Craig Martin Jontvedt v Silverwood Pty Ltd trading as PHM Survey Centre [1996] IRCA 55

DECISION NO: 55/96 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - alleged UNLAWFUL TERMINATION - whether PROCEDURAL FAIRNESS - whether VALID REASON for termination - APPLICATION dismissed. INDUSTRIAL RELATIONS ACT 1988 Ss 170DC, 170DE(1), 170DE(2), 170EA, 170EDA(1), 170EE(2) Nicolson v Heaven and Earth Gallery Pty Ltd (1995) 126 ALR 233 Kennefick v Australian Submiarine Corporation (1995) 131 ALR 197 CRAIG MARTIN JONTVEDT -v- SILVERWOOD PTY LTD trading as PHM SURVEY CENTRE BEFORE: RITTER JR PLACE: PERTH DATE: 16 FEBRUARY 1996

IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 95/2202 BETWEEN: CRAIG MARTIN JONTVEDT - Applicant AND: SILVERWOOD PTY LTD trading as PHM SURVEY CENTRE - Respondent MINUTE OF ORDERS BEFORE: RITTER JR PLACE: PERTH DATE: 16 FEBRUARY 1996 THE COURT ORDERS THAT: 1. The application be dismissed. NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 95/2202 BETWEEN: CRAIG MARTIN JONTVEDT - Applicant AND: SILVERWOOD PTY LTD trading as PHM SURVEY CENTRE - Respondent BEFORE: RITTER JR PLACE: PERTH DATE: 16 FEBRUARY 1996 REASONS FOR JUDGMENT This is an application under Section 170EA of the Industrial Relations Act 1988 ("the Act"). The applicant alleges that the respondent terminated his employment in contravention of Part VIA of Division 3 of the Act. The respondent denies this and asserts that the applicant's employment was terminated for a valid reason and in compliance with Section 170DE of the Act. The applicant seeks compensation pursuant to Section 170EE(2) of the Act, contending that his reinstatement would be impracticable. The applicant gave evidence in support of his case. With the consent of the respondent, the applicant also tendered an affidavit of Mr Tony Nicholls, who resides interstate. Evidence for the respondent was given by Mr Doug Lloyd, the managing director of the respondent, and Mr Michael Lindroos, Mr Edward Lennie, Mr David Taylor and Mr David Liddiard, all of whom are employees of the respondent. The respondent conducts a business which involves the distribution and sale of navigation equipment. The applicant commenced employment with the respondent on 4 October 1994 as the marine and aviation products manager. The applicant's duties included the marketing and distribution of Magellan marine and aviation products including navigation equipment to dealers. The applicant was also required from time to time to attend interstate and intrastate sales and exhibition shows. At the shows the respondent would promote navigation equipment. There is no dispute that the applicant's employment was terminated on 28 September 1995. On that date the applicant was given a letter of termination by Mr Doug Lloyd, the managing director of the respondent. Omitting formal parts, the letter was as follows: "Further to our discussion on Monday 25 September concerning the disappearance of a Magellan 5000 DLX GPS receiver, serial no. 1H006320, and your explanation of it being sold for cash at the Sydney Boat Show, 27 July - 2 August, and this cash being retained by yourself and David Liddiard and not returned to this company until questioned on Monday 25 September, I have deliberated on the motives of your actions and conclude that your actions were beneficial to yourself and against this company and therefore I have no option but to dismiss you from employment with immediate effect. Your salary to date with two weeks notice will be paid. Please return immediately your mobile phone and your keys." The reference to a "5000 DLX GPS receiver" is a reference to a piece of navigation equipment involving a global positioning system. The piece of equipment was also referred to as a "NAV 5000 DLX" in the evidence. It is necessary to refer to the background to and evidence about the sale of the NAV 5000 DLX at the Sydney Boat Show. The applicant and Mr Liddiard attended at the Sydney Boat Show for the respondent. The Sydney Boat Show took place from 27 July to 2 August 1995. The respondent had an exhibition stand at the boat show. At the exhibition stand navigation equipment was displayed. Employees of the respondent who attended at interstate boat shows were provided with a monetary advance. The advance was to cover expenses including a $55 per day food allowance and other incidentals such as taxi fares. The hotel expenses and air fares of the applicant and Mr Liddiard were also paid for by the respondent. These were generally paid prior to the employee travelling interstate, although in this instance the respondent's cheque in payment of the hotel accommodation of the applicant and Mr Liddiard did not arrive until part way through their stay at the hotel. After the completion of the boat show, the applicant was to go on holidays to Queensland with his girlfriend, Ms Amanda Penfold. Ms Penfold travelled by air from Western Australia to Sydney to join the applicant for the commencement of the holiday in Sydney. Ms Penfold had relatives in New South Wales with whom she stayed during the period of the boat show. The air fare of Ms Penfold cost $352. This air fare, together with that of the applicant and Mr Liddiard, was booked with the travel agent of the respondent. In doing this, the respondent incurred an expense which was solely the responsibility of the applicant and/or Ms Penfold. The respondent was aware of and did not take issue with this. There was a dispute, however, as to the way in which the respondent was to be reimbursed for this. The evidence was that not long before the applicant's travel to Sydney, the respondent had introduced a system of individual accounts for employees with the respondent. This system was introduced by Mr Taylor. Mr Taylor commenced full time employment with the respondent in June 1995, as an accountant. He explained the account system as creating a loan account in the name of an employee for the amount of money that they took by way of an advance prior to a show. He said that on the return of the employee, they would complete an expense report detailing how the advance was spent, attaching receipts and other necessary supporting evidence. An analysis would then be done of the report. There would then be a debiting of the appropriate account in the general ledger and a transfer of the amount out of the employee's advance account. If the employee spent more than the advance, a reimbursement cheque for the difference was drawn and similarly, if the employee did not use all the money advanced, a refund cheque would be provided with the expense report. With respect to the air fare of Ms Penfold, the $352 was recorded by Mr Taylor in the personal account of the applicant with the respondent. This was recorded on a cheque requisition for the air fares which included the air fare of Ms Penfold. Mr Taylor therefore understood that