Industrial Relations Commission of New South Wales CITATION: Annie Margaret Clark and Graham Wellings [2007] NSWIRComm 8 APPLICANT Annie Margaret Clark PARTIES: RESPONDENT Graham Wellings FILE NUMBER(S): 2526 of 2006 CORAM: Sams DP Termination of employment - unfair dismissal - application lodged out of time - Commission's discretion to extend time to accept application - whether sufficient reason to accept claim - constructive dismissal - termination of employment at employer's initiative - conversation between applicant and respondent - expectation of ongoing employment. CATCHWORDS: Held; sufficient reason established to accept out of time application - words used by respondent constituted employment terminated at employer's initiative - constructive dismissal - dismissal harsh - reinstatement impractical - compensation ordered. LEGISLATION CITED: Industrial Relations Act 1996 Allison v Bega Valley Council (1995) 63 IR 68 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Griffith Ex-Services Club Limited v Federated Liquor and Allied Industries Employees' Union of Australia (NSW Branch) (1993) 51 IR 186 CASES CITED: Hurrell and Queensland Cotton Corporation Limited [2003] NSWIRComm 139 Martin v Nominal Defendant (1957) 74 WN (NSW) 121 Waine -v- BHP Steel (unreported matter IRC3130/2001) Ward v Mobile Innovations [2002] NSWIRComm 287 HEARING DATES: 14 November 2006 DATE OF JUDGMENT: 2 February 2007 APPLICANT Ms Annie Clark (unrepresented) LEGAL REPRESENTATIVES: RESPONDENT Mr T Hynes Austen Brown, Boog Solicitors JUDGMENT: - 13 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 2 February, 2007 Matter No IRC06/2565 Annie Margaret Clark and Graham Wellings Application by Annie Margaret Clark re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2007] NSWIRComm 8 1 This is an application filed by Annie Margaret Clark ('the applicant'), pursuant to section 84 of the Industrial Relations Act 1996 ('the Act'), in which she seeks relief from her alleged unfair dismissal by Mr Graham Wellings ('the respondent') on or about 4 December 2005. The applicant had been employed as a barmaid for some 14 years at the White Cliffs Hotel Motel in western New South Wales. 2 The applicant's claim was filed on 26 June 2006, some five months outside the 21 day time limit for filing such claims, thereby making it considerably out of time. I shall return to the issue of whether the Commission should exercise its discretion to allow the application to be accepted out of time, pursuant to s 85(3) of the Act. Unsuccessful attempts at conciliating the claim were made by teleconference. The matter was subsequently listed for hearing in Broken Hill on 14 November, 2006. The hearing dealt with both the jurisdictional challenge to the claim being accepted out of time and the merits of the applicant's dismissal. This latter issue was also subject to some conjecture; that is whether the applicant was actually dismissed by the respondent or whether she left her employment of her own accord. 3 Both parties filed short statements which were elaborated upon in oral evidence. A short statutory declaration deposed to by Mr Nathan Tucker was accepted into evidence, although Mr Tucker was unavailable for cross examination. Mr Tom Hynes, agent for the respondent, accepted the conditional admission of Mr Tucker's statutory declaration. Its contents concerned the incident in the hotel in the early hours of Sunday, 4 December, 2005. It will be apparent that the controversy over this incident was whether the exchange between the respondent and the applicant constituted a constructive dismissal, thereby enlivening the unfair dismissal jurisdiction of the Commission. OUT OF TIME APPLICATION 4 It was undisputed that over her 14 years of employment the applicant was normally stood down between the months of December to April when business in White Cliffs suffered its usual seasonal downturn. However, in oral evidence the applicant claimed that in the last two years she worked through the summer and the year before she was only off work for four or five weeks. After the incident on 4 December, 2005 the applicant said she approached the respondent in May 2006 inquiring about resuming work. He had indicated that business was poor and it was unlikely that anyone would be employed. 5 The applicant claimed that she had delayed filing her claim for unfair dismissal because she had assumed the respondent would re-engage her. While she had sought legal advice, she had felt uncomfortable taking legal action against Mr Wellings as she considered him a friend of 14 years. She had still found it an unpleasant experience taking legal action against him. 6 Mr Hynes relied on his written submissions which I quote in full: It is public policy to fix limitation periods for the prosecuting of civil claims. In Brisbane South Regional Health -v- Taylor , 186 CLR 541, McHugh J summarised the following: "Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second it is oppressive, even "cruel" to a Defendant to allow an action to be brought long after the circumstances, which gave rise to it, have passed. