Peter John McNally v Cadima Express Pty Ltd [1996] IRCA 89

DECISION NO: 89/96 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - TERMINATION at initiative of employer - whether RESIGNATION - effect of withdrawal of RESIGNATION Industrial Relations Act 1988 ss. 170EE(3) & 170EE(5) CASES: Mohazab v Dick Smith Electronics Pty Ltd, Full Court of the Industrial Relations Court of Australia, (unreported) No. NI 2571 of 1995, 28 November 1995 Gunnedah Shire Council v Raymond Ernest Grout, (1995) 134 ALR 156 Quinn v Jack Chia (Australia) Ltd, (1992) 1 VR 567 PETER JOHN MCNALLY - v - CADIMA EXPRESS PTY LTD No. VI 4968 of 1995 Before: Judicial Registrar Millane Place: Melbourne Date: 20 March 1996

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 4968 of 1995 B E T W E E N : PETER JOHN MCNALLY Applicant AND CADIMA EXPRESS PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Millane 20 March 1996 THE COURT ORDERS WITHIN 14 DAYS OF THE DATE OF THESE ORDERS THAT: 1. The respondent pay to the applicant the sum of $2,000.00 damages pursuant to section 170EE(5) of the Industrial Relations Act 1988. 2. The respondent pay to the applicant the sum of $4,000.00 compensation pursuant to section 170EE(3) of the Industrial Relations Act 1988. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 4968 of 1995 B E T W E E N : PETER JOHN MCNALLY Applicant AND CADIMA EXPRESS PTY LTD Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 20 March 1996 REASONS FOR JUDGMENT The applicant seeks compensation alleging that his employment as a state manager of the respondent's freight enterprise was terminated on 14 September 1995 in contravention of Division 3 Part VIA of the Industrial Relations Act 1988 (the Act). The respondent, whilst conceding that the applicant was employed by it as its Victorian state manager between at least January 1993 and 14 September 1995, denies that termination of his employment was at its initiative; rather it asserts that the applicant tendered a voluntary resignation to the respondent in July 1995 which was accepted and acted upon by the respondent almost immediately. BACKGROUND From approximately June 1987 the 49 year old applicant alleges that he commenced employment with Cadima Express which was then an unincorporated entity. The business operated from Sydney and the applicant, at the request of David John Dickerson (Dickerson), who was then a proprietor of the transport business, commenced a freight delivery operation in Melbourne. This involved the applicant in arranging delivery as well as loading and unloading freight and moving premises as the business expanded. There was a dispute between the parties as to whether the applicant, until January 1993 when Cadima Express was incorporated, was in fact an independent contractor. For the purpose of this proceeding it is not necessary to decide this point because it was conceded at hearing that, at least from the date of incorporation, the applicant was employed as the state manager of the Victorian end of the business at the rate of pay of $1,000 gross per week; working long hours managing the Victorian operation up until 14 September 1995 when his employment ceased. However, notwithstanding the lastmentioned observation, I note that Exhibit A3, which is a letter dated 4 February 1990 bearing the letterhead of Cadima Express, refers to the applicant as the state manager authorised by the business to, amongst other things, sign paperwork on behalf of "our company". The document does suggest that the respondent's allegation that the applicant was not an employee prior to January 1993 would be, if otherwise relevant to this proceeding, unsustainable. That the applicant worked hard and for long hours was not really disputed. Neither was it disputed that on occasions prior to July 1995 the applicant had tendered his resignation to the respondent and this had not been acted upon. According to the applicant the reason for his behaving in the above described manner was that he worked very long hours and had not taken or been given many holidays in the eight years he worked with Dickerson. Because of this he was obliged to threaten to resign in order to force the issue on the question of taking his annual leave. There is some outstanding dispute, not fully aired before this Court, as to the proper calculation of the applicant's annual leave entitlements as at 14 September 1995. Exhibit A1 is entitled 'Termination Statement for Peter McNally' and was prepared by the respondent. It showed that for the period from 13 January 1993 to 14 September 1995 there was unused annual leave of 282.96 hours. The applicant alleges that he is and was at termination owed more annual leave than that shown. However, for the purpose of this action it is clear from the employer's own statement that there was considerable unused annual leave as at 14 September 1995 for the period from January 1993 and this indication is consistent with the applicant's claim that he did not take regular annual leave. In contrast, it was asserted by Dickerson, who is now the respondent's managing director, that the reason the applicant did not take regular annual leave was that he chose not to, seeking to work this time and be paid both annual leave and wages for the time worked. It was Dickerson's evidence that he acquiesced in this alleged arrangement and, if the applicant had so requested, he would have had no hesitation in allowing him to take time off. On viewing