructions of the police officer and handed over the keys to the premises and other items, only returning to the bar to collect personal possessions. I am satisfied that in this case there was a termination of the employment of the applicant at the initiative of the employer. This is for the following reasons: Constructive Dismissal The conduct of the respondent in failing to pay the wages of the applicant on more than one occasion when they were due and payable amounted to course of conduct in fundamental breach of the agreement between the parties. So too did the conduct of the respondent on 30 January 1995 in refusing to pay the applicant's wages for that prior pay period, or to allow him his annual leave payments. These were fundamental breaches of the terms of the contract between the parties. According to the authorities, on mere contractual principles alone, the applicant was entitled to treat the contract as having been rescinded by the respondent, and in the circumstances his employment terminated. See in this regard Western Excavating Ltd. V Sharp (C.A.) [1978] 1 QB 761 at 769 where Lord Denning M.R. stated: "If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates that contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract." The circumstances of the dealings with the applicant through the auspices of the respondent's agent, the police constable, and also by the repossession of keys and the requirement of vacation of the premises immediately, also constitutes a constructive dismissal in the contractual sense. I refer also to the decision of Judicial Registrar Millane in Slifka v JW Sanders Pty Ltd (unreported, 8 June 1995, VI 2741 of 1994) at page 16 of that decision, where the Judicial Registrar said: The test in determining whether the employment was terminated at the initiative of the Respondent is clearly an objective one and requires an act, or acts, on the part of the employer inconsistent with the continuation of the contract of employment. The evidence in this case leads inexorably to the conclusion that by repossessing the company car and keys, by threatening the Applicant and by treating the Applicant as a trespasser at the employer's premises, it was the act or acts of the Respondent which gave rise to the termination of the Applicant's employment by 28 November 1994. It cannot be said that that the Applicant made a voluntary decision to leave his employment in the sense required by the authorities to constitute a resignation (see Weller v Transport Superannuation Board 4 VIR 353). The court as presently constituted adopts the above passage in the circumstances of the present case. Termination Initiated by the Employer Further I am of the view that the term " termination of the employment at the initiative of the employer", which is the termination contemplated by S170EA of the Act, contemplates circumstances of termination of employment which are much broader and not merely dependant upon establishing which party was responsible for the breach of contract which led to its discharge, as in the case of Western Excavation cited above. In these circumstances the conduct of the employer in its treatment of the employees, in particular the applicant, led directly to the "resignation" letter in circumstances where the applicant had no other choice. The act which initiated this resignation was the act of the employer in failing to pay the applicant his wages and entitlements due. In this regard I refer to the decision of Moore J in Grout v Gunnedah Shire Council (1994) 125 ALR 355 at 372 where his Honour stated: "A principal purpose, if not the sole purpose, of Division 3 is to provide an employee with the right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination. An example would be en employee who engaged in misconduct at work, which ultimately led to the employer dismissing the employee. However, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps which effectively terminated the employment or purported to do so were taken by the employer." Actual and Express Termination of the Employment by the Employer It is clear on the evidence that the respondent had through an agent, namely the police officer, conveyed to the applicant the termination of his employment. This may be described by some as a constructive dismissal, however I am more inclined to the view that it was an actual termination of the employment by the respondent. This conduct by the respondent constituted an actual termination of the employment. It overtook any notice period which may have existed in respect of the letter of resignation of the applicant. It was a termination of employment on that day, 30 January 1995, summarily. In this matter there is no evidence to suggest that the respondent had any valid reason for terminating the applicant's employment on 30 January 1995. The onus in this regard rests with the respondent and I have not been so satisfied. To the contrary and on the evidence of the applicant, I am satisfied that there was no valid reason and I am satisfied that the conduct of the respondent and its officers in this matter was harsh, unjust and unreasonable. The applicant is entitled to a remedy. Remedy The applicant has given evidence that he has obtained alternative employment at the Toorak Hotel as an assistant manager, earning a wage in excess of that paid by the respondent. He says that an order for reinstatement in those circumstances would be impracticable, and I agree that this is so having regard to his new job and to the conduct of the respondent. The applicant seeks compensation and also various amounts on the contractual claim in the accrued jurisdiction. I am satisfied as to the terms of the contractual claim made by the applicant. The evidence establishes payment of two days of annual leave entitlement to the applicant, and this, together with the applicant's evidence of the term, is sufficient to satisfy me as to the contractual entitlement to annual leave (Exhibit A3). Similarly, the evidence of a limited number of payments by the respondent to the superannuation fund satisfy me as to a term in this regard (Exhibit A4) . The applicant was unemployed for a period of 14 weeks after the termination of his employment. His rate of pay was $661.00 per week. I have taken into account in the awarding of compensation in this matter that length of unemployment, together with the humiliating manner in which the applicant was dealt with by the respondent in the course of the termination of the applicant's employment. I have decided that in the circumstances, having regard to the lack of any basis for the termination of the employment, the applicant is entitled to additional compensation beyond merely the amount of earnings lost. Consequently I have determined the amount of compensation as being $ 13,220.00. This amount represents the equivalent of the 14 weeks wages lost, together with an additional amount in compensation for the factors discussed above, and also including lost annual leave accruals and other benefits in the course of the employment. I also find pursuant to S170DB of the Act that the applicant was not paid the notice to which he was entitled upon termination of the employment, and the court will order that the applicant be paid in damages such amount pursuant to S170EE (5). I further find for the applicant on the contractual claim, and the orders of the court in this regard will be that the respondent pay to the applicant the amounts in damages set out in relation to those matters contained at paragraphs C, D and F in Exhibit A7; those amounts being respectively a claim on the contract for unpaid annual leave accruals of $ 2,328.85, unpaid wages for work already performed prior to the termination in the sum of $661.00, and unpaid superannuation contributions of $1,057.60. The contractual damages being in the sum total of $ 4047.45. The orders of the court will be: 1. That the respondent pay to the applicant the sum of $13,220.00 in compensation pursuant to S170EE(2). 2. That the respondent pay to the applicant the sum of $661.00 in damages pursuant to S170EE(5). 3. That the respondent pay to the applicant the sum of $4047.45 in damages for breach of contract. 4. That payment be within 21 days of the date of this order. I certify that this and the preceding seven (7) pages are a true copy of the reasons for judgment of Judicial Registrar Parkinson delivered ex tempore. Associate: Dated: 6 July 1995 Solicitors for the applicant: Testart Robinson & Pitts Counsel appearing for the applicant: Mr J Bailey No appearance for the respondent Date of hearing: 6 July 1995 Date of judgment: 6 July 1995