IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 509 of 1994 BETWEEN: GARY WILLIAM ELSBERRY - Applicant AND: ABORIGINAL MUSIC CORPORATION (ABMUSIC) - Respondent BEFORE: BOON JR PLACE: PERTH HEARING DATE: 2, 3 & 4 MAY 1995 JUDGMENT DATE: 17 MAY 1995 REASONS FOR JUDGMENT This is an application under Section 170EA of the Industrial Relations Act 1988 arising out of the termination of the Applicant's employment by the Respondent. There is an associated claim for alleged unpaid salary arising out of the contract of employment. The Applicant's case is that the Respondent has breached the provisions of the Act in a number of ways. Firstly, it is said that the Respondent in contravention of Section 170DC of the Act terminated the Applicant's employment for reasons related to the Applicant's conduct and performance without first giving the Applicant the opportunity to defend himself against the allegations made. Secondly, if it is found that Section 170DC was not contravened, it is said that there was no valid reason, or valid reasons, for the termination connected with the Applicant's capacity or conduct or based on the operational requirements of the Respondent's service. Further, it is said that the termination of the Applicant's employment was harsh, unjust or unreasonable within the meaning of Section 170DE. The Respondent contends that the better view of the evidence is that the Applicant was advised of a meeting at which the decision to terminate his employment was made, and that although the Applicant chose not to attend that meeting, he was given an opportunity to defend the allegations against him within the meaning of Section 170DC. Further, the Respondent states that in any event the termination was not harsh, unjust or unreasonable as it took place for valid reasons connected with the Applicant's conduct and performance and the operational requirements of the organisation. BACKGROUND The Respondent, the Aboriginal Music Corporation (known as ABMUSIC) was incorporated in 1986 under the Aboriginal Councils and Associations Act 1976. It is an organisation set up to promote and assist aboriginal musicians and operates from premises in Bentley. ABMUSIC's 40 or 50 members annually elect a Committee of Management to oversee its affairs. There are two main branches of ABMUSIC. The branch known as ABMUSIC itself promotes and assists aboriginal musicians with tours, recordings, shows, band bookings, renting out musical equipment, the sale of recorded music and appearances at schools. The other branch is known as the Aboriginal and Islander Music School which runs music courses accredited by TAFE. The college is a project of ABMUSIC and does not have its own management committee. The Applicant is now 48 years old and was born in the United States of America. His qualifications are numerous and include a Bachelor of Arts in Economics (with a Commerce major) from the University of Oregon. He has completed a number of post-tertiary courses. Between high school and university he volunteered for the US Military and went to Vietnam. After completing his university studies in 1971 he came to live in Australia. He has been in the RAAF and has held administrative positions in various organisations. I accept on the evidence that in addition to his paid employment, the Applicant has throughout his life done a significant amount of voluntary, unpaid work, including work with indigenous people of various countries. On occasions his paid employment has brought him into contact with indigenous people. The ABMUSIC committee employed staff members to conduct most of ABMUSIC's affairs. In February 1992 the Applicant, Gary Elsberry, responded to a newspaper advertisement for the position of Administrator of ABMUSIC. Mr Elsberry was interviewed by a selection panel and was eventually offered the position. He started work at ABMUSIC on 26 February 1992. This court was presented with a number of documents purporting to show the structure of ABMUSIC with respect to the lines of authority of its staff members. These documents and the verbal evidence of the witnesses contradicted each other. In particular, there was a conflict of evidence on the question of whether the Executive Officer of ABMUSIC had authority to direct the Administrator as to what to do. It is unnecessary for me to decide that question here but I do find on the evidence that the Committee never told Mr Elsberry that he was answerable to the Executive Officer. The documents show that the Applicant was told that he was responsible to the Committee and was expected to work in close consultation with both the Executive Officer and the Dean of the Music School. When Mr Elsberry started work at ABMUSIC the organisation was experiencing financial difficulties. ABMUSIC is funded primarily through grants from various funding agencies. It also raises some money through its own fund raising activities such as the hire of musical equipment and the sale of recorded music. The funding bodies make grants for specific purposes. Mr Elsberry