Maguire v Rostcom Pty Ltd t/as Penrith Mazda Centre

APPLICANT: Mr J Pearce of counsel SOLICITORS: Peter Adams & Co Solicitors

RESPONDENT: Mr M Heath of counsel SOLICITORS: Lamrocks Solicitors

JUDGMENT:

• 32 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

CORAM: Schmidt J DATE: 18 August 2000 MATTER NUMBER 2753 OF 1999 STEVEN MAGUIRE v ROSTCOM PTY LTD t/as PENRITH MAZDA CENTRE Application under s106 of the Industrial Relations Act 1996 JUDGMENT

1 This claim was brought by the applicant, Steven Maguire, under s106 of the Industrial Relations Act 1996 ('the Act') in relation to his contract of employment with the respondent, Rostcom Pty Ltd trading as Penrith Mazda Centre. That contract was terminated in March 1999, when Mr Maguire was summarily dismissed from his position by the respondent. 2 The orders sought by the applicant were: '1. An order declaring the Contract between the Applicant and the Respondent (including the contract of employment between the Applicant and the Respondent) under which the Applicant performed work for the Respondent is an unfair contract.

An order declaring void in whole ab initio (expect to the extent to which monies have been paid to the Applicant) the contract between the Applicant and the Respondent (including the contract of employment between the Applicant and the Respondent) under which the Applicant performed work for the Respondent.

An order varying from its commencement, the contract (including the contract of employment between the Applicant and the Respondent) by inserting the following provisions:- (a) That the contract shall not be terminated by the Respondent except for serious misconduct, incapacity or for reasons relating to redundancy unless the Respondent gives the Applicant 12 months notice in writing or pays the Applicant an amount in lieu thereof equal to the amount of 12 months remuneration payable under the contract (including the value of bonuses, superannuation, motor vehicle provided and other fringe benefits);

(b) That the contract shall not be terminated by the Respondent fro reasons relating to the applicant's conduct or performance unless:- (i) The Respondent shall give the Applicant notice of its intention to terminate the contract and provide to the Applicant reasons for the proposed decision;

(ii) The Applicant has been given and opportunity to defend himself against any allegations made in relation to his conduct or performance; and

(iii) The Respondent has undertaken a thorough investigation of any allegation made in relation to the Applicant's conduct or performance and any matters presented by the Applicant in his defence;

(iv) The Respondent shall make the decision to terminate the contract fairly and reasonably having regard to:- A. The Applicant's personal circumstances; and

B. The satisfactory (or otherwise) performance by the Applicant of his obligations under the contract; (v) If the Applicant agrees, the Respondent shall give the Applicant a reasonable opportunity to work in an equivalent position with the Respondent including such training, instructions, supervision and other assistance as may reasonably be required by the Applicant and as may reasonably be made available to the Respondent. (c) The contract shall not be terminated by the Respondent for reasons relating to redundancy unless:- (i) The Respondent shall give the Applicant notice of its intention to terminate the contract and provide to the Applicant reasons for the proposed decision;

(ii) The Applicant shall be given an opportunity to present factual material and argument in relation to the intention of the Respondent;

(iii) The Respondent shall undertake a thorough investigation of the factual material and arguments presented by the Applicant;

(iv) The Respondent shall make the decision to terminate the contract fairly and reasonably having regard to:- A. The Applicant's personal circumstances;

B. The satisfactory (or otherwise) performance by the Applicant of his obligations under the contract. (v) If the Applicant agrees, the Respondent shall give the Applicant a reasonable opportunity to work in an equivalent position with the Respondent including such training, instructions, supervision and assistance as may reasonably be required by the Applicant and as may reasonably be made available by the Respondent;

(vi) At the end of a reasonable period but not less than 3 months, the Respondent may determine that the Applicant is not able to discharge the duties and obligations for the alternate position. If the Respondent so determines then the Respondent may terminate the contract: A. By giving the Applicant 6 months notice in writing or paying an amount in lieu thereof equal to the amount of 6 months remuneration payable under the contract (including the value of bonuses, superannuation, motor vehicle provided and other fringe benefits); and

B. By paying to the Applicant an amount of 6 months remuneration (including the value of the bonuses, superannuation, motor vehicle provided and other fringe benefits) as a severance payment.

An order that the Respondent pays the Applicant such sum of money in connection with the contract as the Commission considers just in the circumstances of the case.

An order that the Respondent is liable to pay the Applicant the sum of Six Thousand Four Hundred and Twenty Four dollars ($6,424.00).

An order for payment for interest on sums of money ordered to be paid by the Commission.

Such further and other orders as the Commission deems fit.

An order that the Respondent pay the costs of the these proceedings.'

3 The monetary claim advanced was: '(a) The amount claimed in respect of Orders 1 - 4 is $89,200.00 which is calculated by reference to the Applicant's total remuneration at the time of termination of $89,200.00 per annum including the value of a motor vehicle.

(b) As to the amount claimed in Order 5 , the Respondent terminated the Applicant's employment on 23 March 1999 and since then has refused, omitted or neglected to pay to the Applicant:- (i) The Applicant's proper entitlement to long service leave pursuant to the Long Service Leave Act, 1955 from 19 October 1992 to 23 March 1999. (c) Details of how the amount claimed in Order 5 is calculated are as follows:- Pro Rata by the following formula P = Months of Service x 2 Months Ordinary Pay 10 Years P = 2345 (Days) x $10,000.00 3,650 (Days) P = $6424.00'

