INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2049 of 1995 B E T W E E N : SIMON KAVANAGH HARRIS Applicant AND MACK BROTHERS Respondent Before: Judicial Registrar Murphy Place: Melbourne Date: 16 August 1995 REASONS FOR DECISION Mack Brothers is an old established business that manufactures and supplies roofing material to the building trade. It is a family operated business with two brothers being partners and two sons of Mr Laurie Mack, operating in senior positions within the business. The business operates in a somewhat old fashioned way in that the bulk of sales are cash before production, invoices and dockets are all written out by hand and computerisation does not seem to have intruded. Procedures for the operation of the business are set out in a procedures manual which is in evidence and which I find was provided to the Applicant. In July 1994, the business advertised for a salesman and the Applicant successfully applied. The Applicant has had considerable experience in the building industry, including a period with a competitor of the Respondent. The reason the Applicant was employed was an endeavour on the part of the Respondent to achieve business through telemarketing. This involved obtaining lists of people and companies that had recently obtained building approvals and telephoning them, seeking to quote on the particular job. The Applicant was provided with these lists and a book to record the results of his endeavours. The Applicant's duties also included attending to phone inquires and orders, and to customers off the street. The Issues in the Case The central issues in this case concern the extent to which the Applicant had failed to perform his duties, whether he had been counselled for that failure and whether his termination breached the Industrial Relations Act (the Act). The Court heard evidence from the Applicant, a former employee, Mr Greg Watts and four members of the Mack family. Before stating my findings on the evidence I should indicate that the Applicant was heavily pressed in cross-examination as to his credit. Having regard to his demeanour and presentation, I am not prepared to accept his evidence where there is a conflict between it and the evidence called on behalf of the Respondent. In contrast, I found the witnesses for the Respondent impressive. I was particular impressed by Mr Laurie Mack. He gave evidence that in 50 years of business he had never terminated the employment of any other person. He also said that in dealing with the Applicant he sought to give the Applicant, as an employee, a fair go. I accept that he was endeavouring to do that. I find that the Respondent had essentially a manual system of recording and operating its business records. This system, which included a quote book, an invoice book, production sheets and a cash sales book, required vigilance and accuracy by employees. I am satisfied that the Applicant was made aware on numerous occasions by Laurie Mack and his son the sales manager, Ian Mack, of what the requirements of the Respondent's business were. I am satisfied that on numerous occasions in the course of his duties, the Applicant made errors and omissions in completing various documents which were part of those duties. I am satisfied that these mistakes were brought to his attention by Ian Mack, his immediate superior and on a number of occasions by Laurie Mack. I am satisfied that some of those matters brought to his attention were of a relatively minor nature but were seen by the Respondent as a failure to comply with its business procedures. Copies of a number of the invoices which were brought to the Applicant's attention were provided to him. I find that these documents represented only a proportion of the matters relating to the Applicant's performance that were causing difficulties for the Respondent. I find that as a result of Ian Mack bringing these errors to the Applicant's attention, friction developed between the two of them. The Applicant, I find, resented being required to meet the standards and procedures laid down by the Respondent. Further I find the Applicant failed to follow instructions regarding the proper procedures in telemarketing, including recording details in a book. I also find that the lack of endeavours of the Applicant in this area meant that telemarketing was not proving as successful in generating sales as envisaged at the time of the Applicant's employment. On 1 December 1994, an incident occurred when Ian Mack raised a matter with the Applicant. I find that in response to this the Applicant threatened him. On 6 December a further incident occurred in which the Applicant sought to have a fight with Ian Mack. Mack responded by inviting the Applicant to go outside for a fight. The fight did not occur but the Applicant did say to Ian Mack that he would "get him in his own time, in his own way". This statement, along with the previous aspects of non-performance by the Applicant, was taken very seriously by the Respondent. The Applicant was called in by the two partners, Laurie and Ken Mack, for a counselling session on 8 December. The Applicant attended that session with a tape recorder; he recorded part of the session. His evidence in relation to the reason why he had the tape recorder at his work was unsatisfactory to say the least. At all events he recorded part of the meeting but I am satisfied with the evidence of the Mack brothers that at the beginning of the session the atmosphere was quite amicable. He was handed a document containing the matters which were of concern to the Respondent and invited to comment on it. The Applicant refused to accept the document and said he refuted its contents. I am satisfied, however, that he accepted at the time that there had been problems with his performance in the area of sales and compliance with the Respondent's business methods. The atmosphere in the counselling session, I find, degenerated in that the Applicant exhibited an attitude during that session that he did not wish to co-operate with the Respondent to address its concerns. This is evidenced by the fact that as he left the session, he was laughing down the stairs. In the document handed to the