Hall v Starlone Pty Limited [1996] IRCA 385

DECISION NO: 385/96 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - VALID REASON - COMPENSATION Industrial Relations Act 1988, Ss 170 DE(1) EDA EA EE(3) JOHN FRANCIS HALL V. STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS PETER JAMES YOUNG V. STARLONE PTY LIMITED(A.C.N. 063 294 879)trading as BEGA SMASH REPAIRS BRIAN SYDNEY HALL V. STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS No. AI 1386 of 1995 No. AI 1387 of 1995 No. NI 4830 of 1995 CORAM: LINKENBAGH JR PLACE: CANBERRA DATE: 7 AUGUST 1996

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY No. AI 1386 of 1995 JOHN FRANCIS HALL Applicant STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS Respondent Coram: Judicial Registrar Linkenbagh Place: Canberra Date: 7 August 1996 MINUTES OF ORDERS THE COURT ORDERS THAT: The respondent pay the applicant the sum of $17,191.20 as compensation pursuant to the provisions of Section 170 EE of the Industrial Relations Act 1988 Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY No. AI 1387 of 1995 PETER JAMES YOUNG Applicant STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS Respondent Coram: Judicial Registrar Linkenbagh Place: Canberra Date: 7 August 1996 MINUTES OF ORDERS THE COURT ORDERS THAT: The respondent pay the applicant the sum of $13,988 as compensation pursuant to the provisions of Section 170 EE of the Industrial Relations Act 1988 Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY No. NI 4830 of 1995 BRIAN SYDNEY HALL Applicant STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS Respondent Coram: Judicial Registrar Linkenbagh Place: Canberra Date: 7 August 1996 MINUTES OF ORDERS THE COURT ORDERS THAT: The respondent pay the applicant the sum of $14,383.20 as compensation pursuant to the provisions of Section 170 EE of the Industrial Relations Act 1988 Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY No. AI 1386 of 1995 JOHN FRANCIS HALL Applicant STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS Respondent AND No. AI 1387 of 1995 PETER JAMES YOUNG Applicant STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS Respondent AND No. NI 4830 of 1995 BRIAN SYDNEY HALL Applicant STARLONE PTY LIMITED(A.C.N. 063 294 879) trading as BEGA SMASH REPAIRS Respondent Coram: Judicial Registrar Linkenbagh Place: Canberra Date: 7 August 1996 REASONS FOR JUDGMENT (Delivered ex tempore and revised from the transcript) Each of the matters before me today is an application under the provisions of Section 170EA of the Industrial Relations Act 1988. The three applicants were employed by the respondent in the business it conducted at Pambula under the business name Sapphire Smash Repairs. Mr Young had been employed there for five months prior to the terminations, which took effect on 29 November 1995. Mr John Hall had been employed by the respondent for about eight months, firstly at its premises at Bega and from the beginning of July 1995 at the Pambula premises, and Mr Brian Hall had similarly been employed at Bega before transferring to Pambula in July of 1995. The evidence is that the respondent came into ownership of the business at Pambula early in July of 1995. The employment of the three applicants was terminated by oral notice given on 23 November 1995, when the three applicants and the apprentice who was employed in the business had a meeting with Mr Benesch who is the effective controller of the respondent corporation. I find that in that conversation Mr Benesch said to the applicants words to the effect that he had sold the business and that the new owners were taking over on the Monday, 27 November, and that the new owners would not need the services of the three applicants. I accept the evidence of Mr Young that he took Mr Benesch at face value and accepted that the business had been sold at that stage. On Monday, 27 November, the persons who were said to have purchased the business, Robert Short and Darren Lancaster, were at the Pambula business. Those two men had, until that time, been employed in a similar business conducted by the respondent at Bega. I also accept Mr Young's evidence that on 27 November he formed the belief that, in fact, Mr Short and Mr Lancaster had not purchased the business. Nevertheless, the services of the three applicants were concluded on 29 November pursuant to the notice they had been given on 23 November. If there was no sale of the business effective at the end of November 1995, then there is no evidence from which I could conclude that there was a valid reason for the termination of the employment of the three applicants. The respondent's case is difficult to follow, but is to the effect, if I understand it correctly, that the proposed sale to Mr Short and Mr Lancaster, necessitated the termination of the employment of the three applicants. There is no evidence before me which supports a finding that a sale to the two men had been negotiated, let alone completed as at 29 November 1995. The respondent relies as well on an assertion that the business had, in fact, been sole to Mr Howse, who is the uncle of the wife of Mr Benesch. The evidence of Mr Benesch was that Mr Howse had made available the sum of $45,000 in June of 1995, which Mr Benesch, or the respondent corporation, used in the purchase of the business which was conducted at the Pambula premises. Mr Benesch's evidence-in-chief was that Mr Howse owned half the business, although there is no documentary evidence before me to support that assertion. I am not satisfied that Mr Howse owned a share of the business. He may well have made moneys available, but in the absence of any evidence, which would be readily available if it were in existence, I cannot be satisfied that he was, in fact, a part owner of the business. If I were satisfied that he was a part owner of the business, he would have to be joined as a respondent in these proceedings as he would be an employer of the applicants equally with Starlone