4 Evidence was called in the proceedings from Steven Maguire, the applicant; John Brennan, Assistant Service Manager; Mr Raymond Boyle, Company Director; Robert Borg, Service Manager; Jim Kalamiotis, Used Car Manager; Jamie McKnight, New Car Sales Manager at Penrith Mazda Centre. 5 The applicant was first employed as the respondent's service manager in October 1992. Initially, he had responsibility for the respondent's workshop, where some 8 staff were employed. His responsibilities and salary package increased over the years, with the establishment of a used car sales yard and a new sales outlet at Windsor, where a second workshop for which the applicant also had responsibility, was established. In July 1998, Mr Maguire was promoted to act as general manager, in the absence of Mr Boyle, the respondent's managing director, who was suffering from a serious illness. 6 Mr Maguire's dismissal resulted from events concerning a Mr Doug Talbot, the respondent's Parts Manager. There was no issue that Mr Talbot's conduct involved wrongdoing. What was contested was Mr Maguire's involvement in, or knowledge of, that wrongdoing and whether this had warranted his summary dismissal for misconduct. 7 The circumstances involving Mr Talbot arose after he had arranged with Mr Kalamiotis, then the respondent's assistant used car manager, for a used car owned by the respondent to be wholesaled to Kingswood Budget Cars ('Kingswood Budget'), from which Mr Talbot's ex-wife would purchase the vehicle at a lower price than Mr Talbot was able to purchase the vehicle direct from the respondent. There was no evidence that Mr Maguire was aware of the arrangement made between Mr Talbot and Mr Kalamiotis. On the evidence it was an arrangement inconsistent with the respondent's policy about the sale of vehicles to employees and their family members, a policy of which Mr Kalamiotis was aware. 8 Mr Talbot approached Mr Maguire in January 1999 and asked if his ex-wife's car could be examined in the respondent's workshop, it having an oil leak. Mr Maguire agreed and the car was examined, but the problem could not be identified and Mr Talbot took the car away. 9 Several days later Mr Maguire noticed that the car was again in the workshop. In the afternoon he was approached by Mr Kalamiotis, who told him of the circumstances of the sale of the vehicle. Mr Kalamiotis informed Mr Maguire that Mr Talbot wished to have the car repaired under warranty by the respondent. On the evidence, the respondent had no responsibility to make such a repair, because it had not sold the vehicle to Mr Talbot's ex-wife, that responsibility lay with Kingswood Budget. 10 After consideration and discussion with Mr Maguire, Mr Kalamiotis' attitude was that the repairs would not be done under warranty, a course with which Mr Maguire agreed although he had told Mr Kalamiotis that it was a matter for him and that if there were any grey areas or the respondent had done anything wrong, that then the position might be different and that this was a matter for Mr Kalamiotis to determine. The car was repaired. When Mr Maguire later noticed that the vehicle had left the workshop he asked the assistant service manager, Mr Borg, how the work had been paid for and was informed that Mr Talbot had provided a stock number and 'everything is under control'. The cost of the repairs was some $375 retail. 11 Mr Maguire understood by this that Mr Kalamiotis had authorised Mr Talbot to charge the repairs to another used car owned by the respondent. On his evidence and that of Mr Brennan and Mr Borg, that was a common practice of the respondent. That practice was, however, disputed by Mr Boyle and Mr Kalamiotis. Mr Maguire gave no further thought to the matter. Mr Maguire's understanding was, however, incorrect. The stock number which Mr Talbot had in fact provided Mr Borg was the number of the car provided to him by the respondent as part of his employment conditions. This was not known to Mr Kalamiotis and had the result that the respondent had borne the cost of the repairs, but not consistently with Mr Maguire's discussion with Mr Kalamiotis, that if there was a grey area, the repairs should be borne by the respondent. There was no question that this was a breach of the respondent's policy and was regarded by Mr Boyle, when he later learnt of it, as fraud, warranting Mr Talbot's dismissal. 12 The matter came to Mr Boyle's attention when it was raised with him by Mr Jamie McKnight about a month later, in early March. 13 The matter next arose with Mr Maguire when he was informed by Mr Borg that Mr Boyle had called for the stock card on the motor vehicle which had been repaired. Mr Maguire asked Mr Boyle about the matter, who told him that he would discuss it the following Monday with he and Mr Talbot. Due to a family death, Mr Talbot took leave and the matter was not raised again until 23 March at a meeting Mr Maguire had been asked to attend by Mr Boyle, in a letter of 18 March, which did not advise the purpose of the meeting. 14 The meeting on 23 March was attended by Mr Maguire, a consultant, Mr Peter McKnight, (Mr Jamie McKnight's father) and Mr Boyle. At the commencement of the meeting Mr Maguire was informed that the consequences of the meeting could range from a reprimand to his dismissal. Mr Maguire was asked to explain his knowledge of the circumstances in which the motor vehicle in question had been repaired. He was shown a copy of the repair order, which he had not previously seen and was told that Mr Borg had already informed Mr Boyle that Mr Maguire had told him that Mr Talbot had been given the stock number by Mr Kalamiotis and that Mr Borg had made a written statement to that effect. He was also accused of having told Mr Borg that Mr Talbot would give him a stock number. 15 Mr Maguire was questioned as to why he had not brought these matters to Mr Boyle's attention and was accused of 'knowing what was going on'. Mr Maguire explained his approach, including the practice which was to his knowledge also applied to members of Mr Boyle's family of charging repairs for one car to another; the involvement of various senior employees of the respondent in the matter and his lack of knowledge that the method of payment had not been appropriately approved by Mr Kalamiotis. Mr Maguire was also criticised for not seeking the repayment of the money by Mr Talbot after 5 March when he became aware of what had happened. He explained that he had been directed by Mr Boyle not to discuss the matter with anyone. 16 A minute of this meeting was prepared by the respondent and given later that day to Mr Maguire. After Mr Maguire signed the amended transcript on 23 March he was dismissed, handed a cheque and told to leave the premises immediately. The minutes were inaccurate in a number of respects. Unknown to the others present at the meeting, Mr Maguire had made a recording of the meeting. A transcript of that recording was, nevertheless, prepared by agreement between the parties in these proceedings and was admitted into evidence without objection and was relied upon by both parties. 17 Mr Maguire's dismissal was summary in effect, even though payment in lieu of a week's notice was made. His contract of employment provided for two weeks' notice on termination. The respondent declined to pay Mr Maguire any long service leave, his dismissal having been for misconduct. Mr Maguire was later provided with a separation certificate giving the reason for his dismissal as 'knowingly being concerned with dishonest conduct'. 18 Mr Talbot was also dismissed, but Mr Kalamiotis was not and indeed was later promoted to the position of Used Car Manager. Mr Talbot was not called to give evidence by either Mr Maguire or the respondent. The evidence was that when interviewed by Mr Boyle he had denied that Mr Maguire had known or approved of his use of the stock car of his own vehicle for the repair of his ex-wife's vehicle. That denial was not believed by Mr Boyle. 19 The applicant had difficulty finding alternative employment, eventually accepting employment at a lower salary package. He also complained about comments allegedly made by Mr Boyle to prospective employers about circumstances of his dismissal, which Mr Boyle denied. 20 The case advanced for Mr Maguire by Mr Pearce of counsel was that Mr Maguire had been denied a fair opportunity to defend himself against the allegations made and that the contract denied him the right to have those allegations thoroughly investigated before it was terminated. The contract permitted the termination to be effected without notice reasonably appropriate to the circumstances and without payment in respect of such notice or other statutory entitlements. The contract also operated to deny the applicant knowledge of the respondent's intentions as to his future, an opportunity to consider whether he wished to continue working for the respondent and to defeat his legitimate expectations that he would be involved in negotiations and deliberations about its termination. 21 It was argued that the respondent bore the evidentiary burden of establishing that there was a proper basis for the summary dismissal for misconduct. (Pastry Cooks Union v Gartrell White (No 3) (1990) 35 IR 70 at 83; Franklins Ltd v Webb (1996) 72 IR 257 at 260). That onus had not been met. 22 It followed that the orders sought as to notice and long service leave payments would be made. 23 The case advanced for the respondent by Mr Heath of counsel was that Mr Maguire knew or ought to have known that Mr Talbot had wrongly charged the repairs to his ex-wife's vehicle to another vehicle owned by the respondent; that he had in effect authorised the improper charging of the repairs, resulting in what amounted to a fraudulent invoice and that he had also failed to raise with Mr Boyle or to properly deal with the sale of the car to Kingswood Budget cars, a matter about which he also knew or ought to have known. The respondent's conduct as to these matters warranted his summary dismissal and in those circumstances, the orders sought would be rejected.

