Industrial Relations Commission of New South Wales CITATION: Mohamed v. Reuben F Scarf (Retail) Pty Limited [2004] NSWIRComm 1113 APPLICANT Sherif Mohamed PARTIES: RESPONDENT Reuben F Scarf (Retail) Pty Limited FILE NUMBER: IRC 6749 of 2003 CORAM: Connor C CATCHWORDS: unfair dismissal - misconduct - theft - aborted criminal investigation - monetary compensation - onus of proof - costs LEGISLATION CITED: Industrial Relations Act 1996 Henderson v. Rural Lands Protection Board (1997) 74 IR 142 D and R Commercial Pty Limited v. Flood (2002) 113 IR 344 Pastrycooks Employees, Biscuit Makers Employees and Flour and Sugar Goods Workers Union v. Gartrell White (No.3) (1990) 35 IR 70 CASES CITED: Wang v. Crestell Industries Pty Limited (1997) 73 IR 454 M v. M (1988) 63 ALJR 108 Briginshaw v. Briginshaw (1938) 60 CLR 336 General Steel Industries Inc. v Commissioner for Railways (1964) 112 CLR 125 HEARING DATES: 10/25/2004 DECISION DATE: 11/10/2004 APPLICANT Anthony Russo REPRESENTATIVES: RESPONDENT Elaine Brus DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Wednesday, 10 November, 2004 Matter No IRC 6749 of 2003 Sherif Mohamed and Reuben F Scarf (Retail) Pty Limited Application under S.84 of the Industrial Relations Act, 1996 DECISION [2004] NSWIRComm 1113 Preliminary 1 Mr Sherif Mohamed was employed as store manager by Reuben F Scarf (Retail) Pty Limited which conducts twelve retail stores in New South Wales selling men's clothing and employs approximately sixty persons in its operations. Mr Mohamed was employed at the Bankstown store. His services were summarily terminated on Tuesday, 11 November, 2003 for misconduct after four years of employment for the alleged theft of moneys for banking to the value of $1,170.00. Mr Mohamed denied that he had stolen the money and he subsequently lodged an application under Part 6, Unfair Dismissals, of Chapter 2, Employment [Ss.83 to 90] of the 1996 Industrial Relations Act. 2 The matter was set down by Registry staff for a conciliation and directions hearing on Thursday, 11 December, 2003 and a mention on Friday, 6 February, 2004. There was no appearance for Mr Mohamed at the mention on Friday, 6 February, 2004 and I adjourned the mention for Wednesday, 24 March, 2004. (In fact, Mr Russo, representing Mr Mohamed in the proceedings, did appear later on Friday, 6 February, 2004 and I informed him of the adjournment of the matter.) The police had been involved in this matter but on Wednesday, 24 March, 2004 I was informed that for "...budgetary reasons...", ie in the light of the amount of money involved in the alleged theft measured against the resources for the police, they would not be continuing with the matter which they regarded as only a "...soft crime...". 3 Conciliation failed to resolve the matter. I programmed it for arbitration which occurred on Monday, 25 October, 2004. It was originally intended that the hearing would proceed on Tuesday, 26 October, 2004 but that additional day was not required. Mr Russo represented Mr Mohamed in the hearing, calling him to give evidence. Ms Brus represented Reuben F Scarf in the hearing. She called three witnesses to give evidence in the hearing - Mr Andrew Scarf, the general manager of Reuben F Scarf, and two tellers employed by Westpac Bank at its Bankstown Square Branch: Ms Maria Barounis and Ms Jannette Robles. 4 Mr Mohamed's claim in his Part 6 application is confined to monetary compensation - six month's salary, ie the maximum amount of remuneration available in accordance with S.89(5). But Mr Mohamed's claim must be considered bearing in mind the provisions of S.89(6), viz: "When assessing any compensation payable, the Commission is to take into account whether the applicant made a reasonable attempt to find alternative employment and the remuneration that would have been payable if the applicant had succeeded in obtaining alternative employment." On Sunday, 23 November, 2003 Mr Mohamed had taken up work for another menswear store on a salary greater than that which he received when he was working for Reuben F Scarf. Indeed, Mr Mohamed had worked on a part-time basis for that menswear store during his period of employment with Reuben F Scarf. In doing so, it appears to me that he was acting contrary to directions in the policy and procedure manual which provides that: "...staff may not engage in outside employment with the competitors during the time of his employment..." Mr Mohamed claimed in his evidence that the other menswear store was retailing a product for another market than that which Reuben F Scarf had directed its sales. But that may be a fine distinction which the policy and procedure manual was not contemplating. The fact remains that both Reuben F Scarf and the store with whom Mr Mohamed also worked were selling menswear. 