Harrison v Storetek Pty Ltd [1996] IRCA 132

DECISION NO: 132/96 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - VALID REASON - whether employee disobeyed a reasonable and lawful order Industrial Relations Act 1988 ss.170DC, 170DE(1), 170DE(2), 170DF(1)(a), 170EDA(2) CASES: Johns v Gunns Ltd (1995) 60 IR 258 Adami v Maison De Luxe Limited (1924) 35 CLR 143 MICHAEL HARRISON - v - STORETEK PTY LTD No. VI 5224 of 1995 Before: Judicial Registrar Millane Place: Melbourne Date: 15 April 1996

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 5224 of 1995 B E T W E E N : MICHAEL HARRISON Applicant AND STORETEK PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Millane 15 April 1996 THE COURT ORDERS THAT: 1. The applicant's application is dismissed. 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 5224 of 1995 B E T W E E N : MICHAEL HARRISON Applicant AND STORETEK PTY LTD Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 15 April 1996 REASONS FOR JUDGMENT The applicant is a salesman who was originally employed by the respondent's predecessor Lamson as a sales executive on 25 May 1994. It was common ground that at the date of termination he was employed by the respondent; although how that charge came about was not canvassed at hearing. The applicant alleges that on 27 September 1995 the respondent terminated his employment in contravention of Division 3 Part VIA of the Industrial Relations Act 1988 (the Act). Apart from claiming that there was contravention of section 170DE(1) and (2) and section 170DC of the Act, the applicant also relies on alleged contravention of section 170DF(1)(a) of the Act claiming that his temporary absence due to illness in the days preceding the termination was a factor or one of the reasons for terminating his employment. Inasmuch as the lastmentioned allegation is raised, it casts a burden of proof on the respondent to prove a negative; that is to say, that the reason or one of the reasons for termination was temporary absence due to illness (see section 170EDA(2) and the discussion of the onus of proof provision contained in His Honour Justice Northrop's decision in Johns v Gunns Ltd, (1995) 60 IR 258). Apart from denying any breach of the provisions of the Act and, in particular denying that any absence due to temporary illness was a factor in the decision to terminate, the respondent defends this application and justifies the termination by pointing to a range of performance related incidents in the months preceding the termination. More particularly, it relies on the applicant's refusal to obey a lawful instruction at the date of termination precipitating the termination with one month's pay in lieu of notice and an additional $1,000 referrable to the car allowance paid to the applicant. THE WITNESSES The applicant gave evidence on his own behalf with the respondent calling the following three witnesses: (a) David James Killen (Killen), the state manager for Victoria and Tasmania from 24 May 1995; (b) Ricky Kasper (Kasper), store work and internal sales person taking on some of the applicant's duties after he left the respondent; and (c) James Stuart Griffiths (Griffiths), sales representative responsible for sales in the respondent's eastern region. Having heard from and observed the demeanour of all the witnesses, I have accepted the evidence of the witnesses Kasper and Griffiths as being both reliable and dispassionate evidence given in circumstances where they were still employees of the respondent but nevertheless had been friendly with the applicant whilst he was a work colleague. Because of the corroboration provided by the evidence of Kasper and Griffiths and some of the documentary evidence, I have largely accepted the evidence of Killen in most but not all matters where there was conflict between his evidence and that of the applicant. My primary concern with the evidence of Killen was in the area of some of the hand written diary entries (see Exhibit A9) and documents allegedly handed to the applicant (for instance, Exhibit R3). Some of the hand written diary entries appear to have been inserted or expanded with added explanations even though Killen alleged that the diary was a contemporaneous diary; that is to say he made notes in the diary as events occurred. For example, the entries for 14 and 21 September 1995 suggest that additional commentary was added after the day's events had concluded. In respect to Exhibit R3 Killen gave contradictory and unsatisfactory answers to questions as to the date upon which the document was made and the date upon which it was, according to his evidence, given to the applicant who denied ever seeing it before the hearing of the application. Killen was also unable to explain the inconsistency in the document which was dated Monday, 11 September 1995 but referred to discussions on "Tuesday night", the following evening. The applicant was clearly distressed during the hearing and appeared to be somewhat obsessed by the obvious personality clash between himself and Killen. Apart from giving contradictory evidence himself he was also contradicted in significant ways by Kasper and Griffiths; not to mention Killen and, because of this, his evidence cannot be relied upon as an objective account of the matters leading up to the termination of his employment. He clearly felt that Killen placed unnecessary personal stress on him in scrutinising his work activities and performance. The applicant also tendered in evidence a copy document which purported to be a written reference from his former manager (Killen's predecessor) dated 4 April 1995. The document is unsigned and was, so the applicant told the Court, given to him by the manager before he left the respondent's employ and without any request by the applicant for a written reference. The respondent claims that the document is not a reference authored by the previous manager but is in fact a document found