this amount, together with the cash advance received by the applicant before the Sydney Boat Show, would form part of the applicant's loan account with the respondent, which would be reconciled after an expense report was completed at the end of the show. The applicant said that he understood the situation somewhat differently. The applicant said that the $352 placed on his account with the respondent would be deducted from his wages after he returned from holiday. He said that he understood this from a discussion with Mr Taylor. He said that if, when an account was reconciled, the employee owed the respondent money, it would be taken out of his wages. The applicant did not sign any authority entitling the respondent to deduct such amounts from his wages. Mr Taylor did not accept that he explained the account system to the applicant in this way. I prefer Mr Taylor's evidence on this point. Mr Taylor presented as a person of some experience in workplace accounting. I do not think that he would have created an account system, involving a possible deduction from employees' wages, without signed authorities having been obtained. Further, I do not think that Mr Taylor would have explained the account system to the applicant in the way in which the applicant alleges. Therefore I find that, in effect, the applicant received an advance of $352 prior to the Sydney Boat Show, which was recorded in his loan account with the respondent and that the applicant knew this. In addition, the applicant received a cash advance of $540. This comprised eight days of the $55 daily meal allowance and $100 for incidentals. The total amount advanced to the applicant prior to the Sydney Boat Show was therefore $892. One of the responsibilities of the applicant prior to the Sydney Boat Show was the ordering of equipment to be displayed. A number of items of equipment including two NAV 5000 DLX's were shipped by the respondent to the applicant, care of the hotel in which the applicant was staying in Sydney. The transportation of these items was effected by a consignment note. At the Sydney Boat Show, one of these NAV 5000 DLX's was sold by the applicant and Mr Liddiard to a Mr Nicholls. The policy of the respondent was that generally items of equipment were not to be sold by the respondent directly to members of the public at a boat show. If a member of the public wanted to purchase a piece of equipment they were referred to retail dealers of the equipment. In this instance, there was a retailer also exhibiting at the boat show. When Mr Nicholls advised the applicant that he was interested in purchasing a NAV 5000 DLX, the applicant referred Mr Nicholls to the dealer. However, Mr Nicholls returned later saying that he was dissatisfied with the service he had received from the dealer and that he wished to purchase the NAV 5000 DLX from the applicant. The applicant was then placed in a difficult position but agreed to sell a NAV 5000 DLX to Mr Nicholls. The piece of equipment sold was one of those sent to the applicant in Sydney by the respondent. Mr Lloyd conceded that the applicant had some discretion in deciding whether or not to sell the NAV 5000 DLX to Mr Nicholls. Mr Lloyd did not take issue with the decision of the applicant to sell the NAV 5000 DLX to Mr Nicholls. It was conceded that the applicant had been placed in a difficult position by the lack of service from the dealer that Mr Nicholls reported. Mr Nicholls paid for the NAV 5000 DLX in cash. The sale price was $1,600. Mr Nicholls gave this amount to Mr Liddiard, whilst the applicant prepared the piece of equipment for Mr Nicholls' use. Mr Nicholls requested a receipt. Mr Liddiard was unable to provide a formal receipt as he had left such sales documents at the hotel. However, he wrote out a receipt on the back of one of his business cards and gave this to Mr Nicholls. He also advised Mr Nicholls to post the warranty card that came with the NAV 5000 DLX to the respondent so that the twelve month warranty for the equipment could be validated. Mr Liddiard received and retained the $1,600 received from Mr Nicholls. Neither Mr Lloyd nor any other employee of the respondent was advised of the sale of the equipment to Mr Nicholls. As stated above, at the completion of the Sydney Boat Show the applicant was to go on holidays directly from Sydney to Queensland. Prior to his departure, the applicant discussed with Mr Liddiard the disbursement of the money received from Mr Nicholls. The applicant advised Mr Liddiard that he had incurred expenses on this trip of $650 in excess of the amount which had been advanced to him prior to his departure. The applicant's calculations did not take into account the $352 advanced for Ms Penfold's air fare. Nor did the applicant advise Mr Liddiard of this advance. The applicant discussed with Mr Liddiard being "reimbursed" for the $650 he had spent, from the proceeds of sale of the NAV 5000 DLX. Mr Liddiard agreed to this, although as he acknowledged in evidence, he had no authority to do so. All expenditure of company money had to be approved by Mr Lloyd. Mr Liddiard said that he agreed to the applicant's proposal because it seemed a fair request. The applicant had advised him that there had been expenditure on company business which would be reimbursed. Mr Liddiard said that he had a lot of time for the applicant but knew there was some friction between the applicant and Mr Lloyd and Mr Taylor in regard to expenses. He knew from the applicant that it was possible that he would leave the respondent and work for somebody else. Mr Liddiard said that his motivation in agreeing to the applicant's proposal was to keep the applicant happy with hopefully this leading to the applicant staying with the respondent. In this way, he saw that there would be a benefit for the respondent. Both the applicant and Mr Liddiard agreed that Mr Lloyd was not to be informed of what occurred. The applicant signed and gave to Mr Liddiard an IOU for the $650. It was agreed that Mr Liddiard would keep the balance of the sale funds and that he would not put the sale through the books until the applicant had returned from his holiday, put in an expense claim with the respondent and had received the $650. This amount, together with the balance which Mr Liddiard had retained, would then be given to the respondent together with the relevant sales documents. Both the applicant and Mr Liddiard held mobile phones and there was no reason why Mr Lloyd could not be contacted to seek his approval of the transaction. There was no satisfactory explanation given either by the applicant or by Mr Liddiard as to why Mr Lloyd was not contacted to seek his approval for the payment of the $650 to the applicant. I infer that the reason for Mr Lloyd not being contacted was that the applicant and Mr Liddiard were concerned that Mr Lloyd would not approve the