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liability beyond a definite period." It was further discussed by Connor C in Waine -v- BHP Steel (unreported matter IRC3130/2001) that out-of-time applications should not be accepted if the Commission is able to make a positive finding that the claim would ultimately fail on its merits. Taking the above into account and the wording of Section 85(3) of the Act where it states any hardship may be caused to the Applicant or the employer should the application be accepted out-of-time and that ignorance of the Law excuses no one and the following points should be taken into account: (i) On the night of the incident there were a number of people present at the Hotel and witnessed the confrontation, however the majority of these were visitors and cannot be located this long a period after the incident. (ii) Ms. Clark was due to finish work a week after the incident and due to the fact of the downturn in business she would not have been re-instated in April, 2006, any claim would be cruel to Mr. Wellings and would amount to unjust enrichment for Ms. Clark. (iii) Mr. Wellings has gone on to arrange his business affairs and utilise his resources on the basis that Ms. Clark would not be further employed due to the downturn. It is our position this out-of-time application should not be accepted as it would ultimately fail on its merits. By her own submission at point one Ms. Clark is claiming ignorance of the Law and as stated earlier ignorance of the Law is no excuse. By her own admission at point five Ms. Clark was given legal advice but found it difficult to commence proceedings against Mr. Wellings obviously further delaying the process. It is obvious the Applicant has not diligently applied herself to either obtain advice and then having obtained the advice submitted her Application in a timely manner. Consideration of out of time application 7 The legislative provisions dealing with the Commission's discretionary powers to allow unfair dismissal applications to be filed out of time are found at s85(3) of the Act. This section relevantly provides: 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. 8 As Mr Hynes pointed out, the general principles applying to the waiver of time limits for the filing of civil claims was helpfully discussed by the High Court in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541. In that case McHugh, J said at p551: The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods. For nearly 400 years the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates"… and at p552: The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost (26). Second, it is oppressive, even "cruel", to a defendant to allow an action to be bought long after the circumstances, which gave rise to it, have passed (27). Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them (28). Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period (29), as the New South Wales Law Reform Commission has pointed out (30)… and at p553 …In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated. Against this background, I do not see any warrant for treating provisions that provide for an extension of time for commencing an action as having a standing equal to or greater than those provisions that enact limitation periods. A limitation provision is the general rule; an extension provision is the exception to it. The extension provision is a legislative recognition that general conceptions of what justice requires in particular categories of cases may sometimes be overridden by the facts of an individual case. The purpose of a provision such as s. 31 is "to eliminate the injustice a prospective plaintiff might suffer by reason of the imposition of a rigid time limit within which an action was to be commenced". (35) But whether injustice has occurred must be evaluated by reference to the rationales of the limitation period that has barred the action. The discretion to extend should therefore be seen as requiring the applicant to show that his or her case is a justifiable exception to the rule that the welfare of the State is best served by the limitation period in question. Accordingly when an applicant seeks an extension of time to commence an action after a limitation period has expired, he or she has the positive burden of demonstrating that the justice of the case requires that extension. 9 In deciding whether to exercise its discretion to allow an out of time application, the Commission must be satisfied that a sufficient reason, or reasons, have been made out by the applicant. Consistent with each case being decided on its own facts and circumstances, the term 'sufficient reason' is not defined in the Act, as it is not appropriate to do so. In this regard, I refer to Griffith Ex-Services Club Limited v Federated Liquor and Allied Industries Employees' Union of Australia (NSW Branch) (1993) 51 IR 186 where a Full Commission observed at 190: It is not appropriate to attempt to formulate any definition as to what constitutes a "sufficient reason". See also Martin v Nominal Defendant (1957) 74 WN (NSW) 121. 