in the applicant's computer system and prepared by him. This assertion is denied by the applicant who seeks to rely on the reference as an indication of his performance and skills until Killen arrived on the scene. The expressions used and the curious turn of phrase contained in the document are strikingly similar to those contained in another document prepared by the applicant (Exhibit R1) when he provided Killen with a SWOT (Strength, Weaknesses, Opportunities & Threats) analysis of himself. For instance, in both documents he is described as a "potent closer" when referring to his selling skills. This is a strange and rather idiosyncratic way of expressing oneself. In all the circumstances, I have concluded that the document is not an authentic reference and should not be relied on insofar as it purports to be an indication of the applicant's skills. BACKGROUND The applicant commenced his employment with the respondent on or about 25 May 1994 working first in sales for Lamson and then Storetek Pty Ltd, after that corporate entity took charge of the business. The respondent's business is centred in Sydney where the manufacture of its product occurs. The company makes to order and sells specialised storage units. In the period between May 1995 and September 1995 the Victorian end of the operation consisted of a small group of employees headed by Killen to whom the other employees answered. The applicant was the sales representative responsible for a designated western sales region. Griffiths within the named period was employed and took over from another sales person who was responsible for the eastern sales region. Kasper worked in the store and there was another employee (female) who looked after debtors and paper work. Because the respondent's product is a specialised product, it attends on customers who need storage and designs, measures and quotes on the customer's needs. This means that there may be a number of quotes and check measurements on site. It was not contested that much of the respondent's custom was dependent on referrals and presumably the attendances by the sales representatives canvassing trade and commercial interests as well as looking after the respondent's own distributors. Killen commenced his employment with the respondent on 24 May 1995 having not worked in this particular industry previously; although he had a background in management over some years in various industries. To acquaint himself with the performance of the Melbourne operation Killen spent a couple of months observing the business and the performance of the employees. He gave uncontested evidence that on his arrival the Melbourne end of the business was not as profitable as the Sydney counterpart and he set about examining and assessing the performance of the staff with a view to improving business profitability. To that end the staff were asked to do a SWOT analysis of the company, which task it is alleged the applicant misinterpreted as a request to provide an analysis of himself. In any event, on 8 August 1995 Killen provided the applicant with a detailed written assessment (Exhibit R3) of his performance, which I accept was given to the applicant and was the subject of some detailed discussion between the two men. It could not be said that the assessment was anything but favourable, balancing as it does the applicant's perceived strengths and weaknesses. PERFORMANCE ISSUES There are at least eight identifiable issues relating to the applicant's performance prior to termination, being the source of conflict between the applicant and Killen primarily in the month of September 1995 and leading to counselling and warnings as well as an attempt to closely supervise the applicant's performance. The matters included the following complaints: (i) It was alleged that the applicant, contrary to proper practice, dealt with a client outside his territory, Compumedics, in order to gain the account. The client was in fact in Griffiths' territory and it was not ascertained until later that the applicant had behaved inappropriately in seeking out and obtaining this client. (ii) Having obtained Compumedics as a client with a substantial order the applicant failed to give proper instructions for the writing of an order form showing that there were access problems with delivering products to the client. This led to some hundreds of dollars being incurred in extra charges for delivery. (iii) The applicant was responsible for giving instructions on the writing up of the order for Compumedics and in doing so did not indicate to the respondent that as part of the deal he had offered to supply two additional shelves. The effect of this offer was that a 14.9% discount on goods was given where there was only a 10% limit allowed to salesmen without first seeking the authority of the respondent. The goodwill with the customer was damaged by the incident because the customer complained when the shelves were not delivered. (iv) An appointment was made for the applicant in his territory to attend upon a customer, Preston Motors. It appears for reasons best known to the applicant that he did not attend at the time the customer believed was arranged and on 11 September 1995 Killen fielded a call from a customer who was upset because there was no salesmen in attendance. In response Killen took samples out to the customer and after returning to the office received a call from the applicant suggesting that they must have passed each other because the applicant attended after Killen had left. The applicant denies that there was any time arranged for the appointment, however, I accept that it is more probable than not that there was a pre-arranged time and this prompted Killen to go out to see the customer to pacify him. (v) In the same period referred to above the respondent had difficulties with a major client, Havelin De Hawker, because the applicant took a large order failing to note