5 In any event, as far as the assessment of monetary compensation is concerned, S.89(5) involves identifying loss of income by the dismissed employee, not an assessment of damages [Henderson v. Rural Lands Protection Board (1997) 74 IR 142 at p.50]. It is fairly settled law now in this State that such monetary compensation is neither punitive, punishing an employer for any wrongdoing on his part, nor designed to enrich the dismissed employee at the expense of his former employer. Because Mr Mohamed found alternative employment so soon after his dismissal, it must follow that the amount of monetary compensation to which he may become entitled is substantially reduced. 6 I accept that S.89(6) should not provide merely for a simple mathematical formula in the assessment of monetary compensation - a sum representing the amount of income over the period of six months immediately prior to the dismissal, compared and contrasted with the remuneration received in the alternative employment and considered against the length of time that an employee was out of work [D and R Commercial Pty Limited v. Flood (2002) 113 IR 344 at p.363]. Whilst S.89(5) does provide a clear jurisdictional limitation of the six month ceiling in S.89(5), the rest is a matter for my discretion. But in exercising that discretion, I am directed by S.89(6) to have regard to efforts made by a dismissed employee to mitigate his loss and the fact that Mr Mohamed had obtained employment, with a higher salary than he had formerly received when he was working for Reuben F Scarf, must serve to limit the amount of monetary compensation he may receive. (That is a matter which Ms Brus also suggested gave rise to an argument that his claim was really frivolous and vexatious and justified costs being ordered against him. I will discuss the question of costs later in this decision). 7 That brings me to the issue before me in this hearing. It is, of course, trite to say that the theft of money from an employer is a ground for his summary dismissal. But, in the light of Mr Mohamed's denial of the allegation against him, the onus of proof rests with Ms Brus to establish that he was guilty of the theft [Pastrycooks Employees, Biscuit Makers Employees and Flour and Sugar Goods Workers Union v. Gartrell White (No.3) (1990) 35 IR 70 at pp.83 and 84]. The position was confirmed by the Full Bench of the Commission [Cahill J - Vice President, Hill J and French C) in Wang v. Crestell Industries Pty Limited (1997) 73 IR 454 at pp.463 and 464, viz: "…The onus of proof in such a case is on the employer and the standard of proof must be such as to enable a positive finding that the misconduct occurred. The standard is, of course, the civil and not the criminal one, but the requisite degree of satisfaction must have regard to the seriousness of the alleged conduct and the gravity of the consequences of the finding. The satisfaction must be such as to warrant a positive finding of the type referred to by the High Court of Australia in M v. M (1988) 63 ALJR 108 and by Dixon J in Briginshaw v. Briginshaw (1938) 60 CLR 336 at p.362…" The fact that the police are no longer considering laying charges against Mr Mohamed does not in any way resolve the issue before me. That would especially be the case since it has been suggested in the proceedings that the reason they have not laid charges against Mr Mohamed was not because they did not believe that Mr Mohamed did not have a case to answer on the basis of the criminal standard of proof - beyond reasonable doubt - but simply because of budgetary constraints on their resources to pursue the matter further. The Evidence 8 On Monday, 13 October, 2003 Mr Mohamed took money representing the store takings out of the safe at the back of the store, put it in a plastic bag, walked the short distance to the bank and placed it in the business express deposit box. It is Mr Mohamed's emphatic claim that there were three envelopes that he deposited in the deposit box at the bank - $934.00, representing the store takings for Friday, 10 October, 2003, $1,170.00, representing the store takings for Saturday, 11 October, 2003 and $793.45, representing the store takings for Sunday, 12 October, 2003. The envelope containing $1,170.00 has gone missing. On Friday, 7 November, 2003 the financial clerk employed by Reuben F Scarf approached Mr Scarf and told him that she had been informed by the bank that the store takings for Saturday, 11 October, 2003 had not been received by it. Mr Scarf raised the matter with Mr Mohamed over the telephone. 