Kirkwood & Victor Ollis t/as Country House and Land Sales [2005] NSWIRComm 1037

LEGISLATION CITED: Industrial Relations Act 1996

APPLICANT Mr C Dorber, Industrial Agent Employment Advocacy Solutions LEGAL REPRESENTATIVES: RESPONDENT Mr H Karimjee In-house Solicitor

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: McLEAY C 23 March 2005

Raymond Kirkwood and Victor Ollis t/as Country House and Land Sales Application by Raymond Kirkwood re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2005] NSWIRComm 1037

1 This is an application by Raymond Kirkwood for unfair dismissal against Victor Ollis t/as Country House and Land Sales pursuant to section 84 of the Industrial Relations Act 1996 ("the Act"). The application shows that Mr Kirkwood was dismissed from the position of Manager on 5 July 2004. The applicant had been employed by the respondent since 1 August 2003. 2 When the matter was not resolved by conciliation on 27 September 2004, directions were issued regarding the filing and serving of witness statements. The matter did not proceed when listed for hearing on 15 December 2004, but proceeded on 14 and 24 February 2005. 3 At the hearing, the applicant was represented by Mr C Dorber, Industrial Agent, who called evidence from Mr Kirkwood. The respondent was represented by Mr H Karimjee, in-house solicitor, who called evidence from the respondent Mr Ollis and his partner Ms Gail Lye. APPLICATION LODGED OUT OF TIME 4 The claim for unfair dismissal was filed on 19 August 2004, some 45 days after the date of dismissal set out in the application and 24 days beyond the statutory requirement. The time frame is reduced by seven days in each case if the date of dismissal is taken to be 12 July, as set out in the Employment Separation Certificate. In accordance with s 85 of the Act, (1) An application under this Part must be made not later than 21 days after the dismissal of the employee.

(2) The Commission is required to accept an application that is made out of time if the applicant has previously made a similar application under Commonwealth law relating to the same dismissal and: (a) the similar application was made within the time required by that Commonwealth law, and (b) the similar application has not been settled or determined, and (c) the application under this Part is made not later than 21 days after the similar application is withdrawn, or is declined because of the existence of an alternative remedy under this Part.

(3) 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. 5 In this case, Mr Kirkwood moved to Queensland following his dismissal, and filed an application in the Queensland Industrial Relations Commission. He sent a copy of his application to Mr Ollis. Some four or five days later Mr Kirkwood received advice that he had filed in the wrong jurisdiction. On the same day, he contacted the Industrial Relations Commission of New South Wales. On receipt of their documentation he completed the forms and returned them by mail, together with the appropriate fee. 6 Because accommodation was provided with the position of Manager of the guesthouse, Mr Kirkwood was required to move following his dismissal. It is unsurprising that he filed his claim in his local area. 7 I am satisfied to take the date of dismissal as 12 July, for two reasons. The first is the date provided by the respondent on the Employment Separation Certificate; the second is that the letter of dismissal acknowledges a further week of accrued leave to be taken after the date of the letter. On this basis, the application was filed in Queensland within 21 days of the date of dismissal. 8 While s 85(2) makes reference to applications filed under Commonwealth law, I am satisfied that the same principle applies to applications made in other State jurisdictions when, as in this case, they have been done so in the belief that it was the correct jurisdiction. If the initial application had been made out of time, I may have been reluctant to accept it. However, it was made within time and, although in the wrong jurisdiction, Mr Ollis was put on notice in a timely way that the applicant was making a claim. In any event, Mr Kirkwood's letter of 21 July had put Mr Ollis on notice of intention to file a claim, even prior to the filing of the claim. 9 Mr Kirkwood gave uncontested evidence that his physical and mental health have deteriorated since his dismissal, causing him hardship. The respondent did not provide any evidence of hardship arising from the lateness of the current application. 10 In all, I am satisfied that there is sufficient reason to accept the application out of time, having regard to the factors outlined above. CONSIDERATION 11 Mr Kirkwood and his wife Sandra were employed as joint Managers of a Bed and Breakfast guesthouse, named Bonaparte's Retreat, in Wellington. They were also responsible for renting out some 40 properties comprising 67 rentals owned by Mr Ollis in the area. 12 Bonapartes (as it was known) had 23 rooms, two common rooms, a large dining/lounge room and shared bathroom facilities. Mr Kirkwood said the shared bathrooms were the major factor contributing to vacancies at the guesthouse. The vacancy factor of other rental properties reduced from about 40 per cent to 8 per cent during the Kirkwood's period of employment. 13 It was Mr Ollis' intention to run the guesthouse at a loss pending the building of a jail nearby, due to open in 2007. It was presumed that workers at the jail would provide patronage for the guesthouse and it would then become profitable. 14 The conditions of employment were discussed between Mr and Mrs Kirkwood, Mr Ollis and Ms Lye in Wagga Wagga in May 2003. The areas discussed and agreed were salary, superannuation, holiday entitlements and accrued time off. Accommodation and meals formed part of the package. Mr and Mrs Kirkwood were each to be paid $625 per week, and were to work from 7 am each day seven days a week, accruing one day off for each seven days worked, to be taken in blocks when a relief manager could come in.