Pty Limited. Mr Benesch gave further evidence that Mr Howse bought out his share of the business as at 1 January 1996. I have difficulty in reconciling Mr Benesch's evidence about that transaction with Mr Howse and his evidence about his transaction with Mr Short and Mr Lancaster. Mr Benesch gave clear evidence that Mr Short and Mr Lancaster did not decide not to go ahead with their purchase of the business until two weeks after the end of November 1995,that is, towards the middle of December 1995. He also said that Mr Short and Mr Lancaster had negotiated the purchase of the business at $80,000. Mr Howse gave oral evidence that he put $45,000 into the business in June of 1995 and his evidence-in-chief was that that money belonged to Starlone. He gave evidence that in late December he paid the difference between that amount and the sum of $106,000, the latter amount being the price at which he had agreed to purchase the business from the respondent. Mr Howse told the Court that he decided to purchase the business in mid-October 1995 and that the price of $106,000 was agreed in early November. If that were so, then I am at a loss to understand why Mr Benesch would then negotiate to sell to Mr Short and Mr Lancaster for $80,000. The explanation advanced by the respondent in submissions was that the personal circumstances of Mr Howse had some bearing on the course that the negotiations took. I cannot follow that reasoning, because if Mr Benesch and Mr Howse were at arms length in their dealings and if they had concluded a binding agreement for the sale and purchase of the business at $106,000 by early November, there would have been no incentive for Mr Benesch to abandon that deal and enter into negotiations with Mr Short and Mr Lancaster. In fact, Mr Benesch would have been running some risk of repercussions at the hands of Mr Howse if he had in fact done that and had Mr Howse elected to hold him to the deal. There is no documentary evidence to support the making of any agreement between Starlone Pty Ltd and any other person for the sale and purchase of this business which could be seen in any way to be relevant to the termination of the employment of the applicants on 29 November 1995. There is a document in evidence, the original of which is contained within the Solicitor's file, which is exhibit "F" and a copy of which is exhibit "B". That document bears the date 1 January 1996 and is between Starlone Pty Limited and John Howse. It relates to the sale of the business known as Sapphire Smash Repairs and indicates that the sale and purchase is to be effective from midnight on 31 December 1995. There are several features of this agreement and what is disclosed by the Solicitor's file in relation to the transaction. The document does not refer to the payment of the $45,000 in June of 1995 and on the contrary, it asserts that the sum of $106,000 has been paid. The document is not stamped with New South Wales Stamp Duty. The evidence of Mr Benesch and Mr Howse was inconsistent as to the date of actual execution of the document, but it certainly was signed well after 1 January 1996 and probably in March of 1996. The Solicitor's file indicates that the Solicitor quite properly turned his mind to the question of the transfer of the lease of the premises in which the business was conducted. The file does not indicate, however, any contact with the lessor seeking the lessor's consent to the transfer of the lease, which I note is dated 5 July 1995 and shows Mr Benesch personally as the lessee. I note further that there is a file note in the file dated 13 December 1995 and I quote from it in part - I said that the restraint of trade that he had for seven years was likely to be unenforceable. I said that if I was the purchaser, I would want him to agree to enforce the restraint. He said that whilst he was selling to his uncle....and I underline the next words...he was still staying involved. I said that if that was the case, had he sought advice from Graham Andrews in relation to this and he said "No". The file indicates that Graham Andrews was the accountant from Kothe and Partners, who acted for Mr Benesch. That file note does not support a conclusion that this was an arms length transaction between Starlone Pty Limited and Mr Howse, nor is that conclusion supported by the evidence generally. I note Mr Benesch's evidence that, at the time, his businesses were heavily staffed and his move of Mr Short and Mr Lancaster to Pambula, and the termination of the employment of the applicants, certainly had the effect of reducing his staff numbers. I have grave reservations about the true motives of Mr Benesch in terminating the employment of these applicants. I cannot be satisfied that either Mr Benesch or Mr Howse are witnesses of truth. Mr Howse may have attempted to give his evidence honestly, but there is conflict between his evidence and that of Mr Benesch in some significant details. It may be that Mr Howse was not fully aware of all of the facts and that that is the reason for which I have to find that his evidence is unreliable. The instances of conflict between the evidence of the two witnesses for the respondent include the evidence as to the nature of the transaction between them in July of 1995, the history of the preparation of the documents, such as they are, in relation to the proposed sale of the business to Mr Howse, and their evidence as to the times at which the alleged agreement for the sale of the business was concluded. There are other instances of inconsistency between them, to which I need not refer. If the respondent had concluded a genuine sale of the business to either purchaser, and if Mr Benesch's dealings with Mr Howse were at arms length, then I am sure that there would be documentary evidence to support the fact that the transaction took place in the manner described by Mr Howse and Mr Benesch. There was ample opportunity for the respondent to bring independent evidence to support