LOGAN v OTIS ELEVATOR COMPANY PTY LTD [1997] IRCA 200

DECISION NO:200/97 CATCHWORDS INDUSTRIAL LAW - Termination of Employment - Review of Decision of Judicial Registrar - Whether employment terminated for valid reason Industrial Relations Act (1988) Victoria v Commonwealth (1996) 138 ALR 129 Jones v Dunkel (1959) 101 CLR 298 Lek v Minister for Immigration (1993) 43 FCR 100 Hurskin v Australian Jewish Press Pty Ltd (1996) 69 IR 123 Brooks v Panalpina World Transport Pty Ltd (unreported, Industrial Relations Court of Australia, 25 March 1997, Patch JR) Patterson v Newcrest Mining Limited (unreported, Industrial Relations Court of Australia, 6 June 1996, Wilcox CJ) Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199 Anthony Smith & Assoicates Pty Ltd (1996) 67 IR 240 May v Lilyvale Hotels (1995) 68 IR 112 Davis v Portseal Pty Ltd (unreported, Industrial Relations Court of Australia, 10 April 1997, Full Court) Ware v O'Donnell Griffin (Television Services) Pty Ltd [1971] AR(NSW) 18 San Remo (Southland) Pty Ltd v Farrell (1987) 22 IR 291 Otto Waste Industries Pty Ltd v Klajman (1985) 34 IR 361 Robinson v Roxburgh & Alexander Pty Ltd t/as Power Price (1988) 25 IR 1 Comdox (No. 272) Pty Ltd t/as Ronald Stead Golf v Dawson (1993) 49 IR 458 N E I Pacific Ltd v Nicholl (1994) 53 IR 355 Prichard v Krantz (1983) 5 IR 437 Cliffs Road River Iron v Seamen's Union of Australia [1974] LBC Current Review 200 Merchant Service Guild of Australia v J Fenwick & Co Pty Ltd (1993) LBC Current Review 5 Byrne v Frew Australian Airlines Ltd (1995) 185 CLR 410 Ray v Radano [1967] AR(NSW) 471 Poletti v Ecob (No. 2) (1989) 31 IR 321 Electrical Trades Union of Australia, Nsw Branch v Boral Hardies Pty Ltd (1993) 51 IR 412 Hyslop v Liverpool Hospital (1987) 21 IR 192 Richards v Vinlon Pty Ltd (1971) 18 FLR 422 Con-stan Industries of Australia v Norwich Winterthur Insutance (Australia) Ltd (1986) 160 CLR 226 Hackshalls Ltd v McDowell [1930] AR(NSW) 620 Furnace Demolishers Case [1960] AR(NSW) 670 Metropolitan Meat Industry Board re Collective Responsibility [1972] AR(NSW) 80 Re Federated Ironworkers' Association of Australia NSW Division and Australian Fetilizers Ltd Re Overtime [1977] AR(NSW) 17 Sullivan v Comalco Aluminium Ltd (1985) 10 IR 237 No. NI 1279R of 1995 LOGAN v OTIS ELEVATOR COMPANY PTY LTD MOORE J SYDNEY 20 JUNE 1997 IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 1279R of 1995 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: Peter LOGAN Applicant AND: OTIS ELEVATOR COMPANY PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 20 June 1997 ORDER OF THE COURT THE COURT ORDERS THAT: 1. The matter be adjourned to enable the applicant to bring in short minutes to give effect to these reasons for judgment. 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 1279R of 1995 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: Peter LOGAN Applicant AND: OTIS ELEVATOR COMPANY PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 20 June 1997 REASONS FOR JUDGMENT Introduction On 16 February 1995 Mr Peter Logan filed an application under s 170EA of what was then entitled the Industrial Relations Act 1988 ("the Act"). Mr Logan alleged that his employment with Otis Elevator Company Pty Ltd ("Otis") had been terminated on 8 February 1995 in contravention of provisions of the Act. That application was ultimately heard and determined by a Judicial Registrar who concluded, in reasons for judgment published on 30 October 1995, that the termination of Mr Logan's employment was not for a valid reason of the type referred to in s 170DE(1) of the Act, and went on to express the view that, had it been necessary for him to determine the matter, the termination was also in contravention of s 170DE(2). This last provision is not a valid law of the Commonwealth and need not be considered further: see Victoria v Commonwealth (1996) 138 ALR 129. The Judicial Registrar did not order reinstatement but awarded compensation of $20,000. By notice of motion filed on 17 November 1995, Otis sought a review under s 377 of the Act of the determination of the Judicial Registrar. That application apparently gave rise to further claims by Mr Logan not based on the provisions of Division 3 of Part VIA of the Act. In January 1996, a statement of claim was filed on behalf of Mr Logan which, in its final amended form, alleged a failure to pay him amounts due under of one of two awards and alleged a breach of the contract of employment concerning overtime and notice. Sums aggregating more than $830,000 were particularised in the statement of claim as amounts due to Mr Logan. The amounts said to be due under the award were for overtime worked by Mr Logan and amounts payable to an employee who is liable to be called back to work and/or who is standing by. While it was, for a period, a contentious issue at the trial, it was ultimately determined that judgment should be given on all issues except the quantum of Otis's liability for breaches of any award, if liability is established. The litigation between Mr Logan and Otis has been protracted. The hearing before the Judicial Registrar took four days and the review took seven days. Issues have been ventilated fully if not exhaustively. Six witnesses gave evidence before the Judicial Registrar. Four of them gave further evidence in the