Applicant and read to him by Mr Laurie Mack, the final paragraph read: "If further threats are made against Ian Mack then your employment with Mack Bros. will be terminated immediately. Regarding the other matters being discussed unless you can improve on these matters within 2 weeks from today we will find it necessary to terminate your employment with Mack Bros." In the next two weeks, Ian Mack raised with the Applicant on at least nine occasions matters of a nature similar to those which had been of concern to the Respondent prior to 8 December and which had been raised with him previously. In his evidence-in-chief, the Applicant denied that matters relating to his performance had been raised with him after 8 December. In cross-examination he conceded one or two instances but could not recall the rest. On the central issue of whether or not, both before and after 8 December, the Applicant was made aware of the business requirements of the Respondent after he had failed to meet those requirements, without hesitation I accept the evidence of Ian Mack and Laurie Mack. A number of invoices and other documents were produced with contemporaneous annotations made by Laurie Mack at the time that he raised them with Applicant. Even without this corroborating material, I would accept their evidence. It follows that I also accept Ian Mack's account as to whether or not the Applicant threatened or provoked him. Corroboration of this was provided by another witness called by the Applicant, Mr Greg Watts, who I find told Ian Mack "I will punch your head in like Simon said he would". I reject Watts' evidence that the Applicant's comments were made in response to any earlier threat by Ian Mack. In relation to the decision to terminate the Applicant's employment, I accept Laurie Mack's evidence that he decided to terminate him on the basis that there had been no improvement in his performance in the period following the counselling. I further accept his evidence that the Applicant was abusive as he entered the room for the final meeting on 22 December. Further I accept his evidence that he told the Applicant that his performance had not improved and he was to be terminated. I accept that Laurie Mack then invited him to discuss the matter. This the Applicant refused to do and demanded his termination entitlements. Laurie Mack's version of this transaction is corroborated by Mr Ken Mack. Further, the Applicant's attitude on that day of not co-operating with Mr Laurie Mack is manifested by a letter which he tendered at the time of the meeting claiming that he had been victimised and asserting that he would be seeking appropriate redress. I find that had the Applicant been prepared to afford a modicum of co-operation with Laurie Mack, then Mack would have been prepared to reconsider the decision and to discuss the matter. The Applicant's attitude is also manifested by a comment he made to Ian Mack in December that he would leave essentially on his own terms. The Competing Contentions It was the Respondent's contention that it had discharged its onus of proof that it had a valid reason to terminate the employment. The Respondent relies on similarities between this case and the case of Selvachandran v Peteron Plastics Pty Limited, (Industrial Relations Court of Australia, Northrop J, 7 July 1995). There, Northrop J, considered the meaning of the term "valid" in section 170DE(1) and said that it should be given the mean of "sound, defensible or well founded". Importantly Northrop J went on to say: "Further in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must be "applied in a practical, commonsense way to ensure that" the employer and employee are each treated fairly." The representative for the Applicant argued that the whole termination process was flawed both procedurally and substantively. It was argued that the counselling letter had been pre-typed. I do not accept that this flawed what happened at the session on 8 December. The document cannot be extracted from the invitation made by Laurie Mack to discuss it, which the Applicant declined. The document refers to three matters; the alleged threats, failure to complete invoices properly and non-performance in the area of sales. Only the first of these matters had never previously been raised with the Applicant and he then proceeded to deny that he had made any threats. The Applicant's response to the whole of the matters in that letter was to refute the bulk of them. The evidence was however that on numerous previous occasions both his competence and his sales performance had been raised by the Respondent. Evidence was led in relation to 10 individual matters in the period prior to 8 December 1995. When the counselling letter is read with this background, it cannot be asserted that the Applicant was unaware of the matters which were putting his employment at risk. On the tape of the meeting, at one stage is a request for details of the invoices. This was not pressed by the Applicant and I accept that the details had previously been provided in any event. It was also contended by the representative for the Applicant, that a witness should have been allowed to attend that session. There is no rigid requirement that this occur and I find that in the circumstances where the Applicant had a tape recorder this was unnecessary, particularly given that there was no suggestion that the Applicant was, for personal reasons, at any particular disadvantage in dealing with the Mack brothers. It was also said that no milestones were provided to review the Applicant's performance in the next 14 days. I reject this because of what happened after 8 December; first the Applicant cannot in a sense, refuse to participate in the process and then allege that the process is flawed. It must be remembered that I have found that the Applicant refused to accept this counselling letter. It is difficult for the Applicant to then turn around and rely on the detail of the letter when he refused to even engage in a discussion with his employer in relation to it. If he maintained that what happened on 8 December was unfair, he had the opportunity and indeed a duty to go back to the employer after that meeting