Industrial Relations Commission of New South Wales CITATION: Li v Rayna Pty Ltd [2006] NSWIRComm 1118 APPLICANT Dasheng Li PARTIES: RESPONDENT Rayna Pty Ltd FILE NUMBER(S): 4740 of 2005 CORAM: McLeay C CATCHWORDS: Unfair dismissal - accountant - delay due to proceedings elsewhere - application accepted out of time - allegations of criminal conduct - allegations not proved - applicant claimed constructive dismissal - credibility of witnesses - case not made out - aplication dismissed Industrial Relations Act 1996 LEGISLATION CITED: Crimes Act 1900 Evidence Act 1995 CASES CITED: Allison v Bega Valley Council [1995] NSWIRComm 175 Western Suburbs District Ambulance Committee v Tipping [1957] AR (NSW) 273 HEARING DATES: 27/04/06, 05/07/06 DATE OF JUDGMENT: 07/26/2006 APPLICANT Mr Dasheng Li appeared unrepresented LEGAL REPRESENTATIVES: RESPONDENT Mr S Bliim of counsel Mr C Cheung, solicitor Keith Chow & Co DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: MCLEAY C 26 July 2006 Matter No IRC 4740 of 2005 Dasheng Li and Rayna Pty Ltd Application by Dasheng Li re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2006] NSWIRComm 1118 1 This is an application by Dasheng Li ("the applicant") for unfair dismissal by Rayna Pty Ltd ("the respondent") pursuant to section 84 of the Industrial Relations Act 1996 ("the Act"). The application shows that Mr Li was dismissed from the position of accountant on 24 August 2004, having commenced work with the respondent on 17 June 2003. 2 Mr Li had become concerned that he had been asked to maintain the accounts in a way that he felt was wrong. On 3 June 2004 Mr Li reported the respondent to the Australian Taxation Office ("ATO"). Prior to this, he had warned workers in the factory that they should declare their incomes to the ATO, as he said they had been paid cash in hand without any deductions for taxation. 3 A series of events followed in which Mr Li had various discussions with Raymond Chen, a former director of the respondent company, and his wife Nina Chen, the sole Director during the relevant period. These events culminated on 1 September 2004 when Mr Li was arrested and charged with extortion under s 100A of the Crimes Act. The decision of Magistrate Longley was handed down in the Local Court on 26 August 2005, at which time the charges were dismissed. 4 Whilst Ms Chen was the sole Director of the respondent company, her husband Mr Chen had delegated responsibility for the day-to-day affairs of the company in his role as Manager. Application lodged out of time 5 Mr Li filed his application for unfair dismissal on 9 September 2005. Section 85 of the Act provides, in subsection (3), that: The Commission may accept an application that is made out of time if the Commission considers there is a sufficient reason to do so, having regard in particular to: (a) the reason for, and the length of, the delay in making the application, and (b) any hardship that may be caused to the applicant or the employer if the application is or is not rejected, and (c) the conduct of the employer relating to the dismissal. 6 The application was made one year and 16 days after the date of the alleged dismissal, being almost one year out of time. The reasons given for the delay were the charges against the applicant and proceedings in the Local Court. Mr Li was charged just one week after his dismissal and his application was filed eight days after those charges were dismissed. There was no argument by the then representative for the respondent Mr Blim of counsel, as to hardship. 7 During the hearing of this matter on 26 April 2006, I set out my consideration of the relevant issues and found that there was sufficient reason to accept the application out of time. Arguments about evidence 8 The hearing originally was set for two consecutive days, being 26 and 27 April. However, some delay occurred when the applicant sought to tender transcript of proceedings between the parties in the Local Court. A certificate under section 128 of the Evidence Act 1995 was produced in evidence, having been issued by Magistrate Longley on 29 May 2006. The certificate provided that evidence given by Raymond Chen on 19, 20 and 21 July 2005 in case no 20327457/04/2 Police v Da Sheng Li could not be used against him. 9 Statements made by Mr and Ms Chen in preparation for those proceedings were received into evidence before me without objection. Also part of the transcript of those proceedings not related to the testimony of Mr Chen were received into evidence. Dismissal or resignation? 10 Mr Li admitted to Ms Chen on 3 June 2004 that he had warned the factory workers that they may be in trouble with the ATO because of the way they were paid. On 15 June Mr Li said he was called in to Mr Chen's office where Mr Chen initially tried to dismiss him but then offered him a salary increase from $50,000 to $75,000. On 24 August he said he was again called in to Mr Chen's office where he was threatened by Mr Chen. Mr Li said he left the office saying he had been sacked. 