15 There were many differences between the parties about aspects of the applicant's work during the period of employment. For example, Mr Ollis complained that when he and Ms Lye called in to Bonapartes the front door was locked; he was not provided with a meal when he asked for one; he had received many complaints from guests about the quality of meals provided; Mr Kirkwood would not do minor maintenance and would not place advertising signs in the front of the house. Mr Kirkwood, on the other hand, described himself as a loyal and dedicated employee who had been congratulated by Mr Ollis and by guests on the quality of the service provided at the guesthouse. He said that he had earned a good reputation in the town, and had never received any complaints. He claimed the vacancy level at the guesthouse was largely a result of the respondent's personal reputation following a program on '60 Minutes'. The dismissal 16 The termination of the applicant's employment was by facsimile on 5 July 2004, in a letter addressed to Mr and Mrs Kirkwood, which read in relevant part as follows: We regret the position of Managers of Bonapartes is no longer viable and therefore we have to appoint a live-in caretaker until the jail is open.

We therefore suggest you remove your belongings as soon as possible and take the opportunity to find alternative accommodation during your week (8 days) off. 17 The letter then set out payments due, and was signed by Mr Ollis. The days off referred to in the second paragraph of the letter were days to be taken as accrued leave.

Merit 18 Relevant legislation for any claim for unfair dismissal is set out in s 88 of the Act as follows: In determining the applicant's claim, the Commission may, if appropriate, take into account: (a) whether a reason for the dismissal was given to the applicant and, if the applicant sought but was refused reinstatement or re-employment with the employer, whether a reason was given for the refusal to reinstate or re-employ, and (b) if any such reason was given - its nature, whether it had a basis in fact, and whether the applicant was given an opportunity to make out a defence or give an explanation for his or her behaviour or to justify his or her reinstatement or re-employment, and (c) whether a warning of unsatisfactory performance was given before the dismissal, and (d) the nature of the duties of the applicant immediately before the dismissal and, if the applicant sought but was refused reinstatement or re-employment, the likely nature of those duties if the applicant were to be reinstated or re-employed, and (e) whether or not the applicant requested reinstatement or re-employment with the employer, and (f) such other matters as the Commission considers relevant. 19 The reason for dismissal, the first of the matters set out above, was unclear. Whether the applicant's employment was terminated because an agreed period had expired, whether his position became redundant or he was dismissed because of performance issues became less clear throughout the proceedings. The letter of termination reads as a redundancy, in that the positions held by Mr and Mrs Kirkwood were "no longer viable". However, in evidence, Mr Ollis claimed that a one year period of agreed employment had come to an end. He also spoke of dissatisfaction with Mr Kirkwood's services. 20 Mr Ollis' verbal testimony in regard to his conversation with Mr Kirkwood after he sent the letter of dismissal was as follows: I told Ray it wasn't working out, that the running of the situation was far too expensive and that it was time our agreement was brought to an end. There were a number of issues outstanding and we would work through those over the next week and then his pay would be forthcoming, as per the agreement I had sent him.

There is a level of ambiguity in those words that does not assist the Commission. It remains necessary to look at the surrounding facts to determine the reason/s for the termination of the employment relationship. 21 As to a redundancy, Mr Kirkwood said that Mr Ollis told him that he was going to 'mothball' the guesthouse because it was losing money and the opening of the jail had been postponed. He understood that a retired person was going to look after the place on a part-time basis. However, the evidence showed that a young chef was employed at Bonapartes following the Kirkwood's dismissal. Mr Ollis gave evidence that the guesthouse was mothballed recently, because the interim employee had left. Ms Lye, on the other hand, gave evidence that the guesthouse was "still trading". 22 Mr Kirkwood said that his reference to a twelve month contract of employment, in a letter to the respondent dated 21 July, was an error on his part. He said that no such limitation on the employment period had been agreed. The respondent produced no evidence to back up his own statement that a 12 month period of employment had been agreed. Ms Lye said a draft employment contract had been drawn up but not signed. She could not recall whether it contained a reference to a 12 month period. Logically, if the employment had been for a fixed term one year contract, it would have come to an end on 31 July 2004. It did not. 23 Under cross-examination, Mr Ollis said he had said to Mr Kirkwood at the time the employment was offered: "We'll employ you for 12 months and we'll then review it at that stage".

