Troop v Spastic Centre of New South Wales [1996] IRCA 624

DECISION NO:624/96 CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - Review of decision of Judicial Registrar - Whether there was conduct providing valid reason for termination - unauthorised use of phone and facsimile and post office box number of business for purpose unrelated to business - No point of principle WORKPLACE RELATIONS ACT 1996 (Formerly known as INDUSTRIAL RELATIONS ACT 1988) s 170DC, s 170DE(1), s 170EHA, s 347 No. NI 1519R of 1995 MARIANNE TROOP v SPASTIC CENTRE OF NEW SOUTH WALES MOORE J SYDNEY23 DECEMBER 1996

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 1519R of 1995 ) NEW SOUTH WALES DISTRICT REGISTRY ) BETWEEN: MARIANNE TROOP Applicant AND: SPASTIC CENTRE OF NEW SOUTH WALES Respondent JUDGE: Moore J PLACE: Sydney DATE: 23 December 1996 ORDER OF THE COURT THE COURT ORDERS THAT: 1. Subject to order 2, the application for review is dismissed. 2. Order 2 of the orders of the Judicial registrar are set aside. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 1519R of 1995 ) NEW SOUTH WALES DISTRICT REGISTRY ) BETWEEN: MARIANNE TROOP Applicant AND: SPASTIC CENTRE OF NEW SOUTH WALES Respondent JUDGE: Moore J PLACE: Sydney DATE: 23 December 1996 REASONS FOR JUDGMENT This is a review of a decision of a Judicial Registrar determining an application under s 170EA of the Industrial Relations Act 1988 (now known as the Workplace Relations Act 1996) ("the Act") by Ms Marianne Troop. Troop had been employed as the data entry and bookkeeping service Manager at D.E.B. Services, a business unit of The Spastic Centre of New South Wales ("Spastic Centre"), between 11 November 1993 and 20 March 1995 when her employment was terminated. The Judicial Registrar dismissed Troop's application and ordered that Troop pay the Spastic Centre's costs. Their costs were assessed in accordance with the Federal Court scale and totalled $7,523.95. Troop sought compensation in proceedings before the Judicial Registrar but now seeks reinstatement and payment under s 170EE(1)(ii). The review was conducted as a hearing de novo though evidence led before the Judicial Registrar was relied upon by both parties in the review. It was supplemented by further oral evidence. Counsel for Troop submitted there were two principal issues. First, was there a valid reason for the termination having regard to Troop's conduct. Second, even if so, was the termination harsh, unfair or unjust under s 170DE(2) the Act. The reason, in summary, for the termination of Troop's employment was that she permitted her de facto partner, Mr Garry Beauchamp, to use the post office box, phone and facsimile number of D.E.B. Services as part of the process of reconstructing invoices that Beauchamp was required to provide to the Australian Red Cross. This matter I discuss in more detail shortly. The Facts D.E.B. Services is a commercial enterprise operated as a business unit of the Spastic Centre. The business provides data entry and book-keeping services for its clients, preparing general ledgers and journals for transactions that, generally, have already occurred. During Troop's employment, D.E.B. Services employed a manager, another able-bodied person and fourteen disabled people. Troop described her duties in the following terms: "I was the manager for D.E.B. Services and I had to basically run the place. We did book-keeping and data entry and at times I even had to do personal care for the guys because that was part of my role. As manager, I had to do everything." Clients of D.E.B. Services included ACROD, Miss Australia Quest, Australia Cerebral Palsy Association (ACPA), and the Australian Red Cross. Troop gave evidence that Beauchamp gave some voluntary assistance to D.E.B. Services, including proffering advice on tenders, marketing the business of D.E.B. Services among his friends, providing business contacts, and assisting with maintenance of D.E.B. Services' office. In addition, Beauchamp lent D.E.B. Services a telephone answering machine, and provided a positive reference, on Australian Red Cross New South Wales letterhead, for services provided by D.E.B. Services. The work done by D.E.B. Services was actually performed for Sydney Mobile Voluntary Aid Detachment ("Sydney Mobile"), a volunteer group of Australian Red Cross members which provides first aid training and services and of which Beauchamp was Commandant and Group Leader. Troop said that Sydney Mobile was a client of D.E.B. Services, although no account was ever raised or paid for work done by D.E.B. Services for Sydney Mobile. Despite the assistance to D.E.B. Services offered by Beauchamp, he was at no time a registered volunteer of the Spastic Centre or any of its business units. In about November 1994, Beauchamp asked Troop whether he could use the post box of D.E.B. Services and identify a D.E.B. Services fax and phone line on three documents related to his personal business, Packaging Plus. Packaging Plus was, at the relevant time, an unregistered business name. It later became the registered business name First Aid Plus and a company First Aid Plus Australia Pty Ltd, was later incorporated. Beauchamp