Kenneth Brunette v Integral Energy Australia - [2003] NSWIRComm 324 - NSWIRComm 1998 case summary — Zoe

NSWNSWIRComm

Kenneth Brunette v Integral Energy Australia

[2003] NSWIRComm 324

Industrial Relations Commission (NSW)|1998-11-10|Before: Kavanagh J, Peterson J, Marshall J

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At a glance

Source facts

Court

Industrial Relations Commission (NSW)

Decision date

1998-11-10

Before

Kavanagh J, Peterson J, Marshall J

Source

Original judgment source is linked above.

Judgment (179 paragraphs)

[1]

Industrial Relations Commission of New South Wales in Court Session

[2]

CITATION : Kenneth Brunette v Integral Energy Australia [2003] NSWIRComm 324 APPLICANT: PARTIES : Kenneth Brunette RESPONDENT: Integral Energy Australia FILE NUMBER: IRC1925 of 2001 CORAM: Kavanagh J CATCHWORDS : Section 106 unfair contract claim in the performance of contract - conduct of respondent in investigation into complaint - grievance proceedings in contract not followed - applicant not fully informed of ambit of broader issues to be further investigated - applicant refuses to perform special project duties allocated to him by respondent during investigation - constructive dismissal - repudiation of contract - employer makes clear contract in its existing form is not to continue - changed role of employee - contract of employment terminated by respondent in unreasonably requiring applicant to perform special project duties - compensation, just in the circumstances, determined by payment of order in form of Notice LEGISLATION CITED : Industrial Relations Act 1996 Bates v Finance Australia Pty Limited & Others Finance Australia Pty Limited & Ors v Gregory Scott Bates [2002] NSWIRComm 42 Brookton Holdings Pty Ltd v Kara Kar Holdings Pty Ltd (1994) 57 IR 288 Day v Lumley Life Ltd (1999) 90 IR 70 Elkins v Full Bloom Pty Ltd (2000) NSWIRComm 223 Malik v BCCI SA (In Liq) (1997) 3 All ER Marriott v Oxford & District Co-Operative Society Ltd (No.2) (1970) 1 QBE 186 CASES CITED : McIlraith v Bliss Corporation Ltd (unreported, Peterson J, No 4461 of 1997, 10 November 1998) Richtsteiger v Century Geophysical Corporation (unreported, Marshall J, 8 October 1996, No. 471 of 1996) R v Darling Island Stevedoring & Lighterage Company Ltd, Ex Parte Halliday (1938) 60 CLR 601 Van Tran v Calum Textiles Pty Ltd (1997) 42 AILR 353 Vision Publishing Pty Limited v PK Lane Holdings Pty Limited & Ors (1998) 84 IR 277 Western Excavating (ECC) Ltd v Sharpe (1978) 1 QB 761

[7]