soon became aware that the accounting systems in place at ABMUSIC were deficient and had very little controls placed over them. For example, ABMUSIC had only one bank account and it was consequently difficult to monitor expenditure against specific grant funding. He also found that there was a large discrepancy between payroll sheets and the cash wages book. Apparently cash advances were often made with insufficient documentation raised to ascertain if such advances were deducted on pay records. In addition, the wage payments made were not sufficiently covered by the grants from funding budgets. In July 1992, following a full meeting with funding bodies and the auditors of ABMUSIC, the Committee authorised the Applicant to implement a system of financial and administrative controls. These were implemented at the suggestion of Mr Elsberry. The measures included opening separate bank accounts for specific purposes and stringent use of petty cash. It was a strict rule never to mix "income meant for one account (ie Atsic Funding Grant) with any other account (ie ABMUSIC College or ABMUSIC Incidentals Accounts)". It was acknowledged by the Respondent that Mr Elsberry's efforts at accounting were (and continued to be up to the date of his suspension) extremely successful. The financial difficulties previously faced by ABMUSIC were overcome. At its Annual General Meeting on 2 March 1993 the President presented a report (which was written at least in part by Mr Rosenthal, the Dean of the Music School, and Mr Elsberry and signed by the President) which stated that "particular mention must be made regarding the performance of Monty Rosenthal and Gary Elsberry. There is little question that but for the efforts of these two men ABMUSIC and its College would not be in existence today". The Committee adopted that report. At the time that the Applicant started work at ABMUSIC, an Executive Officer was also employed there. This person left ABMUSIC within a few months of the start of Mr Elsberry's employment. In order to save money and get ABMUSIC back on its feet financially, Mr Elsberry convinced the Committee not to employ another Executive Officer for the time being. Mr Elsberry and Mr Rosenthal between them carried out some of the functions of the Executive Officer. Also at around this time, Mr Elsberry, Mr Rosenthal and other staff members voluntarily took a temporary reduction in pay when a funding cheque took longer than expected to arrive. This pay cut was taken to help ABMUSIC out of its difficulties. Some time later these people received back pay. This matter will be dealt with in more detail below. There was no Executive Officer at ABMUSIC until Glenn Taylor started in April 1993. There was conflict between Mr Taylor and Mr Elsberry almost from the start. Mr Taylor believed that as Executive Officer he was to be in overall charge of the organisation. He received a higher salary than Mr Elsberry. Mr Rosenthal was also of the view that the Executive Officer was in charge. I have already found however that Mr Elsberry was never advised that he was responsible to the Executive Officer and up to the date of his termination he continued to maintain that he was to take directions only from the Committee. Mr Elsberry's position is that from April 1993, he received a barrage of demands from the Executive Officer, Glenn Taylor, to give him control of finances, which he refused to do "because of the system of financial control which had been agreed upon by the Committee of the Corporation in July 1992". The Applicant's position all along has been that as Administrator of ABMUSIC and its public officer, he not only saw it as his moral and contractual duty to ensure that funds were properly applied against the purpose for which they were intended, but also as his legal duty under the provisions of the Aboriginal Councils and Associations Act. He feared he risked prosecution if he did not do so. Mr Taylor denied that he wanted to take control of the finances of the Corporation and states that to the contrary, at his selection interview he insisted to the interview panel that he would accept the position as long as he was not in immediate control of the finances. However from time to time in the course of the exercise of his duties he needed some access to the funds. I accept that this is a reasonable proposition. The conflict between the two men was such that the Applicant decided it was impossible for him to continue working with the Executive Officer and on 4 November 1993 he tendered his resignation. His letter of resignation states in part that "I refuse to tarnish my good record and name by adopting attitudes, expectations and practices imposed on me by the Executive Officer ..." and ....."I am continuously hampered by immature, poorly educated decisions imposed on me by the Executive Officer. In short, the man lacks business knowledge and VISION". Mr Elsberry was however convinced by the President and the Treasurer to stay on at ABMUSIC. The conflict between the two men was