is a director of that company. Troop agreed to the use of the facsimile, phone line and post office box in relation to those three documents. Troop and Beauchamp both say that at no other time did Troop authorise the use of D.E.B. Services facilities for Beauchamp's personal or business interests. Troop adopted the position that the use of the facsimile and phone numbers, and post office box address, were a quid pro quo for the voluntary assistance provided to D.E.B. Services by Beauchamp. Beauchamp gave evidence that he understood the arrangement in these terms. Mr Robert Kevin White, General Manager, Operations, of the Spastic Centre who was also Troop's direct supervisor at D.E.B. Services gave affidavit evidence that: "If Gary Beauchamp had at any time provided unpaid assistance, that is voluntary labour, he would not have been granted the use of these facilities for any purpose, especially not for personal gain." The production of the three contentious documents arose in the following way. Beauchamp's business, Packaging Plus, had packed and supplied first aid kits for Sydney Mobile in July, September and December 1993. They were then provided, under contract, to ASSET Services. Beauchamp described ASSET Services as "an organisation responsible for buildings within the Commonwealth Government." Packaging Plus was paid for its services from an account of Sydney Mobile's account at the St Leonards branch of the Commonwealth Bank of Australia. The account was in the name of "Sydney Mobile V.A.D." Beauchamp and Troop were signatories to this account. It was not the principal account of Sydney Mobile and its status was contentious. In mid 1994, the Director of Finance and Administration of the Australian Red Cross, Mr Derek Howell, became aware of the existence of the St Leonards bank account. Howell said in affidavit evidence that this account was neither authorised by nor known to the Australian Red Cross. Howell also said that concern about the conduct of the account prompted an internal audit by the Australian Red Cross. The Red Cross' Australian Chief Executive Officer, Mr Phillip Hart, instructed Beauchamp to provide an audit of Sydney Mobile's St Leonards bank account "within the week". Beauchamp gave evidence that he told Hart that "I could not be sure that all appropriate paperwork existed but I would try my best." Beauchamp's affidavit states: "I was aware of the fact that I had not provided any invoices or receipts to Sydney Mobile for Packaging Plus' services. I had merely reported my fees to the appropriate persons within the group who arranged payment out of the St Leonards' account. Mr Hart said to me: "don't worry about the paperwork. I just want a report which tells me that the account has been audited and everything is correct". Beauchamp engaged an accountant to prepare the audit of the St Leonards bank account and provided it, along with supporting paperwork, to Hart on or about 18 November 1995. Beauchamp stated: "Amongst this paperwork were 3 statements I had prepared after my meeting with Mr Hart recording the supply of services by Packaging Plus." These three documents were prepared by Beauchamp to confirm transactions that had not been evidenced in writing. They took the form of invoices. They were dated 17 July 1993, 26 September 1993 and 11 December 1993. They do not indicate, on their face, that they were prepared some considerable time after the transaction. The headings of the invoices contain the following details: "TO: SYDNEY MOBILE PHONE: 977-8653 (02) P O BOX Q 250 FAX: 977-8238 (02) SYDNEY NSW 2000 PACKAGING PLUS P O BOX 315 MANLY NSW 2095" The telephone and facsimile numbers are numbers of D.E.B. Services. Similarly, P.O. Box 315, Manly NSW 2095 is the post office box address of D.E.B. Services. In evidence, Troop explained the circumstances under which D.E.B. Services acquired the post office box. She stated: "[White] did sign the authority on behalf of the Spastic Centre. I completed the form but a cheque and also an authority - because we weren't a registered business we needed it from the Spastic Centre and Rob White confirmed and did sign that." Troop said of the three documents: "[T]hey're basically for work done that had been paid for on the dates which are shown on the face of those and physical work that's done and that money was paid over at that time... So they're receipts for expenses in a way." Troop said she knew that Beauchamp had provided the documented services, and that they had been provided at the times stated on those reconstructed invoices. Although she was not specific about whether she saw the invoices before they were used for the audit, Troop said she first saw them in about November 1994 and was aware that they had not been prepared on the dates appearing on them. She said she authorised the use of D.E.B. Services' address, and phone and facsimile numbers because "it was just ... for a business ID, for a P.O. box identity." Beauchamp gave similar evidence, stating that he did not wish his residential address to appear on the invoices for "personal reasons". He did not disclose these reasons. The circumstances of Troop's dismissal The