Nathan Wellington v Express Publications Pty Limited [2009] AIRC 465; (11 May 2009)

Note: An appeal pursuant to s.120 (C2009/2514) was lodged against this decision - refer to Full Bench decision dated 14 July 2009 [[2009] AIRCFB 629] for result of appeal.

[2009] AIRC 465

Workplace Relations Act 1996

s.643 - Termination of employment

[1] Mr Nathan Wellington has made application under s.643(1)(a) of the Workplace Relations Act 1996 (the Act) on the ground that the termination of his employment as a sales representative by Express Publications Pty Limited (Express) on 23 June 2008 was harsh, unjust or unreasonable.

[2] Mr Wellington represented himself in the proceedings, after receiving limited legal advice under the Commonwealth Unlawful Termination Assistance Scheme. Express was represented by its in-house legal counsel.

[3] In the course of the proceedings I was guided by the general approach espoused by the Full Bench in Re: A. Abouabdillah, [1] namely:

"[18] The general approach to be taken in proceedings involving an unrepresented party is set out in the following passage from the judgment of Samuels JA in Rajski v Scitec Corporation:

'… the advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored. But the court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent. [FOOTNOTE**:** NSW Court of Appeal, 16 June 1986, unreported; cited with approval by Sackville J in Morton v Mitchell Products [1996] 828 FCA 1 (18 September 1996); and by the Full Bench in Davidson, op. cit.]'"

[4] Because Mr Wellington's Form R33 (notice of election to proceed to arbitration or to begin court proceedings) sought to elect to proceed to arbitration on the ground that the termination of his employment was harsh, unjust or unreasonable and to begin court proceedings in respect of alleged contraventions of s.659 (discrimination, etc), [2] at the request of Express the matter was listed for a directions hearing on 13 October 2008, when arbitration proceedings were listed for 19 and 20 November 2008.[3]

[5] At the hearing on 19 November 2008, Express advised that certain of its proposed witnesses were no longer to give evidence (because of Mr Wellington's late notice in advising that they were required for cross-examination). Express declined an opportunity to apply for an adjournment. After Mr Wellington gave his evidence, he made oral application for Express' proposed witnesses to be summonsed and the proceedings were adjourned and summonses were issued.

[6] When the proceedings continued on 18 February 2009 Mr Wellington indicated that he wanted to give further oral evidence and he did so. At that time he had opportunity to tender any other evidence in support of his application. Express then called as witnesses the persons it had originally indicated would give evidence on its behalf, giving Mr Wellington the opportunity to cross-examine them, during which cross-examination Mr Wellington provided the Commission with further documentation.

[7] At the conclusion of the evidence on 19 February 2009 I directed that the parties provide written submissions by close of business on 3 March 2009. At Mr Wellington's request this period was extended to 17 March 2009. Following Mr Wellington's request for a further extension of time, a further extension until 23 March 2009 was granted.

[8] Evidence was given by Mr Wellington on his own behalf. Mr Wellington stated that Express had advised him that an email he purportedly received from a Mr Paul Beck, [4] who worked for Express as a contractor on the magazine Extreme Street, did not exist and, as Mr Beck would not return Mr Wellington's calls, he was not able to question Mr Beck. He drew attention to the fact that Express has declined to provide him with a telephone number of a former employee, Ms Tania (surname not published), when he wanted to clarify some evidence that was given on behalf of his former employer.[5] Also Mr Wellington sought to tender as evidence emails from certain advertisers who had not agreed to appear in the proceedings.[6]

[9] Mr Wellington became argumentative in the course of presenting his case, [7] which he sought to explain by his frustration[8] and his being dumbfounded[9] with Express' evidence. In his written submissions he stated:

"I am a very passionate person with regards to the truth, and fairness for all, and due to these traits the Commissioner should take this into account with regards my cross-examination questioning and submissions. Yes I have made some disparaging comments along the way, but with good reason, in relation to the Respondent's appalling ethics and tactics over a 9 month period."