transaction. With respect to the applicant, there were two reasons for this. The first was that the claimed $650 excess did not include the $352 advanced for Ms Penfold's air fare. The second was that it was likely that Mr Lloyd would have had some difficulty with respect to the amount of expenses claimed. When the applicant returned from his holiday he submitted an expense report. Included in this was an expense of $31.50 for three Pina Colada cocktails purchased at 12.53 am. The applicant said in his evidence that these drinks were purchased after a dinner involving the applicant, Mr Liddiard and three men from Quality Marine, the dealer of the respondent in Sydney. The applicant explained that the group had been out to dinner for which everyone had paid for their own dinner but that the men from Quality Marine had bought some bottles of wine. Due to this, the applicant purchased the Pina Colada's. Later, an issue was raised at work as to whether the Pina Colada's purchased in fact included one for Ms Penfold. The applicant denied this to his employer and in his evidence. However, the evidence of Mr Liddiard was that he recalled an occasion when he and the applicant were present at a cocktail bar with Ms Penfold when the Pina Colada's were purchased. Whilst Mr Liddiard could not identify the precise time when such drinks were purchased, he said that this occurred about midnight or in the early morning in a hotel cocktail bar, the name of which he could not recall. He said that he did not know anything about an expense claim subsequently put in by the applicant for $31.50 in relation to Quality Marine. The applicant's version of what had occurred in relation to the purchase of these drinks was not specifically put to Mr Liddiard either in examination in chief or cross examination. Further, Ms Penfold was not called to give evidence on this issue. I prefer the evidence of Mr Liddiard on this issue to that of the applicant. I say this having regard to the way in which both witnesses gave their evidence about the matter. Mr Liddiard's evidence was given in a fair manner towards the applicant and I have no reason to doubt it on this issue. I therefore find that one of the expenses ultimately claimed by the applicant was an amount of $31.50 which was used to purchase drinks for the applicant, Ms Penfold and Mr Liddiard. Such an amount could not be the subject of any reimbursement by the respondent. Therefore, insofar as the $31.50 comprised part of the estimated $650 worth of expenses which the applicant advised Mr Liddiard that he had paid, the applicant misrepresented the position to Mr Liddiard. Further, the applicant would have known that if Mr Lloyd was aware of this situation, then he would not have approved an amount of the proceeds of the sale of the NAV 5000 DLX being given to the applicant. Another contentious item of expenditure was an amount of $290. This amount was spent by the applicant in payment of a dinner (plus tip) which was attended by the applicant, Mr Liddiard and two representatives from an organisation called Brookes and Gatehouse at a seafood restaurant in Sydney. The applicant explained that Brookes and Gatehouse was a large electronic yacht equipment distributor in Australia. The applicant suggested that Mr Liddiard had known the men from Brookes and Gatehouse and arranged the dinner. The applicant said that he (the applicant) paid for the dinner because it "just came over that way". Brookes and Gatehouse was not an organisation with which the respondent had previously done business, nor was there any agreement reached with Brookes and Gatehouse to conduct future business with the respondent prior to or at the dinner. It seems, however, that some proposal for Brookes and Gatehouse doing business with the respondent was discussed at the dinner. It was agreed that Mr Lloyd was frugal in his attitude to expenditure. The applicant agreed that the only occasion of which he was aware that several hundred dollars had been spent on a meal was when Mr Lloyd and the applicant had entertained the respondent's main suppliers from America. In his evidence, Mr Liddiard said that the men from Brookes and Gatehouse who attended at the dinner were people that the applicant had spoken to at the boat show. Mr Liddiard said that they were not his clients and that the applicant had arranged the dinner. Again, on this issue, I prefer the evidence of Mr Liddiard. I think that both the applicant and Mr Liddiard knew that the amount of the expenditure on the Brookes and Gatehouse dinner would concern Mr Lloyd. I infer that this was another reason why Mr Lloyd was not contacted concerning the payment of the $650 to the applicant. The evidence was that when Mr Lloyd ultimately found out about the level of this expenditure he was angry. The applicant sought to justify his speaking to Mr Liddiard about the $650 "reimbursement" and not Mr Lloyd on the basis of his employment contract. Clause 9 of the contract states "For advise [sic] on Marine Products David Liddiard will be your point of contact in PHM. David will visit Magellan and IMTEC in Chicago next week and return with full Product Knowledge". I am satisfied that the applicant did not genuinely believe that this term was a proper basis for asking Mr Liddiard for the $650 and not contacting Mr Lloyd. The applicant returned to work after his holiday on 21 August 1995. The equipment of the respondent that had remained unsold at the Sydney Boat Show was packed up by the applicant and Mr Liddiard and then returned to the respondent. Mr Lennie, the customer service manager of the respondent, had as one of his duties the control of stock. He said that when the equipment arrived back from the Sydney Boat Show in about the middle of August, he noticed that there was one NAV 5000 DLX missing and unaccounted for. He said that he spoke to the applicant about this on 21 August 1995. Mr Lennie said that the applicant simply advised him that he would sort it out. The following Monday, 28 August 1995, Mr Lennie again raised the matter with the applicant. Mr Lennie explained that he did stock reconciliations each Monday. Mr Lennie said that the applicant again replied that he would sort the matter out. Mr Lennie said that he spoke to the applicant again on 4 and 15 September 1995. On 4 September 1995 he received a similar response. On 15 September he was advised to wait until Mr Liddiard returned from holiday because he knew all about it. The evidence was that Mr Liddiard was on holidays from 4 until 18 September 1995. The applicant said in his evidence that he only spoke to Mr Lennie about the issue on two occasions and both of these were whilst Mr Liddiard was on holidays. The applicant said that he referred Mr Lennie to Mr Liddiard for the sales documents, on these occasions. I generally prefer the evidence of Mr Lennie with respect