not resolved. On 18 March 1994, the Vice President of ABMUSIC, Bernadette Lockyer, telephoned Mr Elsberry at work and asked if the Executive Officer's behaviour had been having any negative impact on his ability to carry out his duties. According to Mr Elsberry, he expressed reservations about conducting this conversation over the telephone whilst at work, but he was directed to answer the questions. Mr Elsberry then gave Ms Lockyer what he described in evidence as his honest view of Mr Taylor, including that he was argumentative and made unreasonable demands. Mr Taylor overheard the Applicant and, according to Mr Elsberry, came into his office and behaved in a physically threatening manner. Following this the Committee set up a sub-committee to try to resolve the conflict between Mr Elsberry and Mr Taylor. The sub-committee comprised Bernadette Lockyer and the Treasurer, Shirley Thorne. Mr Elsberry was told that everything he said would remain confidential. The Applicant gave the sub-committee his opinion of Mr Taylor, including that Mr Taylor had a lack of loyalty and respect for the Committee, that he lacked teamwork spirit, that he rejected the advice of others who were more experienced, that he lacked judgement and that he was too young, headstrong and immature. According to the Applicant, it was decided at his suggestion at this meeting that work related communications between himself and Mr Taylor should be in writing to decrease the chance of misinterpretations occurring. Neither Ms Thorne nor Ms Lockyer gave evidence about this point. Mr Thorne, the President of ABMUSIC, was not aware of any such direction but he was not at the meeting. He was not impressed (when it came to his notice) with the fact that Mr Elsberry had reduced communications with Mr Taylor to written memoranda. On 13 April 1994 the Applicant attended a committee meeting. The minutes of the meeting state "the Administrator, having completed his report, then requested that he be given an opportunity to air a few grievances that he had. Mr Gary Elsberry then asked the Committee if ABMUSIC was a racist organisation? Mr Elsberry said he believed that if the committee implements aboriginalisation policy as contained in the strategic plan, then ABMUSIC would be perceived as a racist organisation and that history had proven that policies based solely on race, led to establishment of little enclaves/ghettos which are ultimately doomed to fail. This is because major funding agencies, sponsor organisations etc. would not be willing to fund these kinds of enclaves". Mr Elsberry states that the minutes do not accurately reflect what occurred and that he had previously been requested by the Vice President to comment on the impact to finances and potential sponsorships, if an aboriginalisation policy was adopted. In his evidence Mr Elsberry stated that he was not against aboriginalisation, but thought it should be done in a thoughtful, considered way and that the person with the most demanding position, that is the Administrator, should have at least a one year traineeship. He said to the committee that he was against aboriginalisation if it was brought in too quickly. As a result of his comments at the meeting, Mr Elsberry was strongly attacked by some committee members who took offence and considered that Mr Elsberry had said that they were racist. Mr Elsberry admitted in evidence that what he had said was close to what was reported in the minutes but he did not use the words "little enclaves, ghettos". After this meeting Mr Elsberry was sent a letter by the Committee requesting an apology for his comments. The letter states in part, "It is unfortunate that your comments and behaviour continue to place you in conflict with your employers. Whilst acknowledging that this is the second official notification of unsatisfactory behaviour we would be anxious for a resolution to these matters". The Applicant wrote a five page response to the committee expressing his disappointment at the letter and noting that he had received no prior notification of unsatisfactory behaviour in writing. Mr Elsberry's reply states in part, "My comments to the committee members dealt with my professional job. Nothing more, nothing less. For an organisation to retain health and maintain growth, two separate and different financial systems do not exist - one aboriginal and one non-aboriginal. There is one system only, proven and true. And it is the financial management system that demands control and an ever present strong sense of responsibility, honesty and economic good sense." THE SUSPENSION AND TERMINATION The instances of conflict between Mr Elsberry and Mr Taylor are too numerous to go into in detail here. I accept the evidence of Mr Rosenthal that there were often arguments which became heated. Mr Rosenthal, who was friendly with both men, tried to make peace by holding fortnightly staff meetings at which to air grievances. This approach was unsuccessful. The bad feeling culminated in an incident on 11 October 1994. On the