CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - No VALID REASON - COMPENSATION - PROCEDURAL FAIRNESS - CONDUCT AND PERFORMANCE - UNFAIR TERMINATION - REINSTATEMENT IMPRACTICABLE - Short period of employment - Pregnancy - Anxiety and Mental Distress Industrial Relations Act 1988 ss 170DC, 170DE, 170EE James Lewis Aitken -v- Construction, Mining, Timberyards, Sawmills & Woodworkers Union of Australia - WA Branch (WI 328 of 1995, unreported, Lee J, 7 Auguust 1995) SOPHIE CAROLINE LETHERN -v- BERESFILED PTY LIMITED t/as TITAN FORD BROOKVALE No. NI 1212 of 1994 COURT: MCILWAINE JR PLACE: SYDNEY DATE: 3 OCTOBER 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. NI 94/1212 BETWEEN: SOPHIE CAROLINE LETHERN Applicant AND: BERESFIELD PTY LIMITED T/AS TITAN FORD BROOKVALE Respondent REASONS FOR JUDGMENT This is an application under Division 3 of Part VIA of the Industrial Relations Act 1988 for the unlawful termination of employment of Sophie Caroline Lethern by her former employer, Beresfield Pty Limited trading as Titan Ford, Brookvale. I am satisfied that this matter has been referred by the Court to mediation and that this was unsuccessful. The matter is properly before me. The applicant commenced work with Beresfield Pty Limited trading as Titan Ford (hereinafter called "Titan Ford") on 27 June 1994. Her services were terminated by letter dated 30 November, 1994. The Application was filed on 1 December 1994 and is written within time. At an early stage of the proceedings Mr Ridley, solicitor for the applicant, made an application to amend paragraph 21 of the claim to include a comma after the ticked box 'Compensation' and to then read "and damages under the accrued jurisdiction of the Industrial Relations Court". Particulars of the amount claimed under that heading were finally stated to be:- 1. Reasonable notice period and the applicant claims two months' notice and 2. Mental Anxiety and Stress, the applicant claims $6,000. This, of course, raised the issue of whether the claim would be in excess of $10,000 and in this regard I was informed by Mr Ridley that the applicant abandoned any claim in excess of $10,000. Mr Rothman, counsel for the former employer, put to me on behalf of the respondent that I had no power to hear a claim of this nature. I consider that there are a number of views in the Court on this issue and that issue to my knowledge has not yet been finally determined by a Judge of the Court or by the Full Court. Nevertheless, because the applicant was pregnant and wanted to go on with her case, it seemed to me to be best to deal with the matter on the basis that I did have jurisdiction to hear that aspect. I did this because the claim would be limited to an amount of not more than $10,000. The applicant gave evidence to me that she was born on 18 August 1966 and at the present time is 29 years of age. At the time of the hearing she was working as a canvasser/telemarketer on a part-time basis. The applicant gave evidence that about June 1994 she had seen an advertisement in the Sydney Morning Herald offering three positions as trainees with "Titan Ford", Brookvale. These positions included finance and sales. The applicant then telephoned the number and made an appointment for an interview. At the interview she saw Mr Peter McHeyser, Matthew Hale, Rachel Leggott and Don Jackson. Mr McHeyser was introduced as the dealer principal and the interviews took place on either a Tuesday or Wednesday. On the Friday of that week the applicant rang and spoke to Peter McHeyser, who agreed that she should start. The applicant joined "Titan Ford" on 27 June 1994 on a six month traineeship basis with four other trainees. Some of the other trainees did not last as long as the applicant in her employment. The applicant testified that she worked from 8.00 am to 6.00 pm and during the day would follow the other salesmen around. "During the third week of July 1994 Rachel Leggott, my main instructor, had two days off." During those two days the applicant commenced selling new cars on her own and was thereafter permitted to conduct the sales. During July 1994 she had a conversation with Matthew Hale. He said: "I need help in used cars". I said: "I do not like the area but I'd like to help". The applicant then worked 21 days straight in used cars. At the end of those 21 days I had a conversation with Don Jackson and Matthew Hale. I said "I hate used cars. Will you give me a chance at new cars." Mr Jackson said "Yes". The applicant gave evidence that during mid August 1994 she received instructions in a new Ford product called 'Red Carpet Options'. The applicant also testified that to get off the traineeship and on to full time wages she had to sell ten cars a month. Her view was that in September 1994 she sold twelve cars and that "during that month I sold the second highest number of cars in the "Titan Ford" dealership. I think I sold approximately three 'Red Carpet Options' in that month". During