that the client wanted desk locks keyed alike. (vi) The applicant uses distributors as part of its sales network and its territory managers are required to call on the distributors from time to time. The applicant failed to do this regularly or at all. On or about 14 September 1995 he attended Castlemaine and it appears that he failed to call on the respondent's distributor, first, because he chose to call on someone else attempting to obtain a distributorship in the area and, secondly, because he did not use his distributors list and did not know that Central Storage was in fact the respondent's distributor in the area. (vii) Assessment of the applicant in August 1995 referred to a failure to hand in his sales reports on time. I am satisfied that on the evidence the applicant was tardy in doing this and did not comply with the requirement that the reports be supplied each Monday morning. (viii) There was an issue of unexplained absences and this was illustrated by an event on 12 September 1995 when the applicant was required to man a stand at a trade fair and exhibition. He arrived at the trade fair and spent a half an hour looking around and shortly thereafter Killen left the stand and returned to find that the applicant was missing. Although he waited some 15 to 20 minutes for the applicant he did not turn up. In his evidence the applicant claimed to have gone to the toilet although this explanation does not appear to have been offered when Killen raised the issue with the applicant on or about 12 September 1995. The abovementioned matters were the subject of discussions between at least 12 and 14 September 1995 and, although I have some doubts about the handing to the applicant of any written statement detailing some of these complaints, I am satisfied that in that period there was discussion and counselling over these matters. Even the applicant conceded in his evidence that in the September period he was "shit scared" of losing his job. I infer from this concession that that was because of the discussions with Killen and the warnings given. On 18, 19 and 20 September the applicant was absent from his employment due to illness. This absence was the source of some difficulty because the respondent was trying to access client file material held by the applicant and could only leave messages on the applicant's car phone Voice Mail system because the respondent did not have the applicant's home address and telephone number. Despite a message from Killen to call into the respondent's office at Mulgrave on his return from sick leave it appears that the applicant rang Griffiths to arrange to meet him and attend on a client without having first reported to Killen as requested. The applicant alleged that it was Griffiths who had contacted him and made the arrangement, however, I accept that Griffiths did not have the applicant's telephone number to do this and was unwittingly drawn in to this arrangement by the applicant who by that stage was not properly responding to Killen's direction to him and criticism of his performance. He was by then well aware that his employment was in jeopardy because of these matters. On 21 September 1995 once Killen realised that the applicant had not responded to his direction to attend the office before commencing his calls he telephoned the applicant on the applicant's car telephone and ordered him to return to the office arranging for him to collect files the applicant had at home and return them to the office. On the evening of 21 September 1995 the two men met and at the very least it was agreed that there was discussion concerning the applicant's unsatisfactory performance and the matters set out in a hand written note (Exhibit R5). During that discussion Killen alleges he gave the applicant Exhibits R5 and R6, the latter being a hand written retraining scheme over 30 days devised by Killen to more closely supervise the applicant and improve his performance. Exhibit R6, apart from setting out the retraining requirements, contains the following statement: "Any failure to complete or comply these directions will result in immediate termination of employment. After 30 days, dependent to results, a new program will be discussed. (sic)" The applicant alleges that he was only given Exhibit R6. Because of his contradictory evidence in these matters I am satisfied that by at least 21 September 1995 a number of meetings and discussions had occurred between him and Killen concerning his poor performance in the areas outlined; with the applicant also being given the opportunity to provide explanations. He was in no doubt then that his job was at risk because of his behaviour, however, notwithstanding this knowledge he was unable to accept the disciplines imposed by Killen in order to improve his performance. Griffiths gave evidence that he was told by the applicant in the period prior to the termination that the applicant had been warned on at least four occasions that his employment would be terminated. Part of the retraining program required the applicant to attend the office at 8.00am each day and plan with Killen his daily calls as well as spend two days per week with Killen attending calls in the applicant's territory. On 22 September 1995 there was further discussion between the men relating to, amongst other things, the failure of the applicant to provide certain reports. This discussion included Killen again allegedly warning the applicant. On 25 September 1995 Killen went out with the applicant on the applicant's calls and there was occasion for further tension between the two men because the applicant was not happy to attend clients with Killen stating that Killen embarrassed him. The following day on 26 September 1995 the applicant did not attend work at all, telephoning Killen at 7.15am to tell him that he had a flat tyre. The upshot of this call was that the applicant did not work that day, apparently