SHULVER v SZALADZINSKI [1997] IRCA 104

DECISION NO:104/97 IN THE INDUSTRIAL RELATIONS COURT) OF AUSTRALIA ) No. NI.96/1299R NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: JOYCE MARGARET SHULVER Applicant AND: JULIE SZALADZINSKI Respondent CORAM: WILCOX CJ PLACE: SYDNEY, DATE: 26 FEBRUARY 1997 EXTEMPORE REASONS FOR JUDGMENT WILCOX CJ: This is an application for review of orders made by a Judicial Registrar at a hearing that proceeded ex parte. It is not necessary to go into the reasons why that occurred. But the result, of course, was that the Judicial Registrar had only the evidence adduced on behalf of the applicant. The respondent was not present and her version of relevant events was not before the Judicial Registrar. The hearing today proceeded on the basis of entirely fresh evidence without any reference being made to the material before the Judicial Registrar. The first issue presented to the Court by the parties is whether this is a case where the termination of employment was at the initiative of the employer. Despite the submission put to me by Ms Oakley, on behalf of the respondent employer, I am of the opinion that this question must be answered in the affirmative. Even the respondent's version of the termination compels this conclusion. The applicant Joyce Margaret Shulver was employed in a shop, called the Yamba Kiosk, conducted by the respondent, Julie Szaladzinski. According to the respondent, at about 1pm or 2pm on 31 January 1996 she was attending to some paperwork in her dining room when Ms Shulver came into the dining room and said, "Am I being sacked?" Ms Szaladzinski says she was surprised, but replied, "I'll have no choice but to let you go eventually". Ms Shulver responded to this, according to Ms Szaladzinski, by immediately demanding her money. Ms Szaladzinski says she was unable to say any more because a shouting match developed between Ms Shulver and Ms Szaladzinski's boyfriend, a Mr Lewis, who was present at the time. Ms Szaladzinski "could not get a word in edgewise". I have to say that I was not impressed by Ms Szaladzinski as a witness. She was unresponsive to many questions and often seemed deliberately to prevaricate. I do not believe there was no opportunity for her to give a fuller explanation of the position, had she wished to do so. Ms Shulver seemed to me to be a quiet, almost unassertive, person. I cannot imagine her getting into a shouting match with anybody, and certainly not to the point where she could not be spoken to about the difficulties of the business, if that is what Ms Szaladzinski wished to do. In any event, even on Ms Szaladzinski's version of the facts, it will be apparent that when Ms Shulver asked her the direct question whether she was being sacked, Ms Szaladzinski did not deny it. She responded affirmatively, even though she made a reference to it happening "eventually", whatever that might mean. When asked by Ms Shulver to make up her money, she did so, without saying that she did not wish Ms Shulver to leave at that time. Ms Shulver's version is even more supportive of a finding of unlawful termination at the initiative of the respondent. According to her, she originally had a good relationship with Ms Szaladzinski and Mr Lewis. Mr Lewis was not employed in the business but spent a lot of time in and around the shop. However, Mr Lewis developed the habit of making derogatory remarks to Ms Shulver. On at least one occasion Ms Shulver complained to Ms Szaladzinski about this but Ms Szaladzinski simply "shrugged her shoulders". I accept that evidence. It is consistent with the attitude displayed in the whole of Ms Szaladzinski's evidence. She simply shrugged off anything that seemed inconvenient or made her uncomfortable. On the morning of 31 January, there was an exchange between Mr Lewis and Ms Shulver in which Mr Lewis made a comment about her being given her "marching orders". I think the actual words attributed to him in Ms Shulver's evidence were, "You've got your marching orders. I'm glad you're going". Ms Shulver was sufficiently upset about this to leave the shop and go across the road to ring an adviser at Skillshare, the government agency by whose arrangement she was working, on a subsidised basis, for the respondent. She was told by her contact at Skillshare to go back to the shop and confirm the situation with Ms Szaladzinski. It was for that reason that she went to the dining room and asked a direct question, as recounted by Ms Szaladzinski. According to Ms Shulver she asked: "What did Mr Lewis mean about marching orders, am I sacked?" Ms Szaladzinski responded to Ms Shulver with a simple "Yes". Ms Shulver says she was upset about this. She asked for her money to be made up and rang her sister to come and drive her home. The fact that she did this was confirmed by her sister, Ms Vicki McDonald, who gave evidence that applicant was upset when she (Ms McDonald) arrived at the shop. She also gave evidence that Mr Lewis came out of the shop as Ms Shulver was leaving and called out remarks to her like, "You are a silly old cow. You'll never work again". This is consistent with the evidence of Ms Shulver as to the type