October 1994 the applicant sold and delivered fourteen new cars. On 26 October 1994 Mr Peter McHeyser was sacked. He was the dealer principal and he was replaced by Mr Frank Perram in that position. It is acknowledged by both sides that the applicant was in a personal relationship with Mr McHeyser at that time. During the first two weeks of November 1994 the applicant was feeling very sick as a result of being pregnant, she was often nauseous and had severe stomach cramps. On Saturday 19 November, 1994 she said to Mr Don Jackson, the Sales Manager, "I'm pregnant, I need to go to hospital". He said "Oh, congratulations. I hope it all goes well at the doctor's". I'm satisfied that there is an overlay to the factual situation that was presented to me by both parties. This relates to the fact that Mr Peter McHeyser, who continues in a relationship with Miss Lethern, was formerly the dealer principal of the company and has been dismissed. I understand he may have separate proceedings against the company in another jurisdiction in Western Australia. On the other hand, so far as the respondent is concerned I am convinced that the management of the dealership was receiving complaints from at least the female staff about Miss Lethern. Some of these complaints were based on the fact that the Applicant had a relationship with Mr McHeyser. In the view of the other salespersons. Miss Lethern had been receiving additional assistance from him which was not available to them in completing their sales. I do not think that I have to form a concluded view on this particular issue. At the time Mr McHeyser was the dealer principal and entitled to make such decisions, he gave evidence that he would assist all members of the staff to complete sales and denied he was assisting her improperly. These complaints were not raised with him at the time. As sometimes happens in these types of cases the most neutral evidence and probably, therefore, the one in which reliance can best be placed from a former employee who has been subpoenaed to give evidence. Subject in those cases to the opportunity being given and/or taken by counsel to question the motivation of that kind of witness, in giving testimony. I was most helped by the evidence of Mr Phillip Andrew Gruppelaar. Mr Gruppelaar, currently the Finance Manager of Parramatta Nissan and Hyundai, told that he worked at "Titan Ford" at Brookvale between the period June 1994 and February 1995. He first started at "Titan Ford" as the Finance Manager and after a period of time he was made Sales Manager and then later on he was returned to the Finance Manager's job. He confirmed that he was Sales Manager in September and October 1994. It seems to me that at that time in the dealership there would have been considerable tensions and an example of this was as follows: "Do you recall the applicant, Sophie Lethern working at Titan?---yes. Do you remember when she worked there?"---She was there when I started and left in October or November. And who was the dealer principal when you started work at Titan?---Peter McHeyser. And was he there throughout your employment?---No. He left in early October I think and Frank Perram took over. Were you ever told why he left?---No, I was absent when he left. THE J. REGISTRAR: "Sorry, you were absent?"---I'd gone out for an hour." MR RIDLEY: "You're gone out for an hour and he left.---Yes" It seems to me that this emphasises the speed with which the staff turnovers happened in the dealership at this time. The dismissal of Miss Lethern is dealt with as follows: "MR RIDLEY: Did she leave while you were there?---Yes, she did. Do you know under what circumstances she left?---I was - I dismissed her and I don't remember the exact date but for ..... THE J. REGISTRAR: You dismissed her? --- Yes, I was a Sales Manager, I'm sorry I dismissed her on the instruction of the dealer principal. MR RIDLEY: Frank Perram?---Correct." Further ...... MR RIDLEY: Taking you to the circumstances surrounding Sophie's dismissal, did you have any conversations with any of the management at Titan? ---She was discussed on a few occasions. What was said in those conversations?---The first conversation revolved around--- Sorry to interrupt. When was this? Do you remember roughly when the conversation was?