Spastic Centre became aware of the unauthorised use of D.E.B. Services' address and telephone facsimile numbers when contacted by the Red Cross. Hart contacted the Chief Executive of the Spastic Centre, Mr Ivan Bruce Alcorn, seeking information about the company or business Packaging Plus. Alcorn gave evidence that Hart told him the Red Cross was investigating some anomalies in one of their bank accounts and had tried to contact Packaging Plus using the contact details given on some invoices. Hart said that the contact details on the invoices led the Red Cross to the Spastic Centre's Data Entry and Bookkeeping Services. The Red Cross faxed copies of the Packaging Plus invoices to the Spastic Centre. The Spastic Centre made inquiries about the identity of Packaging Plus. White gave evidence that, at this point, he noticed that the invoices predated the time at which the relevant Spastic Centre's post office box number was required. White told the Court: "I believe the post box was started up for an ACROD contract ... sometime in June 94. So it was a year after these invoices were supposedly used, that post office box that never existed, and two of the three invoices had a date on them which stated that they had been raised prior to the employment of Marianne Troop [by D.E.B. Services]." Two meetings were held before Troop was dismissed. The first, between 2.30pm and 3.30pm on 16 March 1995 was held at the Allambie Heights headquarters of the Spastic Centre. In attendance were Troop, White, Mr Peter Merino and Ms Meryl Brown. During this meeting, Troop was asked questions relating first to her relationship with Beauchamp, second, the documents on which she had authorised the use of the D.E.B. post box, and third whether, as a member of Sydney Mobile, she was a co-signatory to a Sydney Mobile bank account. Troop's "conflict of interest" was also discussed. Troop gave evidence that she understood this conflict of interest to refer to the relationships between her and Beauchamp, and between their relationship with Sydney Mobile. In addition, Merino and White referred to a "scandal". However Troop says it was never made clear to her what this scandal involved. She said: "[T]hey just - basically, it was just - they said by implication. They didn't want their name to be involved in some sort of scandal." A second meeting was held at 9.00am on 20 March 1995, and was attended by Troop, White, Merino, Mr Phil Ryan and Troop's solicitor, Mr Don Edmunds. At this meeting, Ryan informed Troop that the Spastic Centre had lost confidence in her abilities as manager of D.E.B. Services. Troop gave evidence that she was asked to resign but to keep working until a replacement manager was appointed. White's recollection of the meeting is that two options were discussed with Troop, either she resign or her employment would be terminated. Troop said she then believed: "In regards to my employment, when I left the meeting I was under the understanding that I had to go away and think - I was told to think about it." After this second meeting, Edmunds prepared, on Troop's behalf, a letter to the Spastic Centre stating that she was not prepared to resign. Troop then returned to work at D.E.B. Services to help remedy a computer problem. A letter to Edmunds, dated 20 March 1995 and faxed from the Spastic Centre at 5.58pm that afternoon states: "Dear Mr Edmunds Re: M Troop Further to our phone conversation this letter confirms The Centre's decision to summarily dismiss Ms M Troop effective 20th March 1995. Ms Troop has been paid to the end of March and therefore The Centre will be paying one month's pay in lieu of notice, less the portion already paid for March. Yours faithfully (signed) P J Ryan Personnel Manager" Later that afternoon Edmunds told Troop she had been dismissed. Section 170DE(1): Did the Spastic Centre have a valid reason for the termination of Troop's employment having regard to her conduct? The combined effect of s170DE(1) and s170EDA(1)of the Act is that an employer must demonstrate that there was a valid reason for terminating the employment of an employee for reasons, in the present case, relating to her conduct. I am satisfied that the Spastic Centre has demonstrated that Troop's employment was terminated for a valid reason. On Troop's own account, she authorised the use, by description, of D.E.B. Services' facilities for purposes unrelated to the operation of that business. Further, the circumstances under which she gave this authorisation are of a questionable nature. Troop allowed D.E.B. Services' post office box address, telephone and facsimile numbers to be inserted in the heading of invoices which were not only prepared some months after the dates which appeared on them, but which appear to have been intended to provide primary evidence required for an audit of transactions for which no authentic documentation existed. On a charitable view, Troop acted foolishly but innocently. On one occasion only and in good faith, Troop allowed her de facto partner to use the post box number, fax and telephone number of a business she managed for reasons unrelated to the operations that business. On this view, it is