1 This application is brought under the provisions of s106 of the Industrial Relations Act 1996 (the Act). Kenneth Brunette, the applicant, alleges the contract which he entered into with Integral Energy Australia, the respondent, in its terms and/or, in its performance, was unfair, harsh and unconscionable. The applicant claims as to his termination, which he alleges was unfair, in the conduct of his employment contract, a variation to his contract reflecting just compensation in the following terms: (a) A sum equivalent to twenty-four months pay in lieu of notice being $300,000; and (b) A sum equivalent to the "at risk" payment for a period of twenty-four months, being $45,000. Further Amended Summons 2 The applicant pleads his case as follows: The contract of employment and/or the arrangement and/or the collateral contract and/or the collateral arrangement whereby the applicant performance work in an industry is and was unfair, harsh and unconscionable and contrary to the public interest in that: (a) it contained a term relating to termination of the written contract that permitted the respondent to terminate the written contract by providing three months notice or payment in lieu thereof which term is, on its face, unfair, harsh and unconscionable and contrary to the public interest having regard to the history of the applicant's employment with the respondent, the applicant's age, qualifications and experience, the size of the applicant's remuneration package, the senior managerial nature of the position occupied by the applicant, the applicant's legitimate expectation as to the continuity of his employment for a fixed period of at least three years and the difficulties that the applicant will face in obtaining alternative, comparable career employment in the future; (b) it failed to contain an express term relating to termination in the form proposed by the applicant in this summons; (c) it operated unfairly, harshly and unconscionably in that at the point of termination in that it permitted the respondent to repudiate the written contract so as to be the effective cause of the termination of the contract in circumstances where the applicant was not guilty of any wrong doing or serious and wilful misconduct or other conduct that would have justified the termination of the written contract; (d) it failed to contain a term which would have been consistent with fairness, reasonableness and industrial fair play such that would ensure that the applicant would be accorded procedural fairness in the event of termination of the written contract or in the event that the respondent took action which resulted in the termination of the written contract; (e) it failed to provide for any reasonable, fair, adequate and just payments to the applicant by the respondent following termination of the contract of employment for any reason; (f) it failed to protect the applicant against harsh, unjust and unreasonable treatment in respect of termination of the contract of employment or in respect of such conduct by the respondent during the course of the operation of the contract; (g) it invested the respondent with significant discretionary powers to terminate the written contract, or to engage in conduct resulting in termination of the contract, to the substantial disadvantage of the applicant in circumstances where the applicant was an employee of some standing who had an unblemished employment history and had been promoted during the course of his employment with the respondent; (h) it operated so as to allow the respondent to avoid paying to the applicant any or any significant payment in respect of termination of the contract of employment for any reason; (i) it permitted the respondent to unilaterally and without the applicant's agreement to attempt to change the nature of the duties under the contract of employment to such an extent which was in itself unfair, harsh and unconscionable and contrary to the public interest; (j) it allowed the respondent to engage in a course of conduct which was designed to or had the effect of bringing the contract of employment to a conclusion in circumstances where the applicant was not accorded procedural fairness or any fairness at all; (k) it operated so as to permit the respondent to use its superior bargaining position in respect of its dealings with the applicant so as to avoid any fair, adequate or appropriate notice, warning, consultation, discussion or negotiation with the applicant concerning any changes to the applicant's duties of employment or the termination of the applicant's contract of employment or any other matter related to the applicant's contract of employment; (l) in so far as the at risk reward performance scheme was concerned it was unfair in that it reserved to the respondent a complete unfettered and unilateral discretion to determine whether or not the applicant would qualify for a payment under that scheme despite the applicant's completely satisfactory service during the period subject to the assessment; (m) it failed to contain any transparent policy or method of calculation in relation to the at risk performance scheme; (n) it failed to contain a term that ensured that the respondent would only have regard to the applicant's performance during a designated period and would not have regard to irrelevant considerations generally or particularly in determining the at risk reward payment to be made to the applicant; (o) it was otherwise unfair, harsh or unconscionable in that it failed to include any mechanism that permitted the applicant to have his at risk performance payment reviewed independently and on a fair, transparent and impartial basis; (p) it was otherwise unfair, harsh or unconscionable and contrary to the public interest upon such other grounds and for such other reasons as this Commission might find.

[126]

55 Mr Lloyd, in cross examination, was questioned as to why after the initial meeting with Mr Brunette about the complaint had matters related to the complaint raised by Mr Cropper not been determined. He answered: A. No, it hadn't. It may have gone between Mr Brunette and Mr Cropper. I thought there was a broader issue. I was concerned that someone who could tell me that it is appropriate for him to be arrogant because he is that good and all the associated behaviour that goes with it. Q. You thought he was a bit too big for his boots? A. Yes. Q. You just didn't like him? A. No ... I had no personal problem with him. I didn't like his behaviour. That's an important distinction. Q. But really you were basing your actions on your perception of what you thought was his personality? A. It was what I had seen first hand. 56 He was then asked as to his determination to put a note on the applicant's personnel file: Q. Would that have been the end of the matter? A. No, because - it would have been the end specifically of the matter as it related to John Cropper but I thought there was a broader issue with Ken that needed to be pursued because to my way of thinking we didn't get a satisfactory result. What I wanted was for people to work civilly together. That's what I want at the end of the day. That would have been done for me if Ken was prepared to apologise to Mr Cropper on the day and I would have been happy and that would finalise the matter as far as I was concerned. ... Q. There was not a need to conduct an independent review into broader issues which were undefined was there? A. I believe there was, the reason being that it was a view that I had and it was a view that the HR Manager had - that there were problems at hand with Mr Brunette but the only way of really scooping that out and to understand that would be to have an independent come in to conduct an investigation, to have it in a forum which would allow staff to participate on an entirely confidential basis. It was felt that was the best way of understanding whether or not things were as bad as we have perceived them to be. 57 Mr Lloyd also determined on the advice of Human Resources that: I felt, and it was the opinion of the HR manager, if we were to put Ken back into his role without a change in his behaviour, without having substantially completed his counselling programme, we could well expose the organization to a claim of stress or something similar.