10 Nevertheless, the Commission is guided as to the matters to be taken into account, by specific reference to sub clauses (a), (b) and (c) of s85. In most cases, an applicant will address each of the criteria in the sub clauses. However, for the Commission to be satisfied that its discretion should be favourably exercised, requires the balancing of a range of considerations, including ensuring the overall interests of justice to both parties. 11 In Hurrell and Queensland Cotton Corporation Limited [2003] NSWIRComm 139, the Full Bench of the Commission granted leave to appeal having been satisfied that the appeal raised important questions relating to the principles applicable in the determination of an application under s85(3) of the statute. 12 The Full Bench went on to say at para 12-13: Having made that observation, a lack of knowledge of the 21 days time limitation specified in s 85(1) of the Act may well be a relevant consideration in determining whether to accept an application out of time. A failure to consider or to give any weight to such evidence may well amount to a failure to have regard to evidence relevant to essential aspects of the exercise of discretion. The discretion to accept an application out of time involves balancing a range of considerations, including an applicant's ignorance of the relevant time limit, whether an applicant has an arguable case and the applicant's prospects of success. In Griffith Ex-Services Club Limited v Federated Liquor and Allied Employees Union of Australia (NSW Branch) on Behalf of Vian (1993) 51 IR 186, the Full Commission considered the predecessor provisions to those now contained in s 85 of the Act concerning late applications for relief from unfair dismissal (see s 246(3) - (4) of the Industrial Relations Act 1991) in this way: Those subsections, in our view, are procedural and expressly grant the Commission the discretion to allow the lodgement of applications beyond the 21 days prescribed in s246(2). The applicant employee carries the burden of showing why the Commission should exercise its discretion to grant such an extension: Lucic v Nolan (1982) 45 ALR 411 at 416. The discretion, however, requires the formation of the view that there is a "sufficient reason". Factors going to the formation of a view of a sufficient reason are outlined in s256(4)(a) to (d). It is not appropriate to formulate any definition of what constitutes a "sufficient reason": see Martin v Nominal Defendant (1957) 74 WN (NSW) 121. However, the evidence of the proceedings before the Commissioner was relevant to be considered pursuant to the statutory requirements in regard to the formulation of the view. Similarly, in Skelly v Prouds Jewellers Pty Ltd (1994) 53 IR 3 at 6, in the context of an application for the extension of time to appeal, the Full Commission emphasised the need to take all relevant factors into account in determining an extension of time application; see also the decision of Walton J, Vice President in Brady v Kennedy t/as "Sardines" (1999) 91 IR 258. In our view, the considerations discussed in those decisions are apposite to the exercise of discretion under s 85(3) of the Act. In particular, we would adopt the observations of the Vice-President in Brady, that "the ultimate exercise of discretion is governed by the requirements of justice in a particular case. 13 On balance, I have been persuaded that the applicant has established a sufficient reason for the Commission accepting her unfair dismissal application out of time. While the time delay was significant - some five months - I accept the applicant's evidence that she was reluctant to take legal action against a friend of 14 years, and had an expectation of being re-employed at some point in time. 14 In taking into account any hardship for the respondent, I am conscious that the applicant is not seeking reinstatement. In light of my later conclusions, little hardship will be occasioned upon the respondent if the applicant's claim is accepted out of time. On the other hand, I accept that the applicant has suffered considerable financial hardship during 2006 and has had to leave White Cliffs to seek employment in Broken Hill. She was unemployed for around five months and now has a casual job in Broken Hill. 15 In addition, I consider the overall interests of justice will be served by accepting the applicant's unfair dismissal claim out of time. I find accordingly. WAS THE APPLICANT DISMISSED? 16 The next issue to be determined is whether the applicant was dismissed by Mr Wellings or left employment of her own accord. This issue obviously raises the question of whether the applicant was constructively dismissed. I note however, that no reference was made by either party to the principles of, and authorities on constructive dismissal. Nevertheless, the principles of constructive dismissal are well known. 