Daw v Finton Pty Ltd, 85 IR 1 - [2001] NSWIRComm 18 - NSWIRComm 1998 case summary — Zoe

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Daw v Finton Pty Ltd, 85 IR 1

[2001] NSWIRComm 18

Industrial Relations Commission (NSW)|1998-05-28|Before: Sams DP, Schmidt JJ, Schmidt J, Walton VP

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Source facts

Court

Industrial Relations Commission (NSW)

Decision date

1998-05-28

Before

Sams DP, Schmidt JJ, Schmidt J, Walton VP

Catchwords

11/14/2000 DATE OF JUDGMENT: 02/28/2001

Source

Original judgment source is linked above.

Catchwords

11/14/2000 DATE OF JUDGMENT: 02/28/2001

Judgment (115 paragraphs)

[1]

CITATION : Sams and Contact Point International Pty Ltd [2001] NSWIRComm 18 APPLICANT PARTIES : Lynette Sandra Sams RESPONDENT Contact Point International Pty Ltd FILE NUMBER: 3774 of 2000 CORAM: Sams DP Termination of employment - unfair dismissal - heated verbal exchange between employer and employee - whether employee resigned - constructive dismissal - meaning of words used - employee and employer's intentions - procedural fairness - relevant principles. CATCHWORDS : Held, no investigation of employer's complaint against employee - employee did not intend to resign - employer dismissed employee - constructive dismissal established - dismissal "harsh, unreasonable and unjust' - reinstatement impractical - compensation ordered LEGISLATION CITED : Industrial Relations Act 1996 Daw v Finton Pty Ltd, 85 IR 1 Jones and Dunkel (1959) 101 CLR 298 Allison v Bega Valley Council, 63 IR 68 Clark v Pittwater RSL Club Ltd (1998) 84 IR 309 Claric 218 Pty Ltd t/as Sanity Music v Meldrum, 91 IR 396 St Vincents Hospital Sydney Pty Ltd v Harris (unreported) Peterson, Schmidt JJ, O'Neill C, Matter IRC5932 of 1997, 28 May 1998 Britton v Riverstone Public School (unreported) Schmidt J, CASES CITED : Sams DP, McLeay C, Matter IRC5504 of 1999, 6 May 1999 Bates v Gundagai District Services Club (unreported) Walton VP, Sams DP, Redman C, Matter IRC4710 of 1999, 14 April 2000 Police Service of New South Wales v Batton (2000) 98 IR 154 Shankar v Neumo Packaging (unreported) Sams DP, Matter IRC6891 of 1999, 10 November 2000 Cherry v Allied Express Transport, 73 IR 305 Smith v Director General of Education, 51 IR 204 Ryde Eastwood Leagues Club Ltd v Taylor, 56 IR 385 Mohazab v Dick Smith Electronics, 62 IR 205 Police Association of New South Wales, on behalf of Tregonning, and New South Wales Police Service (unreported) Sams DP, Matter IRC2799 of 1999, 8 March 2000 Byrne & Anor v Australian Airliens (1995) 185 CLR 410 Antonakopoulis v State Bank (1999) 91 IR 385 HEARING DATES: 11/13/2000; 11/14/2000 DATE OF JUDGMENT: 02/28/2001

[24]

She said if the applicant had apologised she would still be employed. 27 Mrs Reid gave evidence that the company was expanding and moving to new premises. Although she had just told Mrs Sams she was not getting a new computer at the new premises, this comment reinforced the position that she had no reason to dismiss her. Mr West had been discussing marketing strategies with Mrs Sams a week before the termination - a further indication she was integral to the company's future. 28 The evidence was that Mrs Sams was given considerable flexibility with time off for personal reasons. 29 Mrs Reid described the two occasions Mrs Sams returned to the office on the Wednesday and Friday, 12 and 14 July. The first occasion had been amicable, but on the Friday, Mrs Sams demanded two weeks' pay in lieu of notice. Mrs Reid refused. Mrs Sams said she would be keeping the mobile phone and Mrs Reid retaliated by cancelling her car insurance. 30 The employer's evidence in respect to the staff meeting was that Mrs Reid had told staff that Mrs Sams had resigned for personal reasons. However, it was really about the job sheets and the company's potential loss of $5,000. Mr West and Ms Perrin corroborated Mrs Reid's evidence that the word "fired" had not been used. Ms Perrin could not recollect the amount of $5,000 being mentioned at the meeting. Ms Dulhunty submitted that there are no Jones and Dunkel inferences to be drawn by not calling evidence from all those at the staff meeting. Three people had confirmed what was said and it would be a waste of the Commission's time to bring another ten witnesses who would all give the same evidence. 31 Mrs Reid said she was concerned that Jo Anne Moore was the only employee saying that she (Mrs Reid) had said the applicant was fired. Mrs Reid was concerned that Ms Moore would be in trouble if she was lying. She told her if she couldn't remember what was said, she should say so. She made no attempt to pressure Ms Moore to change her statement.