the applicant's tax returns (see Exhibit A2) for the financial years from the date of incorporation of the respondent it is apparent that the applicant was paid at a rate of pay consistent with his claim that he was remunerated on an annual basis of approximately $52,000 gross. In other words, the tax returns and the evidence of his gross income do not show that; for instance, the applicant received both wages and annual leave entitlements or double pay for any period during the relevant financial years. Moreover, the significant amount of annual leave owing at termination (see Exhibit A1) contradicts the rather strange assertion made by Dickerson as an explanation for the applicant's failure to actually take annual leave entitlements. According to the applicant in July 1995 he was stressed and in need of a holiday. He approached Dickerson who was in Melbourne at the time telling him that he would like to finish work at the end of the month. The request was couched in terms that if he did not get out of the job soon the respondent would end up carrying him out in a "body bag" because he would die on the job. At the very least it was agreed between the two men that in the conversation alleged the applicant had asked Dickerson not to try and talk him out of his decision and that the applicant had made references to dying on the job. It was never suggested by the applicant in Court that there was any discussion of him having a holiday, indeed, he agreed that to his knowledge the respondent then proceeded to advertise his position and interview candidates in late July 1995. Exhibit R1 is a copy of an advertisement placed by the respondent in the Age newspaper on 12 July 1995 advertising the applicant's position. It was agreed that on or about 26 July 1995, Dickerson attended Melbourne and after interviewing candidates made a quick visit to the depot before catching a return flight to Sydney. During this visit the applicant was busy unloading freight but managed to have a conversation with Dickerson in which, it is alleged by the applicant, Dickerson told him he had not found anyone and asked the applicant why he wanted to leave, to which question the applicant responded by reiterating how tired he was. Dickerson's recollection of the abovementioned conversation is that he told the applicant that it was then too early to say if he had found a suitable candidate because there were many candidates with "a lot of degrees". Because the applicant was busy Dickerson left without further discussion of the matter. The end of July came and went without the applicant leaving. It is alleged by Dickerson that when the applicant gave notice he in fact said he would stay until a replacement was found rather than nominating the end of July as the last date upon which he intended to work. The applicant claims to have received a number of enquiries concerning the identity of an alleged new staff member, Neil Williamson, and as a result made enquiries of the Sydney office where he was assured that no such person worked for the company. In any event, in mid August 1995 the applicant spoke to Dickerson by telephone on a Saturday morning because he was then being asked by another person to take another position. As a result he rang Dickerson and told him that he should forget the applicant's offer to resign and said, "If you want to get rid of me you will have to come down and sack me". According to the applicant's version of events Dickerson responded by saying, "All right". I interpreted the applicant's evidence to mean that he understood Dickerson to be accepting the withdrawal of his resignation; rather than agreeing to come to Melbourne and sack him. Dickerson denied that the abovementioned conversation took place at all. The only explanation for the call on the applicant's part is the existence of an alternative job offer and the need to reaffirm his position with the company because the deadline for his leaving, on his own evidence, was the end of July 1995. In considering the weight to be given to the evidence of each man I have relied on a number of matters. The consistency and the plausibility of the evidence is always a consideration to be borne in mind when there is a head-on dispute between principal witnesses. Dickerson's evidence regarding the holiday pay was both implausible and inconsistent with the documentary evidence. Furthermore, the applicant also called evidence from an owner truck driver, Ronald Gordon Turnbull (Turnbull), who worked for the respondent and is well acquainted with both men. Whilst Turnbull could not recall the precise date, he was able to recollect a conversation between himself and Dickerson in Sydney some weeks before the applicant's termination during which conversation he asked Dickerson what was happening with the applicant's employment. In response, Dickerson told him that he had been telephoned by the applicant saying that he was not going to resign and if Dickerson wanted to get rid of him he would have to sack him. It was Turnbull's recollection that, in his words, Dickerson appeared to be in a quandary as to what to do. Dickerson did not deny a conversation with Turnbull about the applicant; instead he recalled saying that the applicant had resigned and that he was looking for someone else to replace him. On balance I am inclined to accept Turnbull's evidence as corroborating the applicant's version of events inasmuch as Turnbull really is an independent