Industrial Relations Commission of New South Wales CITATION: Panayiotou v. Eureka Operations Pty Limited, trading as Coles Express [2006] NSWIRComm 1089 APPLICANT Nick Panayiotou PARTIES: RESPONDENT Eureka Operations Pty Limited, trading as Coles Express FILE NUMBER(S): IRC 286 of 2006 CORAM: Connor C CATCHWORDS: termination of employment - claim of unfair dismissal - alleged misconduct - onus of proof to establish misconduct - alleged intention to defraud - grounds for dismissal found - claim for reinstatement refused - application dismissed LEGISLATION CITED: Industrial Relations Act 1996 Re Avon Products Pty Limited and Reilly (1969) AR 153 Homebush Aboattoir Case (1966) AR 371 Laws v. London Chronicle (Indicator Newspapers) Limited (1959) 2 All ER 285 CASES CITED: Pastrycooks Employees, Biscuit Makers Employees and Flour and Sugar Goods Workers Union v. Gartrell White (No.3) (1990) 35 IR 70 Printing and Kindred Industries Union v. John Fairfax and Sons Limited - unreported Shop, Distributive and Allied Employees' Association v. Jewels Food Stores (1987) 22 IR 1 Wang v. Crestell Industries Pty Limited (1997) 73 IR 454 HEARING DATES: 19/05/2006, 25/05/2006 DATE OF JUDGMENT: 06/09/2006 APPLICANT Fergus Austin Kinghan and Associates LEGAL REPRESENTATIVES: RESPONDENT Michael Easton Corrs, Chambers, Westgarth DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Friday, 9 June, 2006 Matter No IRC 286 of 2006 Nick Panayiotou and Eureka Operations Pty Limited, trading as Coles Express Application under S.84 of the Industrial Relations Act, 1996 DECISION [2006] NSWIRComm 1089 Preliminary 1 Pursuant to the provisions of Part 6, Unfair Dismissals, of Chapter 2, Employment [Ss.83 to 90] of the 1996 Industrial Relations Act, Mr Nick Panayiotou lodged an application concerning the summary termination of his services with Eureka Operations Pty Limited (trading as Coles Express). Mr Panayiotou's services were terminated on Thursday, 12 January, 2006 after over ten years of employment. At that time he was engaged as store manager operating from two service stations and convenience stores - at Randwick and Maroubra. The allegation against Mr Panayiotou is serious misconduct and a breach of established policy and procedure, ie failing to pay for fuel he pumped into his own private vehicle. In his Part 6 application Mr Panayiotou claimed that the termination of his services was unfair and he has sought his reinstatement in employment. 2 The matter was initially allocated to McKenna C by Registry staff who set the matter down for a conciliation and directions hearing before her on Monday, 20 February, 2006. The matter was not settled by conciliation at that time and it was programmed for hearing in accordance with Practice Direction No.17. Mr Panayiotou was to file and serve his evidentiary material by no later than Monday, 27 March, 2006 and Eureka was to respond with its evidentiary material by no later than Friday, 28 April, 2006 with any evidence in reply being filed and served by Mr Panayiotou by no later than Friday, 5 April, 2006. The matter was scheduled for arbitration before me on Friday, 19 May, 2006. The hearing did not conclude on that day. I was able to reconvene the hearing on Thursday, 25 May, 2006 which was convenient to both parties (following advice from Registry staff that a hearing assigned to me on that day was not to go ahead). 3 Mr Austin represented Mr Panayiotou in the hearing. He called Mr Panayiotou to give evidence in the hearing. Mr Austin argued that Mr Panayiotou had been unfairly dismissed and he sought his reinstatement in employment with Eureka as his principle claim [S.89(1)] or, in the alternative (and only if I considered reinstatement impractical), monetary compensation in lieu thereof [S.89(5)]. He also foreshadowed a subsequent application for costs and I reserved his position in that respect. Mr Easton represented Eureka in the hearing. He called four witnesses: Mr Andrew Vrekken, the Regional Manager (South Central) for Eureka, Mr Frank Honon, Regional Area Manager, Mrs Evelyn Paki, a full-time customer service operator, and Ms Mera Manikya, a casual customer service operator. Mr Easton submitted that Mr Panayiotou's dismissal had not been unfair and there were no grounds for my intervention in this hearing in support of him. The Evidence 4 Mr Panayiotou arrived at the Maroubra service station and convenience store at midday on Friday, 6 January, 2006 to find "not in use" signs on six of the eight pumps. He asked Ms Manikya, the attendant on duty what was wrong with them. Mr Panayiotou claimed that Ms Manikya told him that she did not know but she informed Mr Panayiotou that the pumps were out of service when she came on shift. There were no messages concerning the inoperative pumps which, according to Mr Panayiotou, is standard practice and he was critical of Ms Manikya for not taking the matter up with the maintenance centre. But according to Ms Manikya, she had, in fact, telephoned the maintenance centre concerning the pumps which were not in service but was told that a call had already been logged concerning the pumps. She did not record the telephone call in the maintenance log book in the customary manner because she was busy