Consideration 24 On the evidence the relationship between the parties prior to Mr Boyle's investigation of Mr Talbot's conduct had been mutually satisfactory, with both Mr Boyle and Mr Maguire expecting him to have a long term future with the respondent. Mr Maguire stood high in Mr Boyle's esteem, who promoted him to acting general manager at a time when he had serious concerns about his own health. In that context, what later transpired was somewhat surprising. 25 Given Mr Maguire's position at the time that the events in question concerning Mr Talbot came to his attention, there cannot be any doubt that he had a responsibility in respect of them. The evidence was such that it can be accepted that Mr Maguire's conduct gave Mr Boyle cause for concern and a basis to question his capacity for the position to which he had been promoted. Having considered all of the evidence as to what transpired and how the respondent went about investigating the matter when it came to light, I am not satisfied, however, that it can properly be concluded that the deficiencies in Mr Maguire's approach to the matter were such as to amount to misconduct warranting summary dismissal. 26 It is necessary to deal with the evidence in some detail to explain why I have reached that conclusion. The evidence of Mr Kalamiotis was that he had been asked by Mr Talbot to find a suitable vehicle for Mr Talbot to purchase for his ex-wife. The respondent acquired a Toyota Camry which had been traded in. Mr Kalamiotis decided to wholesale the car to another dealer, because it was not good enough for retail sale by the respondent, without repairs, the cost of which could not be recovered on sale, unless he was able to 'bundle' the car with another vehicle on which he would make a profit. He could not find a purchaser willing to pay what the respondent had already paid for the car and then asked Mr Talbot if he was interested in buying the car. In Mr Kalamiotis' view it was suitable for Mr Talbot's purposes. The decision as to whether a car was to be wholesaled or retailed and for what price, was a part of Mr Kalamiotis' responsibilities and on Mr McKnight's evidence, was left to him, albeit there was a general concern at the time that costs for repairs of used cars was too high, a matter which Mr McKnight was monitoring. 27 On Mr Kalamiotis' evidence it was general knowledge amongst the respondent's employees at the time, that Mr Talbot was looking for a car before the transaction with Kingswood Budget was agreed and afterwards that he had acquired a car. Mr McKnight agreed with this. Mr Kalamiotis had not, however, discussed the transaction with others such as his boss, Mr McKnight or Mr Maguire and no-one else had raised the matter with Mr Kalamiotis. 28 Mr Kalamiotis agreed with Mr Talbot to wholesale the car to Kingswood Budget, because Mr Talbot could not afford to purchase it from the respondent. This was because under the respondent's policy, Mr Talbot would have had to pay $1,000 in addition to the wholesale price for such a purchase. Accordingly, they arranged to have certain repairs done to the vehicle which then formed part of the wholesale price paid for it by Kingswood Budget. Mr Kalamiotis' evidence was that he saw no problem with this arrangement at the time and did not regard it as dishonest or unlawful, but had later come to accept that it had perhaps been foolish. There was no evidence that Mr Maguire had any involvement in these arrangements or that he was aware of them until the question of the repair of the car was later raised with him by Mr Kalamiotis. This position was quite consistent with the evidence given by Mr Kalamiotis and Mr McKnight, Mr Kalamiotis' direct supervisor, that he also had no knowledge of the arrangement. 29 Mr Kalamiotis was later asked by Mr Boyle about the circumstances of the sale and why Mr Talbot had not paid the additional $1,000 applicable under the respondent's policy. Mr Kalamiotis, who was aware of the policy, said he had explained to Mr Boyle that it only applied to retail sales and that the car was not good enough, he couldn't get the price the car owed the respondent and that Mr Talbot was prepared to pay that price, so the arrangement was made with Kingswood Budget. Mr Boyle did not accept this explanation and Mr Kalamiotis received a written reprimand from the respondent in about the sale on the following day, given to him as a 'first warning'. 30 On Mr Boyle's evidence he did not then dismiss Mr Kalamiotis because he did not believe that the sale of the vehicle had been fraudulent and because he believed that he was obliged to give him a warning before dismissal. This view seemed rather at odds with the serious concerns Mr Boyle expressed in his evidence as to the potential consequences of this transaction for the respondent, which seemed potentially much more serious than the respondent's loss of $375 in respect of the repairs. 31 Had the question of the further repair of the car not arisen, it is difficult to see that any detriment would have flowed to the respondent. It had wholesaled the car to Kingswood Budget at a price which covered both the cost of acquisition and the repairs made to the car. Kingswood Budget had agreed to sell the car to Mr Talbot's ex-wife for the same price it had paid. A statutory warranty attached to the sale from Kingswood Budget, but not to the sale from the respondent to it. The respondent had thereby recovered the cost of both the purchase and repair of the car, in circumstances where Mr Kalamiotis had been unable to wholesale the car to other dealers at that price and where he believed that the cost of the purchase and repair of the car would not be recouped by the respondent if it sold the car from its lot. This would appear to have also satisfied the respondent's concern that excessive amounts were being spent on repairs for used cars, which the respondent was not recovering, a matter which Mr McKnight was then monitoring. The only real difficulty with the arrangement seemed to be that it was not in accordance with the policy about the sale of vehicles to employees. 32 In that light, Mr Boyle's evidence about these matters was somewhat perplexing. In cross-examination he agreed that the sale of the car to Kingswood Budget was not directly in breach of the respondent's policy, but he was, nevertheless, concerned about the transaction. He was seemingly not aware of Mr Kalamiotis' views as to the difficulty of the respondent being able to sell the vehicle other than at a loss, or his unsuccessful endeavours to otherwise wholesale the vehicle, nor was he aware as to whether Mr Maguire knew about the transaction, in his view, he should have. His evidence was that he regarded Mr Kalamiotis' opinions as to the possibility of a sale at a profit as irrelevant, because the car was sold by Kingswood Budget with a warranty and, in his opinion, could have been sold on the same basis by the respondent. This seemed to ignore that under the respondent's policy if Mr Talbot had purchased the vehicle from the respondent, he would have had to pay an additional $1,000 for it and that Kingswood Budget had made no profit on the sale it effected. 