relevant that Beauchamp had, in the past, given voluntary assistance to D.E.B. Services and Troop may have thus reasonably thought the assistance she gave was unexceptional. Troop readily admitted all the details of the incident when questioned by the Spastic Centre and continues to believe she has done nothing wrong. On another view, Troop acted improperly in assisting Beauchamp to provide misleading documentation to the Red Cross of Australia and, in doing so, implicated the Spastic Centre and D.E.B. Services in what were activities of dubious morality if not illegal. However, the issue for this Court is whether the Spastic Centre acted rationally and reasonably when it terminated Troop's employment: Selvachandran v Peteron Plastics Pty Limited (1995) 62 IR 371 at 373, per Northrop J. Troop was employed as manager of a business unit of the Spastic Centre. She gave evidence that in this role she had "to do everything" to administer D.E.B. Services. Troop's general management of D.E.B. Services was unsupervised on a day-to-day basis. A person in this position clearly requires the trust of her superiors. Even if her conduct is viewed in the most benevolent light, it is conduct incompatible with the responsible management of a business unit of a well known Australian charity. Even if only foolish, her conduct could have justified, in my opinion, to decision to terminate her employment. Viewed less benevolently, it plainly warranted her termination. I am satisfied that the Spastic Centre terminated Troop's employment upon rational and reasonable grounds. The termination was not in contravention of s 170DE(1). Section 170DE(2): "Harsh, unjust or unreasonable" termination of employment On 4 September 1996, the High Court of Australia in Victoria v Commonwealth (unreported) held that s 170DE(2) of the Act is invalid. The review in this matter was heard on 14 June and 15 July 1996. Although the case was, in part, argued on s 170DE(2), that provision can no longer be relied upon by the applicant. Section 170DC I am satisfied that as a result of the meeting of 16 March 1995, Troop was made aware of the conduct she was alleged to have engaged in concerning the use of the phone, facsimile and post office box numbers, that might lead to the termination of her employment. She was given an opportunity to respond. No contravention of s 170DC has been established. Costs I have found this issue more difficult. The Judicial Registrar took the view that the application had no substantial prospects of success. I am more sanguine about that issue, particularly given that at the time the application was filed s 170DE(2) would have been available. I am inclined to think that Troop's case was not, at the time the application was made, a hopeless one. It was likely a finding would be made that her conduct was, at the least, foolish. However her dismissal, because of the isolated incident, may have been viewed as harsh unjust or unreasonable having regard to her performance as the mananger of D.E.B. Services more generally. I have not, in this judgement, dealt with evidence intended to impeach Troop's credit. It has not been necessary to do so. However, the likely success of Troop's application depended upon firstly the acceptance of her evidence and secondly, a view being adopted that either her conduct did not warrant the termination or, had s 170DE(2) remained available, it fell within those provisions. It was reasonable, in my opinion, for her to proceed on the assumption that her evidence might be accepted and that the Court might view her conduct benevolently, particularly for the purposes of s 170DE(2). I am not satisfied the application was made vexatiously or without reasonable cause. The Spastic Centre also relied on s 170EHA. For that section to operate it would be necessary for the Spastic Centre to demonstrate that Troop caused it to incur costs because of an unreasonable act or omission of hers in connection with the conduct of the proceeding. I proceed on the basis that the initial hearing before the Judicial Registrar and the review are the one proceedings: Shackley v Australian Croatian Club Ltd (unreported, 6 February 1996, Industrial Relations Court of Australia, Moore J - though that judgment is the subject of an appeal in which judgment is reserved). While not identified with particularly by the Spastic Centre, it is plain it relies upon the commencement and prosecution of the review. However, for reasons earlier given in relation to s 347, I am not satisfied that the conduct of Troop in commencing or prosecuting the review constituted an unreasonable act on her part. I propose to set aside the order of the Judicial Registrar ordering Troop to pay the Spastic Centre's costs and not make any order concerning costs in lieu. I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore. Associate: Alexandra George Date: 23 December 1996 APPEARANCES Counsel for Applicant: Mr R Moore Solicitor for Applicant: Farmer Campbell Edmunds Solicitor for Respondent: Mr D Gardner of Culter Hughes & Harris Dates of Hearing: 14 June & 15 July 1996 Written Submissions Completed: 22 September 1996 Date of Judgment: 23 December 1996