to these conversations. I am satisfied that he discussed the NAV 5000 DLX with the applicant on 21 and 28 August 1995. I am satisfied that on both occasions he received the response referred to in his evidence. I am satisfied that the applicant did not refer Mr Lennie to Mr Liddiard on these occasions. However, insofar as Mr Lennie asserted that he spoke to the applicant on 4 September 1995, I find that he was mistaken. This was because the evidence was that the applicant was not at work on that day. Both Mr Lennie and Mr Liddiard in their evidence agreed that the issue of the NAV 5000 DLX was raised by Mr Lennie with Mr Liddiard on Mr Liddiard's return from holidays. In the meantime, the applicant had submitted his travel expenditure report for the Sydney Boat Show. It was submitted to Mr Lloyd for approval, either directly or via Mr Taylor. The applicant was unclear as to when the report was submitted. The applicant said that he thought he submitted the report after the Perth Boat Show, which was on 22-28 August 1995. I do not accept that this is correct. Evidence was given that in light of the expenses claimed by the applicant Mr Lloyd issued a memorandum to "All Staff" concerning "Travel Expenses". This memorandum was dated 24 August 1995 and Mr Lloyd said that it was written on that date. I therefore find that the applicant's travel expenditure form was submitted prior to 24 August 1995. This is supported by the evidence of the date of reimbursement, set out below, and Mr Liddiard's evidence that the applicant mentioned difficulties he has having in getting his expenses paid, during the Perth Boat Show. In the travel expenditure report, the applicant included $892 as the total of advances received prior to the trip. This total comprised Ms Penfold's air fare, the eight days of $55 daily allowance and $100 for incidentals. The respondent contended that the applicant therefore acknowledged in this document that the advance for Ms Penfold's air fare was to be taken into account in assessing the net amount due after submitting travel expenditure, rather than being deducted from wages as the applicant had stated in his evidence. When this was put to the applicant, he said that after he returned from the Sydney Boat Show Mr Taylor then explained to him that the money advanced for Ms Penfold's air fare should be included in the travel expenditure claim form in the way in which it subsequently was. Mr Taylor denied this. Again I prefer the evidence of Mr Taylor to that of the applicant. I therefore agree with the respondent's contention concerning the significance of the amount of $892 being written as the total advance prior to the trip being taken. The expenditure form submitted by the applicant was not submitted in the appropriate form. This was drawn to the attention of Mr Taylor who then wrote out an expense report in the appropriate form. He did this using information obtained from the expense report prepared by the applicant and the receipts that the applicant had attached to that report. The expense report prepared by Mr Taylor included a greater itemisation of matters such as entertainment and taxis. The expense report prepared by Mr Taylor showed a total of expenses, including the $55 per day daily meal allowance, of $1,171.05. From this was deducted the advance of $892, leaving a balance due to the applicant of $279.05. Mr Lloyd was not happy about the level of expenditure, particularly that relating to the dinner with Brookes and Gatehouse. However, in the end he decided to accept responsibility on behalf of the respondent for each of the expenses claimed by the applicant. This included the $31.50 incurred for the Pina Colada's referred to earlier. A cheque of the respondent for $279.05 for the benefit of the applicant was then drawn. The expense report prepared by Mr Taylor had stamped on it the words "Since Paid" and the amount of $279.05 with a date of 28 August 1995 written in. It also included a stamp saying "Posted" and a date of 29 August 1995 written in. It was explained that "Since Paid" was stamped when Mr Lloyd signed the cheque for the benefit of the applicant. The "Posted" item referred to the date on which the contents of the expense report were posted on the computer system of the respondent. The evidence was that the cheque for $279.05 for the benefit of the applicant was given to Mr Taylor. Mr Taylor could not specifically recall whether he gave the cheque to the applicant or left it on his desk. I think it likely that Mr Taylor came into possession of the cheque on the date when Mr Lloyd signed it, being 28 August 1995. Further, Mr Taylor said that it was his preference to give cheques personally to employees when he could. He also said that he liked to give cheques for reimbursement of expenses to employees as soon as practicable. The evidence was that the applicant was in the office for at least part of 28 August 1995. This was because there was a meeting of all of the employees of the respondent in the early evening on that date. I therefore think it likely that Mr Taylor gave to the applicant the cheque for $279.05 on 28 August 1995. In making this finding, I note that the applicant's evidence was not clear on when he received this cheque. He said that he did not accept the respondent's contention that the cheque was processed on or about 28 August 1995. He later said that he believed that it was on 1 September 1995 that he received the cheque. He said that he received it before the Brisbane Boat Show and that he left for the Brisbane Boat Show on 5 September 1995. Later, again, he said that he could not remember the day that he got reimbursed but remembered that he put the cheque in the bank before he went to the Brisbane Show. There must be some doubt about this last aspect of his evidence. This is because Mr Taylor, in his evidence, said that from his perusal of the respondent's bank statements, the cheque was not deposited by the applicant until 25 September 1995. This was the date on which Mr Lloyd first discussed with the applicant the events of the Sydney Boat Show. It was only on this date that Mr Lloyd on behalf of the respondent received $1600 for the sale of the NAV 5000 DLX to Mr Nicholls. An issue that arose was why the applicant and Mr Liddiard did not arrange to pay the proceeds from the sale of the NAV 5000 DLX to the respondent earlier. The applicant's position was that he did not have the practical opportunity to do this. His evidence was that he returned from his holiday on 21 August 1995. He then worked on the Perth Boat Show from 22 - 28 August 1995. On 28 August he spent time organising his next trip to the Dowerin Field Day. He attended at the Dowerin Field Day for three days until 1 September 1995. He was not at work on 4 September 1995. He then left for the Brisbane Boat Show on 5 September 1995. He attended