Theodore Geros v Mitcham Automatics Vic Pty Ltd [1995] IRCA 593

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 3353 of 1995 B E T W E E N : THEODORE GEROS Applicant AND MITCHAM AUTOMATICS VIC PTY LTD Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 10 November 1995 REASONS FOR JUDGMENT The applicant is a 29 year old man who at the date of the hearing was unemployed. Between 20 February 1995 and 23 May 1995 he was employed as an automatic transmission rebuilder by the respondent, a company specialising in the rebuilding of automatic transmissions for motor vehicles. The applicant alleges that this employment was terminated in contravention of Division 3, Part VIA of the Industrial Relations Act 1988 (the Act). The respondent defended the claim by saying that the applicant lacked the skills required to perform his job. It relied on a number of performance related issues to illustrate this point as well as breaches of workplace rules prohibiting smoking in the workshop. The respondent also relied on the applicant's lack of the experience he claimed to have at interview. It was agreed by both parties that there is no formal training for the job of an automatic transmission rebuilder. The applicant commenced a 3 year adult motor mechanics course in 1993 and apart from that course between February 1992 and August 1993 he completed a number of Trade Short Courses at the Richmond College of TAFE to do with automatic transmissions (see Exhibit R3). It was further agreed that experience in rebuilding automatic transmissions is the only way one can gain the necessary expertise in the unsupervised rebuilding of different kinds of automatic transmissions. The contract of employment Richard Edmund Keown (Keown) is a director of the respondent company, specialising in the rebuilding of automatic transmissions at the trade and retail level since 1983. He is also a qualified motor mechanic with 18 years experience of his own in rebuilding automatic transmissions. Until February 1995 he did the rebuilding work for the respondent himself. In late January it was decided that the business would expand and it would employ additional staff including an experienced person to do the rebuilding work. This was to leave Keown free to run the business and deal with the customers. On 1 February 1995 an advertisement was placed in the Age newspaper (see Exhibit R1) as follows: "TRANSMISSION RE-BUILDER WANTED. Are you a Re-Builder or a Production Line Robot? Do you have control over your quality of work? Do you have a say in what you do or what you fit? Do ZF Mercedes and other imported transmissions worry you? We are looking for a motivated, reliable Re-Builder who must have diagnos- tic skills as well. Anyone can do Tri-matic's or 35's. We want some- one who cares about the finished product and takes pride in their work. Above award wages to the right person. Genuine applicants only. Send written reply to:- W.T.R. PO Box 755, Ringwood, 3134." The applicant denied seeing the abovementioned advertisement. He said that when he bought the Age newspaper on Saturday, 18 February 1995 he saw an advertisement for an automatic transmission rebuilder to which advertisement he responded on the same day and was interviewed, commencing his employment on Monday, 20 February 1995. Keown agreed that a later advertisement was placed with the Age newspaper, however, enquiries with the newspaper have been unsuccessful in locating details of that advertisement or the sending of any invoice for same. He contended that the second advertisement did seek an experienced rebuilder; his recollection being that the applicant rang him a number of times before he was interviewed and offered the position ahead of other candidates. Although the terms of the advertisement responded to are not clear, it was accepted by the applicant that the respondent was looking for an experienced rebuilder and that the position being offered was one where he was required to work alone on the stripping, cleaning and rebuilding of the automatic transmissions brought into the respondent's workshop. In other words he was not working on a production line where he might only be required to perform part of the rebuilding process and where he was under supervision. Accordingly, experience was an essential requirement. It was agreed that at interview the applicant gave the respondent a copy of a resume (which was not produced to the Court), two references (see Exhibit R2) and at least seven certificates attesting to the applicant's successful completion of a number of Trade Short Courses at the Richmond College of TAFE. The certificates showed that the applicant had completed courses in rebuilding different kinds of automatic transmissions. Keown recalled reading the certificates which included a certificate for a trade course in "Automatic Transmission - BTR Ford Facon (sic) 85LE 4 Speed". The spelling error caught Keown's eye and caused him to comment on this error to the applicant. After looking at the written material Keown recalled discussing the qualifications required and being told by the applicant that the applicant had rebuilt "millions" of the common auto transmissions such as the Borg Warner 35s and Tri-matics. Having seen the