and could not find the log book at the time. 5 Mrs Paki arrived for the commencement of her shift at that time. She observed Ms Manikya standing behind the console and doing her paperwork. She also observed Mr Panayiotou pump fuel into his vehicle from one of the inoperative pumps [Pump 3]. Mr Panayiotou explained his actions in the written statement which formed the basis of his evidence in this hearing that: "...because of the fact that there were six pumps out of use, it was Friday afternoon and I wanted to get all the pumps working for the weekend - and also because I was running behind schedule... - I decided to see what was wrong with the pumps myself... I got into my car and drove onto the pumps and tried out all of the pumps. At each pump I put the nozzle into my petrol tank and squeezed the lever. I then looked to the window of the store and waited for Ms Manikya to indicate with a shake of her head whether the computer showed that they were working or not. The first pump I tested did not work. The second one did. By the time I had released the lever on that pump I had pumped $12.00 worth of petrol into my car or approximately 10 litres. I did not need the petrol as my petrol tank was fairly full before I put the petrol in. After I had tested all six pumps I parked my car in the usual spot and walked into the store..." Mr Panayiotou claimed that he tested the pumps so that he would be able to inform the maintenance staff what was wrong with them. 6 Mrs Paki claimed that Mr Panayiotou said to her: "I checked those pumps and they were all out of order except Pump 3. That was the only one that was working." There was, of course, a sum of $12.00 recorded on the console. Mr Panayiotou said to Mrs Paki: "To-day when you close your shift, you will be $12.00 short because I put $12.00 petrol in my car and I'm not going to pay for it because I had to try the pumps to find out what was wrong with them because you girls did not do your work right." He directed Mrs Paki to record the $12.00 worth of petrol that he had placed in his vehicle as a "variance", ie an unexplained discrepancy in the takings, usually by operator error when the wrong change is given out. 7 Mrs Paki said to Mr Panayiotou: "You can't do that. You have to pay for the petrol. That's thieving." And she claimed that Mr Panayiotou responded: "I work hard. I've been up since 4.00am. I didn't need the petrol. I was checking the pump. You will have a variance." Mr Panayiotou contacted the maintenance centre and informed them of the problems with the pumps. He was promised a person to fix them and was given an order number. 8 Mr Panayiotou claimed that he had pumped 10 litres of fuel - $12.00 worth - into his car before he realised that the pump was actually in working order. In his written statement Mr Vreeken commented on that claim, stating that: "...whilst different pumps operate at slightly different speeds, in my experience, a person would probably notice that a pump was working after $2.00 worth of petrol was dispensed because it would usually take approximately a minute for $12.00 worth of petrol to be dispensed into a car..." I think Mr Vreeken's assertion is somewhat wide of the mark. But, equally, I do not believe that Mr Panayiotou would have needed to pump 10 litres - or $12.00 worth - of petrol before he was able to determine whether the pump was, in fact, working. He claimed that he kept pumping petrol into his car because he had not been able to attract the attention of Ms Manikya but Ms Manikya recorded in her written statement that she had observed Mr Panayiotou continue to pump fuel into his vehicle even though she had indicated to him that he should stop. 9 Mrs Paki was concerned that the variance would be recorded against her. She indicated in her evidence that discrepancies in takings may ultimately lead to disciplinary action for customer service operators and warnings for negligence in handling cash. That I believe was one of the reasons why she subsequently contacted Mr Honan and informed him what had happened. She then prepared an incident report form and forwarded it to Mr Honan by facsimile transmission. Mr Honan regarded Mr Panayiotou's conduct as a serious matter. 10 Established formal standards of behaviour for Eureka provide, among other things, as follows: "...Team members are expected to behave openly and honestly in their dealings with the company. Team members shall not steal, or use for personal gain, equipment, stock, cash, files, intellectual property or other property belonging to the company. In addition, team members shall not mislead or defraud, or assist another person to mislead or defraud their fellow team members, customers, suppliers, contractors, or the company in general. This includes the inappropriate marking down of stock, giving unauthorised discount, consumption of stock and underpricing or under-ringing of goods. A failure to comply with these fair business principles will result in the taking of disciplinary action, which may include termination of employment..." 