---All of this would have taken place over the period of two weeks. I can't remember the exact dates. Initially we'd had complaints from other staff members that they didn't believe that Sophie was doing her job properly. She was taking advantage." There was disputed evidence submitted by the parties as to the results of the "QCP's" which were surveys conducted by Ford of its customers, independently of the dealership. Mr Gruppelaar in his evidence says as follows: "I didn't actually see the results. I was lead to believe they we were particularly poor, that Frank Perram, the dealer principal, said that he wasn't prepared to have anyone in his new car department with results that were that bad because it did affect the dealership and he asked that I transfer Sophie to used cars." Further on Mr Gruppelaar indicated that a result between 8.5 and 9 in the QCP's would be what was expected. Evidence was to the effect that in two months Sophie Lethern achieved the result of 8.5 and 8.92. Mr Gruppelaar gave evidence that the only time he had warned Sophie Lethern about her performance was when he said he was transferring her to used cars on the Saturday. He further said to her that he told her: "that the reports came through said you have been performing particularly badly". He went on: "It wasn't acceptable to us, we expected a far higher standard, subsequently I was going to transfer her". To the question "Did you give her the opportunity of saying anything" the answer was "She said a few things. She said she wanted to see the reports". "She asked to see the reports?" "She did, yes. I hadn't actually seen them myself. I said that Frank Perram had them and he was away until Monday and I didn't have any way of getting them for her". He confirmed that she then went to see the General Sales Manager, Mr Jackson, and was allowed to stay in new cars until Monday. Mr Gruppelaar also testified: "There were complaints made to me regarding the fact that Peter was assisting Sophie over and above what was considered normal". It is also clear on Mr Gruppelaar's evidence that there was never any discussion with Miss Lethern or Mr McHeyser about the suggestion by staff that she had been getting too much assistance from him. I am satisfied that Mr Grupelaar carried out the termination of the employment of Miss Lethern. I accept her evidence that on Wednesday 30 November 1994 Mr Gruppelaar handed her a letter which is now part of Exhibit 1 in these proceedings. I regard the manner in which this was done as lacking elementary procedural fairness. In effect Mr Gruppelaar never had the actual reports and simply acted on instructions. I'm also not convinced that there was a valid reason for the termination of Miss Lethern and accordingly I find that the company is in contravention of both Section 170DC and 170DE(1). At an early stage of the proceedings Mr Rothman conceded that the reinstatement of the applicant was impracticable. It is obvious that given the history of this matter and when account is taken of the evidence of her former female colleagues against her that reinstatement is also impracticable from the point of view of the applicant. I find that reinstatement is impracticable. Miss Lethern gave evidence that her termination from "Titan Ford" and subsequent unemployment "have caused me a lot of mental anxiety, stress and worry. Such anxiety, stress and worry has also increased my fear that I'll lose my unborn baby". In relation to this issue, which is the basis of a claim for additional damages under the accrued jurisdiction of the Court, I have given careful consideration to the remarks of his Honour Justice Lee, with which I respectfully agree: "The Court will consider the detriment occasioned to the employee by the employer's contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences. Division 3 of the Act provides the context in which s.170EE is to be construed. It includes provisions intended to protect the dignity of an employee, in particular, s.170EA provides an employee with a right to seek redress in respect of a breach of the Act and s.170EE provides the entitlement to receive compensation as the remedy for such a breach, characteristics of a statutory tort. Therefore, in some cases principles relevant to the assessment of damages in tort may provide assistance in assessing the compensation to be paid under s.170EE(2). That is to say it may be appropriate to include in the measure of compensation to be paid pursuant to s.170EE(2) a sum sufficient to compensate an employee for mental distress or injured feelings caused by a harsh, unjust or unreasonable termination of employment (See: Whelan v Waitaki Meats Ltd [1991] 2 NZLR 74 at 90)." If guidance is sought from the measure of damages applied in contract for the breach of an employment contract by wrongful dismissal, damages may be awarded for the breach of an implied term that an employer would not so breach the contract to cause vexation, mental distress, disappointment or frustration to an employee where such an adverse consequence for the employee may be said to have been within the reasonable contemplation of the employer and the employee. (See: Cox v. Philips Industries Limited [1976] 1 WLR 638; Whelan v. Waitaki Meats Ltd; See also: Heywod v. Wellers [1976] QB 446; Watts v. Morrow [1991] 1 WLR 1421 per Bingham LJ at 1445; Baltic Shipping Company v. Dillon (1993) 176 CLR 344 per Mason CJ. at 361-364). It is also appropriate to keep in mind that the purpose of the Act in providing for compensation to be paid to an employee for an employer's failure to abide by the terms of the Act is not only to redress