review and an additional three witnesses gave evidence in the review. The review proceeded on the basis that the evidence given in the proceedings before the Judicial Registrar, including documentary evidence, would be evidence in the review. This evidence was supplemented by not only further oral evidence but further documentary evidence as well. The Evidence The following narrative describes events leading to the termination of Mr Logan's employment in February 1995. Insofar as Otis contends that a valid reason for the termination existed having regard to Mr Logan's capacity or conduct and its operational requirement, the important years are 1990 onwards. The award and contractual claims made by Mr Logan require consideration of earlier events. Much of the narrative reflects evidence that was not contentious or where the scope of the controversy attending it was limited. If there was conflicting evidence about matters which I viewed as material then I have made findings and generally endeavoured to explain why I have made them. The narrative otherwise reflects findings I have made. (a) Logan's personal circumstances and employment history Mr Logan first worked for Otis in 1968. He commenced an apprenticeship in early 1969 as an electrical mechanic. He obtained good grades and in December 1971 gained a certificate stating that he had completed the electrical mechanics course in the honours grade. Indeed, he was nominated for the apprentice of the year in NSW as an electrical mechanic. He continued working for Otis until mid 1975 when he left to help his father in a trucking business. He did this for approximately two years and then took up employment with Otis again in October 1978. However he left in 1979, because his father had became ill, to work again in the trucking business with a view to winding it up. He recommenced at Otis in February 1980 and worked continuously with Otis until his employment was terminated in February 1995. In 1984 Mr Logan first commenced doing work as a local representative of Otis in the Orange area. I will describe shortly and in more detail what the job of local representative entailed in the Orange area. He initially worked as a local representative on an informal or acting basis relieving the local representative, Mr Sarchfield, who was spending a lot of time on sick leave. Mr Logan worked in the Orange area while still generally based in Sydney and would go to Orange for periods of two or three weeks, and up to six weeks, at a frequency of every one or two months. For the purposes of doing that work he was given an expense account and a car to travel to and around the Orange area. He was then paid a wage and additional payments for overtime worked and for callouts though Mr Logan did not make any claim for overtime except for after hours calls. During this period, when not in the Orange area, he would perform his normal duties in Sydney. To that end, he would commute to Sydney from his home at Morisset by car and train. It would take three hours in travel each way. He was doing this on a daily basis for nine or ten months. Mr Logan was permanently appointed to the position of local representative in July 1985 and he relocated there with his family. He was then paid an annual salary. He said that in approximately 1990 he separated from his wife and two of his three children. They were reconciled in 1991. One of the considerations, as he described it, in the separation was the demands arising from being on call 24 hours a day seven days a week. When reconciliation was effected he gave his family an assurance that he would give them as much attention as he could "taking into account his work position". Mr Logan acknowledged in evidence that the separation affected his work performance and in early 1990 he explained to Otis' service manager for the state the difficulties he was experiencing. As local representative at Orange, the most distant places Mr Logan had to work were Nyngan, Coonamble or Coonabarabran. It would take approximately four hours, from the time a call was received, for Mr Logan to get from his home base at Millthorpe to Coonamble. Millthorpe is 20 to 25 minutes drive to the south-east of Orange. It would also take approximately four hours to get to Nyngan and Coonabarabran. Mr Logan estimated that he spent 35 to 40 percent of his work time travelling to and from units being serviced. Travelling time assumes some significance in Mr Logan's claim for overtime and I discuss the evidence in more detail later in this judgment. The property at Millthorpe he owned was a farm of 58 acres. He bought the property in 1987. Mr Logan said in evidence before the Judicial Registrar that he derived income from it though it ran at a loss. He denied spending a lot of time working on the farm. He also said in February 1995 he had 130 sheep and 10 or 12 cattle on the property and that a farm needed to be 100 acres or more to be viable. Mr Logan said that from his point of view it was purely a hobby farm and a space for his children to enjoy the benefits of a country lifestyle. The extent of Mr Logan's involvement in farming was put in issue in the review. It is a matter I return to later. His office on the farm was in an old railway carriage located away from his home. He had located his office there in order to