certificate with the spelling error, he also recalled asking the applicant if he had experience in rebuilding the Ford Falcon 85LE 4 Speed automatic transmission and was told "no problems". It was further alleged by Keown that the applicant agreed to strip, clean and rebuild two of the basic transmissions (that is to say Borg Warner 35s and Tri-matics) each working day between 8.00am and 5.00pm, five days per week. He told the applicant that the respondent would supply his overalls and that the workshop was "totally smoke-free". There were two reasons for the lastmentioned prohibition. One was safety because of the use of flammable items in the workshop and a fire on a previous occasion, as well as Keown's allergic response to cigarette smoke. The applicant conceded he had been asked by Keown what experience he had and responded by telling Keown what the extent of that experience was, as well as providing Keown with the resume, certificates and references which he too recalled Keown looking at. However he told Keown that he only had experience on the Borg Warner 35s, 40s and 51 C series and Tri-matics as well as building a couple of Borg Warner 65s. He denied that he had experience in rebuilding the Falcon 85LE 4 Speed transmissions saying that he had only stripped them. He also alleged that he told Keown that he had no prior experience in any 4 speed overdrive transmissions, which included Magnas and the 85LE series of transmissions. He did concede that he had agreed not to smoke in the workshop. Fraudulent misrepresentation I have concluded from the evidence given that it is not disputed that the respondent read and relied on at least the references provided by the applicant (see Exhibit R2). The first of these is a reference from Borg Automatics & Power Steering Pty Ltd dated 14 February 1995 stating amongst other things: "Theodore Geros has been employed by this company since 24.10.94, as a transmission rebuilder, building the standard Borg Warner, Tri-Matic and C Type automatics. He was called on to do some fitting in our workshop at times." The second reference is dated 5 September 1994 from Victorian Differentials & Transmission Centre and is signed by Lou Messimeris, a director saying: "I Lou Messimeris, the Director of Victoria Differentials, 1 Cochrane St., Mitcham do hereby state and declare that I have known Theodore Geros of 1 Ajax St., North Balwyn for the Last 10 Years and he has been under my employment for the last 14 Months. Theo is a strong and determined person with the ability to always complete a task which he has assigned himself. His disposition towards other people is kind, considerate and polite. He is a capable person and I have no doubt that he will demonstrate himself, as he has done on all occasions in the past, a colleague of good spirit and a very active and supportive member. I faithfully commend Theo to you with the utmost certainty that he will meet the demands of any position assigned to him." In his evidence-in-chief the applicant told the Court that he had only worked with Victorian Differentials for 7 weeks not 14 months as stated in the reference. The reference to the 14 months of employment was not an error. Lou Messimeris is his friend and the applicant admitted to approaching Messimeris and asking him to help the applicant by writing this reference overstating the applicant's period of employment with Messimeris' company. Although the Victorian Differentials business includes the rebuilding of automatic transmissions, the reference fails to precisely identify the type of employment the applicant was engaged in whilst working with Messimeris. I conclude from the applicant's admissions that he knew that the reference was false and that the purpose of obtaining the reference and giving it to Keown was to induce the respondent to employ him in the belief that he was an experienced automatic transmission rebuilder. It was Keown's evidence and I have accepted that evidence that he would not have employed the applicant if he had been aware that the applicant had only 7 weeks experience with Victorian Differentials combined with less than 4 months experience with Borg Automatic and Power Steering Pty Ltd. The applicant agreed that the job with Victorian Differentials was the first occasion he had worked on rebuilding automatic transmissions; during the course of which job he was supervised by Messimeris in the performance of his duties. He finished that job on 2 September 1994 and was unemployed until 24 October 1994 when Borg Automatics took him on. In obtaining the second job he agreed that he showed Borg Automatics the reference from Messimeris. At Borg Automatics he also worked under close supervision. He claims to have left Borg Automatics because he was offered another job by that company just to strip transmissions and "do hard parts", rather than the full rebuilding job. He agreed that the new job offered by Borg Automatics was not as a transmission rebuilder but as a mechanical tradesman assisting the person rebuilding the transmission. He refused the Borg Automatics' job offer and left. In law the effect of the fraudulent misrepresentation which induced the respondent to enter into a contract of employment was to give the