[10] The following persons gave evidence on behalf of Express:

• Ms Diana Screpis, General Manager and most senior staff member after the owner, Mr Charles Vella. [10]

• Mr Richard Vella, Mr Charles Vella's brother, who manages the sales staff. Mr Richard Vella was Mr Wellington's direct supervisor and made the decision to terminate his employment. Mr Richard Vella has worked for Express for approximately 17 years.

• Mr Ben Hosking, Publisher, Performance Motoring Division in charge of performance motoring magazines. At the time of Mr Wellington's employment he was Publisher, Express Motoring Group and responsible for leisure and four wheel drive magazines as well as the performance motoring magazines which are relevant to these proceedings.

• Mr Roy Velardi, Editor of the publications, Street Fords and Xtreme Fords. He has never been editor of Extreme Street.

• Mr Mark Cutajar, sales representative who was present when Mr Wellington's employment was terminated by Mr Richard Vella.

[11] Express objected to what it submitted was Mr Wellington's attempt to introduce fresh evidence in his written submissions - after he had been given the opportunity on 18 February 2009 to introduce additional evidence and had since 19 November 2008 to consider what further evidence he should submit.

[12] Mr Wellington submitted that I should accept that Express was an unethical company with a poor reputation and that its witnesses had colluded in giving much false and misleading evidence. This may well be his view. However this Commission makes decisions based on the evidence before it. Where there is conflicting evidence, the Commission must decide which evidence it prefers by taking account of relevant factors, including the credibility of witnesses and probabilities. I have done so in this case. However the evidence that has been presented by Mr Wellington and the responses of the other witnesses to his cross-examination fall well short of proving such assertions which, having regard to all of the evidence before me, I must reject.

[13] I have carefully reviewed all of the material that has been provided to the Commission and insofar as it is relevant to the grounds of the application have given everything appropriate weight in exercising my statutory discretion. Limited weight has been given to documents to which objections had been made and where the relevant persons were not available for cross examination. [11] I have not relied on the respondent's initial 'pleadings' insofar as they are not included in the evidence or its written submissions.

[14] Mr Wellington was employed as an Advertising Sales Executive Motoring from 12 November 2007 until a proposed expiry date of 12 November 2008 (unless terminated earlier or extended). [12]

[15] Express publishes over 30 magazines covering motoring, leisure, lifestyle and craft. Thirteen magazines relate to motoring. [13] The company is privately-owned and has been in business for over 20 years. It employs approximately 200 persons and has 8 contractors and a multitude of casual contractors who contribute to the magazines.

[16] Mr Wellington's role was to sell advertising in the motoring magazine Extreme Street, although from time to time he assisted in selling advertising for other motoring magazines. He worked under Mr Richard Vella who managed all advertising related matters and had the authority within Express to recruit and terminate sales staff.

[17] In their selling of advertising, sales representatives are required to meet Express' sales targets for magazines. Whilst there is a standard rate for advertising, sales representatives have flexibility in the rates they can charge advertisers in order to meet their overall targets for editions. This includes the ability to charge at lower rates than the standard rate without Mr Richard Vella's approval in certain circumstances. [14]

[18] If there is unfilled space in a magazine the use of complimentary 'filler ads' can be used by the sales representative to attract or retain advertisers. Whilst Mr Richard Vella has overall responsibility for the allocation of space for filler advertisements, it was the responsibility of the advertising manager for the particular magazine to determine which filler advertisements were selected. In the case of Extreme Street Mr Wellington selected the filler advertisements. [15]

[19] It is not an uncommon practice for the editorial staff of motoring magazines to feature articles on the 'building' of project cars for the interest of readers. Project cars are usually built over a period of time with progress being covered in a number of editions. In return for their supplying goods or services towards the project build, the various businesses receive positive exposure in the coverage of the story. The practice is of personal benefit to the owners of project cars which, if the necessary prior approval is obtained, can be the property of members of Express' editorial staff.