of remarks he had been making to her over the preceding month or so. I see no reason to disbelieve Ms McDonald's evidence. It is strongly supportive of Ms Shulver's evidence. I think that harassment by Mr Lewis was a primary cause of the breakdown of the employment relationship. Mr Lewis was not called to give evidence, notwithstanding that Ms Szaladzinski is still in contact with him. Apparently, their romantic relationship has broken down but he is aware of this litigation. In fact it appears he complained to Ms Szaladzinski about being denied an opportunity to give evidence at the hearing before the Judicial Registrar. The obvious question, which was put today to Ms Szaladzinski, is "Well why did you not ask him to give evidence today?" - in other words, why not give him the opportunity he claimed he would have liked to have had. She gave no comprehensible answer to this question. In short I accept the case presented by the applicant as to the circumstances of the breakdown of the relationship between the parties, and as to what happened on 31 January. It follows that I must find that the termination of employment was at the initiative of the employer. The next question is whether the employer has established there was a valid reason for termination of the employment. The submission put by Ms Oakley, on behalf of the respondent, is that there was a valid reason, namely the lack of profitability of the business. In support of that submission she refers to a number of matters. One is evidence given by her client that, during January 1996, she realised the business was not doing well financially and that she should cut down orders for slow-selling stock. I hesitate to accept any uncorroborated evidence given by Ms Szaladzinski, but it is not difficult to think she would have realised it would be sensible to cut down on slow-selling stock. Any business person, who has any management skills whatever, would realise this is a good idea. The realisation does not necessarily mean the business is lacking in profitability. Ms Oakley also relies upon a document that was admitted into evidence over the objection of Mr Davron, counsel for the applicant. This document is in the form of a Profit and Loss Statement. It is scrappy in the extreme. According to the evidence, it was created by a tax consultant to whom various records were given. The statement shows a net loss of $29,303 in the operation of the business between 20 September 1995, when it was purchased by Ms Szaladzinski for $30,000, and 23 March 1996, when it was sold for $10,000 to her former defacto husband as one element of an overall property settlement between them. I am sceptical about the document. This is not only because of its unprofessional form but also because it claims a gross profit - that is, the difference between cost of goods sold and gross takings - of only $14,682. Given that the business was substantially a take-away food shop, a trading profit of only 20 per cent before operating expenses is difficult to believe; particularly when one takes into account that this includes the whole of the summer holidays, and that Yamba is a seaside resort. To put the matter at its lowest, I am not affirmatively satisfied these figures are correct. Given their central position in the respondent's case, it is unfortunate that no witness was called to swear to their accuracy. Ms Szaladzinski could only say she handed over certain documents to her tax consultant and her tax return included figures consistent with this statement. That is a far cry from vouching for the figures. The person who compiled the statement was not called. No explanation was given. The other matter relied on by Ms Oakley is that the business closed its doors on 8 February. This fact was proved through Ms Szaladzinski's evidence but no reason was given. The Court is invited to infer that the reason was a lack of profitability that existed before 31 January. I have difficulty about that. According to Ms Szaladzinski's own evidence, on 31 January she was writing cheques for creditors when Ms Shulver came into the room. Apparently at that stage she still had resources enabling her to pay her bills. It seems extremely unlikely that only eight days later she had to close the door for lack of supplies. I also bear in mind that on, 31 January, according to her evidence, she telephoned to the "Sydney Morning Herald" an advertisement for the sale of the business. It seems unlikely she would wish to present a prospective purchaser with a business whose doors were closed. Further, I note that the wages' records seem to indicate no payment to any employee of wages after the wage period ending on 25 January; except to Ms Shulver, for whom a payment was made up as of 1 February. As will be apparent, this is probably incorrect. It may be that the wages' records are simply inadequate and insufficient. It may be that other employees left at this time and that was the reason the doors were closed. It may be something occurred in the relationship between Ms Szaladzinski and Mr Lewis that affected the operation of the business. I do not know. I emphasise that I am not making any