to clarify the matter. He did not do that. The fact that he did not do that is consistent with the conclusion that he did not wish to co-operate with the employer to address the employer's concerns. This is consistent with him making the threats, taping the conversation and making the comment to Ian Mack I have referred to earlier. It was also suggested that the actual termination was essentially unfair. I reject this. Following the counselling and the events of 8 to 22 December, the Respondent was entitled to conclude that the Applicant was not prepared to meet its business requirements and for that reason to terminate his employment. The termination therefore could be said to be "sound, defensible or well founded", to use the words in Selvachandran (above). I therefore find that the Respondent did have valid reason to terminate the employment of the Applicant pursuant to section 170DE(1) of the Act. I also reject the argument that the termination breached section 170DC of the Act. I have earlier said that the Applicant knew the matters that were putting his employment at risk. The requirements for procedural fairness as set out in cases such as Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199, Gibson v Bosmac Pty Limited (Industrial Relations Court of Australia, Wilcox CJ, 5 May 1995), Johns v Gunns Limited (Industrial Relations Court of Australia, Northrop J, 18 May 1995) and Selvachandran (above) have been met. The Applicant, in the words of Mr Laurie Mack, has been given a fair go. Was the Termination in Breach of Section 170DE(2)? It was also argued that the termination was substantively harsh, unjust or unreasonable in breach of section 170DE(2) of the Act. In the recent decision Cox v South Australian Meat Corporation (Industrial Relations Court of Australia, von Doussa J, 13 June 1995), von Doussa J applied the comment made by Sheppard and Herrey JJ in Bostik (Australia) Pty Limited v Gorgevski No 1 (1992) 36 FCR 20, 28 where it was said: "We do not think any redefinition or paraphrase of the expression ["harsh, unjust or unreasonable"] is desirable. We agree with the learned trial judge's view that a court must decide whether the decision of the employer to dismiss was, viewed objectively, harsh, unjust or unreasonable. Relevant to this are the circumstances which led to the decision to dismiss and also the effect of that decision on the employer. Any harsh effect on the individual employee is clearly relevant but of course not conclusive. Other matters have to be considered such as the gravity of the employee's conduct." In the decision of Gibson v Bosmac Pty Limited, (above) Wilcox CJ has confirmed that the term "unreasonable" must be looked at from the point of view of both a reasonable employer and a reasonable employee. Here, given the matters relating to the Applicant's performance that had been raised with him previously, and his attitude as evidenced by the events both before and after the counselling on 8 December, and the events on 22 December itself, it is clear that he was not prepared to meet what I find were reasonable requirements of the Respondent's business. It is therefore relevant to consider what was said by Jenkinson J in Gregory v Philip Morris (1988) 80 ALR 455, 457 where he said: "The question whether the termination was unreasonable is, I think, one of fact. This requires a determination, by reference to moral values and prudential considerations current in the community, of what the tribunal of fact thinks a reasonable employer in the circumstances would have decided to do at the time when the Respondent terminated the appellant's employment." This approach has been accepted by Lee J in Aiken v The Construction Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - W.A. Branch (Industrial Relations Court of Australia, Lee J, 7 August 1995). Here applying these tests, I am not satisfied that the Respondent acted unreasonably in terminating the Applicant's employment. Having regard to my earlier findings in relation to the Applicant's performance and the way that matters were raised with him and also the circumstances leading to his dismissal, I am not satisfied that the Applicant has discharged his onus of proof that the termination was harsh, unjust or unreasonable. It follows from this that the application must be dismissed. MINUTES OF ORDERS THE COURT ORDERS: 1. The application is dismissed. 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 twelve (12) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy. Associate: Dated: 23 August 1995 Union for the Applicant: AFMEPKIU (Vehicle Division) Union Representative for Applicant: Mr M Perica Solicitors for the Respondent: Messrs Phillips Fox Counsel for the Respondent: Mr B Dennis Date of hearing: 14, 15 & 16 August 1995 Date of judgment: 16 August 1995 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - claim of UNLAWFUL TERMINATION - VALID REASON - OPPORTUNITY TO RESPOND - whether employee afforded PROCEDURAL FAIRNESS. Industrial Relations Act 1988 ss.170DC, 170DE & 170DE. CASES: Selvachandran v Peteron Plastics Pty Limited, (Industrial Relations Court of Australia, Northrop J, 7 July 1995) Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 Gibson v Bosmac Pty Limited (Industrial Relations Court of Australia, Wilcox CJ, 5 May 1995) Johns v Gunns Limited (Industrial Relations Court of Australia, Northrop J, 18 May 1995) Cox v South Australian Meat Corporation (Industrial Relations Court of Australia, von Doussa J, 13 June 1995) Bostik (Australia) Pty Limited v Gorgevski (No 1) (1992) 36 FCR 20 Gregory v Philip Morris (1988) 80 ALR 455, 457 Aiken v The Construction Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - W.A. Branch (Industrial Relations Court of Australia, Lee J, 7 August 1995). SIMON KAVANAGH HARRIS -v- MACK BROTHERS No. VI 2049 of 1995 Before: Judicial Registrar Murphy Place: Melbourne Date: 16 August 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2049 of 1995 B E T W E E N : SIMON KAVANAGH HARRIS Applicant AND MACK BROTHERS Respondent MINUTES OF ORDERS Judicial Registrar Murphy 16 August 1995 THE COURT ORDERS: 1. The application is dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.