11 The following day Mr Li applied for an Apprehended Violence Order against Mr Chen because of alleged threats against himself and his family. That application was later withdrawn. No threats were substantiated by the applicant, and Mr Chen denied having threatened Mr Li or his family. 12 Mr Chen denied any knowledge of tax avoidance or tax evasion. He said that at the meeting on 15 June Mr Li had demanded a salary increase in lieu of causing trouble with the ATO. Because it was the end of the tax year and Mr Chen had no knowledge of how the accounts operated, he said he had no choice but to increase Mr Li's salary. Following a discussion on 24 August, Mr Chen said that Mr Li left his office saying to the factory workers: "I resign because the company has serious tax problems." Mr Chen then called Mr Li back into his office and turned on his MP3 player to record the conversation. Mr Chen provided transcript of the recording, which was in Mandarin, with a translation by an accredited interpreter, showing the speakers as R (for Raymond Chen) and L (for Mr Li, who was known at work as Luke). The translation read in part as follows: R Luke, why did you make things so terrible? Any benefit to you? L I don't want to talk about anything now. It is not necessary. R Luke, is there anything good to you? L You can talk. R Sorry? L Raymond…(not very clear). I do not want to talk. I cannot see any meaning to talk with you. R That's what you said. What do you want? L I have already told you. 1500000 dollars. R Luke, you should not behave like this as a man. L You either. I do not need you to teach me. R Luke, you have a long way to go from now. So do we. You should not do thing like this. Luke's mobile was ringing. (Maybe it was from his wife.) L Hello. OK. OK. I am now in his office. You know the address. You should call. Call the police. R Who are you calling? L Yes, I cannot go out. He does not allow me to. R Go away. Nobody does not allow you to go! Luke, what do you mean? Luke stood up and began to move. L Raymond, if the Federal Police starts their investigation, I will report and provide the evidence. At that time the problems are yours. Whether you have broken the law or not, you can decide by yourself. OK? I do not need one cent from you. What I should get is one-year or half-year salary. R I can pay your salary to you. Take a seat. I do not force you to sit down. Please take a seat. L OK. R You made things so complicated. Is there anything good to you? Luke began to move. R Luke, wait! Tell me what you want. L I have told you, haven't I? 1500000 dollars, pay me! If not, it is unnecessary for us to see each other gain. I don't need this money to live on. I can find a job. It doesn't matter, I can find a lawyer to sue you and take my time to find a job. It doesn't matter. It doesn't matter. R Luke, I have consulted a lawyer too. I asked my friend about a lot of things. L That's your business. Don't talk to me. R Don't use this to threaten me. L I am not threatening you. First of all, I didn't break the law. R We are not kids. L You are not a kid. Me either. R What did you do such thing for? L Nothing. Rights! R We trusted you so much! We treated you so well! Why? L You did not treat me as well as you said. In fact, you ruined my future. As you know, I quit my job at a professional accountant firm. If you did not need an accountant, you should tell me earlier. If you only need a receptionist, just look for a receptionist. The reason you need me to work here is to do the tax evasion for you. I refused, so you wanted to fire me. I know you too well. R Luke, take a seat and let's have a talk. L Raymond, no further talk. I know you too well. 13 Mr Li claimed that the recording had been edited, but was not specific in this allegation. The transcript of the recording, as provided in evidence, does not assist in determining what was said by Mr Li before or after the discussion in Mr Chen's office. It does, in my view, show that Mr Chen did not dismiss Mr Li. However, it shows that Mr Chen did not deny the allegations of tax evasion, allowing Mr Li to claim that he was constructively dismissed because Mr Chen made it impossible for Mr Li to continue working with the respondent. As Mr Li said, his professional reputation was at stake. 14 During the proceedings, Mr Chen claimed that Mr Li's role included that of receptionist because, as a small business, all office staff were required to respond to telephone calls. It was clear from the evidence of Mr Li and Ms Chen that the role for which Mr Li was recruited d not include reception duties. Mr Li understood the discussion about other duties to be a diminution of his responsibilities. 