Kennington v Quickilver Diving Services Pty Ltd [1996] IRCA 436

DECISION NO: 436/96 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - ALLEGED UNLAWFUL TERMINATION - VALID REASON - OPERATIONAL REQUIREMENTS - FAILURE TO GIVE ADEQUATE NOTICE - LACK OF PROCEDURAL FAIRNESS INDUSTRIAL RELATIONS ACT 1988 , s170EA, 170DE, 170 DB, 170DC PHILLIP KENNINGTON -v- QUICKSILVER DIVING SERVICES PTY LTD NI 96/1358 BEFORE: BOULTON JR PLACE: BRISBANE (HEARD IN CAIRNS) DATE: 23 AUGUST 1996

IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. NI 95/1358 QUEENSLAND DISTRICT REGISTRY BETWEEN: PHILLIP KENNINGTON Applicant AND: QUICKSILVER DIVING SERVICES PTY LTD Respondent BEFORE: BOULTON JR PLACE: BRISBANE (HEARD IN CAIRNS) DATE: 23 AUGUST 1996 THE COURT ORDERS THAT: 1. The application be allowed; 2. The respondent pay to the applicant the sum of $3,868 damages; 3. The respondent pay to the applicant the sum of $5,819 damages; 4. The respondent pay to the applicant the sum of $2,000 compensation, each of the said sums to be paid within 14 days of the date of these orders. NOTE: Settlement and entry of orders are dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. NI 96/1358 QUEENSLAND DISTRICT REGISTRY BETWEEN: PHILLIP KENNINGTON Applicant AND: QUICKSILVER DIVING SERVICES PTY LTD Respondent BEFORE: BOULTON JR PLACE: BRISBANE (HEARD IN CAIRNS) DATE: 23 AUGUST 1996 REASONS FOR JUDGMENT Background At all material times the applicant, now aged 31, was employed by the respondent, the correct title of which is Gaincrew Pty Ltd ACN 010 571 892. He initially commenced work with the respondent in Queensland in late 1991, becoming one of its diving instructors in mid‑December 1991. He later became a staff instructor which enabled him to assist in the teaching of diving instructors. In July 1994 the respondent appointed the applicant to set up on its behalf a diving operation in Mexico. The terms of that appointment are contained in a letter dated 14 July 1994 (exhibit A16). From his arrival in Mexico to early 1996, the applicant managed that operation for the respondent. Late in 1995 it was obvious that the Mexican operation was not profitable. The respondent decided to send its financial controller, a Mr Moors, to Mexico to report on its future. Moors arrived about Christmas Day 1995. After investigation, he decided to recommend to his superiors in Australia that the business in Mexico be closed down, and did so recommend. Findings Thereafter the picture becomes murky. What follows, unless otherwise indicated, represents my findings on what I consider to be material matters, including those in dispute. The applicant was involved in a physical altercation with a Mexican national on 2 January 1996, which altercation Moors witnessed. The Mexican national performed work for the respondent's business. On 3 or 4 January 1996 Moors told the applicant he was dismissed, citing his part in the altercation and telling him he was to return to Australia as soon as possible. There is a dispute between the parties about whether or not Moors also then told the applicant of an offer by the respondent for the applicant to take up his old job in Australia as a dive instructor. However, a facsimile from a Mr Dineen, the managing director of the respondent, received by the applicant on 8 January 1996 made it clear that, "it has been decided to replace you as General Manager in Mexico with Mr Bob Moor, (sic) "our Company Secretary. This is effective from 4 January 1996." The facsimile went on to add a request that, "you make immediate arrangements to return with your family in order to recommence in your previous position as a Dive Instructor with Quicksilver Dive Australia. This position has a start date of Monday, the 15th of January 1996." The facsimile made reference to the "criminal charge against you," and what might be collectively called financial irregularities, claiming that these matters, "have all contributed to the Directors' decision in this matter." The offer of employment in Australia as a dive instructor was a demotion. The applicant's position as manager of the Mexican operations was terminated at the initiative of his employer. The termination was botched. I am not satisfied that there was anything in the applicant's involvement in the altercation, or the alleged financial irregularities, which justified the summary termination of his employment in Mexico. The applicant ought to have been given a proper opportunity to answer the matters which Mr Dineen claimed had contributed to the directors' decision. He was not. The respondent had a valid reason to terminate the applicant's employment in Mexico, associated with its operational