[45]

48 It is trite law that the Commission's jurisdiction under Pt 6 ch 2 of the Act is not enlivened without a dismissal of an employee by the employer. In the absence of any findings of fact that a dismissal did occur, an application for relief from alleged unfair dismissal is bound to fail. 49 Often, the circumstances giving rise to a termination of employment will be clouded by no direct, or readily discernible act which gives immediate clarity as to who initiated the termination. 50 This is the conflict which applies in this case. It is resolved by the Commission making a positive finding as to whether a constructive dismissal has occurred. 51 The trigger to such a finding has been variously described as "termination at the employer's initiative", or "where the conduct or action of the employer is the real and effective initiator of the termination of employment" or "where the conduct of the employer has compelled or unduly influenced the employee to resign". 52 The seminal authority for the above descriptors is found in Allison v Bega Valley Council 63 IR 68. At p72-73 of the Full Bench's decision the relevant passage reads: 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 wilful 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?

[71]

In any event, I find the words used by the applicant to be ambiguous. They do not convey any real or actual intention. 67 On this point a passage from Cherry v Allied Express Transport, 73 IR 305 at 309-310 is particularly apposite: The first and central consideration in this matter seems to me to be whether or not there was ever an intention on Mr Cherry's part to resign from his contract of carriage with Allied. Whilst I have come to the view that his actions in relation to Mr Poppleton were stupid and uncontrolled, in that he could have brought the matter to a ready end at two clear points in his conversation with Mr Poppleton, and his wild reaction merely added fuel to the fire, I do not consider that it can be said he manifested by his language, even if he used the words "stick it", that he intended to permanently sever the relationship; his language was ambiguous. I think the preferable view is that he created a mess for himself which resulted in Allied treating him as having that intention although on what is probably an insecure foundation. .... The authorities to which I was taken suggest that where an employee is thought by the employer to have resigned in the course of a heated exchange, and by the use of ambiguous language, the employer who accepts words seemingly of resignation faces the risk of having the contrary finding of fact made. In Minato v Palmer Corporation Ltd (1995) 63 IR 357, Murphy JR extracted and applied the principle adopted in Britain where seemingly unambiguous words of termination are used. The judicial registrar's decision reads (at 361-362) The central issue here, as far as the respondent is concerned, is whether the applicant had resigned. ... The legal position is set out in the case of Sovereign House Security Services Ltd v Savage [1989] IRLR 115 where at 116 May LJ said: In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view tribunals should not be astute to find otherwise ... However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight. Those comments were considered in another case: Kwik-Fit (GB) Ltd v Lineham [1992] ICR 183 where at 188 Wood J said that he saw no difference in principle between words or actions of resignation. At 191 he set out the position as follows: If words of resignation are unambiguous then prima facie an employer is entitled to treat them as such, but in the field of employment personalities constitute an important consideration. Words may be spoken or actions expressed in temper or in the heat of the moment or under extreme pressure ("being jostled into a decision") and indeed the intellectual make-up of an employee may be relevant: see Barclay v City of Glasgow District Council [1983] IRLR 313. These we refer to as "special circumstances". Where "special circumstances" arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if circumstances arise during that period which put the employer on notice that further inquiry is desirable to see whether the resignation was really intended and can properly be assumed, then such inquiry is ignored at the employer's risk. He runs the risk that ultimately evidence may be forthcoming which indicates that in the "special circumstances" the intention to resign was not the correct interpretation when the facts are judged objectively. The Commission has to determine the position which developed at the time and in this regard I conclude that Mr Cherry did not intend to, nor did he, offer his notice of termination of his contract of carriage.