33 Mr Boyle's opinion was that the transaction should not have occurred without his prior approval and that if it had been sold by the respondent in accordance with the policy and not to Kingswood Budget, the later difficulties about the repairs could not have arisen because the car would have been covered by the respondent's warranty. He regarded the transaction as dishonest, but not amounting to fraud, because the respondent had strictly lost no money on it. 34 Rather more seriously however, Mr Boyle also regarded the transaction as being contrary to the Motor Dealers Act 1974, perhaps even putting the respondent's dealer's license at risk. There was no explanation advanced as to the basis for this view. Mr Boyle suspected that the vehicle had been driven away from the respondent's premises by Mr Talbot's ex-wife and had never been physically taken to Kingswood Budget. There was no evidence as to whether this had in fact been the case. Mr Boyle had established that Mr Talbot's ex-wife had received the statutory form of warranty for the car from Kingswood Budget. He understood, however, that Kingswood Budget had not wished to repair the vehicle because it had made no money on the sale. 35 In those circumstances, Mr Boyle had a concern as to what Mr Talbot's ex-wife's understanding of the arrangement might have been, but apparently made no attempt to speak to her about the matter to establish what her understanding was, or to recover the costs of the repairs from her or Mr Talbot. 36 I can find no basis at all for a finding of misconduct so far as Mr Maguire was concerned in any of these matters. It is also relevant that the evidence demonstrated that quite a different approach was adopted by the respondent as between Mr Maguire and Mr Kalamiotis in relation to this matter. Mr Kalamiotis was cautioned; but soon afterwards promoted and Mr Maguire was dismissed. Similarly, quite a different approach was also taken so far as Mr Maguire and Mr McKnight were concerned, neither of whom were aware of the transaction until after the repairs were done, both having a degree of responsibility for supervision of Mr Kalamiotis, but only Mr Maguire having been taken to any task. Indeed, on the document tendered for the respondent as to its internal management arrangements, it was to Mr McKnight that Mr Kalamiotis reported and he who had direct responsibility for his work, not Mr Maguire. 37 Mr McKnight was asked in cross-examination whether he was aware of the circumstances of the sale of the car to Kingswood Budget, which he denied knowledge of. His evidence was that when initially told of the situation concerning the repairs by Mr Kalamiotis he did not know where the car had been bought from by Mrs Talbot. He denied knowledge of the circumstances of the sale to Kingswood Budget at the time of the sale. He also denied being Mr Kalamiotis' boss in respect of such wholesaling matters. On the evidence, it does not seem as if Mr McKnight's knowledge of the circumstances of the sale was ever investigated by Mr Boyle and he was not held responsible by the respondent in any way for this transaction. 38 As to whether Mr McKnight had any relevant responsibility for this transaction, it is relevant that in re-examination Mr McKnight explained that at the time in question he was checking repair orders on cars because there was an exorbitant amount being spent on used cars and he was keeping an eye on these orders. His evidence was that as manager of the department 'it was up to me to control the costs of the used car stock, the new car stock and keep an eye on any exorbitant bills on cars because the option is to wholesale out immediately or put on the lot with the used car repair bill added to that and they were too high for the car. Every car consistently was too high.' In the light of this evidence and the evidence of the respondent's management structure, it seems rather odd that the respondent took the view that Mr Maguire ought to have known about the circumstances of the sale, but not Mr McKnight. This is a factor which I have taken into account in the conclusion I have reached. 39 Mr Maguire had become aware of the circumstances of the transaction with Kingswood Budget, after Mr Talbot had brought the car into the respondent's workshop for repair, when Mr Kalamiotis raised with him Mr Talbot's desire to have the repairs performed for free. Mr Maguire's evidence was that until then, he had believed that the car had been purchased from the respondent. That Mr Maguire failed to raise this matter then with Mr Boyle may have been an error of judgment, but one for which Mr Maguire has paid with the loss of his job. I cannot conclude on the evidence, however, that this failure amounted to misconduct warranting summary dismissal. 40 I turn then to the repair of the car. Mr Boyle's view was that the way the repairs were invoiced amounted to fraud, although he was uncertain as to which employee had prepared the documentation in question, Mr Talbot, Mr Borg or Mr Maguire; who had signed it or who had made various alterations which appear there. Mr Borg's evidence clarified these matters. On his evidence, he had prepared the documentation in question and Mr Talbot had made various alterations to it. It was also Mr Talbot who had supplied the stock number and not Mr Maguire. Despite the deficiency in this aspect of his investigation, Mr Boyle held Mr Maguire responsible for the transaction, even despite Mr Maguire and Mr Talbot's statements that Mr Maguire had not been involved in Mr Talbot supplying Mr Borg with the stock number of his car. 41 When Mr Kalamiotis raised the question of the repair of the car with Mr Maguire, Mr Talbot had already asked Mr Maguire if he could bring the car into the workshop for repair. That Mr Maguire agreed was not surprising, given that he was then unaware of the circumstances of the sale and initially believed it had been acquired from the respondent. In any event, the workshop not only performed repairs on vehicles owned by the respondent, but also vehicles owned by the general public, who paid for those services. 42 Mr Talbot had also spoken to Mr Kalamiotis and told him that the car had an oil leak, which he wanted the respondent to repair. Mr Kalamiotis told Mr Talbot that the repair had nothing to do with the respondent and Mr Talbot said that he would think about the matter. He raised it again a few days later with Mr Kalamiotis and again, after further reflection, Mr Kalamiotis told him that it could not be done. Mr Talbot told him 'I'll fix it'. 43 Mr Kalamiotis then decided to raise the matter with Mr Maguire, who in Mr Kalamiotis' evidence, told him 'we do try to help each other' and said that he would think about it. Later in the day, Mr Maguire approached him and said 'I suppose when you think about it I wouldn't get involved with it' and Mr Kalamiotis replied 'Well I am not going to get involved with him'. 44 In cross-examination, Mr Kalamiotis said he then again discussed the matter with Mr Talbot and told him that the repairs would have to be paid for. Mr Talbot asked Mr Kalamiotis if Gavin at Kingswood Budget, (with whom he and Mr Kalamiotis had arranged the sale of the car to his ex-wife), couldn't be helped out and Mr Kalamiotis had told him: 'No you can't, just pay for the problem you've got for the car out of your own money because you know Gavin has sold you the car at no profit, I can't see why you should go and ask Gavin to pay for the car, all he has done is help you out.'