at the Brisbane Boat Show until 13 September 1995 and was off work on 14 September 1995. Mr Liddiard was then on holidays and did not return from his holiday until 18 September 1995. I do not think that this evidence adequately explains the reason for the delay in paying the amount of $1600 to the respondent. There were days when both the applicant and Mr Liddiard were at work, after the applicant received his refund cheque, when the payment of the $1600 could have been organised. This was both before and after Mr Liddiard's holiday. Yet, nothing was done in this regard until the applicant and Mr Liddiard were spoken to on 25 September 1995. Mr Liddiard said that he was told by the applicant, when they were working together at the Perth Boat Show, that he was having some difficulties in having the full amount claimed paid and that there was a dispute over some of the expenditure. There was evidence of a part payment from the applicant to Mr Liddiard. The applicant gave to Mr Liddiard $150 towards the total of $1600 to be paid to the respondent. It was also agreed between Mr Liddiard and the applicant that an amount of about $100 which Mr Liddiard owed to the applicant would be "put in" by Mr Liddiard on the applicant's behalf. With respect to the outstanding balance of $400, the applicant said in his evidence that he told Mr Liddiard that when he had the paperwork ready "Just ask me and I will bring the rest of the money". Mr Liddiard could not recall any such conversation. He said that he already had the paperwork ready. He said that he completed the relevant paperwork when he returned to his hotel in Sydney after the sale had been made to Mr Nicholls. I accept the evidence of Mr Liddiard in preference to that of the applicant. I mentioned earlier that Mr Lloyd discussed the events of the Sydney Boat Show with the applicant on 25 September 1995. As stated, Mr Lennie became concerned when one of the NAV 5000 DLX's that he had forwarded to Sydney did not return and could not otherwise be accounted for. Subsequent to this, the respondent received a facsimile from Mr Nicholls. This was addressed to Mr Liddiard. It was received on 1 September 1995. Mr Lennie received the facsimile as Mr Liddiard was then absent. The facsimile requested a paid invoice for the records of Mr Nicholls for the "Magellan 5000 DLX" purchased at the Sydney Boat Show. Mr Lennie thought that this may refer to the NAV 5000 DLX that he could not trace. He therefore requested that Mr Nicholls provide him with the serial number of the item which he purchased. Mr Nicholls provided this by a further facsimile received by the respondent on 3 September 1995. On looking at this document, Mr Lennie was able to see that the item purchased by Mr Nicholls was indeed the item which he had been unable to previously trace. Mr Lennie then conveyed his concerns about the matter to Mr Taylor. Mr Taylor telephoned Mr Lloyd who was then in America. Mr Lloyd was advised that there appeared to have been an item of navigation equipment sold at the Sydney Boat Show for which no money had been received by the respondent. Mr Lloyd instructed Mr Taylor not to do anything about the matter in his absence. Mr Lloyd returned to work on 20 September 1995. He then spoke with Mr Lennie who produced the evidence which indicated an item had been sold without the respondent having been informed of this or receiving the proceeds of the sale. Mr Lloyd met with Mr Liddiard and then separately with the applicant on 25 September 1995. On both occasions, Mr Taylor was in attendance as a witness. He took no active part in the discussions. Mr Lloyd first spoke to Mr Liddiard. Mr Lloyd commenced the meeting by mentioning to Mr Liddiard that there had been a problem with stock and asking whether he knew anything about it. Mr Liddiard didn't indicate that he did. Mr Lloyd was then more specific. He said there was an item of marine stock that had gone missing which seemed to relate to the Sydney Boat Show. Mr Liddiard said that he was aware that a product had been sold at the boat show and that was probably the missing item. Mr Liddiard then admitted that the item had been sold for $1600 and that he had given the applicant $650 of that amount. Mr Lloyd said that Mr Liddiard explained that he had given the money to the applicant because the applicant was short of money. Mr Liddiard in his evidence said that he explained the reason to Mr Lloyd as to why he had given the money to the applicant. I accept Mr Liddiard's evidence on this. I think it likely that he would have given this explanation to Mr Lloyd so as to try and justify his actions in allowing the applicant to take part of the sale proceeds. Further, Mr Liddiard's evidence is broadly supported by that of Mr Taylor. Mr Lloyd said that Mr Liddiard could not give a satisfactory explanation as to the delay in reporting the matter. Mr Lloyd said that he was outraged and thought that it was a very serious matter. Mr Lloyd's evidence was that he informed Mr Liddiard that he had three options. One was to call in the police, the second was to simply terminate employment and the third was to leave "the door open", consider the matter and see whether a better explanation as to what had happened would come forward. With respect to this, Mr Liddiard said that there was also mention by Mr Lloyd of the possibility of Mr Liddiard signing a five year contract with the respondent to indicate his commitment to the company, in the face of an apparent breach of trust. Mr Liddiard said that he was not sure whether this was mentioned at this meeting or when he saw Mr Lloyd later in the day. Mr Lloyd said that the meeting was left on the basis that he would leave the door open for some further explanation to come to him. Mr Liddiard, however, thought that Mr Lloyd was going to come back to him after he had considered the matter further. Mr Lloyd then met with the applicant in the presence of Mr Taylor. He said that he also put to the applicant that there was an irregularity with stock and asked if he knew anything about it. He said that the applicant did not reply. Mr Lloyd said that he was then more specific and said that there was evidence that one of the NAV 5000 DLX receivers that went to the Sydney Boat Show had been sold and $1600 cash was handed over and that this product had not been accounted for in the sales figures. Mr Lloyd said he told the applicant that his belief was that the money had been misappropriated. He said that the applicant then "started to give a story which I just could not believe about everybody owing everybody money." He said it was "the most confused story I have heard in my life", and later referred to it as a "convoluted story". Mr Taylor's recollection of what the applicant said was somewhat clearer. This is not surprising, given that he was not a participant in the conversation