15 Mr Li then sent an email to a number of people, in the following terms: Dear Creditor As an internal accountant for WD Express and Rayna Pty ltd, I resigned today. I have reasonable ground suspicious that the company above involving serious Tax evade and I reported to the Federal Police and Australia Taxation Office. As a professional accountant and a member of CPA Australia, I have to discharge my responsibility to notice all the creditors of the above companies. Thank you Luke 16 The email correspondence sets out that Mr Li resigned, and gives the reasons for his resignation. Because of the reasons given, it is open to Mr Li to claim that his employer's conduct was the effective reason for the termination of his employment, that is, that there was a 'constructive dismissal': Allison v Bega Valley Council [1995] NSWIRComm 175. Credibility of the witnesses 17 Whether or not the respondent's agents were acting illegally is not a matter on which I wish to comment. I respectfully agree with his Honour, Magistrate Longley, who said: There is absolutely no doubt that the accused believed, after a relatively short period of time as the book-keeper and accountant, that there was non-compliance with the payment of the GST and excise duty, customs duty and a detailed cross-examination about those business activities was put to Mr Chen and he did not shift from his position. When one analyses his evidence, certainly in my view, it got stronger rather than weaker as time went on. Whether or not he, or the company or companies, are guilty of tax evasion, that is for another time and place; certainly another organisation. Certainly there is no evidence to suggest anything has happened as a result of - and this is not in contest - the accused sending off material to the ATO. 18 Mr Li held a number of beliefs firmly, as evidenced throughout these proceedings. As to his demand for money from Mr and Ms Chen, the evidence shows that when Ms Chen gave him a cash cheque for $150,000 on 1 September, he asked for it to be replaced by a cheque in his name so that he could put it into his bank account. This is a not a sign of dishonesty, where one might expect a dishonest person to want to hide ill-gotten gains. It supports Mr Li's claim that he sought two years' salary so that he and his family would not suffer financial hardship while he sought another position. 19 The cheque for $150,000 also supports Mr Li's claim that his talk of larger sums of money were sarcastic remarks intended to express his disapproval of his employer's actions. 20 Ms Chen is the sole Director of Rayna Pty Ltd, a family business. Mr Chen is a Director of Depict which uses space in the same building as Rayna Pty Ltd. He had set up the company in 1994 and had ceased being a Director of the respondent company in June 2004. Mr Chen spends two weeks in Australia, then two weeks in China, where the manufacturing is done. He imports garments and accessories to Australia for sale. 21 Mr Chen said that he employed Mr Li when the needs of the company grew, and gave him a pay increase because he had no choice. Mr Chen said that he and his wife trusted Mr Li to keep proper accounts and records and handle all tax matters for the company. When Mr Li told him he had company records on discs which he would provide to the ATO, Mr Chen said he was concerned because he did not now what Mr Li had done with the records. Mr Chen said that he had trusted Mr Li to keep the accounts and he himself had no knowledge of any wrong-doing. 22 When Mr Li commenced cross-examining Ms Chen, Mr Chen appeared to be indicating to his wife the responses he wished her to give, by nodding his head. When I brought this to the attention of Mr Cheung, his solicitor at the time, Mr Chen left the court room. Whether there was an intention to do wrong, or whether Mr Chen thought he was assisting his wife, is not a matter about which I can draw a conclusion. The question at the time related only to whether or not Ms Chen had been a Director of the respondent in 1995, and her response did not affect the matters relating to the questions before the Commission. Mr Chen's willingness to leave the room satisfied me that there was no ongoing effort by either of them to collude in regard to Ms Chen's evidence. 23 The evidence given by both Mr and Ms Chen was consistent throughout these proceedings, and consistent with statements prepared in 2004 for other proceedings. There is no reason for me to prefer Mr Li's evidence over that of Mr and Ms Chen, or vice versa. 24 There were some inconsistencies between the evidence of the parties, but some may be due to different memories of conversations, and some due to different inferences made from those conversations or different intent, where the intent is not always clear from the words used. 25 For example, Mr Li would have the Commission accept that his pay increase from $50,000 to $75,000 was an indication of the respondent's guilt and an attempt to cover up illegal action. Mr Chen said he needed an accountant who knew the company books and could deal with end-of-year work. He though Mr Li deserved the pay rise. Ms Chen accepted her husband's decision in regard to the pay rise. While both sides of the story are plausible, there is insufficient evidence to accept the applicant's inference. 26 Specifically, there was nothing to cause me to doubt the veracity of any of the witnesses. The result is that where the evidence of the applicant contradicts that of the respondent's witnesses, generally I have disregarded it. Conduct of the applicant 27 As I have said, the question of whether or not there was illegal action is not one that falls within the jurisdiction of the Commission, but clearly Mr Li believed there was and acted on this basis. 