witness. He described himself as a "sticky beak"; asking Dickerson what was happening because he already knew that the applicant had offered his resignation. In accepting that the applicant purported to rescind or withdraw his resignation in August having worked past the deadline for him to leave and that Dickerson led him to believe that that was acceptable, I have concluded that there was no voluntary resignation in the sense that the contract of employment was brought to an end as well as the employment relationship (see the Full Court decisions of Mohazab v Dick Smith Electronics Pty Ltd, (unreported) No. NI 2571 of 1995, 28 November 1995 and Gunnedah Shire Council v Raymond Ernest Grout, (1995) 134 ALR 156). The abovementioned conclusion is reinforced by events which occurred after the applicant's conversation with Dickerson in August. On or about 14 September 1995 Dickerson attended Melbourne having arranged to see the applicant but did not tell him the reason for that attendance. In the morning he had coffee with Turnbull and the applicant and then moved his car to allow the applicant to leave the depot before returning at 1.00pm to be available to unload freight arriving from Adelaide. After moving his vehicle Dickerson called the applicant into the office and, according to the applicant, told him that he had employed Neil Williamson as state manager in the applicant's stead, however, he wanted the applicant to remain and work under this other person. It is alleged by Dickerson, and this is denied, that he also told the applicant he would make him operations manager or depot manager and that his terms and conditions of employment would remain the same. According to the applicant none of the lastmentioned matters were raised because when he was told that he would be required to work under someone else he got up and left the room telling Turnbull who was outside the office, "Got a job for me, he's just sacked me". Turnbull corroborated the applicant on the lastmentioned contemporaneous statement. I infer from the conversation between Dickerson and the applicant, as well as from all the circumstances surrounding it, that at the time Dickerson approached the applicant he still believed the applicant was employed by the company and the contract of employment remained on foot. His behaviour is consistent with the behaviour of an employer seeking to demote an employee rather than relying on any true resignation or repudiation of the contract of employment by the applicant. In any event, on the day following the conversation the applicant approached Dickerson and asked him what was happening only to be told that he had refused the other position and was finished with the company. Dickerson's version of this exchange is that he told the applicant that he had resigned and he had offered him a "lesser" position only to be told to "shove it", therefore his employment was at an end. Dickerson told the Court that he had refrained from telling the applicant that he was making the other appointment, preferring to tell him "face to face". Again this behaviour indicates that he knew the applicant would be upset at losing his position as state manager having "cried wolf" once too often. For the purpose of this proceeding all the Court has to decide is whether there was termination at the initiative of the respondent. On the facts as accepted by me any offer of resignation was withdrawn by agreement and not acted upon by at least August 1995 with the employment relationship continuing uninterrupted until Dickerson decided to bring in a replacement state manager. The demotion offered was more than a variation of contract (see Quinn v Jack Chia (Australia) Ltd, (1992) 1 VR 567) amounting to termination of the contract of employment. At termination the applicant received no compensation in lieu of notice and now seeks five weeks' pay by relying on employment pre-dating the incorporation of the respondent from 13 January 1993. However, this submission ignores the obvious change in the identity of the employer and any damages payable in accordance with section 170EE(5) of the Act should be confined to two weeks' pay amounting to $2,000.00. Neither party saw reinstatement as being a practical remedy. The applicant has been gainfully employed with a transport company at the same rate of remuneration from some six weeks after termination of his employment. In all the circumstances I am satisfied that reinstatement is impracticable and I have assessed appropriate compensation at $4,000.00. MINUTES OF ORDERS THE COURT ORDERS THAT WITHIN 14 DAYS OF THE DATE OF THESE ORDERS: 1. The respondent pay to the applicant the sum of $2,000.00 damages pursuant to section 170EE(5) of the Industrial Relations Act 1988. 2. The respondent pay to the applicant the sum of $4,000.00 compensation pursuant to section 170EE(3) of the Industrial Relations Act 1988. 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 eight (8) pages are a true copy of the reasons for judgment of Judicial Registrar Millane. Associate: ............................................................. Dated: 20 March 1996 Solicitors for the Applicant: Adams Leyland Solicitors Solicitor appearing for the Applicant: Mr Don Cameron Representatives for the Respondent: Victorian Employers Chamber of Commerce and Industry Representative appearing for the Respondent: Mr Robert Ironmonger Date of hearing: 26 February 1996 Date of judgment: 20 March 1996