and that Mr Lloyd was admittedly "outraged" at what he was hearing. Mr Taylor said that it was put to the applicant that Mr Liddiard had said that $650 of the sale proceeds had been advanced to the applicant to help him by way of cash for his holiday. Mr Taylor said that the applicant indicated that was not true and that he had borrowed $300 of "company funds and $350 from David Liddiard in a personal capacity". Mr Taylor said this was at odds with the story that Mr Liddiard had given and he thought that made Mr Lloyd more concerned and angry than he already was. Mr Taylor said that Mr Lloyd told the applicant that he didn't believe him. The applicant's evidence differed from that of Mr Taylor. He essentially said that he explained to Mr Lloyd what had happened in terms consistent with his evidence given in Court. I do not accept this, given the evidence of Mr Taylor. I prefer the evidence of Mr Taylor to that of the applicant. In my view, the applicant mentioned that he had borrowed $350 from Mr Liddiard in a personal capacity because he was aware that he had already received a $352 advance from the respondent in the form of the payment for the air fare of Ms Penfold. Therefore if he put it to Mr Lloyd and Mr Taylor that he had spent $650 in excess of the advance received they would know this to be incorrect because of the advance for Ms Penfold's air fare. Mr Lloyd said that he concluded the meeting with the applicant by mentioning that he had the same three options that he suggested to Mr Liddiard. The applicant's evidence was that the three options mentioned were going to the police, termination of employment or, if the applicant was going to remain in the employment of the respondent, signing a five year contract to indicate commitment to the respondent. Both Mr Lloyd and Mr Taylor denied that there was any mention of a five year contract during the meeting. However, I prefer the evidence of the applicant on this point. This is because of the evidence of Mr Liddiard that a five year contract was also mentioned to him on that day. I am not sure that the five year contract was simply mentioned as being the third option. However, I think it is likely that there was mention of a five year contract in the context of the third option; which was, the applicant and Mr Liddiard remaining in the employment of the respondent after Mr Lloyd's consideration of the matter and possibly hearing something further from Mr Liddiard and the applicant. After Mr Liddiard's meeting with Mr Lloyd on 25 September 1995, he went to the bank and withdrew $400 from his account. He then put this together with the other money in his briefcase and gave to Mr Lloyd the total of $1600 received from the sale to Mr Nicholls. Later that same day, the applicant withdrew and gave to Mr Liddiard the sum of $400 which was the final amount "owing" to Mr Liddiard on the $650 previously given to the applicant. There was no relevant interaction between Mr Lloyd and either the applicant or Mr Liddiard between 25 and 28 September 1995. On 28 September 1995, Mr Lloyd met with Mr Liddiard and the applicant at the same time. Again, Mr Taylor was in attendance as a witness. Mr Lloyd said that he commenced the meeting by saying that no-one had come back to give a further explanation concerning the events at the Sydney Boat Show. He then said that therefore he had no other option apart from the termination of employment. He then produced letters that had been prepared for both the applicant and Mr Liddiard. The contents of the applicant's letter are set out earlier in these reasons. Attached to the letter of termination was a cheque for the money that was owed to the applicant for salary to date and two weeks' notice. Mr Lloyd, Mr Taylor and Mr Liddiard all said in evidence that the applicant commented "Is this all I'm worth?" The applicant did not recall such a comment. Each of them took this to be a comment about the amount of the termination payment. I accept this to be correct. It was suggested by Mr Mulvey that this comment could have referred to the fact of termination rather than the amount of the termination payment. However, I think the former is more consistent with the comment made. Mr Liddiard, in his evidence, said that he advised Mr Lloyd that he could not accept being terminated on this basis. Both Mr Taylor and Mr Lloyd agreed that after receiving the letter of termination that Mr Liddiard began to "pour his heart out". It was agreed by all that the applicant said very little. Mr Liddiard commented that he appeared aloof. The applicant explained his silence on the basis that he was stunned at what had occurred. Mr Liddiard said that he explained to Mr Lloyd the motives for what he had done. He said that his motive had been to assist the applicant in having a good holiday. He thought the applicant worked hard and was genuinely short of money because he had spent his bankcard allowance on company business. He said that he thought the applicant was a valuable team member and he wanted to keep the peace with him and keep him happy. He said that he thought it was to the benefit of the company to retain the services of the applicant. He said that things had not worked out as he had expected because of the protracted amount of time it had taken to receive the money back. He said that as he remained convinced that the money would be repaid from the funds of the applicant there would be no long term problem for the respondent. Mr Lloyd's evidence about this was not significantly dissimilar. He said that Mr Liddiard explained that he had done what he had because he "thought it was the right thing to do and that he had been told that [the applicant] ... had expenses ... that he had incurred that he felt sorry for him, that he had spent some money and that he was just doing what he thought was the right thing. He had every hope that the money was going to be returned when [the applicant] said he was going to return it. When that didn't occur he then got deeper and deeper into the mire and he couldn't get out of it". Whilst being less specific, Mr Taylor gave similar evidence about Mr Liddiard's reaction and comments. It was agreed by all four that the applicant left the office before the conversation between Mr Liddiard and Mr Lloyd had been completed. The evidence differed as to how this occurred. The applicant said that after about twenty or twenty five minutes of Mr Liddiard talking, Mr Lloyd said that he had to let the applicant go but would keep Mr Liddiard because of his long service with the company. He then asked the applicant to leave. In cross examination the applicant also said that he told Mr Lloyd "something in the line that what Mr Liddiard had explained of what happened at the Sydney Boat Show was also my explanation". However no other witness said this and I am not satisfied the applicant did make