11 Mr Honon recorded in the written statement which formed the basis of his evidence that: "...at no time are staff advised to go out and attempt to fix or use faulty equipment themselves. Given the nature of the industry which involves flammable and dangerous goods, safety is paramount. Coles Express is concerned about safety of both customers and staff. Staff members are not allowed to use or fix equipment because they are not trained to understand or fix faulty equipment. Apart from safety issues, if unqualified staff members attempted to fix faulty equipment quickly, they might end up damaging the equipment and causing more substantial problems later on..." Of course, Mr Panayiotou was doing no more than fill his vehicle with petrol from a pump - something that any customer would do - but, as Mr Honon indicated in his evidence, Mr Panayiotou did not really know what was wrong with the pump when he used it and his actions were therefore potentially unsafe. There is also an established and simple procedure for managing faults to plant and equipment, viz: "...Identify broken or faulty plant or equipment. Stop using the item of plant or equipment..." Therefore, it was not Mr Panayiotou's job to test the pumps: that was a task for the maintenance contractors. 12 On Wednesday, 11 January, 2006 Mr Panayiotou was contacted on the telephone and directed to attend a meeting with Mr Vreeken at the head office of Coles Express at Chullora. Mr Panayiotou recalled the conversation at the meeting in some detail and I accept his version of that conversation as accurate. Firstly, Mr Vreeken asked: "Last Friday when you went to Maroubra and you had a lot of pumps not working what did you do?" To which Mr Panayiotou responded: "I went to Maroubra at approximately 1.00pm and I found out six pumps out of the eight were not working and nobody knew what was wrong with them. So I tried all the pumps and one was working and I put $12.00 petrol in my car and I didn't pay for it." 13 Mr Vreeken asked why Mr Panayiotou did not pay for the petrol. Mr Panayiotou replied: "The reason I put the $12.00 in my car was to find out what's wrong with the pumps. I wasn't desperate to put $12.00 petrol in my car." Mr Vreeken told Mr Panayiotou: "But that's not the right thing to do." And Mr Panayiotou replied: "Well, I was late. I didn't have enough time. That's the way I thought at that time. That is why I did it. I didn't pay for it because I didn't want to put petrol in my car. If I stopped my car on the pump and filled it with petrol and didn't pay for it, that's a different story. But there was a reason why I put the $12.00 in." 14 The meeting adjourned briefly. Ten minutes later, Mr Vreeken returned and said to Mr Panayiotou: "What you've done is a very serious matter and does not leave me a lot of options. The only option I've got is to terminate you. You don't have to go to work anymore." Mr Panayiotou replied: "Okay. If you want to terminate me, that's fine. I didn't steal anything. I only used the $12.00 petrol to find out what's wrong with the pump to get the business back in working order as quick as I could. It was Friday afternoon and I wanted to get the pumps working before the weekend." 15 Mr Vreeken emphasised that Mr Panayiotou had not followed correct procedure and Mr Panayiotou stated: "Oh well, it's not the right procedure but that is what I did. What's done is done!" Mr Vreeken spoke to Mr Panayiotou: "You have used a faulty pump, taken product without paying for it and you've asked people to fraudulently report it under a shift variance." Mr Panayiotou was instructed to return a key and a uniform which he held for his work and he did that several weeks later. He was paid up for the time he worked, together with annual leave and long service leave entitlements up to Thursday, 12 January, 2006. 16 Mr Panayiotou indicated in his written statement that: "...I have never taken petrol and not paid for it previously and it was never my intention to steal from the respondent. I could have just taken the signs off the pumps and let the customers use the pumps and tell me what was wrong with them. However, there were six pumps out of use, it was Friday afternoon and I wanted to get everything sorted before the weekend. I had a lot to do in the office before the end of the day. There were a lot of cars driving into the store and then noticing the signs and driving off. I wanted to get the business going again and quickly. I have never had a complaint raised against me or received any warnings since I began working for the respondent company. Nor for that matter the companies that preceded the respondent company. I have always been punctual and have not taken a sick day off in the last five years. I have put myself out for the company on a number of occasions..." Mr Panayiotou indicated in his Part 6 application that he was now prepared to pay the $12.00 to Eureka to be reinstated. Eureka has not accepted that offer. Conclusion 17 When an employee is dismissed for misconduct, which the employee denies, the onus of proof to establish the offence, according to the civil standard, ie the balance of probability, rests with the employer [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 and Wang v. Crestell Industries Pty Limited (1997) 73 IR 454 at pp.463 and 464]. But there is really no dispute between Mr Austin and Mr Easton in this hearing concerning what Mr