finding, or even assumption, about these matters. I only say one cannot infer from the fact of the closing of the doors on 8 February that the business was in a situation on 31 January where it could not continue to carry Ms Shulver's wages. The business was receiving a government subsidy for Ms Shulver's wages. She was paid a gross sum of $420.80 per week but there was a subsidy of $100. She was working full time and, so far as the records show, was the only full time employee of the business other than Ms Szaladzinski. However, Ms Szaladzinski seems not to have spent a great deal of time in the shop itself. Bearing these matters in mind, I would have thought she would be the last person to be terminated on financial grounds. I am left with the overwhelming impression that Ms Shulver was terminated because of the animosity between Mr Lewis and Ms Shulver. There may have been faults on both sides, as is so often the case. But, according to the evidence, the problem arose because of the way in which Mr Lewis treated Ms Shulver, something that Ms Szaladzinski did nothing to control. Even when the crisis occurred on 31 January and, according to her own evidence, a "shouting match" commenced, Ms Szaladzinski did nothing to assert her authority. Why Mr Lewis thought it was appropriate for him to become involved in a discussion between Ms Shulver and Ms Szaladzinski about the latter's employment, I do not know. Still less do I understand why Ms Szaladzinski allowed him to take over the situation. I think the termination of the employment owes a great deal to the way in which Ms Szaladzinski handled the employment relationship. Perhaps she was distracted by her relationship with Mr Lewis. That is as may be. I do not wish to speculate on personal matters. I simply know that she failed in the normal duty of management that any employer has towards an employee. In any event I am not satisfied that the reason for the termination was the financial situation of the business. I hold that no valid reason for the termination is proved. The termination was unlawful. I come to the matter of compensation. The Judicial Registrar awarded compensation consisting of three items. The first item was for the sum of $420.80, this being because of the respondent's failure to give one week's notice as required by s 170DB of the Workplace Relations Act. That item is not contested. It is clear that no such notice was given and it seems appropriate to include this figure in the overall award. The second item concerned an alleged shortfall in wages. This was a matter of contention between the parties. But eventually it was agreed there was a shortfall of $481.29. Accordingly, that sum also should be included in the award. The most significant item is compensation for the unlawful termination. The Judicial Registrar awarded compensation on the basis of six months pre-termination wages. The evidence is that, after termination, Ms Shulver was unemployed until the beginning of July; a period of about 22 weeks. Mr Davron, on her behalf, suggests I should uphold the Judicial Registrar's award of six months earnings. The basis of this submission is that she had left earlier employment, apparently both a full time job and a part time job, in order to enter the respondent's employment. He also points out that this was an extremely upsetting experience for her, particularly as the termination came at the end of a period in which she was harassed at work. I understand that submission and have some sympathy for it, but I do not think I should go so far as counsel submits. I think the appropriate course is to allow compensation reflecting the period during which she was in fact unemployed. On my arithmetic, 22 weeks at $420.80 comes to $9,257.60. Accordingly, I propose to award compensation as follows: (i) One week's wages in lieu of notice pursuant to s 170DB of the Act, $420.80; (ii) Shortfall of wages $481.29; (iii) Compensation for unlawful termination $9,257.60. Those amounts total $10,159.69. I will round that out to the nearest dollar and order that compensation be assessed at $10,160. There will be tax payable on that amount. The appropriate course is for me to order that the compensation be paid into Court within 14 days. The respondent should submit to the District Registrar a calculation of the tax payable on that amount, if necessary after obtaining advice from the Australian Taxation Office. Notice of that calculation should be given to the applicant. If she wishes to contest the amount then the matter can be brought before the Court. If not, the tax should be paid to the Taxation Office and the remainder to the applicant. I appreciate that the respondent may have difficulty in paying within 14 days. I make that order nonetheless. This will allow any enforcement action that may be necessary. I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment of his Honour Chief Justice Wilcox. Associate: Dated: 26 February 1997 APPEARANCES Counsel for the Applicant: V Davron Solicitor for the Applicant: Conroy & Stewart Counsel for the Respondent: J Oakley Solicitor for the Respondent: Clinch Neville Long Date of hearing: 26 February 1997