17 The test of what constitutes a constructive dismissal has been referred to in numerous decisions of the Commission at Full Bench level and consistently applied by single members of the Commission by reference to the most often cited authority found in Allison v Bega Valley Council (1995) 63 IR 68. In that case, the Full Bench said at pp 72 and 73: It is a trite observation that a contract of employment like any contract can come to an end in a number of ways. Termination can be "by" the employer where an employee is "dismissed" either with notice in accordance with the provisions of the contract or without notice in the event of serious and willful misconduct. Both the employer and the employee may mutually agree that the contract of employment should come to an end. In other cases the employee may bring about the termination by resigning. In some cases the circumstances in which the termination comes about makes it difficult to determine whether there was termination "by" the employer or the employee. There are cases where the courts, after analysis, have determined that although on the face of it an employee has resigned and brought about the termination of the contract of employment, in reality the conduct of the employer has compelled or unduly influenced the employee to resign. The most quoted example is an assertion by an employer to an employee to the effect that the employee must resign or he or she will be dismissed. This situation is commonly referred to in the text books and decided cases as a "constructive dismissal", that is in effect the employer has brought about the termination of the contract of employment. Although the term "constructive dismissal" is quite commonly used it can deflect attention from the real inquiry. That inquiry should involve an analysis of what occurred. Did the employer behave in such a way so as to render the employer's conduct the real and effective initiator of the termination of the contract of employment and was this so despite on the face of it the employee appears to have given his or her resignation? It is obvious that a consideration of these matters must be made on a case-by-case basis and that an attempt to formulate general principles in the absence of particular facts will not assist in the overall determination of this issue. In order to undertake the necessary analysis it is necessary to look carefully at all the relevant facts. It is necessary to determine whether the actual determination was effectively initiated by the employer or by the employee, particularly where the dynamics within a factual situation may change. For example, an employer may demand a resignation with a threat of dismissal, negotiations may then ensue and the employee may ultimately be genuinely pleased with the outcome of those negotiations to the extent that any resultant resignation may be said to be given freely and without any undue influence being brought to bear by the employer. Where an employee initiates the termination of the contract of employment it is necessary to consider whether that ostensible act of termination was given freely and without any undue pressure. If the ostensible resignation is, in effect, a response to and consistent with a desire by an employer that such resignation be forthcoming, then what has occurred may be that the termination has been brought about by the employer and that in this way the employee has been dismissed. 18 In Ward v Mobile Innovations [2002] NSWIRComm 287 the Full Bench reaffirmed the principles discussed in Allison. At para [4] the Commission said: The Commission has authoritatively addressed the question of constructive dismissal in Allison v Bega Valley Council (1995) 63 IR 68 (although the Full Bench in Allison expressed the need for caution in the use of that expression). Hence, the principles for determining whether a termination constitutes a "constructive dismissal" are now well settled, in our opinion, and do not require revisiting in this appeal. In particular, Allison makes clear (at 72) that the proper approach in this context involves an identification of whether the employer was the true initiator of the termination of employment. Each such inquiry must relate to the facts and circumstances of a particular case. This matters represents no exception in this respect. 19 The general proposition to be distilled from Allison and the many other authorities since, is whether the employer was the effective initiator of the termination of employment. In this case, the answer to this proposition is relatively straightforward and emerges from the conversation between the applicant and Mr Wellings on the morning of 4 December, 2005. 