respondent the right to either rescind or elect to re-affirm the contract, once the respondent was aware of the fraudulent misrepresentation. Events overtook the respondent inasmuch as the evidence shows that the respondent was not aware of the fraudulent misrepresentation until after it terminated the applicant's employment. The termination followed on from a number of incidents demonstrating to it that the applicant lacked the skill to perform the duties required of him in rebuilding automatic transmissions. The performance matters were compounded by the applicant's failure to observe the prohibition against smoking despite his undertaking to do so during his job interview. Putting to one side the reasons for the termination of the applicant's employment on 23 May 1995 and the lawfulness of the termination under the Act, if the respondent had known of the fraud, it would have been entitled to bring the contract of employment and the employment relationship to an end, relying on the fraudulent misrepresentation to do so. Apart from any misrepresentation as to an employee's skills it has long been understood that there is at the very least an implied warranty on the part of an employee employed to perform skilled work that the employee is reasonably competent for the work undertaken. If the employee holds himself or herself out as possessing a particular skill, which in fact is not possessed, the employer has a right to summarily terminate the employment because of inefficiency (see generally, Printing Industry Employees Union of Australia v Jackson and O'Sullivan Pty Ltd (1958) 1 FLR 175). In the present case, aside from the misrepresentation contained in the reference it was also alleged that the applicant had misrepresented his experience in overhauling and rebuilding 85 LE's, one of the consequences of which was that the respondent was unable to ask the applicant to rebuild this type of transmission. I am satisfied on the evidence that, given the false reference, it is more likely than not that in order to obtain the job the applicant at interview specifically informed the respondent that he had experience in rebuilding transmissions other than the basic ones including the 85LE transmission. The witnesses' credibility Apart from Keown the respondent called its receptionist, Lynette Margaret Croot (Croot) to give evidence. She was not cross-examined. Amongst other things she informed the Court that the respondent had a no smoking policy. On a "couple of occasions" prior to his termination she recalled speaking to the applicant about smoking in the workshop and in the week before the termination pointed out to him that it was dangerous to do so. Keown alleged that the applicant had been caught smoking on a number of occasions, (some of which were diarised by him and referred to in Court) and, in the days before his termination, he was again caught smoking by Keown, running away when he saw Keown approaching him. The applicant admitted the last occasion, denying that he ran away and, further, denied having smoked or having been admonished for smoking in the workshop on any other occasions. Taking all the abovementioned matters into account and the applicant's willingness to fabricate a reference to obtain employment, which he clearly lacked the experience to perform unsupervised, where there was conflict between his evidence and that of Keown I have preferred Keown's evidence. Added to this, I should also say that Keown presented as a straightforward witness who demonstrated a considerable understanding of his trade and had experience over some 18 years in rebuilding automatic transmissions. The performance related issues In the first week Keown noticed that the applicant was extremely slow in performing his duties. Over the period of his employment the applicant never fulfilled his commitment to rebuild two basic automatic transmissions in one day's work without the assistance of Keown. I accept that he spoke to the applicant about this on a number of occasions. The applicant initially told Keown, and this is not in argument, that he had difficulty in finding various items in the workshop. Notwithstanding the longer period of employment to acquaint himself with the whereabouts of parts and, to allow the respondent to relocate its parts section, the applicant's performance did not gain any momentum. The respondent also complained to the applicant on a number of occasions about the discarding of good parts from automatic transmissions he was stripping. The effect of this was that the respondent spoke to the applicant who claimed that certain parts found by Keown in the bin and referred to as "bushes" were "all stuffed man". Keown told the applicant he had to stop throwing the good parts away because "it was sending me broke". In late April Keown noticed that the delivery of parts to the respondent had increased from one delivery to two deliveries per day. As a result he asked the applicant to clear all parts with him before discarding them. The respondent provides a three year warranty or 60,000 kilometre warranty with every rebuilt automatic transmission fitted by it. If the automatic transmission is rebuilt for the trade, the warranty is reduced to 12 months or 20,000 