[88]

UNJUST: unfair, inequitable, undeserved or biased. Having established that each element of the expression has its own independent meaning, it is axiomatic when the expression is applied to a particular case, and set of circumstances, that not all of the three terms might be evident. In aliis verbis , a particular dismissal might be found to be 'harsh', but not 'unreasonable' or 'unjust'. Other variations might be found. This notion has been considered in a number of authorities to which I now refer. In Byrne & Anor v Australian Airlines (High Court, 11 October 1995 185 CLR 410) the expression 'harsh, unjust or unreasonable' was considered in the context of an award provision. In their joint judgment, McHugh and Gummow JJ said at p465: It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted. The principle was further discussed in Outboard World v Muir ( Cahill VP, Peterson J and Tabbaa C , 51 IR 167 at 182) where a Full Commission said: First we deal with the argument for the appellant that the Commission erred by applying the wrong test in connection with the dismissal: 'unfair' rather than 'harsh, unreasonable or unjust' dismissal. We agree with Mr Reitano's submission in this respect that the reference by the Commissioner to "unfairness" did not represent any misunderstanding of the correct test but was merely the use of a shortened form of expression intended to embrace the three relevant words. Whilst we recognise that there may be a natural tendency (recognised in the use even by the advocate for the Company before the Commissioner of the term 'unfair') to use the shortened form, we consider that it is preferable that a member of the Commission utilise the precise words provided by s246, rather than the catch-all heading, particularly when expressing the basis for a finding that a dismissal is within one or more of the heads provided by the section. We take this view because, even though there may be some circularity in the full phrase 'harsh, unreasonable or unjust', we detect scope for variation of meaning which may be critical to the determination of a particular matter and may be obscured by the use of the substitute term "unfair". Different but not wholly dissimilar words, "unfair", "harsh", and "unconscionable", are used in s275, power of the Industrial Court to Declare Certain Contracts Void, of the 1991 Act. In relation to those words, then appearing in s88F of the 1940 Act, the Commission in Court Session (Perrignon, Cahill and Dey JJ) in A & M Thompson Pty Ltd v Total Australia Ltd [1980] AR (NSW) 399 at 418 (Cahill J delivering a separate judgment) said: The duty of the Commission is to reach a conclusion on the issues of whether the subject transaction is 'unfair', or 'harsh' or 'unconscionable'.

[104]

86 A more recent Full Bench decision reaffirmed the basis upon which procedural matters might be considered in the context of an alleged unfair dismissal. In Antonakopoulis v State Bank (1999) 91 IR 385, the Commission said at p389: We agree with the conclusion of Hill J that procedural issues, that is failure to deal with the matter in a procedurally fair way, may, in certain cases, of themselves, constitute the basis for a determination that a dismissal is harsh, unjust or unreasonable. A failure to adopt a procedure which constitutes a breach of 'an essential prerequisite to, or inviolable limitation on, the exercise of the employer's right to dismiss' or a failure to afford procedural fairness which causes a 'substantial and irrevocable prejudice to the employee' will often vitiate the decision of an employer and warrant, in itself, a determination that the dismissal was harsh, unreasonable or unjust (and hence, establish the basis for a remedy under the Act). Further, a decision to dismiss made upon the basis of procedures which are unfair and where an innocent explanation or other appropriate explanation is reasonably available will normally constitute a firm basis for a determination that a dismissal, so effected, is harsh, unreasonable or unjust. and later, at page 390: While the findings of the Commission in Buckman focus on the issue of warnings, the observations apply also to broader tenets of procedural fairness contemplated in s88 and to matters such as those raised in these proceedings. We agree that there is no obligation in the Act to follow any particular procedure when effecting a dismissal. However, a failure by an employer to adopt appropriate procedures when effecting a dismissal, or a failure to follow procedures prescribed in an industrial instrument, or in procedures laid down administratively by an employer, may be properly taken into account by the Commission as part of the consideration of an application brought under s84. Further, as we have noted, where procedures are specified in an industrial instrument or by administrative action, a failure by an employer to apply, or to properly apply, those procedures may in appropriate cases, of itself, support a finding that the dismissal was harsh, unreasonable or unjust .

Daw v Finton Pty Ltd, 85 IR 1

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Judgment (115 paragraphs)

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