spending the entire day having the vehicle attended to. This involved changing the flat tyre, putting in a replacement battery because he had a flat battery some weeks earlier and had not attended to a replacement as instructed and the recoding of the car radio affected when the battery was replaced. Not surprisingly Killen was of the mind that the applicant was not really trying to comply with his retraining program and had some serious doubts about the time taken to attend to the vehicle. THE TERMINATION On 27 September 1995 the applicant presented at work, greeting Killen by saying "Hi, I'm off". In response Killen called him back into the office for discussion. Kasper corroborated Killen on these opening matters telling the Court that he was within earshot of the initial conversation before going to another part of the store and returning to hear the latter part of the conversation as well. After calling the applicant into his office Killen asked for an explanation of the previous day's activities going so far as to ask for the invoice from K-Mart Tyre and Auto (see Exhibit A6) and ringing that business to enquire about the time taken to attend to the vehicle. What seems to have been at issue is that the applicant instead of pursuing his client calls after repairing the tyre and replacing the battery left the vehicle for recoding of the radio. Killen was upset and obviously felt that the applicant had wasted the better part of a day on the recoding of the radio which was not necessary to the performance of the applicant's duties. Killen alleges that early in the conversation the applicant threatened him by saying, "I have six friends and myself and we will kill you". Despite what was said Killen alleges that, and this is supported by Kasper who by that stage had returned to the area, he told the applicant they should put the problem behind them and get into the car and get on with the job of selling. The applicant responded by refusing to travel in the car with Killen. As a result Killen told him that his employment was terminated and asked for the return of the car keys. It seems that at first the applicant refused to accept the situation and hand over the keys leading to Killen attempting to telephone the police. However, the applicant on seeing this action interrupted the call and handed the keys over. Kasper did not hear any death threat and such a threat was flatly denied by the applicant. The applicant attempted to suggest a version of events amounting to him telling Killen that they could not travel in the same car because the applicant had a client call in Tullamarine at 3.30pm and could not take Killen back to Mulgrave by 4.30pm. His account really does not tally with Kasper's evidence on these matters. Having made that observation, however, I must also say that I do not accept Killen's claim that a death threat was made. It was more likely than not that the refusal to hand over the keys prompted the aborted call to the police. Moreover I find it highly improbable that after a direct threat to kill him Killen would then suggest that they put their problems behind them and drive off to attend on customers. As it turned out after clearing out the applicant's vehicle Killen drove the applicant home to drop him off and collect other items owned by the respondent. This behaviour is not consistent with any or any serious threat being made to Killen's life. Regrettably, the termination did not bring the acrimony to an end and it was alleged by the applicant when they arrived at his home Killen said, "Michael, I know where you live so don't fuck with me or you'll find out why my name is Killen". The lastmentioned statement is denied by Killen. Nevertheless both men subsequently made complaints to the police; although I did find it strange that Killen would make such a late complaint given the circumstances I have already described above. FINDINGS I am satisfied that the principle reason for termination was the refusal of the applicant to comply with the retraining program implemented on 21 September 1995 as a consequence of ongoing performance issues. That refusal took the form of directly disobeying a reasonable and lawful request by Killen to travel with the applicant on his customer calls on 27 September 1995. Given the agreement by the applicant on 21 September 1995 to embark on the retraining program the refusal was clearly a repudiation of his contract of employment (see Adami v Maison De Luxe Limited (1924) 35 CLR 143). The refusal was given in circumstances where the applicant had been warned on numerous occasions that his job was at risk and had a specific warning given that non-compliance with the training program would result in immediate dismissal. The applicant's conduct over a period of time showed a lack of co-operation and an unwillingness to yield to the supervision and direction of his new manager. The applicant was counselled on numerous occasions and obviously had many opportunities to explain any performance related complaints. In these circumstances I find that there was no contravention of section 170DE(1), section 170DE(2) or section 170DC of the Act. Further, I am satisfied that on the balance of probabilities the respondent has shown that the decision to terminate was not tainted by any reason prohibited by section 170DF(1)(a) of the Act. Accordingly the application is dismissed. MINUTES OF ORDERS THE COURT ORDERS THAT: 1. The applicant's 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 twelve (12) pages are a true copy of the reasons for judgment of Judicial Registrar Millane. Associate: .................................................... Dated: 15 April 1996 Solicitors for the Applicant: Slater & Gordon Counsel for the Applicant: Ms L. Fleming Solicitors for the Respondent: Home Wilkinson & Lowry Counsel for the Respondent: Mr A. McNab Date of hearing: 29 February & 1 March 1996 Date of judgment: 15 April 1996