[20] Express advised that it has a practice of not allowing sales representatives to build project cars under similar arrangements. As explained by Ms Screpis, this is because of a possible conflict of interest, namely sales representatives may not act in the interests of the company when signing up advertisers as they may prefer their own agenda of building their project car over the interests of Express to generate revenue. No such conflict of interest applies to editorial staff who find and write stories and do not sell advertising. [16]

[21] As further explained by Ms Screpis, a sales representative may have a conflict as opposed an editorial staff member because: '… an advertising representative has control of all our advertising pages. They have the ability to I guess manipulate or sell a space of advertising giving free products. Editorial staff are not able to do that. The editorial staff control words and pictures. … It's very easy to control. The advertising representatives (are) very, very hard to control. We cannot maintain the control of that (if) they are doing something not in the best interests of Express.' [17] Further, 'they could for example sell a page of advertising that should normally be sold say it's $1000 a page, they could sell it for $500 a page and get some things done to the car without our knowledge.'[18]

[22] Mr Wellington's evidence was that he was not aware of a policy that advertising sales representatives were not allowed to build project cars in exchange for editorial coverage in Express magazines. He submitted that no such policy had existed prior to his being advised of the policy.

[23] Mr Wellington is the owner of a 1967 Ford Mustang Fastback which he considers to be 'high profile'. It needed to be rebuilt to a new show standard using some of the latest technology. He values his vehicle which had been featured on the cover of a 1995 edition of an unrelated motoring magazine.

[24] Shortly after he commenced employment with Express, from mid-December 2007 onwards [19] in the course of his employment Mr Wellington approached advertisers or potential advisers to ascertain whether they were interested in contributing goods towards the rebuilding of his mustang as a project car within an Express motoring magazine. The parts would be supplied to Mr Wellington who would accept responsibility for the rebuilding.[20]

[25] It is uncontroversial to say that Mr Wellington had not obtained formal approval for his mustang to be used as a project car. Also he did not have approval to approach advertisers or potential advertisers about sponsorship for the rebuilding of his mustang. [21] The situation was that:

(a) Mr Wellington was aware that other employees of Express were using their vehicles as project cars and obtaining product from suppliers in return for editorial coverage in a magazine.

(b) Mr Paul Beck, was regarded as the editor of Extreme Street. [22] According to Mr Wellington, Mr Beck had verbally supported his examination of a business case[23] (although they had not gone into specifics[24]) as he supported the mustang being featured.[25] Mr Beck advised him to contact Mr Hosking who would have the final say.[26]

(c) According to Ms Screpis, Mr Beck was not an employee of Express. He was a contractor of Express whose role related to designing editions by putting various components (photographs, advertising and other content) together. Unlike Mr Wellington he was not responsible for selling advertising. If he had given encouragement to Mr Wellington he wasn't acting on behalf of the company but as a fellow colleague. [27]

(d) On numerous occasions Mr Wellington had discussed the rebuilding of his mustang with Mr Ben Hosking the publisher of Express' Performance Motoring Division. [28] It is not contested that Mr Hosking did not give the necessary approval of the proposal.[29]

(e) Mr Hosking advised him that it would be entirely dependent upon the editors say so [30] - who Mr Wellington took to be Mr Beck.

(f) According to Mr Hosking he had warned Mr Wellington that he should not push his idea too hard as it was not usual for sales representatives to have project cars approved by the company. [31]However if the editors were passionate about having his car included as a project car he would think about seeing if senior management would make an exception to the general policy.[32]

(g) Mr Wellington stated that, despite his repeated requests for Mr Beck to provide him with a pro forma letter endorsing the rebuilding of his mustang as a project car that Mr Wellington could show potential advertisers, nothing had been forthcoming. [33] Becoming frustrated with Mr Beck's lack of response, shortly before his termination he approached Mr Velardi, the editor of two other motoring magazines - although Mr Velardi suggested that their discussion was about a rebuild of Mr Wellington's other mustang, a Big Block 69 Sportsroof.[34]

(h) It is not contested that Mr Velardi did not give the necessary approval for Mr Wellington's mustang to be used as a project car. Mr Wellington suggested that Mr Velardi had said 'It sounds good to me, I think it would suit the magazine but I would need to speak to Ben (Hosking) to get his final approval'. [35] According to Mr Velardi he advised Mr Wellington that he would like to cover certain areas of his rebuilding as a technical article. However as he knew that sales staff weren't to have project cars he would put the proposal forward and see if anything has changed since the policy was introduced over two years earlier.[36]

[26] It was not contested that Mr Wellington had not discussed the matter with his manager, Mr Richard Vella, or sought his approval.