45 Mr Kalamiotis could not recall discussing this conversation with Mr Maguire. 46 Mr Maguire's evidence was that when Mr Kalamiotis first approached him about the repair of the car he had no knowledge of the circumstances of its sale, but when informed by Mr Kalamiotis told him that, in the circumstances, the car was not covered by a warranty, but 'if there's a grey area and the Company have done anything wrong or should be helping Doug or Gavin, then its up to you as Used Car Manager to make that call'. He explained his reason for this as: 'Gavin used to work for us on weekends and would do a lot of work for us and one time in appreciation Ray Boyle gave him a watch for it. He had tried to help Doug's ex-wife with the car and it looked like at that stage once I found out the facts from Jim he was going to come back and try to buy either our company or Gavin's company back for it. I said to Jim, "If there's a grey area where you think you have done something wrong it is up to you as manager to make that call". Q. When you said it might come back to "bite" your company, what do you mean? A. At that stage I thought the car was bought from the company until Jim told me that night it was actually bought through Gavin, I thought it was a warranty by us.'

47 Mr Kalamiotis told Mr Maguire that he would not do it and Mr Maguire accepted this. 48 On the following day, Mr Maguire informed Mr Borg, the assistant service manager, that the car was not covered by a warranty. Mr Maguire told Mr Borg and Mr Talbot that the repair was going to be retail because it wasn't covered by a warranty and Mr Talbot had said. 'I'll sort this out.' 49 Several days later Mr Maguire inquired of Mr Borg how the repairs were being paid and he was told 'Doug has given me a stock number. Everything's under control. Don't worry about it.' Mr Maguire replied 'Not a problem', and thought no further about the matter. It was in adopting this approach that Mr Maguire obviously fell into error, sufficient for the respondent to have concerns about his performance. Mr Maguire did not pursue the matter with Mr Kalamiotis or Mr Talbot, assuming that they had come to an agreed and appropriate arrangement between themselves as to the cost of the repairs, contrary to the view Mr Kalamiotis had earlier expressed. He was wrong in this assumption and plainly erred in not following the matter up. 50 Mr Borg's evidence in chief was that Mr Maguire had told him 'Doug will give you a stock number for the work to be charged to.' Mr Maguire denied this. Mr Borg's evidence was that by this he understood that Mr Talbot would not be paying for the work. This understanding was consistent with the practice he gave evidence about as to repairs being charged as between used cars. The next day he chased Mr Talbot up for a stock number and was eventually given a number, which later turned out to be that of the vehicle which the respondent supplied to Mr Talbot. Mr Borg then completed the paperwork to transfer the cost of the repairs to that vehicle and Mr Talbot made various handwritten alterations to that paper work. 51 Mr Kalamiotis also raised the payment for the repairs a few days later with Mr Jamie McKnight, the general sales manager, who said he would keep an eye on the matter. Mr Kalamiotis then later told him when the car was in the workshop. Mr McKnight investigated the way the repairs were costed over the following month and eventually raised the matter with Mr Boyle. Mr Kalamiotis was later asked about the matter by Mr Boyle and told him that he had refused to become involved with Mr Talbot in the repairs and had raised the matter with Mr Maguire and Mr McKnight. 52 Mr Boyle also questioned Mr Borg on 12 March. Mr Borg mentioned this to Mr Maguire and later that evening was telephoned by Mr Maguire at home to ask what had happened. Mr Maguire was still at work and told Mr Borg that he would discuss the matter with Mr Boyle, which he did. He told Mr Boyle that Mr Borg could not be blamed for what had happened and Mr Boyle told him that the matter would be discussed further the next week. 53 The matter had come to Mr Boyle's attention from Mr McKnight. Mr McKnight's evidence was that when he was approached by Mr Kalamiotis, Mr Kalamiotis told him that he had been approached by Mr Maguire who had asked him to absorb the costs of the repairs against another used car owned by the respondent, Mr Maguire stating that 'we do these things for our wives and families'. Mr McKnight told Mr Kalamiotis that this could not be done and he replied 'I think its already in process because when I spoke to Doug I informed him that I didn't think it could be done and he threw up his hands and said 'I'll fix it'.' 54 Mr McKnight's evidence was to very different effect to the evidence which both Mr Maguire and Mr Kalamiotis gave about their discussions. In cross-examination, Mr McKnight agreed that he was aware of the differences between his evidence and that of Mr Kalamiotis and that he and Mr Kalamiotis had discussed these differences at the time they had prepared their affidavits. 55 An important difference in the two versions of the events was whether it was Mr Kalamiotis who approached Mr Maguire about the payment of the repairs or whether Mr Maguire had approached Mr Kalamiotis. Both Mr Kalamiotis and Mr Maguire's evidence was that it had been Mr Kalamiotis who had approached Mr Maguire. Mr McKnight was adamant that Mr Kalamiotis had told him that he had been approached by Mr Maguire. 56 On the evidence there can be no doubt that Mr McKnight understood that Mr Kalamiotis had been approached by Mr Maguire. As Mr McKnight himself however appreciated, Mr Kalamiotis was in a better position than Mr McKnight to give evidence as to what had, in fact, occurred between he and Mr Maguire. Mr Kalamiotis' evidence was to the same effect as that of Mr Maguire. There is no reason to doubt that evidence. It follows that it must be accepted that Mr McKnight was wrong in thinking that Mr Maguire had approached Mr Kalamiotis about the matter. It might be thought that Mr McKnight's misunderstanding of the situation undoubtedly influenced not only his reaction to the matter, but also ultimately Mr Boyle's. I note, however, Mr McKnight's evidence that he never discussed with Mr Boyle the detail of his conversations with Mr Kalamiotis. This evidence was difficult to believe however, given Mr Boyle's understanding of what had occurred. 57 Mr Boyle became concerned when Mr McKnight showed him the documentation in relation to the repairs. This same information was available to Mr Maguire and was regularly reviewed by him, but he did not himself pursue the question of which car the repairs had been charged to so did not realise that the repairs had, in fact, been charged to Mr Talbot's stock number. As I have earlier found, Mr Maguire plainly erred in this respect. 58 Mr Boyle's evidence was that Mr McKnight approached him about the matter on 4 March. He asked Mr Borg about the matter on 5 March. His investigations showed that $375 repairs done to the vehicle in late January had been charged to the car supplied by the respondent to Mr Talbot and had hence been borne by the respondent, not Mr Talbot's ex-wife. He dismissed Mr Talbot the owner of the vehicle as a consequence, taking the view that his conduct had been dishonest. 59 Mr Maguire raised the matter with Mr Boyle on 5 March, but the discussion was deferred and did not take place until 18 March. Mr Boyle explained his reasons for Mr Maguire's dismissal as: '55. I had formed the view that disposal of the vehicle to Kingswood Budget Cars was in order to reduce the price that would otherwise be paid for the vehicle if it had been purchased from Rostcom.