previous day, Mr Taylor had directed Mr Elsberry to pay Royal Show performers from the College Account. Mr Elsberry refused to do this because it was contrary to the accounting policy and in any event the College Account was not the proper source of funds for such payments. Mr Taylor then told Mr Elsberry to pay them from the ATSIC Account and Mr Elsberry again refused for the same reason. Mr Elsberry explained to Mr Taylor that the performers should be paid from the Australia Council Account and the cheque was expected to arrive within the next few days. On mid-afternoon on Tuesday, 11 October 1994, Mr Taylor approached Mr Elsberry with the petty cash tin. Prior to the start of the Royal Show, Mr Elsberry had given Mr Taylor the tin with $100 from the Incidental Account to establish a float for selling CD's, cassette tapes and didgeridoos at the Show. According to Mr Elsberry, the petty cash tin should have contained the $100 float plus the proceeds of sales. Mr Elsberry found that the tin contained only about $10 and asked where the money had gone. Mr Taylor handed him a piece of paper which listed the names of performers and said that he had handed out the money as part payment for their performances. Mr Elsberry handed back the tin to Mr Taylor and refused to have anything to do with it. Mr Taylor told him to do what was necessary to adjust the ledgers, and Mr Elsberry responded by saying he was not going to cook the books for him or anyone else. According to Mr Rosenthal, who overheard the incident, the Applicant screamed at Mr Taylor to "take it away, I don't want to see it, I don't want to know about it". Evidence was given at the hearing, which I accept, that the normal practice in the music industry was for performers to be paid immediately after their performance. Mr Taylor and Mr Rosenthal were concerned about delays in payment as this caused some difficulties with the performers. After this incident Mr Taylor then left a letter of suspension on Mr Elsberry's desk. The letter stated he was suspended "until such time as the Committee meet to review your position of employment within this organisation", and stated "You will be advised in writing by the Management Committee via the Executive Officer in reference to an audience and rights of appeal". The Applicant wrote a letter to the Management Committee stating that the "suspension" was unauthorised and illegal, that this followed a long history of harsh, unjust and unreasonable persecution and harassment against him by the Executive Officer, that he was prepared to present to higher judgment authorities the reasons which motivated the Executive Officer's behaviour and that he had remained constantly by his home telephone awaiting advice to return to work. The Committee held a meeting on 19 October 1994 to discuss the suspension. I accept the evidence of Mr Taylor, Mr Hayward and Mr Eggington that they believed that the Applicant had been advised of the meeting and had elected not to come. I am, however, unable to find that the Applicant was in fact advised by anyone that the meeting was to take place. Mr Elsberry denied that he was told about the meeting. Various Committee members stated that Mr Thorne had said to them that Mr Elsberry had been advised. Mr Thorne himself, however, cannot remember advising Mr Elsberry about the meeting. There is no evidence of any written notification as foreshadowed by the suspension letter. At the Committee meeting, Glenn Taylor provided a report on various incidents involving Mr Elsberry. Mr Thorne gave evidence that he suggested to the Committee that they hear both sides of the story but that they refused to do so after Mr Thorne tried twice to telephone Mr Elsberry but was unable to reach him. The Committee directed Mr Thorne as President to write to Mr Elsberry advising that his employment was to be immediately terminated, due to his "continued misconduct, examples of which are listed below". Nine examples of alleged misconduct were listed. These instances went back to 4 November 1993 and included "slanderous statements to Vice Chairperson" (which referred to the telephone conversation with Bernadette Lockyer on 18 March 1994 mentioned above), "slanderous comments to sub-committee re Executive Officer" (which referred to the confidential sub-committee meeting mentioned above) and "non-compliance with the directive from the Executive Officer re payments" (which referred to the incident on Tuesday, 11 October 1994). On the evidence I find that the Applicant was not accorded procedural fairness as required by Section 170DC of the Act. As he was not told about the meeting on 19 October 1994, he was not given an opportunity to defend himself against the allegations made against him. The Applicant must therefore succeed in his application. Even if the Applicant had been given the opportunity to appear at the meeting, however, I consider that it would have been unfair to terminate his employment on the basis of the reasons put forward by the Committee. Mr Elsberry was