9 Ms Barounis' duties at the bank include emptying the business express box and processing its contents. She does so always in the presence of another bank employee. In an affidavit which formed the basis of her evidence in this hearing she recorded the procedure she had adopted on Monday, 13 October, 2003, viz: "...I collected the deposits from the business deposit box with...Ms Robles in accordance with correct Westpac procedure. We then emptied the contents of the box into a basket. The collected amount of envelopes was first counted at this stage and recorded in a register and signed by both myself and Ms Robles. I then took the basket containing the business express deposits to my desk and entered the details into the computer. The details include the account numbers and the amount and the business express deposit number. I processed several Reuben F Scarf deposits on Monday, 13 October, 2003. At the time of processing the deposits, I was not aware of which Reuben F Scarf store the particular deposits came from. When the bank received an inquiry regarding a missing deposit in early November, 2003, we were able to confirm that the amounts received and deposited from the Bankstown store were $934.00 and $793.45. Neither of the deposits I processed from the Bankstown store nor from any other Reuben F Scarf deposit was for the amount of $1,170.00." Ms Barounis had a key to the deposit box but only opens it in the presence of another bank officer. The manager of the bank also holds a key to the deposit box but to my mind it is simply not plausible that such a senior and responsible member of the bank staff may have accessed the box and taken the missing money as Mr Russo appears to me to have been suggesting in his cross-examinatin of Ms Barounis and Ms Robles. 10 Mr Scarf met with Mr Mohamed on Monday, 10 November, 2003. It is Mr Mohamed's claim in the affidavit that he provided as the basis for his evidence that he: "…had no idea what the meeting was about but I suspected something was going on..." I reject Mr Mohamed's claim in that respect. Mr Scarf had already spoken to Mr Mohamed over the telephone concerning the missing money and Mr Scarf asserted in his evidence that when he had again telephoned Mr Mohamed to arrange the meeting he spoke of the missing money, asked him if he would like a witness to be present in the meeting and, when Mr Mohamed did not respond, arranged for Mr Joe Karam, the area manager to attend the meeting as his witness. 11 Mr Scarf claimed that in the telephone conversation Mr Mohamed stated that: "I banked the money and nobody but the bank could possibly have the money." That is an assertion which Mr Mohamed continued to make during the meeting, even when Mr Scarf suggested to him the possibility that he may have dropped the missing money on the way to the bank, viz: "I could not have dropped it because of the way I was carrying it." 12 Mr Scarf had asked Mr Mohamed to outline the procedure he had followed on Monday, 13 October, 2003. Mr Mohamed's explanation to Mr Scarf, outlined in his affidavit, was as follows: "...On Monday, 13 October, 2003 I opened the store safe and got out three days banking, double checked that I had three days banking and went to the bank as usual..." Mr Scarf recalled Mr Mohammed saying that for Saturday, 11 October, 2003: "I closed off the till, counted the cash, balanced the till, drew up a banking sheet, put the money in a sealed banking bag, then took it to the safe. I then turned the alarm off, the lights off and walked out. I pulled down the shutters at around 4.00pm." And for Monday, 13 October, 2003: "I opened the shutter, turned off the alarm, then turned on the lights. I then counted the Sunday takings, filled in the banking slips, counted the float. By about 9.30am Sunday's takings were in the safe. When I put the money in the safe, I saw the banking from Friday and Saturday in the safe." Mr Mohamed confirmed that no other person had access to the keys to the safe. He has no other explanation for the missing money. Mr Scarf wrote out minutes of the meeting. It was signed by Mr Scarf, Mr Mohamed and Mr Karam. 13 On Tuesday, 11 November, 2003 Mr Scarf had a further conversation with Mr Mohamed. Mr Scarf recalled Mr Mohamed summarising the position in the following manner: "It was either me or the bank. It wasn't me as I definitely remember taking the three days banking from the safe and taking them to the bank and placing them in the express slot... The bank stole the money and have set me up. The banks steal money." At a further meeting at midday Mr Scarf asked Mr Mohamed for a further explanation and Mr Mohamed reasserted that "...there were only two possibilities - me or the bank...". Mr Scarf formed the view that Mr Mohamed had stolen the money and summarily dismissed him. He asked Mr Mohamed to hand over the keys to the store and the safe, collect his personal belonging and leave. Mr Mohamed refused to hand over the keys and remained at the store. Mr Scarf claimed that Mr Mohamed threatened him, viz: "If I have to sell my home, I am going to fix you and your brother up in court." Mr Mohamed denied that he made any such threat. But Mr Scarf called the local police and two