56. The conduct outlined in this affidavit had the potential to place at risk Rostcom's dealer licence. I regarded the conduct as dishonest.

57. I note Mr Maguire denies being knowingly concerned in the events surrounding Mrs Talbots vehicle. As stated I was not satisfied with the explanations given and further even if it were the case that he was not aware of the conduct it was a matter of which he should have been aware, and when sufficient facts came to his attention in relation to the incident he should have brought them to my attention.'

60 The decision to dismiss was made after the interview attended by Mr Boyle, his wife and Mr Peter McKnight, Mr Jamie McKnight's father. Neither Mrs Boyle nor Mr McKnight were called to give evidence. Mr Kalamiotis and Mr Talbot had also been interviewed. Mr Boyle had interviewed Mr Borg on about 12 March. Mr Borg was asked how the work was transferred from one repair order to the other. Mr Boyle's evidence was that Mr Borg had told him that Mr Maguire had directed him to do so and at the interview, Mr Maguire was told that Mr Borg had given a written statement to this effect. 61 Mr Borg's evidence did not corroborate that of Mr Boyle as to this aspect. Mr Borg denied that he had given Mr Boyle such a statement or had told him the stock number had been given to him by Mr Maguire, all he told Mr Boyle was how the repairs had come to be charged to Mr Talbot's stock car. In cross examination, he agreed that he had had only one conversation with Mr Boyle about the matter, which was as recorded in his affidavit and that was all he had told him. Mr Borg's recount of the conversation did not include a statement that Mr Maguire had directed him to record the repairs against the wrong vehicle. He confirmed that Mr Talbot had given him the stock number and that he had altered the first repair order to reflect this in Mr Borg's presence. It was Mr Borg who had written 'cancelled' on the first order and Mr Borg who had raised the second repair order. Mr Borg also confirmed that Mr Talbot's stock number had not been given to him by Mr Maguire and that he had not informed Mr Boyle that Mr Maguire had done so. 62 Mr Borg also confirmed evidence given by Mr Brennan and Mr Maguire that there was a practice at the respondent where, on occasions, repairs made to one car owned by the respondent were charged to another car. Mr Boyle's daughter's car was mentioned in this context. He also confirmed Mr Maguire's evidence as to the inquiry Mr Maguire had made of Mr Borg as to how the repairs were being paid. Mr Borg did not tell Mr Maguire they were being charged to Mr Talbot's car. 63 In cross-examination, Mr Boyle agreed that Mr Talbot had told him that Mr Maguire had no knowledge that he had given Mr Borg the stock number of his car. Mr Boyle did not believe Mr Talbot, because he believed Mr Maguire and Mr Talbot were friends and Mr Maguire was Mr Talbot's boss. In cross-examination he said his attitude would have been no different even if their friendship had broken down. Mr Boyle agreed that he had made no attempt to recover the $375 in question. Nevertheless, he was firmly of the view that Mr Maguire had been involved in Mr Talbot's fraudulent conduct. 64 Mr Boyle agreed that after Mr Maguire's dismissal, a new general manger had been employed by the respondent, that Mr Borg had been promoted to the position of service manager and that Mr Kalamiotis had also been promoted. The respondent had closed the Windsor branch as well as the used car division and made a number of employees redundant. Mr McKnight also continued in employment.