[27] According to Mr Wellington, in approaching advertisers or potential advertisers about his mustang he had been putting together a 'business case' which would assist him to sell advertising.

[28] Even though such preparation covered approximately six months Mr Wellington did not present the Commission with evidence of anything in writing that might resemble what is generally regarded as a business case (including a first draft or a partially completed document), notwithstanding Mr Wellington's unsupported suggestion that he 'had hundreds of thousands of dollars worth of people that wanted to advertise' if his mustang could be built as a project car with editorial coverage.

[29] There was no evidence before the Commission that Mr Wellington had actually accepted goods from advertisers for the rebuilding of his mustang, although there was evidence that at least two had indicated a willingness to participate in a rebuilding of his mustang in exchange for editorial coverage. [37] There was no evidence before the Commission to find that Mr Wellington had discounted advertising rates in exchange for the actual or future supply of goods for his mustang. Express did not assert that Mr Wellington had provided complimentary advertising to advertisers or potential advertisers in exchange for the actual or future supply of goods for his mustang.[38]

[30] There was no evidence of any of the advertisers or potential advertisers having received editorial coverage as part of Mr Wellington's proposal.

[31] Things came to a head on Friday 20 June 2008 when Mr Richard Vella first heard that Mr Wellington had plans for his mustang to be used as a project car and without prior notice Mr Vella raised the subject with him. Without any discussion on the subject, Mr Vella rather directly expressed his disapproval of the idea and warned Mr Wellington that if he persisted it would mean the end of his employment. [39]

[32] After Mr Wellington explained the proposal to him, Mr Vella suggested that Mr Wellington approach Ms Diana Screpis to obtain an official position on the matter. [40]

[33] That afternoon Mr Wellington sent an email to Ms Screpis, referring to certain benefits to Express of his mustang being used as a project car and expressing an interest in meeting with her 'to discuss these opportunities in more detail'. [41]

(a) Ms Screpis emailed her response to Mr Wellington (with copies to Mr Hosking and Mr Richard Vella) in the following terms:

Our company policy is no vehicles besides approved editorial staff will have projects cars used for editorial.

The answer is no, as you can understand I will have (the) rest of the company coming to me requesting the same thing.

(b) In response to Mr Wellington's recent approach (refer to subparagraph 25(h) above) Mr Velardi emailed Mr Hosking asking if he was 'cool' with the project as Mr Velardi would like to cover the various bits as technical articles. He asked if it would be covered as a project car or a readers-build type story. [43] (Mr Wellington accepts that the email seeks Mr Hosking's approval.[44])

[35] On Monday 23 June 2008 Mr Hosking emailed his reply to Mr Velardi, referring to Ms Screpis' decision in her email of 20 June 2008. Mr Velardi forwarded-on that email to Mr Wellington with advice that he could not run a story on anything being built by sales staff "as you guy's apparently are not allowed to have 'project cars.' " [45]

[36] Early that morning Mr Richard Vella mentioned Ms Screpis' reply to Mr Wellington who then viewed her email refusing the proposal. [46]

[37] Later that morning Mr Richard Vella held a meeting in his office with Mr Wellington and Mr Cutajar to discuss sales targets. Discussion then moved to the subject of Mr Wellington's mustang and the decision of Ms Screpis. Mr Vella explained the email to Mr Wellington [47] and advised Mr Wellington that 'it's not happening due to Dianna Screpis' email'.[48] During further discussion Mr Vella terminated Mr Wellington's employment.