20 The applicant said that after finishing her shift at around 8:00pm on 3 December, 2005 she had remained in the hotel games room until 1:00am. She had been having a drink and engaged in conversation with her nephew, Peter Blades. She had then borrowed her nephew's car and drove down the street. It was unclear for what reason. When she returned shortly after, she had a conversation with Mr Tucker in the bar and finished her drink. When she went to leave Mr Wellings had said "with that attitude, I did (sic) not have to return to work on Tuesday morning 6 December". She had replied "okay" and left the premises. She said she was very upset by Mr Wellings' comments. Mr Tucker's statutory declaration referred to him hearing Mr Wellings telling the applicant not to worry about coming into work on Tuesday. I do not understand Mr Hynes to contest this aspect of Mr Tucker's statutory declaration. 21 Mr Wellings' evidence was that when the applicant borrowed Mr Blades' car she had driven past the hotel in excess of 100km/h. When she returned she had said "I told you I'm going to do that for the wrong thing you said about my son". Mr Wellings said that he replied "Annie, if you are going to carry on this way, I think you should look for another job." The applicant did not turn up for work on her next shift (Tuesday) but returned to the hotel on Friday and asked about her job. Mr Wellings had said "The way the current year is going, I probably will not require a barmaid, because the trade is not there." 22 In later submissions, Mr Hynes put that the applicant had 'suspended' herself that night and, in any event, there was only one week's work left for her. The applicant maintained that she had no idea that she had only one week's work left. Consideration 23 Firstly, I would observe that the fact that the applicant may not have been employed beyond another week due to lack of trade is not relevant to the conclusion as to whether she was constructively dismissed on the morning of 4 December, 2005. I note also that in the employer's reply to the application the respondent cited the new smoking laws as the reason for the downturn in trade. However, this reason was not mentioned in the respondent's evidence. 24 The Commission accepts the applicant's evidence that for the previous two years she had not been put off in December. There was no evidence that Mr Wellings had informed the applicant she was to be put off, let alone given an actual date of termination. Thus, it was most improbable that she had any expectation of losing her job in December 2005. Moreover, I accept the applicant's claim that she had no idea that she would be losing her job the very next week. There was no issue taken as to the seasonal nature of the applicant's employment. However, I accept that she had worked full time for over two years without being put off during the seasonal downturn. 25 Turning then to the words used by Mr Wellings, I am completely satisfied that the words "I think you should look for another job" conveyed the clear impression that he no longer wished to have her employed and was therefore effectively dismissing her. It was a termination of employment at the employer's initiative as comprehended in Allison. It follows that I do not need to make a finding as to whose version of the conversation is correct, although the applicant's version does not conflict, in practical terms, with the effect of Mr Wellings' own words. 26 Other considerations fortify my finding that the applicant was constructively dismissed. Firstly, the applicant said she was very upset by Mr Wellings' comments. Secondly, notwithstanding they had been friends for 14 years, Mr Wellings made no attempt to contact her when she failed to turn up for work on Tuesday 6 December, or for the next few days. Thirdly, it makes no sense at all that the applicant would leave her only employment or 'suspend' herself considering the desperate job market in White Cliffs and her ultimate requirement to move to Broken Hill to find work. 27 Accordingly, the Commission finds that the applicant was constructively dismissed by the respondent on 4 December, 2005 and that her dismissal was 'harsh' within the meaning of Pt 6 Ch 2 of the Act. 28 In light of the applicant's claim for compensatory relief and her move to Broken Hill to secure alternative employment, I find that reinstatement or re-employment of the applicant would be impractical. This finding is strengthened by Mr Wellings' evidence as to this summer's downturn in his business. 29 Accordingly, I am prepared to make an order of compensation equivalent to one month's wages. I have taken particular account of the five month delay in the filing of the applicant's claim, notwithstanding that it did not disqualify her application from being accepted out of time. ORDERS 30 Pursuant to s 89 of the Industrial Relations Act 1996 the Commission orders that: 1. The respondent, Mr Graham Wellings shall pay to the applicant, Ms Annie Clark an amount of $2629.60 being four weeks wages at $657.40 per week. 2. The amount in order 1 shall be paid within 28 days. 3. These proceedings are now concluded. Peter J Sams, AM Deputy President 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.