INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2110 of 1995 B E T W E E N : KEVIN GEORGE HEYFRON Applicant AND STRAPP MOTORS PTY LTD Respondent Before: Judicial Registrar Fleming Place: Melbourne Date: 22 August 1995 REASONS FOR JUDGMENT (Ex Tempore) (Revised from Transcript) The Applicant was employed by Strapp Ford in 1988. In a letter dated 26 May 1988, (Exhibit A1), Mr Heyfron was employed as a Finance and Settlements Officer to commence work on 6 June 1988. His remuneration was a base retainer plus commission and he had the use of a fully maintained, new Ford. His salary was set out in memoranda prepared by Mr Lourensz, the Company Secretary, and was reviewed from time to time (Exhibit A2). Mr Heyfron's duties were to arrange motor vehicle finance with Ford Credit and sometimes with Citicorp, and it seems part of his duties were to sell insurance. Strapp Ford was a dealership and at the time of Mr Heyfron's commencement of employment the principal dealer was Ted Strapp. In the first year of his employment the dealership acquired Silver Star Motors dealership and Mr Heyfron performed similar duties for Silver Star. Mr Lourensz was Mr Heyfron's immediate supervisor. He reviewed Mr Heyfron's salary package (Exhibit A2) and I accept Mr Strapp's evidence that it was up to Mr Lourensz to discuss performance issues with Mr Heyfron. Mr Lourensz retired from Strapp Ford in mid-1995. Throughout the period 1988 to 1995 Mr Heyfron understood there was no complaint about his performance. Mr Strapp, who was a credible witness, gave evidence which I accept that he spoke to Mr Lourensz about encouraging Mr Heyfron to sell more product. "Because I would like him to get the fruits of it, and also it's good for my company." Mr Strapp described Mr Heyfron thus: "His honesty, integrity, reliability and attitude to customers was excellent." And Mr Strapp said that these qualities were more important to him than the amount of business he sold. Mr Green, for Mr Heyfron, tendered a Christmas note of December 88 (Exhibit A6) and a letter of 27 August 1993 (Exhibit A5) and also a letter of 4 July 1994, all of these documents congratulate Mr Heyfron for his performance. In December 1994 Mr Strapp announced to his employees that he was selling 40 per cent of the dealership to Mr Marcus Birrell. On 20 December a letter was distributed which announced the change in ownership and stated: "Accordingly we offer you and all other employees of Ted Strapp Motors Pty Limited employment on the same terms and conditions as you are currently employed. In this regard would you please note the following: (i) On 3 January 1995 you will be paid all salary and wages owing to you up to 2 January '95. (ii) Strapp Motors Pty Limited will assume responsibility for all your leave entitlements accrued to the completion date, and your past service with Ted Strapp Motors Pty Limited will count as service with Strapp Motors Pty Limited." There was attached to that an acceptance of offer of employment which was signed by Mr Heyfron on 21 December 1994. After having signed that, Mr Heyfron took the main days off at Christmas and returned to work at the Respondent company, Strapp Motors Pty Limited, believing that the change to his employer was in name only. Mr Heyfron was told in early January that A. I. M. would be conducting a survey and he assisted with the survey by providing all the required documents. On 30 January 1995 there was a meeting between Mr Birrell and Mr Heyfron. Mr Heyfron was handed a copy of the A. I. M. survey result (Exhibit A11) with documents attached. Mr Heyfron was not given the complete report and the report he was shown did not include the "preamble". Mr Heyfron had not seen the result before and he commented that if Mr Birrell went back in time to assess the figures he would get a different picture. Mr Birrell, to his credit, looked at all the figures back to 1992, but he did not change his mind about what he believed to be Mr Heyfron's poor performance over the entire period. Mr Birrell did not show the report in its entirety to Mr Heyfron and this is a glaring omission on his part. At this meeting Mr Birrell offered Mr Heyfron three options. Mr Heyfron could implement a business plan, or, he was invited to sell new or used cars, or he could resign. Mr Heyfron's evidence was that he said to Mr Birrell: "I've always conducted myself professionally, but it doesn't seem like you're prepared to give me a chance to perform my job and he said if I hadn't performed it to date he didn't think