[127]

58 Mr Lloyd was questioned as to why, after the applicant agreed to undertake management coaching and after a note was placed on his personnel file he elected to continue with a further investigation. He said: A. We had to have the counselling programme and we had to have the investigation completed because we didn't know at that point how extensive and how exhaustive the problems were with Mr Brunette. The fact that Ken had said it was a problem and recognized that was one thing. It's the dimension of that that needed to be defined and attended to. Q: So you had no idea of the dimension of what you thought may be a problem before you commissioned the investigation? A: That was why we commissioned the investigation. He agreed as follows : Q. So you had this external consultant talking to people in your business about a particular employee, trying to ascertain if there were extensive concerns with this particular employee in order to put together a report, which report you did not know what form it would take and that was the investigation process you were referring to when you told Mr Brunette that he would be in Special Projects until the completion of the investigation? A. In addition I believe I said it would depend on his progress under the coaching programme. Q. And the outcome of the investigation? A. Could be yes. Q. You really had no idea what would happen at the end of the investigation? A. No idea. 59 The applicant, having being stood down from duties, attended the meeting with the consultant, Mr Wiggins, which had finally been arranged for 4 December 2000. The interview went for two hours. The applicant asserts he became suspicious of the direction the interview was taking and found the questions very personal. He expressed this view to Mr Wiggins. At the end of the interview the applicant asked, "What happens from here?" Mr Wiggins replied, "Integral Energy are keen to bring the investigation to a conclusion as quickly as possible. I have a number of interviews still to complete and once this is done I will present my report."

[157]

90 In Bates v Finance Australia Pty Limited & Others Finance Australia Pty Limited & Ors v Gregory Scott Bates [2002] NSWIRComm 42, Peterson J considered submissions based on the concept of constructive dismissal observing at [51]: This history shows a misunderstanding about the legal effect of what was happening to the relationship between the parties. The concept of constructive dismissal seems to me to have had no application. The applicant raised that matter in his e-mail of 7 January 2000 but at that date he remained in employment and continued thereafter until 9 February. The concept of constructive dismissal requires a termination by the employee but at the behest of the employer. As the Full Commission said in Allison v Bega Valley Council (1995) 63 IR 68 at 72: "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 might change." In Brookton Holdings v Kara Kar Holdings (1994) 57 IR 288 at 289 Young J in the Equity Division of the Supreme Court of New South Wales spoke of constructive dismissal this way: However, the authorities are sufficiently full of examples of situations where an employer has repudiated the contract and the employee accepted that , or alternatively where there has been a constructive dismissal . I really do not think that there is any real difference between those two situations, though some philosophers might find some ground for distinction. Essential in both is that one side to a contract of employment has made it clear that the contract in its existing form is not to continue , but the employer puts forward a proposal that the employee will have a changed role. (emphasis added) 91 In the present case it is not contended, as submitted above, there has necessarily been a constructive dismissal in the Allison v Bega sense, but rather a breach which entitled the applicant to treat the contract as being at an end. The assignment to "Special Projects" was to continue subject to a vague reference to three months or alternatively any decision arising from the content of independent investigation report and/or alternatively the result of the agreed counselling sessions. Mr Lloyd conceded he did not know what would be the fate of the applicant after three months. I accept this attitude was conveyed to the applicant.

[175]

Her Honour in Abboud then considered the reasoning of Bauer and Hungerford JJ in Thomas Nationwide Transport Ltd v Thomas & Anor (1990) 34 IR 378 as to what was an appropriate order for interest. She also, in consideration as to money orders under s88F, adopted the reasoning of Barwick CJ in Brown v Rezitis (1971) 127 CLR 157. Barwick CJ adopted the principle (at 165) that orders should ". . . effect wholly or partially the restitution of the parties to their former position upon the variation or avoidance of the contract or arrangement". Her Honour in Abboud then held at [49]: Here, the question which now arises is whether the express provision for a minimum of two weeks notice was unfair, where misconduct warranting summary dismissal has not been established, in the circumstances outlined. I take the view that the proper approach in the circumstances of this case is to make an order as to the payment of money "just in the circumstances of the case", which requires that interest should flow from the date of application and no earlier. While there undoubtedly have and will be cases brought under s106 where the issue is notice and where a proper basis for making an order in relation to interest calculated from a date earlier than the date of application will be established, there was nothing advanced in evidence or submissions in this case, which would provide a proper basis for going beyond that date. 111 The Full Bench of the Commission has adopted her Honour's reasoning. The circumstances of this case persuade me there is reason to adopt the view of Barwick J to effect partially at least the restitution of the applicant to his position from the date of termination. As Schmidt J acknowledged, this is a case where the issue is Notice and the calculation should, I find, be made from the date of termination. 112 Interest is to be paid on the amount ordered from the date of termination, namely, 5 December 1997, in accordance with s94 of the Supreme Court Act 1970 as amended.