The failure to call Mr Talbot 65 It was common ground between the parties that an onus lay upon the respondent to demonstrate that there had been misconduct on the part of Mr Maguire warranting his summary dismissal. Nevertheless, it was the case of the respondent that Mr Maguire should have called Mr Talbot to give evidence and that the failure to do so gave rise to a Jones v Dunkel (1958) 101 CLR 298 inference against the case the applicant brought. 66 There was seemingly no impediment on either party calling Mr Talbot. It was the submission for the applicant, however, that it was the respondent who should have called Mr Talbot, particularly having in mind the evidentiary burden it had to demonstrate that serious misconduct had occurred. It was the applicant's case that Mr Boyle's view that Mr Talbot had not been truthful about Mr Maguire's lack of knowledge of what he had done was pivotal to his conclusion that Mr Maguire had engaged in serious misconduct. It followed that the respondent should have called Mr Talbot, so that his untruthfulness could be demonstrated to the Court. 67 The applicant put forward nothing from its investigation into Mr Talbot's conduct to support Mr Boyle's conclusion that what Mr Talbot had said as to Mr Maguire's knowledge of what he had done could not be believed, other than Mr Boyle's understanding of their relationship. On his evidence however, even if his view about their relationship was wrong, it would have made no difference to Mr Boyle's disbelief of what Mr Talbot had told him. 68 As was submitted by Mr Heath, Mr Boyle's evidence as to what Mr Talbot had told him was not evidence of the true position, indeed, Mr Boyle did not believe Mr Talbot. The rule in Jones v Dunkel does not lead to an inference that Mr Talbot would have given evidence favourable to the respondent, or indeed to Mr Maguire, but it 'will assist materially in determining what findings or inferences might fairly be made or drawn from evidence of the opposing party.' (R v Buckland (1977) 2 NSWLR 452 at 458 Per Street CJ.) The rule is also not concerned with the rejection of direct evidence of eye witnesses. (See RPS v The Queen (2000) 74 ALJR 449 at 454-5.) 69 Mr Talbot's story was consistent with both Mr Maguire and Mr Borg's evidence, that it was Mr Talbot who had supplied Mr Borg with his stock number. It follows that the evidence of Mr Borg must be accepted - it was not Mr Maguire who gave him Mr Talbot's stock number, as Mr Boyle believed. 70 It was the submission of Mr Heath that the use to which the rule in Jones v Dunkel would be put in this case was that it would lead the Court to prefer Mr Borg's evidence in favour of Mr Maguire's in the case of conflict. Such conflict amounted to this - Mr Borg's evidence was that on the day the vehicle was booked in to have the work done, Mr Maguire told him that Mr Talbot would give him a stock number for the repairs to be charged to. Mr Maguire denied this. Mr Maguire's evidence that he later told Mr Talbot and Mr Borg that these repairs would have to be paid for and that Mr Talbot had said he would go and sort this matter out with Mr Kalamiotis, was corroborated by Mr Borg, who also agreed that later in the day Mr Maguire had asked him 'How are we being paid for the job'. Mr Borg told him that Mr Talbot had given him a stock number and that 'everything was under control'. 71 Mr Borg's evidence about these various conversations can be reconciled only with difficulty. Even if it be accepted that the rule in Jones v Dunkel operates in the way submitted for the respondent, the difference in the evidence between Mr Borg and Mr Maguire provides a slim basis indeed for the conclusion that Mr Maguire had engaged in misconduct warranting his summary dismissal. 72 It must also be considered in the light of the other relevant evidence. The discussion which Mr Kalamiotis and Mr Maguire had was whether the respondent would bear the costs of the repairs, in the context of the sale of the car to Kingswood Budget. In their discussions, there was no suggestion that the repairs would be charged to Mr Talbot's vehicle. On Mr Maguire's evidence, consistent with the explanation which he gave to Mr Boyle, he understood that if the respondent was to bear the cost of the repair, this would involve that cost being charged to some other used car under Mr Kalamiotis' control, so that in this way the cost would be recovered by the respondent on the sale of that other vehicle. On Mr Maguire's evidence, that was an approach often adopted by the used car division. Mr Kalamiotis did not agree, but both Mr Borg and Mr Brennan gave evidence as to the existence of such a practice. Mr Borg's evidence was also consistent with him understanding that Mr Talbot had given him the stock number of another used car, consistent with this practice. There was no suggestion that Mr Borg knew that Mr Talbot had given him the stock number of his own vehicle. 73 The practice of charging repairs from one car to another was one discussed by Mr Maguire and Mr Boyle at the interview on 23 March. Indeed they had a heated discussion about it, including how the practice operated for the benefit of members of Mr Boyle's family. It is in the light of all of this evidence that I cannot conclude that the rule in Jones v Dunkel assisted the respondent in the way submitted. 74 The upshot of the evidence was that Mr Maguire had assumed when told by Mr Borg that Mr Talbot had supplied him with a stock number to charge the repairs to, that Mr Kalamiotis had changed his mind about the repairs being charged to another used car. Mr Maguire took this approach, on what he told Mr Boyle and on his evidence, because Mr Kalamiotis and Mr Talbot were both managers employed by the respondent and he trusted them to sort the matter out. Nevertheless, as he readily conceded to Mr Boyle at the interview, he had made a mistake in not checking with Mr Kalamiotis that his understanding was correct and that with the benefit of hindsight he should have done so, even though it was two managers who had been involved in the matter. 