requirements, being its decision to close down the Mexican operation. This process, however, had to be attended with both substantive and procedural fairness in the manner of that termination. Why could the applicant have not been given the notice contemplated in his letter of appointment, which stated: In this event that we choose, for any reasons, to discontinue the arrangement in Mexico we will meet your relocation costs to Australia (including family) and you will return to our full time employ here in Australia but if you leave on your own accord then this will not apply. I suggest that either party may terminate the employment arrangement on one months notice. Had such notice been given, the prospect of an orderly winding up of the Mexican operations might have been achieved. As it was, the applicant reacted very badly to his termination, proving not only unco-operative with Moors, but obstructive. He initiated legal proceedings in Mexico, by serving an embargo on company assets. The Mexican operations in fact ceased about 7 February 1996. The applicant did not avail himself of the respondent's offer to fly back to Australia at its expense, believing the deadline set to be too compressed. He did not take up the respondent's offer of employment with it in Australia. I suspect he was preoccupied with pursuing legal proceedings in Mexico, and also, no doubt, tidying up his and his family's personal affairs. In any event, the respondent was already in breach of the Industrial Relations Act 1988 when it extended the date by which the applicant might accept its offer. As well as giving the applicant one month's notice of the termination of his employment, the respondent ought to have seen to the payment of the relocation costs of the applicant and his family to Australia. The evidence given in respect of these was imprecise and unsatisfactory. The applicant has claimed these costs, which claim I treat as being in the associated jurisdiction of the Court, and properly brought. On the state of the evidence, it will be a case of doing the best I can in assessing damages for this component. I will not allow anything for claimed legal expenses. As the respondent's Counsel pointed out, these legal expenses appear to have related not only to the embargo on company assets but also proceedings arising out of the altercation with the Mexican national. No attempt was made to apportion the sum claimed for this item. Remedies The applicant eschews reinstatement. I find reinstatement to be impracticable. He seeks compensation by pointing to his lower earnings since returning to Australia and finding work. He would not have continued in receipt of remuneration at a manager's rate, after the closure of the Mexican operations, in any event. His earnings since returning to Australia have been somewhat less, of the order of $85 net per week, than had he taken up work as a diving instructor with the respondent. I am not altogether convinced of his diligence in pursuing opportunities in that field, where he is clearly well qualified and experienced. In my view, only modest compensation is called for. In summary, I propose to award the applicant damages for the failure of the respondent to give him proper notice of termination of his employment, damages for the relocation costs which he and his family bore, and compensation for the breach of procedural fairness. By reference to exhibit A16, the value of the applicant's remuneration was about $967 gross per week. Miscellaneous I mention for completeness that at the outset of the trial the respondent raised the question of an alternative remedy, pursuant to sub-section 170ED(4) of the Act. Being not then so satisfied in terms of that sub-section, I proceeded to hear the matter. I understand that the respondent no longer presses this point. The respondent did not take any point about the date of filing of the application in the Australian Industrial Relations Commission. Orders The orders are: 1. The application be allowed; 2. The respondent pay to the applicant the sum of $3,868 damages; 3. The respondent pay to the applicant the sum of $5,819 damages; 4. The respondent pay to the applicant the sum of $2,000 compensation, each of the said sums to be paid within 14 days of the date of these orders. I certify that this and the preceding three (3) pages are a true copy of my Reasons for Judgment. Judicial Registrar: Date: 23 August 1996 Appearing for the Applicant: Mr Newman Solicitors for the Applicant: Newman & Associates Counsel for the Respondent: Mr Philp Solicitors for the Respondent: Mellick Smith & Assoc. Dates of hearing: 17 and 18 July 1996 Date of judgment: 23 August 1996