such a comment. Mr Lloyd said that after listening to Mr Liddiard's "story" for about five minutes he then asked the applicant whether he had anything else to say. Mr Lloyd said the applicant said "That's it". Mr Lloyd said the applicant then left the room and that he continued to talk to Mr Liddiard. Mr Taylor was less precise. He said that the applicant's reaction to receiving the letter of termination was as though it was a fait accompli. He said that he didn't show any emotion, express any concern or indicate that it was unfair or unjust in any way except that he looked at the cheque and said "Is this all I'm worth?". Mr Taylor said that the applicant left at some stage but he couldn't recall "whether there was anything specific or whether he of his own doings [sic] got up and left the room". Mr Liddiard said that when the applicant received the letter of termination his demeanour was calm and aloof. However, he (Mr Liddiard) had reacted as set out above. Mr Liddiard said that part way through his explanation Mr Lloyd interrupted him and asked the applicant whether he had anything more to say. He said that the applicant said no and then Mr Lloyd asked the applicant to leave the room. He said that he then proceeded with his explanation and Mr Liddiard's termination of employment was withdrawn. Having seen all of the witnesses give evidence with respect to this matter and bearing in mind their demeanour, the content of what they said and the likelihood of what they said being accurate in the circumstances, I think that the evidence of Mr Liddiard is most likely to be correct concerning the applicant leaving the meeting on 28 September 1995. That is, that Mr Lloyd asked the applicant to leave, in essence confirming the termination of his employment, when the applicant had nothing else to say about the matter. I am satisfied that the employment of the applicant was terminated for the reasons set out in the letter dated 28 September 1995. The applicant contended that this letter did not truly reflect the reasons for the termination. The applicant's counsel put to Mr Lloyd that the real reasons for the termination were that Mr Lloyd was unhappy with how the applicant had been running up expense accounts, had seen a letter of resignation of the applicant, and was doubting the loyalty of the applicant to the respondent. I have considered this aspect of the case and am quite satisfied that the applicant was terminated for the reasons set out in the letter given to him. The reference to a letter of resignation is to a letter which the applicant drafted on the computer of the respondent and left on the computer system. This was prepared by the applicant over the weekend before Monday, 28 August 1995. The applicant did not print the letter nor did he sign it or present it to Mr Lloyd. The applicant said that he prepared the letter but had not decided whether he was going to present it to Mr Lloyd. Whether or not he did so depended on the outcome of a meeting involving all employees of the respondent on the early evening of 28 August 1995. After the meeting, the applicant decided not to tender his resignation. Mr Lloyd said that he had called the meeting on 28 August 1995 because he was concerned that there was an unpleasant atmosphere about the workplace. It seems that a large part of this was some friction between the applicant and Mr Taylor. The applicant was quite frank in saying that he did not like Mr Taylor. Mr Taylor said that did not like certain work attitudes of the applicant but did not know the applicant well enough to form an opinion as to whether he disliked him or not. Mr Lindroos, another employee of the respondent, said that it was fairly obvious that the applicant and Mr Taylor did not like each other. I do not think the fact that Mr Taylor and the applicant did not like each other formed some covert reason why the applicant's employment was terminated. I make this comment because the relationship between the applicant and Mr Taylor was emphasised by the applicant's counsel. He pointed to the fact that Mr Lloyd had known Mr Taylor for some time through previous work associations and socially. With reference to the aspect of doubting the loyalty of the applicant to the respondent, referred to above, the applicant pointed to the fact that Mr Lloyd was aware that the applicant had applied for a job with a rival to the respondent. Mr Lloyd denied that he knew of this. However, Mr Liddiard said that he had discussed this matter with Mr Lloyd earlier in the year. I am satisfied that Mr Lloyd did know of the applicant's potential employment with a rival company. However, whilst I think that this may have been an influencing factor in whether the applicant's employment was terminated, it was not a reason independent to that with respect to the proceeds of the sale of the NAV 500 DLX. Mr Lloyd also said that in the time leading up to the termination of the applicant's employment, he had seen the applicant out the back of the respondent's premises smoking on a number of occasions and talking to Mr Liddiard. Mr Lloyd said that "on many occasions ... [the applicant] was outside the back of our store smoking and was quite often in consultation with Mr Liddiard". The implication seemed to be that they may have been planning something. Whilst this may show undue suspicion of lack of loyalty and it may have been a matter which was taken into account in determining what should happen to the applicant, I do not think it formed an independent ground for the termination of employment. CONTRAVENTION OF THE ACT? The applicant alleged that Sections 170DC and 170DE of the Act had been contravened. Section 170DC provides that an employer must not terminate an employee's employment for reasons related to their conduct or performance unless they have been given the opportunity to defend themselves against the allegations made. I am satisfied that the applicant was given this opportunity. This arose at the meeting on 25 September 1995 and quite possibly also at the meeting on 28 September 1995. I am satisfied that the applicant had the "fair go" which the section requires: Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233, page 243. Section 170DE(1) provides that an employer must not terminate an employee's employment unless there is a valid reason connected with their capacity or conduct. Wilcox CJ in Kennefick v Australian Submarine Corporation (1995) 131 ALR 197 at 208 said that: "I think it follows that the reason must be genuine, that there must be a causal relationship between the reason and the termination and that the termination must be a logical response to the employee's capacity or conduct or the employer's operational requirements." The respondent has the onus of proving that, apart from Subsection 170DE(2), there was a valid reason of the kind referred to in Section 