kilometres. It was Keown's observation that the warranty returns both on large and small items increased significantly when the applicant commenced employment with the respondent. In the relevant period there was only one return for Keown's work and the work of a former employee, the rest were all attributable to work performed by the applicant. When he confronted the applicant he was told it was not the applicant's fault rather it was to do with the parts. Relying on the certificate the applicant presented to him as well as his representation that he had experience in rebuilding Falcon 85 LE automatic transmissions Keown gave the applicant one to rebuild. He found that even after three attempts at showing him how to rebuild it the applicant could not complete the task. Because of this Keown restricted the applicant to working on basic transmissions. There was a specific complaint from a trade customer concerning a Tri-matic transmission rebuilt by the applicant. Keown collected the vehicle and road tested it noting that the gear did not shift properly. When he put the vehicle on a hoist and checked it he could not initially identify the problem and, after road testing again demonstrated the same problem, the customer was told the vehicle would not be ready that evening. It appears that the applicant also tried unsuccessfully to diagnose the problem and was asked to stay and sort the problem out, choosing to go home and leave Keown and another employee working on the transmission that night. The transmission was taken apart and Keown discovered that the applicant had used incorrect sealing rings for that type of transmission. Keown told the applicant that he had to ensure that he used the correct parts. He was met with the response that it was not the applicant's "fucking problem" and it was "the kit manufacturers problem". When Keown informed the applicant that it was part of the rebuilding procedure to check the parts the applicant responded by saying "that it would take all fucking day to do it". Keown kept some diary notes, not only indicating that the abovementioned incident occurred on 12 April 1995, but also showing that on the following day Keown "warned" the applicant about smoking and the quality of the applicant's work. According to Keown the warning caused the applicant to abuse him calling him "a fucking arse-hole", "a moron" and "a fucking idiot". The Termination It was Keown's evidence that he put the final touches to what he described as a written warning on 22 May 1995. The document had been drafted earlier. However after the smoking incident with the applicant and another employee the day beforehand, Keown decided to complete the document and did so on 22 May 1995 handing it to both the applicant and the other employee on the following morning. The two pages of typed document is entitled "Notice to all staff" and is dated 23 May 1995 (see Exhibit R4). It would be fair to say that it primarily deals with duties such as emptying bins and using order numbers as well as emphasising the respondent's prohibition against smoking in the workshop. It also requires the employees to clean oil spills on the floor immediately. The last two sentences of that document state: "Please take this warning seriously. Non compliance can mean dismissal. Take this as a written warning." Keown recalled seeing the applicant read through the document and go to his work bench. The applicant denies any close scrutiny of the document. In reality Exhibit R4 has little relevance to or bearing on the events which occurred later on on the same day. The applicant was asked by Keown to service the transmission on a Falcon already on a hoist. On the previous evening Keown had cleaned the concrete under the hoist. The respondent has two large trays used for draining oil and on this occasion Keown alleges that one of these trays was available for use within 15 to 20 feet of the applicant. Instead of using the proper collection tray the applicant used a half of a 20 litre container, placing it beneath the pan. When the applicant undid the pan oil spilt on the concrete. Keown came out of his office, saw the spill and told the applicant "it was not good enough" and he should "get his act together". Keown instructed the applicant to clean up immediately. Whilst conceding the incident the applicant, on the other hand, alleges that there was no available tray for draining the oil. Keown was adamant that there was a tray and that when the applicant tried to tell him that there was not one, he went to it and dragged the tray across to the area. He then alleges that the applicant verbally abused and swore at him. The applicant then challenged Keown to sack him if he did not like his work. Keown rose to the challenge telling the applicant that he was fired. He told the applicant he could stay to the end of the pay week on Wednesday because Keown did not know how to make up the pays. However, the applicant left, returning the next day to collect the pay prepared by Croot, which pay included one week's notice in lieu of compensation. Keown felt some concern about the applicant's circumstances because he is a married man with a child. Before the applicant returned to collect his pay Keown rang a colleague