This does not indicate a fixed term contract. The review, if it was to take place, could reasonably have involved both parties to the agreement. Indeed, Mr Ollis testified that Mr Kirkwood "felt he was going to have some input" into the proposed review. Such a review could, equally well, result in ongoing employment with or without mutually agreed amended conditions and rate of remuneration. A review expressed in the terms indicated by Mr Ollis does not indicate a fixed term agreement. 24 I am satisfied that it was not a fixed term contract which came to an end but that there was a dismissal on the initiative of the employer.

25 I am not satisfied that the dismissal was a genuine redundancy at the time it took effect. The relief manager was on duty at the time the notice was given, a new caretaker/manager was employed, and it was not until some months later that a part-time caretaker was employed in lieu of the manager's role. 26 Mr Ollis gave evidence that he had visited the guesthouse on five or six occasions during Mr Kirkwood's period of employment, and that the doors were locked every time. This contradicts Ms Lye's testimony that the door was sometimes locked and Mr Ollis' own evidence that Mr Kirkwood did not leave the premises. There were numerous other performance issued raised by the respondent in his evidence. It is neither necessary nor useful for me to outline each of them at this time. Suffice to say, all were denied by the applicant, and none were substantiated by corroborating evidence. 27 It is also noteworthy that, during cross-examination, Mr Ollis denied that he had dismissed Mr Kirkwood for performance issues. Rather, it was because "the 12 months period was up". 28 Mr Ollis referred to his letter to Mr Kirkwood of 1 July as a written warning. This letter in fact was not a warning, but a note to clarify the situation in regard to use of a work vehicle during periods of leave. No other relevant documents were provided in evidence, and I am satisfied that no written warnings were issued. Although Mr Ollis was described by Ms Lye as "not a book-work man", he employed over 70 employees and was not without experience in industrial proceedings. While he said he gave Mr Kirkwood a number of verbal warnings, he was not specific about any of these and Mr Kirkwood denied them. 29 Much of Mr Ollis' testimony was evasive, ambiguous or offering apparent contradiction. For example, in cross-examination he was asked about referring to himself in his written statement of evidence as a "sole manager". The relevant extract from transcript is as follows: Q. You've indicated in your statement at paragraph two, "At all relevant times I was the sole manager of Country House and Land Sales when the business employed Mr Raymond Kirkwood as the manager", etc. A. Yes. Q. The sole manager is the sole person in charge, running the business. A. I'm a sole trader. I don't have a proprietary company. I am a sole trader. Q. Country House and Land Sales is a trading name of victor Ollis. A. Owned by me. Q. It's not a company? A. Not a company. Q. Okay. In your statement, you describe yourself as a sole manager. Do you agree with that? A. Yes. Q. But you're now saying you're not the sole manager, you're a sole trader? A. The business is owned by me solely. I am a sole manager but I appoint a number of managers to do other jobs. Q. So who managed, under you, Bonaparte's guesthouse in respect of salary, wages, administration and all other related matters - buying and ordering food, maintenance, etc? A. Some of those responsibilities were passed on to Ray. Some were controlled by Gail. Some were by John Giles. Q. So you would agree with me that the statement, "At all relevant times, I was the sole manager", is incorrect? A. No, because I am still responsible as the owner, for the decisions made by my owners. 30 In all, where the evidence of Mr Ollis and Mr Kirkwood is conflicting, I prefer the evidence of Mr Kirkwood generally. 31 Ms Lye also raised a series of issues of performance and trust that were of concern to her. However, these were not substantiated. Nor were they put to Mr Kirkwood. Ms Lye was also evasive in her evidence. For example, she said she spoke to the Australian Taxation office about a superannuation fund for Mr Ollis' employees, but said she did not know the name of the fund. 32 It follows that I am satisfied that there were no performance issues sufficient to justify the dismissal of Mr Kirkwood from his employment as Manager of Bonapartes. 33 In coming to this conclusion, I am persuaded also by the fact that Mr Kirkwood had appeared before both the Residential Tenancy Tribunal (on several occasions) and this Commission on behalf of Mr Ollis. In doing so, Mr Ollis conceded to Mr Kirkwood a level of responsibility and a level of trust that substantially exceeds the normal responsibilities of a guesthouse Manager. Procedural issues 34 The termination itself was by fax, received at the place of employment during a time when the respondent may have anticipated that the Kirkwoods were away, it being during a period when they were on pre-arranged accrued leave. A memorandum of 1 July relating to use of a motor vehicle showed that Mr Ollis was aware that they were taking leave as of 5 July. Yet he made no effort to contact the Kirkwoods prior to their going on leave. Rather, Mr Ollis made disparaging and gratuitous remarks about Mrs Kirkwood's absence at the time, when she was absent on pre-arranged leave. In the circumstances, the timing of the written notice of dismissal was unreasonable. 35 The notice of termination ostensibly provided a week's notice, but it was fortunate that Mr Kirkwood was present to receive it. He was on leave, and was not required to be in attendance at the time. The relief manager had been present when the fax came through. In any case, the notice was less than a week, because the instruction was "to find alternative accommodation during your week off". Neither the applicant nor any other employee can be instructed as to how they spend time off and the Kirkwoods were entitled to remain in the accommodation while they were employed. This aspect of the termination of the applicant's employment was harsh. Remedy 36 I am satisfied that reinstatement or re-employment are impracticable. In determining an appropriate order, I am mindful that the rate of pay quoted in the application was only part of the remuneration package. In Mr Ollis' words, Mr Kirkwood was paid $30,000 per annum, "plus keep, plus accommodation, plus car". No figure was agreed for accommodation and sustenance provided or the use of the car. Ms Lye described the elements of remuneration other than salary as follows: The other benefits of their employment were electricity, gas, food, a car supplied so they wouldn't have to use their own car, what did I say, electricity, gas, telephone, food, accommodation, all those sort of extra things that add up to quite a considerable amount of money above that.