170DE(1): Section 170EDA(1) of the Act. I am satisfied that the respondent has discharged this onus. In essence, the employment of the applicant was terminated because he converted the proceeds of the sale of the NAV 5000 DLX. He compounded this by not explaining what had happened or returning the money to the respondent from 2 August 1995 until 25 September 1995. Even then, the money was not returned until the applicant was spoken to by Mr Lloyd. Section 170DE(2) states that a reason is not valid if, having regard to the employee's capacity and conduct, the termination is harsh, unjust or unreasonable. Given that the respondent has proved that there was a valid reason for termination of employment, the applicant has the onus of proving that because of Subsection 170DE(2), the reason or reasons proved by the employer were not valid: Section 170EDA(1)(b) of the Act. In this case the applicant is unable to discharge this onus. Having considered all of the evidence, I do not think that the termination of employment was harsh, unjust or unreasonable. I make this finding having regard to the totality of the applicant's conduct, as follows: 1. On 2 August 1995 the applicant converted the money of the respondent to his own use by persuading Mr Liddiard to give him $650 of the $1600 received from Mr Nicholls for the purchase of the NAV 5000 DLX. 2. The applicant persuaded Mr Liddiard to part with this money by saying that he had spent $650 in excess of the amount advanced to him by the respondent prior to the Sydney Boat Show. This statement to Mr Liddiard was misleading as it did not refer to the $352 advanced to the applicant in the form of payment for Ms Penfold's air fare. 3. When discussing the matter with Mr Liddiard, the applicant was aware that there would at the very least be concern by Mr Lloyd about the level of expenditure at the dinner with Brookes and Gatehouse personnel. 4. Further, in calculating the amount of $650 the applicant included $31.50 which was spent on drinks for himself, Mr Liddiard and Ms Penfold and for which the respondent would not have to reimburse him. 5. The applicant did not inform Mr Lloyd or any other employee of the respondent (other than Mr Liddiard who was involved in the matter) of either the sale of the NAV 5000 DLX or the fact that he had received part of the proceeds of the sale, until questioned about it by Mr Lloyd on 25 September 1995. 6. The applicant was less than frank with Mr Lennie when questioned about the NAV 5000 DLX on a number of occasions. 7. The applicant completed an expense report form claiming the reimbursement of monies, when he had already received the same in the form of the $650 from Mr Liddiard. 8. The applicant did not proceed to repay the amount of money received from Mr Liddiard as expeditiously as practicable. The applicant received his reimbursement cheque on 28 August 1995, yet did not organise the repayment to Mr Liddiard until 25 September 1995. 9. When asked to explain what had occurred by Mr Lloyd on 25 September 1995, the applicant was not frank with Mr Lloyd. He claimed that he borrowed $350 from Mr Liddiard when this is not what occurred. He said this to try and avoid Mr Lloyd and Mr Taylor being aware that he misrepresented the position regarding his expenses to Mr Liddiard. 10. During the meetings with Mr Lloyd on 25 and 28 September 1995, the applicant exhibited no remorse. 11. The applicant was not a long term employee but had been employed for about 11˝ months at the time of his termination. 12. There were other aspects of the applicant's loyalty to the respondent which could be questioned. This is so given the writing of the letter of resignation, the fact that the applicant was considering employment with other organisations and his general attitude to expenses. As stated above, given the totality of the applicant's conduct as listed, I am satisfied that there was nothing harsh, unjust or unreasonable in the termination of his employment. I make this finding having full regard to the evidence that the applicant was proficient in his job as marine and aviation products manager. Mr Mulvey for the applicant raised other issues relating to the evidence for my consideration. It is sufficient to say, without setting out each of them, that I have considered the arguments raised before coming to my conclusions of fact and law. I have also considered whether it was harsh, unjust or unreasonable for the respondent to have terminated the employment of the applicant yet continued the employment of Mr Liddiard. Again I am satisfied that there was nothing harsh, unjust or unreasonable in this aspect of the matter. One reason for this is that Mr Liddiard had been an otherwise loyal employee of at least four years' duration. Secondly, a number of the matters listed above do not apply to Mr Liddiard. This is so with respect to items 2, 4, 6, 8, 9, 10, 11 and 12 above. Therefore there was a substantial distinction between the conduct of the applicant and that of Mr Liddiard. Thirdly, Mr Liddiard and the applicant had, in my opinion, different motives in the applicant receiving part of the proceeds of the sale of the NAV 5000 DLX. Mr Liddiard's motive as he put to Mr Lloyd at the meeting on 28 September 1995 was that he considered he was doing something which would benefit the respondent as well as the applicant. He thought the applicant was a good worker, that it was in the best interests of the respondent to retain his services and that if he received the $650 it would increase the likelihood of the applicant remaining with the respondent. Further, he thought that the applicant had a genuine claim to reimbursement of $650 worth of expenses. In contrast, I am satisfied that the applicant simply thought it was in his own best interests to receive the $650. I am satisfied that he did not have any proper regard to the interests of the respondent in speaking to Mr Liddiard about obtaining the $650. Further, he knew that the claim for $650 did not include the money advanced for Ms Penfold's air fare. I am satisfied with respect to the applicant that Mr Lloyd accurately described his motives when he concluded in his letter of 28 September 1995 that "your actions were beneficial to yourself and against this company". I am therefore satisfied that there has been no contravention of Section 170DE of the Act. As there has been no breach of Section 170DC nor Section 170DE of the Act, the application must be dismissed. I certify that this and the preceding 26 pages are a true copy of the Reasons for Judgment of Judicial Registrar Rittter. Associate Date: Counsel for the applicant: Mr V Mulvey Solicitors for the applicant: Michael Rennie & Co Counsel for the respondent: Mr C Raymond Solicitors for the respondent: Blake Dawson Waldron Hearing date: 20, 21 December 1995; 19 January 1996 Judgment date: 16 February 1996