[38] The reasons given by Express for the termination of Mr Wellington's employment are:

(a) He refused to accept a directive/company policy that as a sales representatives he was not to approach advertisers for the purpose of having his mustang and the advertisers goods and services written up as a feature in Express' motoring magazines; [49]

(b) Without authority he approached advertisers in an attempt to secure their goods and services for his personal benefit (i.e., rebuilding his mustang) whilst making representations that Express would feature the advertisers goods and services as editorial in one of its magazines; [50]

(c) He failed to disclose his conflict of interest to his employer which he was obliged to do under clause 17.2 of his contract of employment which states:

"The employee agrees to notify the Chairman immediately if any interest or obligation arises which may be inconsistent with the Employee's obligations under this Agreement." ('Chairman' means Express Publications' Chairman) [51]

(d) He breached clause 12.1 (Confidentiality) of his contract of employment, by during the term of his employment utilizing Express' customer list to contact customers in order to benefit or try to benefit himself. Clause 12.1 relevantly includes:

"Unless the Employee has received express written consent to the contrary from the Chairman, the Employee will:

(1) at all times during employment with Express Publications keep secret and use only for the benefit of Express Publications any Confidential Information;

(3) Whenever requested by Express Publications or on termination of employment for whatever reason, whichever first occurs, immediately return to Express Publications all records, documents, computer disks, papers and notes (including copies) in the Employee's possession or control which contain or record in any form Confidential Information; and

(4) The Employee must notify Express Publications immediately of any actual or suspected unauthorised use, disclosure or copying of Confidential Information."

Note: The definition of Confidential Information in subclause 1.1 of his contract of employment includes:

"Confidential Information means all information relating to the current or future business interests, methodology, knowhow or affairs of Express Publications or any person or entity with whom it deals or is concerned, including: …

names, lists and directories of Express Publications' employees, contributors and advertisers; …

reasonably regarded by Express Publications as confidential, being information not in the public domain or known to competitors of Express Publications other than information in the public domain or known to competitors not as a result of a breach of confidentiality by the Employee or any other person. …" [52]

[39] Therefore the reasons for the termination of Mr Wellington's employment are, in essence, twofold, namely:

(a) Mr Wellington's conduct on 23 June 2008 in refusing to comply with the decision of Ms Screpis and endorsed by Mr Vella that he was not to rebuild his mustang as a project car in the course of his employment (i.e. failing to follow an instruction); and

(b) Mr Wellington's conduct from mid-December 2007 onwards when, without prior approval and proper authority, he approached advertisers and potential advertisers in an attempt to secure their goods and services for his own benefit (i.e., the rebuilding of his mustang) whilst making representations that Express would feature their goods and services as editorial (i.e., acting without authority).

[40] During the proceedings Mr Wellington expressed his concern that at least one person in the industry had advised him that they had been told that he had been 'sacked for pilfering'. [53] Clearly, from what has been stated above, this was not the case.

[41] Subsection 643(1)(a) of the Act provides:

"(1) Subject to subsections (5), (6), (8) and (10), an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment:

(a) on the ground that the termination was harsh, unjust or unreasonable; …"

[42] In Byrne v Australian Airlines Limited the High Court explained these grounds as follows:

"It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted." [54]

[43] The Commission is required to have regard to a number of matters specified in s.652(3) of the Act. That subsection provides:

"(3) In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:

(a) whether there was a valid reason for the termination related to the employee's capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the employee was notified of that reason; and

(c) whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee; and

(d) if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination; and

(e) the degree to which the size of the employer's undertaking, establishment or service would be likely to impact on the procedures followed in effecting the termination; and

(f) the degree to which the absence of dedicated human resource management specialists or expertise in the undertaking, establishment or service would be likely to impact on the procedures followed in effecting the termination; and

(g) any other matters that the Commission considers relevant."