never given a warning that his employment was in jeopardy as a result of his behaviour on any of the instances cited. Although his actions on some of those occasions (such as locking up all cheque books while he was on holiday and temporarily reducing all communication between himself and Mr Taylor to writing) may not in retrospect have been wise, Mr Elsberry was never told that unless this behaviour stopped he would be out of a job. In any event, Mr Elsberry has an explanation for his action on each of these occasions and if the Committee did not accept his point of view, it should have warned him that his behaviour was unacceptable. Both the Applicant's contract of employment and the letter of termination provided for an appeal process whereby the Applicant could present his case to the Committee in an attempt to overturn the Committee's decision. The Applicant chose not to use this appeal mechanism. I am satisfied that it would not have provided him with an opportunity to defend himself within the meaning of Section 170DC because the decision to terminate had already been made. THE CLAIM FOR UNPAID WAGES Before Mr Elsberry started work at ABMUSIC, the Committee met and decided that the salary for the position of Administrator was to be $33,000 per annum. Mr Elsberry states that the interview panel told him that he was to receive $35,000 per annum after an initial three months' probation period. His letter of appointment states that after a three month period on $30,000 his salary was to increase to $35,000. It was put to this Court that in view of the minutes of the Committee meeting showing that the salary would be $33,000, the figure stated in the letter of appointment was clearly a typographical error. It is clear from the evidence that after the initial probationary period, the Applicant was never paid more than $33,000 per annum. For a part of 1992, the Applicant, along with the other staff of ABMUSIC, voluntarily took a temporary pay cut to assist ABMUSIC because a large funding cheque was slow in arriving. Once the cheque arrived, everyone, including the Applicant, was paid their back pay. The Applicant's back pay was calculated on the salary of $33,000 and he is now claiming back pay based on the difference between $33,000 and $35,000. The Applicant states that although he was the only one at ABMUSIC not to receive the full amount of his salary after payment of the back pay, he voluntarily accepted $33,000 because he felt ABMUSIC could not absorb the full amount. He stated that everyone knew that he was to be paid $35,000 and that it was agreed that he would receive the difference at some time in the future. As his employment was terminated without Mr Elsberry having received the back pay, it is now claimed as part of the amount owing to him as a result of the termination. Mr Elsberry's pay sheets (which he filled in himself) state that his pay level is $32,999.72 per annum. At the top of the pay sheet covering the period 1 July 1992 to 30 June 1993 the pay level of $32,999.72 is written in biro, along with his other details. In a felt pen Mr Elsberry has written along the top "* temp. voluntary reduced wage from $35,000 pa to $33,000 pa (to assist ABMUSIC)" and in the same felt pen he has written alongside the items for 29 July 1992 "(voluntarily further reduced salary to $30,000 pa)". The word "further" appears to have been inserted afterwards. The Respondent contends that the figure of $35,000 was clearly a mistake and that this is shown by the fact that Mr Elsberry was never paid more than $33,000. The Respondent says that in any event, Mr Elsberry is now estopped from claiming the higher rate after the passage of such a long period of time. I don't consider that the principle of estoppel applies in this situation. Mr Elsberry however bears the onus of proof in this matter. Despite the wording of the letter of appointment, written contracts are capable of variation, and the actions of the party since Mr Elsberry finished his probationary period point to an agreed rate of pay of $33,000. This went on for a period of some years and I consider that as ABMUSIC was by all accounts in a strong financial position by mid 1993, it is more likely than not that Mr Elsberry would have been paid at the higher rate of $35,000 at least from that time onwards if the parties had agreed on that amount. Although I have taken into account that Mr Elsberry has a strong sense of principle, I am left with some doubts as to what the salary was intended to be and on the balance of probabilities I am not satisfied that the parties intended Mr Elsberry to receive a salary of $35,000 from 26 May 1992. THE APPROPRIATE REMEDY The Applicant has applied for alternative work but remains unemployed. Although in his initial application, Mr Elsberry applied for reinstatement and compensation, it is no longer seriously contended that reinstatement is practicable. Mr Elsberry's solicitors have provided this Court with an affidavit and report from Dr Tannenbaum. On the basis of material in