28 Mr Li properly reported his concerns to the ATO. However, although I accept that he was motivated by the best intentions, three actions followed which are contrary to his duty to his employer. 29 Firstly, Mr Li copied financial records of the business and took them home, without the knowledge or permission of his employer. He returned them to Ms Chen after his employment had been terminated, in return for the cheque for $150,000. 30 Secondly, Mr Li spoke to employees of the respondent, accusing the respondent of illegal action, namely, paying cash in hand and avoiding taxation responsibilities. 31 Thirdly, on the day following the termination of his employment, Mr Li emailed clients stating that he had reported the respondent for tax evasion. 32 These three incidents together, if not individually, in circumstances where the allegations are unsubstantiated, show that the applicant has breached his duty of fidelity to his employer. 33 It is well established that the onus to make out the case is on the applicant, except in cases of summary dismissal. In Western Suburbs District Ambulance Committee v Tipping [1957] AR (NSW) 273 at 279, his Honour Justice McKeon summarised the principles in reinstatement cases to include the following: The onus is on the applicant to establish that intervention is warranted ... he must discharge the onus which rests on him of satisfying the Commission that his is a proper case for the Commission's intervention. 34 That onus applies equally to a claim for unfair dismissal when reinstatement is not sought. 35 Mr Li asserted, but brought no evidence to support, that he was obliged as a Certified Practising Accountant to inform the employees and the creditors of his concerns. He did not claim that he was obliged to copy his employer's records onto a disc and take them home. He had no right to do so. 36 Mr Li received a pay rise which, he submitted, was proof of his employer's guilt. He claimed this was paid to him as a bribe. If, as Mr and Ms Chen claimed, the pay increase was negotiated as appropriate for the work and consistent with the needs of the company, then it cannot be interpreted as inferring anything negative on the part of either party. If Mr Li accepted the amount as a bribe for withhold knowledge of wrong-doing, then he himself was at fault. 37 When Mr Chen learned that Mr Li had spoken against him to his employees, he could have considered dismissal at that time. Instead, he increased Mr Li's pay. It is unsurprising that Mr Li continued to believe that he was correct and that the respondent was acting wrongly. Further, the transcript of the meeting on 24 August does not show that Mr Chen denied the accusations of tax evasion. However, as Mr Chen said, he recorded only part of what was discussed on that day. (In his written and oral evidence, he denied the allegations against him.) Again, it is unsurprising that Mr Li believed he had to resign. However, a finding of constructive dismissal requires that the respondent initiated action which forced the resignation, and no such action has been shown to have occurred. What Mr Li believed and what Mr Chen did may not be the same thing. Conclusion 38 While Mr Li appears to have resigned under conditions which he believed to be wrong, he has not justified his action at the standard required of the Commission for a claim under s 84 which requires that there was a dismissal and, further, that the dismissal was harsh, unreasonable or unjust. 39 Whilst he claimed that he was forced to falsify the accounts of the business, and stated that he had reported the respondent to the ATO on 3 June, the conditions of work had not changed substantially since 3 June and Mr Li continued to work until 24 August, accepting a pay rise and making further demands on his employer during and after his employment. 40 Mr Li has not substantiated his claims that threats were made against himself or his family. 41 Having commented on the veracity of the witnesses, I am satisfied that Mr Li acted in good faith at all times, having formed a belief about the conduct of his employer. From that point on, Mr Li viewed everything his employer said from a personal, negative perspective. It is the responsibility of the Commission to view all the evidence objectively. On an objective view of the evidence, and without witnesses to relevant discussions who might provide more information, the case for unfair dismissal has not been made out. 42 It is true, as Mr Li submitted, that an employer does not have the right to hire a person to be a scapegoat for his wrongful actions. However, in this instance, the applicant has not proven that this was the case. 43 Mr Li has not fulfilled his onus to satisfy the Commission that he was dismissed unfairly or that his resignation should be characterised as a constructive dismissal. In short, this is not a proper case for the Commission's intervention. 44 The application is dismissed. ________________________ I 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.