at ANB Automatics to ask if that organisation had a job for someone who could be supervised on its production line. As a result of his inquiry Keown told the applicant the next day to go immediately to ANB Automatics because they could have a job for him. This proved to be a fruitful exercise because ANB Automatics offered the applicant, and he accepted, a job rebuilding power steering, allegedly on one week's trial. The applicant told the Court that after the second week he was informed that he was too slow and was dismissed because he could not perform the duties required of him. He now has an application before this Court alleging that the second employer unlawfully terminated his employment. The applicant denies that there was an empty tray to drain the oil, requiring him to improvise by using the smaller half drum. He also alleges that Keown abused him first, threatening to send him to the "dole queue". It was only after this abuse that he too responded with abuse. The applicant also claims to have said "you keep threatening to sack me why don't you do it?" This is an interesting comment because it suggests that this was not the first time the applicant was "warned" and by that stage he was foolhardy enough to dare the respondent to go ahead and terminate his employment. S170DE(1) and (2) On the evidence I find that the respondent had a valid and contemporaneous reason for terminating the applicant's employment on 23 May 1995 relying on the version of events conveyed to the Court by Keown. On his last day the applicant demonstrated not only incompetence in the draining of the oil from the transmission but a failure to follow instruction and an unwillingness to co-operate. Notwithstanding the abovementioned finding, termination without an express and relevant warning may have been regarded as harsh, unjust and unreasonable but for the evidence of the misrepresentation and the applicant's breach of any implied or expressed warranty as to his skills to perform the duties he was engaged to perform. After acquired knowledge of the employer In order to comply with the Act the respondent must establish a valid and contemporaneous reason for terminating at the date of termination, which reason justifies the termination (see Savvidis v Privileged Clothing Pty Ltd, unreported Parkinson JR, 28 November 1994, No VI-357 of 1994. See also my reasons for ruling accompanying my decision in Hayden v Golden Bowl Sports Central Pty Ltd t/a The Ultimate Sporting Club, unreported VI-453 of 1994). At common law it has long been accepted that an employer could justify a wrongful dismissal retrospectively by relying on information not known at the time of the dismissal but discovered subsequently (see Shepherd v Felt and Textiles of Aust. Ltd (1931) 45 CLR 359 and Lane and Others v Arrowcrest Group Pty Ltd, 99 ALR 45). The enactment of the Act has overtaken the common law and, arguably, despite the existence of the after acquired information, the respondent is still required to establish a contemporaneous valid reason to support termination but may rely on the after acquired evidence and, in this case, the fraudulent misrepresentation, to establish that the termination was not in the circumstances harsh, unjust or unreasonable. Lane's case was heard before the enactment of the Act and dealt with the question of whether the employee's dismissal was harsh, unjust and unreasonable in circumstances where after termination the employer discovered that the employee, Agirov, had fabricated material about his past employment when he applied for his job with the employer. The Court accepted that if the employer had known of the falsehoods it would not have employed Agirov. Despite Agirov's claim that the falsehoods came about because of financial necessity the Court found amongst other things (see page 75 et seq.) that this dismissal, because of Agirov's fraudulent misrepresentation, was not harsh, unjust or unreasonable. In the present case I have found that there was a valid reason for terminating the applicant's employment. Even if I am wrong in my conclusion on this matter and there was no valid reason in the sense that the reason offered was sound, defensible and well-founded, thereby precluding consideration of any of the matters in S170DE(2), the evidence of the lack of skill and the misrepresentation are relevant to the exercise of my discretion in granting a remedy. In all the circumstance, I see no reason to give the applicant any reward for his deception when the respondent could have summarily terminated his employment once the fraud and/or the breach of any express or implied warranty as to skill were brought to its attention. Accordingly, I dismiss the application. MINUTES OF ORDERS THE COURT ORDERS: 1. That 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 seventeen (17) pages are a true copy of the reasons for judgment of Judicial Registrar Millane. Associate: Dated: 10 November 1995 Solicitors for the Applicant: Testart Robinson & Pitts Counsel for the Applicant: Mr A. Cheevers (Solicitor) Representatives for the Respondent: Victorian Automobile Chamber of Commerce Counsel for the Respondent: Mr R. Niall Date of hearing: 27 & 30 October 1995 Date of judgment: 10 November 1995