police officers attended the store, ordering Mr Mohamed to hand over the keys and leave the premises. Mr Mohamed complied but remained outside the store. Mr Scarf asked the police officers to direct Mr Mohamed not to enter the store again. Conclusion 14 Mr Mohamed has consistently argued that the missing money is the responsibility of the bank. His claim is that he did not steal the money and the only other alternative is that bank officers have done so. He sees the issue in purely black and white terms in that respect. However, in this hearing, I do not believe that I am strictly bound to those two alternatives. Notwithstanding Mr Mohamed's claim that the "...bank has stolen the money...", I have looked for another explanation for the missing money, eg that it was dropped in the street. Ultimately, I have come to the conclusion that Mr Mohamed is correct in that assertion at least - the money has been taken either by him or bank officers and there are really no other options. It is apparently only a short distance that he travelled from the store to the bank. The deposit box is inside the bank and if it were dropped on the floor it would have been seen there by bank staff. Mr Mohamed is emphatic that he deposited the money in the deposit box at the bank. 15 Mr Mohamed had total control of the money from the time it was allegedly placed by him in the safe until he deposited it in the deposit box at the bank. Indeed, no other person has seen the missing money from the time Mr Mohamed claims that he placed it in the safe. I do not believe that the procedure which has been adopted by the bank for the processing of deposits placed in the deposit box would permit an error or theft to have occurred at that end. Ms Barounis and Ms Robles provide complimentary evidence in this hearing of the action that was taken by them. By comparison, Mr Mohamed's version of events is totally uncorroborated. 16 I therefore reject Mr Mohamed's version of the incident. I am satisfied, according to the standard of proof required of Ms Brus in accordance with the reasoning in Wang v. Crestell Industries Pty Limited - the civil standard on the balance of probabilities - that Mr Mohamed was entirely responsible for the missing money at all material times and the fact that it has gone missing must mean that he stole it. I therefore see no justification for my intervention in support of him and dismiss his Part 6 application. 17 However, I also reject Ms Brus' application for costs against him. Costs in Part 6 proceedings are governed by S.181(2)(c), viz: "...the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals), who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious..." Ms Brus has argued that Mr Mohamed's Part 6 application was vexatious because (i) the short period of time before he found comparable alternative employment would confine his claim to a modest amount only and (ii) the threat that Mr Scarf alleges he made - "...I am going to fix you and your brother up in court..." (but which Mr Mohamed denies) reveals his real motive for pursuing his Part 6 application. 18 A frivolous or vexatious action is one where the party bringing it is not acting in good faith and merely seeks to annoy or embarrass an opponent or which is not designed to produce any practical result of benefit to him. In order to bring a case within the description of frivolous or vexatious it is not sufficient merely to say that the applicant has no cause of action. It must appear that the cause of action is, on the face of it, clearly one which no reasonable person could properly treat as bona fide and contend that he has a grievance which he was entitled to bring before the court. A frivolous or vexatious claim is, to use the language of Barwick CJ of the High Court in General Steel Industries Inc v. Commissioner for Railways (1964) 112 CLR 125 at p.129: "…so obviously untenable that it cannot possibly succeed; manifestly groundless; so manifestly faulty that it does not admit of argument; discloses a case which the Court is satisfied cannot succeed; under no possibility can there be a good cause of action; so manifest that to allow them (the pleadings) to stand would involve useless expense…" Whilst I am satisfied that Mr Mohamed's Part 6 application had no merit, my assessment has been made on the basis of the balance of probability. I do not hold myself up as infallible in my assessments and my conclusion that Mr Mohamed stole the missing money on the basis of that civil standard does not, in my view, support a claim that he is precluded from mounting a claim under Part 6. Consequently, I do not consider that he was acting frivolously or vexatiously in pursuing his claim under Part 6. He has every right to exercise the rights he has in that respect. P J CONNOR Commissioner DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.