[44] It is also relevant to consider s.635(2) of the Act which provides that the procedures and remedies concerning the conciliation and arbitration of claims, as well as the manner of deciding on and working out remedies:

"... are intended to ensure that, in the consideration of an application in respect of a termination of employment, a 'fair go all round' is accorded to both the employer and employee concerned." [55]

[45] It is now well established that each of the paragraphs in s.652(3) must be considered in determining an application in so far as they have application or are relevant to the circumstances of the case. [56] That approach is summarized in the following passage from the judgement of Moore J in Edwards v Giudice and Others:

"It is clear from both the language and structure … and the statutory context in which the subsection appears that the section requires the Commission to consider each of the matters referred to in paras (a) to (e), though the matter referred to in para (d) does not arise in all circumstances. Not only must the matters be considered but the use of the words 'have regard to' signify that each must be treated as a matter of significance in the decision making process: see Minister for Immigration and Ethnic Affairs v Baker (1997) 45 ALD 136, Friends of Hinchinbrook Society Inc v Minister for Environment (No.3)(1997) 77 FCR 153 and Australian Competition and Consumer Commission v Leelee Pty Ltd (1999) FCA 1121." [57]

[46] It is accepted that the decision of the Full Bench of the Commission in King v Freshmore (Vic) Pty Ltd [58] is also applicable to the existing provision. In that case the Commission indicated that the task of the Commission is not to review the employer's decision as to what conduct occurred but to determine itself, on the evidence, whether the conduct occurred. It stated:

"[23] When a reason for a termination is based on the conduct of the employee, the Commission must, if it is an issue in the proceedings challenging the termination, determine whether the conduct occurred. The obligation to make such a determination flows from s.170CG(3)(a). The Commission must determine whether the alleged conduct took place and what it involved.

[24] The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination."

[47] In determining on the material before the Commission whether Mr Wellington's termination was harsh, unjust or unreasonable evidence of relevant facts in existence at the time of the termination are to be taken into account. As stated by the Full Bench in Metricon Homes Pty Ltd v S Bradley: [59]

"[10] … Evidence of relevant facts in existence at the time of the termination are to be taken into account even if the employer was unaware of them at the time. The starting point for this proposition is the judgment of Von Doussa J in Lane and Others v Arrowcrest Group Pty Limited (t/as ROH Alloy Wheels) [FOOTNOTE (1990) 27 FCR 427] (Arrowcrest). After discussing relevant authority His Honour said this:

'In my opinion it is ... open to an employer to justify a dismissal by reference to facts not known to the employer at the time of dismissal, but discovered subsequently, so long as those facts concern circumstances in existence when the decision was made. Whether the decision can be so justified will depend on all of the circumstances.' [FOOTNOTE Ibid at 456]

[11] The statement of principle in Arrowcrest was adopted by the High Court in Byrne v Australian Airlines Limited. [FOOTNOTE (1995) 185 CLR 410 per Brennan CJ, Dawson and Toohey JJ at 430 and McHugh and Gummow JJ at 468] It follows that the Commissioner was under a duty to determine Mr Bradley's application on the basis of the facts and circumstances in existence at the time of the termination."

[48] What the Commission cannot take into account in determining whether or not Mr Wellington's termination was harsh, unjust or unreasonable are facts not in existence at the time of the termination, i.e., conduct of Mr Wellington or Express that occurred subsequent to the termination. Such facts are not relevant to such a determination and I have excluded any from the material on which I have made such decision. [60]

S.652(3)(a) - WAS THERE A VALID REASON FOR THE TERMINATION?

[49] There is a general acceptance that the often quoted words of Northrop J in Selvachandran v Peteron Plastics Pty Ltd also apply to the existing provision:

"In its context in s.170DE(1), the adjective 'valid' should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reason must be valid in the context of the employee's capacity or conduct …. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must 'be applied in a practical, commonsense way to ensure that' the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, when considering the construction and application of s.170DC." [61]

[50] As stated in Maluk v Sutton Tools Pty Ltd: [62]

"49. The failure to follow a lawful instruction which was reasonable in the circumstances may provide an employer with a valid reason to terminate an employee's employment.