the medical report showing that the Applicant has been suffering from considerable stress and depression arising out of the events leading up to his termination, the termination itself and subsequent events, I am satisfied that it would not be in the interests of Mr Elsberry's health for him to be reinstated. In any event, the history of conflict between Mr Elsberry and Mr Taylor would in itself make reinstatement impracticable. It now remains for me to assess the appropriate level of compensation. Section 170EE sub-section (3) states that in working out the amount of compensation, the Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received if the employer had not terminated the employment, but the amount of compensation must not exceed six months' remuneration. The Chief Justice of this Court has indicated that it is appropriate to consider whether the Applicant's employment would have continued much longer in any event. Mr Elsberry is of the view that it was his refusal to make exceptions to the stringent system of financial controls which ultimately led to his dismissal. There were certainly instances of disagreement between the Applicant and Mr Taylor in relation to this issue. However, I find on the evidence that the areas of conflict between Mr Elsberry on the one hand and Mr Taylor and certain members of the Committee on the other hand, went wider and deeper than this. I accept Mr Thorne's assessment of the situation when he said that in all his experience with aboriginal and non-aboriginal people, a lot of situations like this develop. It was, in his view, a matter of the different way in which aboriginal people and non-aboriginal people look at things. It was a classic case of a clash of cultures and the way the Applicant on the one hand and Mr Taylor and some other aboriginal people at ABMUSIC on the other hand assessed the situation and these assessments didn't match up. I accept the Mr Elsberry was motivated by a desire to do his job properly. He followed his strict system of accounting because he felt it was his duty and because he saw it in ABMUSIC's interest to be in as strong a financial position as possible. I consider that Mr Elsberry's insistence on strict personal control of the finances of ABMUSIC clashed with the very important principle in aboriginal organisations that aboriginal people be in charge of their own affairs. Mr Elsberry's failure to accept that the aboriginal Executive Officer of the organisation should have some access to the finances of ABMUSIC would in all likelihood have meant that the employment relationship would not have lasted for many more months. The Applicant has claimed the payment of salary from the date of termination until the date of judgment, plus general damages for anxiety, stress and trauma. It is not the normal practice to this Court to award general damages for stress and trauma although I accept the medical evidence in this case that Mr Elsberry's health suffered as a result of all of the matters raised above. In the circumstances, I consider that $8,000 is an appropriate amount of compensation in this matter. It follows that the appropriate orders are 1. This Court declares that the Applicant's termination contravenes the provisions of Section 170DC of the Industrial Relations Act. 2. The Applicant's associated claim for unpaid salary is dismissed. 3. The Respondent pay to the Applicant the sum of $8,000 by way of compensation for unlawful termination of employment within 21 days of the date of the judgment. I certify that this and the preceding twenty pages (20 pages) are a true copy of reasons for judgment of Judicial Registrar Boon. Associate Date Counsel for the Applicant: Mr C Chenu Solicitors for the Applicant: Quigley Coulson Chenu Counsel for the Respondent: Mr P Vincent Solicitors for the Respondent: Aboriginal Legal Service Date of Hearing : 2, 3 & 4 May 1995 Date of Judgment : 17 May 1995 IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 509 of 1994 BETWEEN: GARY WILLIAM ELSBERRY - Applicant AND: ABORIGINAL MUSIC CORPORATION (ABMUSIC) - Respondent MINUTE OF ORDERS BEFORE: BOON JR PLACE: PERTH DATE: 17 MAY 1995 THE COURT ORDERS AND DECLARES THAT: 1. The termination of the Applicant's employment contravenes the provisions of Section 170DC of the Industrial Relations Act, 1988. 2. The Applicant's associated claim for unpaid salary is dismissed. 3. The Respondent pay to the Applicant the sum of $8,000 by way of compensation for unlawful termination of employment within 21 days of the date of this order. NOTE: Settlement and entry of Orders dealt with by Order 36 of the Industrial Relations Court Rules C A T C H W O R D S INDUSTRIAL LAW - Termination of employment - claim for unlawful termination - whether procedural fairness - claim for unpaid wages - compensation. INDUSTRIAL RELATIONS ACT 1988, Ss 170EA, 170DC, 170DE, 170EE, ABORIGINAL COUNCILS AND ASSOCIATIONS ACT GARY WILLIAM ELSBERRY v ABORIGINAL MUSIC CORPORATION (ABMUSIC) - WI 509 of 1994 BEFORE: BOON JR PLACE: PERTH DATE: 17 MAY 1995