its case before this Court and as it has elected not to do so, it suffers under what has been called the rule in Jones v Dunkel. I note that neither Mr Short nor Mr Lancaster was called. I also note that there is no documentary evidence to satisfy me that, in fact, the sale to Mr Howse has been put into effect at all. I note also in that regard that no stamp duty has been paid on the documents. If Mr Howse had taken over this business there would be many examples of its business records which could have been brought before the Court to support the assertion that this transaction had actually been completed. Mr Young was the only one of the applicants who gave oral evidence. All of the applicants were present on the first day of the hearing at Bega, on 23 May 1996. Each of the applicants has sworn an affidavit, which is before me in these proceedings, and Mr Young was available for cross-examination. Those parts of the affidavits of Mr Brian Hall and Mr John Hall, which were to be the subject of cross-examination, have not been read by me. I am able to comfortably make the findings that I make in this matter on the basis of the case for the respondent. The onus rests on the respondent, pursuant to the provisions of Section 170EDA of the Act, to satisfy me that there was a valid reason for the termination of the employment. This respondent has fallen far short of adducing before me the evidence which would satisfy me in that regard. There was no sale of the business effective from 29 November 1995. At the very earliest, if Mr Howse did take over the business, that did not occur until after 1 January 1996. I am not satisfied that Mr Howse has taken over the business in any event. There was no other reason apparent on the evidence before me to justify the termination of the employment of the applicants. I therefore find the respondent in breach of Section 170DE(1) of the Act. Turning to the question of remedy. It was put to me by the respondent that compensation should be limited to the period between 29 November 1995 and the date on which Mr Howse took over the business. I am not satisfied that Mr Howse has taken over the business and I consider that to be irrelevant for the purpose of calculating the compensation which is due by Starlone Pty Limited. I note that Mr Howse gave evidence that he did not know about the termination of the employment of the applicants and he took no part in the decision to terminate their employment. Mr Benesch has pre-empted, by his action in terminating the employment of the applicants, any decision which Mr Howse might have made had his purchase of the business been genuine, and had he taken over the business at some later time. It may well have been that Mr Howse chose not to terminate the employment of the applicants and certainly, had Mr Benesch not brought Mr Short and Mr Lancaster to the Pambula premises at the end of November, they would have remained at Bega and the three applicants would have remained employed at Pambula. It would have been the three applicants who therefore were there at the time, whenever it might have been, when Mr Howse took over. I am not minded to restrict the calculation of compensation in the way suggested for the respondent. All three applicants have remained unemployed for at least six months after the termination of their employment with the respondent. Mr Brian Hall obtained other similar employment from 29 May 1996 which is precisely six months after the date of termination. There is little evidence before me as to what each of the applicants has done in the way of obtaining employment since the end of November, apart from some evidence of Mr Young that he has made numerous efforts to obtain alternative employment. I note, as I have said, that Mr Brian Hall has found alternative employment but in so doing, he is no longer resident in the Bega area, but is resident on the Far North Coast of New South Wales. There is no evidence, one way or another, about Mr John Hall's efforts to obtain work. The respondent went first in these proceedings and did not adduce any evidence-in-chief in relation to any challenge which might have been made to the assertion that Mr Hall had not become re-employed, that is, Mr John Hall. I note that the part of Mr John Hall's affidavit, which asserted that he has not worked since November, was excluded because he was not available for cross-examination. The Act grants the Court a discretion, in all of the circumstances of the case, to determine the appropriate amount of compensation to be paid to each applicant. There is no evidence as to whether Mr John Hall has worked since his termination, but equally the respondent has not adduced any evidence to show that he has worked. In all of the circumstances of all three cases, I am of the view that these three applicants have been treated by this employer in a reprehensible manner and I propose to order that each of them be paid the maximum of compensation which is payable under the provisions of Section 170EE(3) of the Act. The orders that I make, therefore, are as follows: 1. In matter number NI95/4830 of Brian Sidney Hall, I order the respondent to pay the applicant the sum of $14,383.20, being 26 weeks at the agreed weekly pre-termination wage of $553.20. 2 In matter number AI95/1386 of John Francis Hall, I order the respondent to pay the applicant the sum of $17,191.20, being six months at the pre-termination weekly rate of $661.20. 3. In matter number AI95/1387 of Peter James Young I order the respondent to pay the applicant the sum of $13,988 being 26 weeks at the pre-termination weekly rate of $538. I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment of Judicial Registrar Linkenbagh Associate: Renee Cauchi Date: 19 August 1996 Counsel for the Applicant: Mr. J. Bundock Solicitors for the Applicant: Griffiths Tierney Representative of the Responent: Mr. G. Harris Motor Traders Association of New South Wales Dates of Hearing: 23 May and 7 August 1996