50. Conversely it has been held that the failure to comply with an unreasonable direction does not provide a valid reason for the termination of a person's employment. In Izdes v L.G. Bennett & Co Pty Ltd t/as Alba Industries Beazley J stated:

'In determining whether a refusal to carry out the lawful and reasonable directions of an employer constitutes a valid reason for termination, it is necessary to have regard to all the circumstances, including the nature and degree of the employee's conduct.' (Footnotes omitted)"

[51] Ms Screpis made her decision to reject the idea and as the General Manager she was entitled to do so. As stated by her, she had the right to engage sales representatives on the basis that 'it is an advertising representatives job to sell advertising, not to try and get their car done up'. [63]

[52] Mr Wellington had no legal right to use his employment to obtain goods or services to rebuild his mustang because there was nothing in his contract of employment to remotely suggest this.

[53] Furthermore Ms Screpis' decision that the vehicles of advertising sales representatives could not be used as project cars for editorial coverage was not unreasonable, given the conflict of interest.

[54] Therefore the decision of Mr Screpis insofar as it affected Mr Wellington's employment was both lawful and reasonable.

[55] Considerations of whether or not Express made a good commercial decision in failing to favourably consider its participation in providing editorial coverage of the rebuilding of Mr Wellington's mustang is not a factor that is relevant to his unfair dismissal application.

[56] Similarly, it is not material to this case whether or not an idea of linking the rebuilding of Mr Wellington's mustang to the allocation of advertising space had merit from a commercial perspective.

[57] Also it is not material whether a different response may have been forthcoming from Mr Wellington's employer if the project car involved had the support of Mr Hosking [64] and had not been owned by an advertising sales representative.

[58] There is no suggestion that Mr Wellington's employment was terminated because he had an idea or he had advanced a proposal. [65] Therefore it is not appropriate that I consider the merits of his notion in determining his application.

[59] The determination of whether there was a valid reason for Mr Wellington's termination because of a failure to follow instructions turns on the characterisation of the meeting which took place on 23 June 2008.

[60] It was not disputed that during the meeting Mr Wellington made it sufficiently clear to Mr Richard Vella that he did not want to accept Ms Scepis decision as final and that he wished to continue to seek goods from clients of Express on a free of charge or discounted basis for the rebuilding of his mustang. In his evidence Mr Wellington agreed that he did not accept Ms Screpis' decision as the end of the matter. He believed that the rebuilding of his mustang had many benefits for Express and wanted to take the matter higher to Mr Charles Vella.

[61] What was in dispute was the differing accounts of the length of the discussion and the extent to which Mr Wellington argued against the decision.

[62] According to Mr Wellington, it was a brief discussion. [66] Mr Vella explained Ms Screpis' decision to him and stated that this meant that the project build of his mustang was not going to happen. Mr Wellington told Mr Vella that he was adopting a different attitude to what he had indicated on the previous Friday. To him, it was 'as though it was beyond discussion.' He wanted to discuss the matter with someone at a higher level, meaning Mr Charles Vella. He wished to proceed with his car build and Mr Richard Vella responded: 'Well you pay for everything you need.' Mr Wellington then argued that he had brought a lot of the advertisers to Express and they were his favoured suppliers. Before his employment with Express they had supplied him with products free of charge. Mr Vella then said: 'Well there's the door then. Get your things and go.'[67] Although Mr Wellington suggested that he received 'verbal abuse' during the discussion, [68] he gave no evidence of this and I find that it did not occur during the discussion.

[63] According to Mr Vella's contemporaneous notes of what occurred during the conversation:

"I told him that the response he got from Diana was final and therefore he cannot proceed with building his own project car using our magazine. I also advised him that if anyone was going to get a mustang built it was me but I am not going to do it. He wanted to debate it because he said he had the contacts and that he needed the money. I responded that he had the same opportunity as the other sales managers to earn money by selling advertising and at this stage Mark agreed.

Nathan still wanted to debate the issue and I told him that I didn't want to. He gave me copies of emails regarding this very issue from Ben Hosking and Roy Velardi - copies attached. I told him that if he continued wanting to debate this matter, and not accept the decision from Diana which I was reaffirming, then I would show him the door.