a wrong done to other employee but, in the public interest, to instil greater awareness of, and adherence to, the provisions of the Act. A measure of compensation which addresses the consequences caused by conduct that has breached the Act assists to meet that purpose." Thankfully, Miss Lethern's fears about her baby were not well founded. During the course of the proceedings the matter had to be adjourned to allow her to have her baby. I was pleased to see that the balance of the proceedings were completed with Mr McHeyser caring for the baby at the back of the Court whilst Miss Lethern conducted her case. In all the circumstances at this stage I am not satisfied that there is sufficient evidence to enable me to make any additional award of damages for mental stress or injured feelings of the order of $6,000 claimed by the Applicant. However, I propose to take account of this factor in calculating the amount of compensation. The weekly wage before her termination was $425.20. In addition the applicant was entitled to a fully maintained company vehicle together with petrol to the value of $120.00 per month. This is a substantial benefit which was lost to the Applicant. The Applicant also lost Superannuation and the opportunity to earn commission. I am confining my award to the amount which I believe is appropriate given the circumstances. I am also not satisfied that there has been any additional contract arrangement established. I do not find that there is any breach of contract to found an additional award of damages. On the evidence before me it is not clear exactly what sales results, including QCP's, Titan Ford expected the applicant to achieve in November. It is essential for sales managers to put clearly to the sales persons under their control the results which they want the representatives to achieve and that failure to achieve those results will mean dismissal. preferably, but not essentially, this should be done in writing. I am not satisfied on the evidence before me that either was properly done in this case. The time for "Titan Ford" to do this, as I find it was not done before then, was at the meeting of 30 November, 1994. Instead, the applicant was dismissed. It may well have occurred, if the respondent had acted appropriately, that within a relatively short period of time the applicant might have been properly dismissed. I think that a period of a further two to four months may have been sufficient to enable her to demonstrate her capabilities in achieving the desired level of sales. I would be prepared to allow this period because of the difficulties I would imagine of selling cars during the Christmas/New Year/January holiday period and taking into account her pregnancy. On the other hand the respondent through its Counsel has submitted that the compensation should be minimum for reasons as follows:- (a) the necessity at the time to reduce the number of staff in any event and the poor performance, financially, of the dealership; (b) the fact that the Applicant was trained so as to be employable by the respondent in a short period of time and given the benefit of greater remuneration notwithstanding her seeming failure to satisfy the objective requirements of that higher salary; (c) the shortness of the period of employment of the employee (5 months); (d) the fact that the Applicant, herself, was seeking employment outside of the respondent and has received an offer of alternative employment when and if she returns to the workface; (e) the likelihood that the Applicant would not have continued with the respondent in any event; (f) the fact that the respondent had intended and would have, but for the action of the Applicant, not dismissed the Applicant but rather transferred her to used cars." The amount of damages that I consider to be appropriate is $8,500.00. In making that assessment I have taken account of the strong submissions which were put to me on behalf of the respondent by Mr Rothman on this issues to why I should not award the maximum amount. I certify that this and the preceeding twelve (12) pages are a true copy of the Reasons for Judgment of Judicial Registrar McIlwaine. Associate: Caroline STERNBERG Date: 3 October 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. NI 94/1212 BETWEEN: SOPHIE CAROLINE LETHERN Applicant AND: BERESFIELD PTY LIMITED T/AS TITAN FORD BROOKVALE Respondent BEFORE: MCILWAINE JR PLACE: SYDNEY DATE: 3 OCTOBER 1995 MINUTES OF ORDER I find: 1. The respondent has contravened section 170DC Industrial Relations Act 1988 2. The respondent not to have had a valid reason for the termination of the applicant and to have contravened section 170DE(1) Industrial relations Act 1988. 3. Reinstatement is impracticable. THE COURT ORDERS: 1. The respondent to pay the applicant compensation of $8,500.00 2. That amount is to be paid within fourteen (14) days of today. 3. Exhibits may be returned at the expiration of twenty-one (21) days from today.