Panayiotou actually did - just whether his actions justified his summary dismissal. Therefore Mr Easton is not required to establish the facts of this matter: those facts are, for the most part, already known. Clearly, Mr Panayiotou did place $12.00 worth of petrol in his vehicle and did not pay for it. The question is simply whether or not his actions constituted misconduct on his part. 18 There may be no fixed rule of law to conclusively define the degree of misconduct which would justify summary dismissal. The issue is determined by identifying whether there is an action by the employee which is of such a nature as to strike at a fundamental element of the contract of employment [Laws v. London Chronicle (Indicator Newspapers) Limited (1959) 2 All ER 285 and the Homebush Abattoir Case (1966) AR 371]. But it is trite that theft by an employee of property of his employer is grounds for summary dismissal [Re Avon Products Pty Limited and Reilly (1969) AR 153]. In his unreported decision of Friday, 25 January, 1980 in Printing and Kindred Industries Union v. John Fairfax and Sons Limited [Matter No.52 of 1980] McClelland J expressed the view that the consumption of intoxicating liquor, stealing an employer's property or fighting at work constituted the classic justification for summary dismissal. 19 When he terminated Mr Panayiotou's services, Mr Vreeken took the view that Mr Panayiotou's explanation was inadequate. He summarised Mr Panayiotou's conduct in his written statement, viz: (i) Mr Panayiotou dispensed fuel to the value of $12.00 into his car without paying for it; (ii) he instructed Mrs Paki to incorrectly record the amount as a variance; (iii) he breached established company policies and procedures; and (iv) he could no longer be trusted in a position of responsibility and authority. Mr Vreeken recorded in his written statement that: "...Mr Panayiotou could no longer be trusted in a position of authority within the company. We had lost our trust and confidence in Mr Panayiotou's ability to be in a position of leadership and responsibility as store manager. We could no longer trust that Mr Panayiotou would follow Coles Express policies and procedures and ensure that the employee's reporting to him followed these policies and procedures..." 20 Mr Panayiotou is emphatic in his evidence that he did not intend to defraud Eureka and Mr Austin submitted that he did not really attempt to hide what he had done. Mr Austin submitted that in testing the pumps Mr Panayiotou had acted in the interests of Eureka, as he saw it. It must be said that his conduct throughout was fairly transparent. He appears to me to have a belief that he has done nothing wrong. He may, in fact, have lacked the mens rea to establish the offence of fraudulent conduct against Eureka. 21 But that does not make his conduct right by any stretch of the imagination. Nor does Mr Panayiotou's claim that he did not really need the petrol provide him with a proper defence: whether he needed the petrol or not, the fact remains that he did obtain it - and instructed Mrs Paki to record the petrol purchase as a variance so that he would not have to pay for it. That would mean that an error would be recorded against Mrs Paki which would not be her fault. I understand her concern. I am satisfied that Mr Panayiotou is guilty of misconduct. 22 Mr Austin indicated in his submissions that Mr Panayiotou is a mature employee with lengthy service in his job and that should be borne in mind when assessing whether or not to intervene in support of him in this hearing. According to Mr Austin, because of his age, his dismissal would be especially unfair to him - "harsh", to use the actual language of S.84(1). Mr Easton responded by drawing my attention to the decision of the Full Bench of the former State Industrial Commission (Fisher J - President, Varnum DP and Sheils CC) in Shop, Distributive and Allied Employees' Association v. Jewels Food Stores (1987) 22 IR 1 and, in particular, the Full Bench's comments (at p.2), viz: "...Store managements have a responsibility to protect their enterprise from dishonesty in the handling of funds, particularly in circumstances where the enterprise is vulnerable and dishonesty difficult to detect and eliminate. It can be difficult to preserve a balance. We consider in cases where dishonesty is alleged as a reason for summary dismissal, management should only summarily dismiss if it is fully satisfied after careful investigation that the accusation has been made out. In coming to such a conclusion, a prudent and fair employer will take into account, where relevant, as part of the circumstances of the case, an employee's youth or inexperience , the nature and effect of any interrogation and any admissions or denials made. We consider that this same standard should be applied by industrial tribunals when considering reinstatement..." Mr Easton's argument is essentially that Mr Panayiotou was far from inexperienced and, as a senior employee, he should have known better. 23 In the circumstances, I believe there are no grounds for my intervention in support of Mr Panioyiotou in this hearing. I dismiss his Part 6 application. 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.