I could perform it in the future." Mr Heyfron then went to Mr Strapp. Mr Strapp's recollection of this conversation was poor and I prefer the evidence of Mr Heyfron that he did speak to Mr Strapp on that day and Mr Strapp was surprised about what occurred with Mr Birrell and had said that he had always been happy with the performance of Mr Heyfron in the past, and that is not inconsistent with Mr Strapp's evidence. Mr Heyfron then went to Mr Lourensz, who was also surprised, and he apologised to Mr Heyfron and offered him a reference. A written reference was later provided by Mr Lourensz in April 1995. Mr Heyfron did not agree with the survey results in Exhibit A11. The results of the survey were: "Finance (a) The overall penetration from the Finance Department was 29.31% according to the data surveyed, which is a poor result." Mr Heyfron disagreed that the percentage was a poor result and suggested that it represented one in three sales. In relation to:- "(b) There was absolutely no penetration at Consumer Credit Insurance!!! of any of the contracts written". He accepted that no consumer credit was sold. There was no evidence put before the court that Mr Heyfron was ever actually encouraged to sell such insurance and the same situation applied to comprehensive insurance sales. Mr Heyfron, however, disagreed with the comprehensive insurance sales, which according to the survey were zero, but according to Mr Heyfron were six. In relation to the warranty insurance it was the policy of Strapp Ford to give these away. The fact that none were sold cannot be relied upon by the respondent. At the close of the meeting with Mr Birrell, Mr Heyfron was invited to go away and create a business plan to present to Mr Birrell. No time frame was scheduled for this business plan. Two days later, Mr Birrell approached Mr Heyfron to ascertain whether or not he had devised a plan. Mr Heyfron had not. Mr Heyfron's evidence was that he thought it was pointless to suggest anything and he thought the offer of a position selling new or used cars was a ploy by Mr Birrell to encourage him to resign. It was agreed between Mr Birrell and Mr Heyfron on 1 February that Mr Heyfron would take four weeks annual leave which he did. The next conversation was on 27 February 1995. The evidence is conflicting as to what was said on this occasion in relation to the position of car salesperson. Mr Heyfron did not believe the job offer was genuine. Mr Birrell said that he kept two positions open, one in new and one in used car sales. I accept the evidence of Mr Heyfron that it was his belief that the offer was not genuine. Mr Heyfron sought two more weeks leave and was granted two more weeks leave and on 7 March solicitors for Mr Heyfron, Messrs Clements Hutchins wrote to the respondent advising that Mr Heyfron will not resign, nor will he accept the offer of a position as a new or used car sales person. Mr Heyfron returned to work on 16 March 1995 to recommence in his position as business manager. Mr Birrell told him he could not continue in that role, but that he could have a position selling cars. Mr Heyfron declined the offer and left the premises. The Respondent submitted that the Applicant abandoned his employment by walking out on the Respondent during business hours and not returning. Mr Lombardi, for the Respondent relied upon the decision of Quinn v Jack Chia (Australia) Ltd (1992) 1 VR 567. Mr Lombardi submitted that the offer of a job selling new or used cars was a change in duties but did not amount to a variation of the contract of employment that was so profound or substantial as to repudiate the employment contract. I do not accept this submission. Mr Heyfron was neither qualified nor prepared to sell new or used cars. His experience and qualifications were related to the finance division of the car industry. Mr Heyfron in refusing to accept the position of car salesman did not resign. I find that the contract of employment had been repudiated by the Respondent when Mr Birrell advised Mr Heyfron that his position as business manager was no longer available to him. Mr Birrell advised Mr Heyfron of this on 16 March but it is this Court's view that he made his decision not to let Mr Heyfron continue as business manager for the Respondent on 30 January 1995. Mr Birrell's reason for terminating the employment of Mr Heyfron was his view about Mr Heyfron's performance. At no stage prior to 30 January 1995 had Mr Birrell raised the issue of Mr Heyfron's performance with him nor had he suggested to Mr Heyfron