try and have a break from company business. After his employment with Otis was terminated, Mr Logan set up as an electrical contractor and was competing with companies including Otis providing lift service and maintenance. He decided to do so soon after his employment had been terminated. He had tendered for and won work to maintain lifts at the Cowra District Hospital which were formerly maintained by him when he worked for Otis. That contract was one in respect of which he had prepared a quotation on behalf of Otis when still working for it. When he prepared a quotation on his own behalf he was aware of the contract price he had earlier prepared for Otis. He indicated it was his intention to quote for any maintenance contract including any arising from the expiry of an Otis contract. At the time he gave evidence in the review in October 1996, Mr Logan had formed a company called Logan Lifts Pty Ltd. He was doing sub-contract work for a competitor of Otis, Schindlers Elevators Pty Ltd. It involved doing emergency or callout repair work in the Bathurst/Orange area. He had, by then, secured work with Cowra District Hospital, Coonamble RSL, Central West County Council and the Canobolas Hotel. Three of these were Otis customers. (b) Basis of his engagement The circumstances in which Mr Logan was offered and accepted the position of local representative at Orange was the subject of evidence from Mr Logan, Mr Raymond White and Mr John Bull. In 1985 Mr White was state manager, NSW and ACT and Mr Bull then held a position described as field operations manager, NSW. In an affidavit, Mr White gave evidence that he offered Mr Logan the position of local representative though he could not recall the words of the conversation with Mr Logan. He said that what he could recall is that he put the same conditions to each appointee in the same way. This was done in accordance with procedures in place at the time. He essentially denied saying to Mr Logan, as Mr Logan contended, that he had the job as local representative for as long as he wanted it. Even if this had been said, which it may well have been, it could not reasonably have been understood by Mr Logan as an indication that the job was his for as long as he wanted it irrespective of how he performed it. It is highly improbable that a statement was made that would have been understood in this way in the circumstances. However, I accept that, at the time, Mr Logan may have believed that the position was, subject to satisfactory performance, one he would occupy for a lengthy period. Mr White said he gave Mr Logan a document which was an earlier version of a document in evidence entitled "Duties and Responsibilities Statement - Local Representative" dated June 1986. That document set out in detail the duties and responsibilities of a local representative. In his oral evidence Mr White said the effect of what he told Mr Logan constituted an explanation of the requirements of the position. He said his present belief was that he would have referred to the "salient issues" and the duties and responsibilities statement. He would have clearly spelt out the structure of his salary package. He believed he would have said that Mr Logan was to be a salaried employee and, as such, would not be paid overtime. Mr White said that for the following three or four years while he was state manager NSW and ACT, Mr Logan did not query his status as a salaried employee. In cross-examination Mr White said that it was not expected that the local representatives' routine hours would be 40 per week although there would be call-backs outside the regular working hours, that is, at night time or at weekends. Mr White said this was reflected in the salary though he could not say what hours might be assumed to be worked for the purpose of setting the salary. He added that the payment would include an amount not only for call-backs but for overtime more generally which would include call-backs. In an affidavit, Mr Bull said that while initially relieving Mr Sarchfield, Mr Logan was paid for any callouts or overtime he worked. He said that while he could not recall the words that passed between him and Mr Logan at the time of his appointment as the local representative, the substance of what he had said was that the job required spending considerable time on his own and required a self starter. Mr Bull had earlier been a local representative in the ACT, and he said he related to Mr Logan his own experiences in that position. He said he ran through the "duties and responsibilities statement" referred to earlier. He pointed out that the salary was to compensate him for any overtime, callouts and additional work of the kind. He demonstrated to Mr Logan how to complete a document entitled "weekly report of hours worked by salaried local representative". It assumes some significance in another context. Part of it reads (relevant sections reproduced): OTIS ELEVATOR COMPANY PTY LTD WEEKLY REPORT OF HOURS WORKED BY SALARIED LOCAL REPRESENTATIVE ACTUAL HOURS WORKED (Including travelling Time) Do not include Lunch Hours, Holidays (unless actually working), absence due to Illness, Vacations or other Absence authorized by Local Manager. (Submit Leave Form ZS.671 through Branch Office.) Work 32 each week MON TUE WED THU FRI SAT SUN TOTAL MULT- TOTAL