75 The discussion between Mr Boyle and Mr Maguire as to the practice in relation to repairs of used cars demonstrated that Mr Boyle himself knew something of such a practice, as did Mr Maguire, Mr Brennan and Mr Borg. All of this evidence must also be considered in the context of Mr McKnight's evidence that the whole matter of costs being spent on repairs of used cars was being reviewed at the time by the respondent because it was too high. It was interesting, in that context, that it was Mr Kalamiotis and Mr Boyle who denied the existence of this practice, but not Mr Brennan, Mr Borg nor Mr Maguire. 76 It must, of course, be considered that Mr Boyle plainly took the view that Mr Maguire had failed in his duty to investigate the matter and should not have left the matter at face value. He did not, however, put to Mr Maguire what he had been told about the matter by Mr Talbot, and that he did not believe Mr Talbot. Mr Boyle also plainly put to Mr Maguire statements which Mr Borg in his evidence denied having made. Having reviewed the transcript of this interview, it must be concluded that the way in which the interview was conducted was hardly conducive to eliciting Mr Maguire's version of what had happened in any calm or sensible way and did not give him an opportunity to consider what in reality the respondent's other investigations had revealed to it, or Mr Boyle's attitude towards him and his suspicion that he had acted in complicity with Mr Talbot. 77 It is, of course, necessary to deal with the complaints made as to the investigation of this matter. On the evidence, it must be concluded that the investigation process was seriously flawed and resulted in real unfairness for Mr Maguire. The transcript of the interview makes plain that the investigation hardly involved a measured discussion conducted by Mr Boyle of what the balance of the respondent's investigation had revealed so as to give Mr Maguire an opportunity to deal with these matters. Rather, this was a heated discussion between Mr Maguire and Mr Boyle, who frequently interrupted each other, both not giving the other the chance to finish what they were trying to say, with a number of interjections by another speaker, presumably Mr McKnight or Mrs Boyle. 78 Having in mind both the nature of this investigation and the way in which it was conducted, the basis on which Mr Boyle's conclusion of misconduct rested, together with the serious consequences of dismissal for Mr Maguire for being knowingly concerned with dishonest conduct, I have come firmly to the view that the respondent's conduct was such as to found a proper basis for the conclusion that the contract was unfair, in the terms of s105 of the Act. Those consequences were not only that Mr Maguire lost his employment, but also that he was dismissed for serious misconduct, thereby losing his statutory entitlements to long service leave, as well as a payment in respect of notice. These difficulties were exacerbated when he was then provided with a termination notice which plainly affected his prospects of finding alternative employment. 79 While Mr Maguire may well have made a serious error of judgment when he did not pursue with Mr Kalamiotis the question of whether he had approved Mr Talbot's repairs being paid by the respondent, I cannot conclude, however, that the evidence established that the respondent had a proper basis for the applicant's dismissal for serious misconduct, because Mr Maguire was knowingly involved in conduct of Mr Talbot which the respondent regarded as fraudulent. 80 In the light of that conclusion, it is necessary to consider what orders should be made. The applicant was provided a week's pay in lieu of notice and as a result of the circumstances of his dismissal, had real difficulty in obtaining other work. He later took on a position at a significantly lower level than that which he occupied with the respondent. 81 Having in mind all of these matters, as well as the evidence of the respondent's position with the application, his package, his years' of service and promotion over that time, I have concluded that in all of the circumstances the contract should be varied so as to require a period of three months' notice on termination or payment in lieu thereof. In the light of that conclusion, questions of mitigation do not arise. 82 It follows that the monetary orders should reflect payment of three months' of the applicant's salary package and that the respondent should also be ordered to pay the long service leave which fell due to the applicant on termination of his employment. I take the view, however, that this is not a case where it is appropriate that the calculation of long service leave should reflect any period of notice, however, particularly given the terms of the variation I have determined should be made to the contract. 83 As to interest, I have concluded that in this case it is appropriate to order payment of interest in respect of the long service leave claim as from the date of termination of employment, but that interest in relation to notice should flow from the date of judgment. It follows that it is unnecessary to make an order as to interest in the latter respect. (See Abboud v State of New South Wales (No. 2) [2000] NSWIRComm 110 at pp15-17).

Orders 84 For all of these reasons I make the following orders:

1. The contract of employment between the parties is varied from 23 March 1999 so as to require the giving of three months' notice or payment in lieu thereof on termination of employment.

2. The respondent is ordered to pay the applicant: 2.1 a sum reflecting three months' of his salary package, plus 2.2 the applicant's entitlements under the Long Service Leave Act 1955 as at the date of termination of his employment, plus 2.3 interest at Supreme Court rates on the long service leave entitlements, calculated from the date of termination until the date of judgment. 3. The respondent is to pay the applicant's costs as agreed or assessed.

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