Ms Lye was not aware of the gross value of the employment package or how it may have been assessed for the purpose of fringe benefits tax. 37 To adequately determine an order for compensation, it is necessary for me to assess a rate for the purpose, or to use the rate given and increase the number of weeks compensation awarded. In the absence of sufficient evidence for me to follow the first course of action, I am satisfied that the second course open to me is the more appropriate one in all the circumstances. 38 I am also mindful of the fact that the total period of employment was a little less than 12 months and that the applicant and his wife had to find alternative accommodation without notice as a result of the dismissal. Costs 39 Mr Dorber, for the applicant, made a costs application in these proceedings to the extent of $4880. Section 181 states relevantly: (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis. (2) However, the Commission when it is not in Court Session may award costs only in the following cases: (a) ... (b) ... (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (c1) ... (d) .... (3) ... (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. 40 In this case, the claim was made on the basis of the respondent's refusal to settle the claim. It was asserted from the bar table and agreed that the respondent consistently refused to enter into settlement discussions with the applicant or his representative. Mr Karimjee, for the respondent, stated that costs should not be awarded against the respondent. 41 Correspondence in evidence shows that a claim was particularised by Mr Kirkwood on behalf of himself and his wife as early as 21 July 2004, with a request for a response. That correspondence indicated that the Kirkwoods were "open to negotiation". That offer was to settle claims for both Mr and Mrs Kirkwood and consisted of 16 weeks pay at the rate of $625 each, plus airfare and superannuation, plus the issue of separation certificates and payment summaries. The total of the claim for both applicants was $26,800 including $6,000 in lieu of superannuation. There was no suggestion that Mr Kirkwood's claim might be settled separately from that of Mrs Kirkwood. Currently, Mrs Kirkwood has indicated that her claim for unfair dismissal will be discontinued if the issue of superannuation is clarified. It follows that the offer of settlement needs to be compared as an offer for both claims compared to the outcome, or potential outcome at this stage, for both claims. Therefore, I cannot find that the respondent unreasonably failed to agree to an offer of settlement. The application for costs is dismissed.

CONCLUSION 42 In all, I am satisfied that there is sufficient reason to accept the application out of time, having regard to the relevant factors. 43 Having considered all of the evidence before me and the submissions of the representatives of the parties, I find that there was no clear or adequate reason for the dismissal. I reject the assertion that it was simply the end of an agreed fixed term position. Nor was it a genuine redundancy. The dismissal was done without notice, by fax, sent at a time when the respondent was on pre-arranged leave. It required him to leave the accommodation provided as part of the position within the notice period. I find that the dismissal was harsh, unreasonable and unjust, both substantially and procedurally. 44 Accordingly, I make the following orders. ORDERS

1. I order the respondent to pay to Mr Raymond Kirkwood an amount of $11,250, being 18 weeks' wages at the rate of $625. 2. I make no order as to costs. 3. The amount of compensation specified in order 1 is to be paid by the respondent within 21 days of the date that these orders take effect. 4. These orders take effect from today, 23 March 2005. __________________

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