possible targets that Mr Heyfron should be aiming for. Mr Heyfron was denied the opportunity of improving. Furthermore Mr Heyfron was not given the aim report in its entirety. The preamble to the report is a critical document and I do not believe Mr Birrell could have read the preamble and not have been influenced by its contents. I find that Mr Birrell had decided to terminate the employment of Mr Heyfron as business manager at least on 30 January 1995. Mr Heyfron was denied the opportunity to defend himself as he was not given all the material that Mr Birrell relied upon in reaching this decision. In the Preamble (Exhibit A16) the author, who was not called, stated that: "Kevin feels that he has done a fairly good job in finance and a not so good job with insurances. This is perhaps confirmed by the fact that he has received little, if any, criticism of his performance in the past." In the absence of criticism or suggestions for improvement, the court wonders how Mr Heyfron was expected to meet the requirements of the new principal dealer. Mr Heyfron's evidence was that Mr Birrell said words to the effect, "If you were unable to perform in the past, you may be unable to perform in the future." This is a telling comment, and I accept that Mr Birrell made this comment. It is clear to the court that Mr Birrell did not think that Mr Heyfron was the right person for the job of business manager. Ms Ray gave evidence that in the six months that she was involved with Strapp Ford when Mr Heyfron was there, that the performance of the finance department was below par, but she made no complaint of performance to Mr Heyfron and I accept her evidence that it was not her role to do so. In summing up, I find that the Respondent did not have a valid reason for the termination of the employment of the Applicant. Nor was the applicant provided with an opportunity to respond to the allegation of poor performance. I find that the decision to terminate the employment of the Respondent was harsh, unjust, unreasonable for the reasons given, and also taking into account the duration of Mr Heyfron's employment. I am also persuaded by the comments of Mr Strapp about Mr Heyfron personally. I find that the Respondent has breached Part IV Division III of the Act, namely section 170DE(1) and (2) and section 170DC of the Act. The Applicant does not seek reinstatement and it is clear to this court that reinstatement would be impracticable given that the Applicant has found other employment and also due to the breakdown in the employment relationship between the Applicant and the Respondent. In arriving at a figure for compensation, I have taken into account the moneys earned by the Applicant with St George partnership, that being $1,725.00. I have also taken into account the manner of the termination, the period of unemployment of the Applicant and his continuing loss. I have also taken into account the fact that the Applicant has lost a secure position of employment. Accordingly, I make an order that the Respondent pay to the Applicant the amount of $16,000 and I order that there be a stay of 21 days. MINUTES OF ORDERS THE COURT ORDERS: 1. That the Respondent pay to the Applicant the amount of $16,000. 2. That there be a stay of 21 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 nine (9) pages are a true copy of the reasons for judgment of Judicial Registrar Fleming. Associate: Dated: 5 September 1995 Solicitor for the Applicant: Clements Hutchins & Co. Counsel for the Applicant: Mr N. Green Solicitor for the Respondent: Romer & Co. Counsel for the Respondent: Mr R. Lombardi Date of hearing: 21 & 22 August 1995 Date of judgment: 22 August 1995 C A T C H W O R D S INDUSTRIAL LAW - INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - complaint of UNLAWFUL TERMINATION - WHETHER EMPLOYEE TERMINATED FOR VALID REASON - ABANDONMENT OF EMPLOYMENT Industrial Relations Act 1988, Part IV Division 3 ss. 170DC, 170DE(1), 170DE(2) & 170EE. Cases: Quinn v Jack Chia (Australia) Ltd (1992) IVR 567. KEVIN GEORGE HEYFRON v STRAPP MOTORS PTY LTD No. VI 2110 of 1995 Before: Judicial Registrar Fleming Place: Melbourne Date: 22 August 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2110 of 1995 B E T W E E N : KEVIN GEORGE HEYFRON Applicant AND STRAPP MOTORS PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Fleming 22 August 1995 THE COURT ORDERS: 1. That the Respondent pay to the Applicant the amount of $16,000. 2. That there be a stay of 21 days. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.