At this stage he still wanted to pursue the matter and I was left with no alternative but to ask him to leave with immediate effect." [69]

[64] Mr Richard Vella's written evidence included:

"Nathan continued to repeat his intention over and over again and whilst this was happening I formed the opinion that Nathan did not want to accept the decision of the General Manager, Diana, and was still wanting to pursue his own agenda which now directly conflicted with that of the company. I therefore made a decision that Nathan's insubordination and failure to accept the situation would leave me in a position that neither I nor Express could (sic) have him in the workplace as he was directly in conflict with the company's decision on the matter." [70]

[65] I accept Mr Richard Vella's evidence in response to a question from Mr Wellington that he was 'like a dog with a bone, you wouldn't let it go'. [71]

[66] Mr Richard Vella explained his actions as follows:

"MR VELLA … Then he got the response on Friday afternoon that the answer was no, that it could not happen which is what I thought it was going to be anyhow, and then on the Monday it was sort of reiterating the decision that had been given to Nathan by the general manager and that's when he said after a period of time, no, no, no, I still want to do it. I thought no, this can't continue and that's the reason for the termination.

COMMISSIONER … Why didn't you say look, settle down, come back and go and cool off and I'll talk to you later this afternoon. What made you think that it was so extreme that led you to terminate his employment?

MR VELLA I've worked with Nathan for eight months at that stage or thereabouts, seven, eight months and knowing the person that he was I knew this wouldn't all sort of just blow over and I had sort of made up my mind - I wish it were that sort of situation because I've done it many times before, go and settle down, just relax, we'll talk about this later. Not with Nathan, with a few others of staff over the years but I knew this wasn't just going to go away. I thought in my own mind at that time that there was nothing going to stop Nathan from pursuing this matter further and further and further and further.

COMMISSIONER The evidence was he wanted to go and see Mr Charles Vella?

MR VELLA Well, just sort of say again well, how far do we go with this thing? I mean I'm the advertising director, I'm managing the advertising department, he's the staff under my control, he's already been given a decision by the general manager and I thought well, how far do you have to go with this? Depending on the size of the organisation you go from here to here to here to here and where do you stop until you actually get a 'yes', that was my reasoning.

COMMISSIONER In your mind I understand you see it as being non-negotiable, do you?

MR VELLA When the general manager says no in an email like that …". [72]

[67] Under cross-examination Mr Cutajar did not waiver in his evidence that the discussion about Ms Screpis' directive lasted about five to ten minutes. [73] During the exchange between Mr Wellington and Mr Vella, Mr Wellington had repeated himself a lot. From Mr Cutajar's evidence it is clear that Mr Vella had wanted to put Ms Scepis' decision behind them and move on. However Mr Wellington repeatedly argued that he should be allowed to use his mustang as a project car and continued to do so after Mr Vella advised him that he was not to pursue it any further or he would be 'shown the door'.[74] I have accepted Mr Cutajar's evidence that his witness statement reflected notes that he made within 2 hours of the meeting.[75]

[68] I find that the discussion went on for 5 to 10 minutes and accept Mr Vella's evidence under cross-examination that it was probably more like 10 minutes [76] during which 'three times for sure' Mr Wellington repeatedly didn't accept the decision[77] and continued not to do so after he was warned that this would result in the termination of his employment.

[69] After Mr Vella told Mr Wellington that his employment was terminated things remained very tense [78] whilst Mr Vella escorted Mr Wellington to his desk and supervised his packing of his belongings. Mr Vella advised Mr Wellington that he would receive the relevant documentation in the mail. When Mr Wellington refused to leave without the paperwork, Mr Vella threatened to call the Police. Mr Wellington then left the building and with Mr Vella's concurrence returned to say goodbye to a colleague. During the course of this Mr Wellington stated 'I've just been sacked for being an Aussie' and 'You haven't heard the last of this. I've had dealings with BHP on ethical things and, you know, so you haven't heard the last of it'.[79]

[70] I have no doubt that Mr Wellington's attitude to Mr Richard Vella's direction that Ms Screpis' decision was the end of the matter was affected by Mr Wellington's perception that his proposal would assist him sell advertising as well as allowing him to rebuild his mustang. He had much to gain personally by the sponsorship of goods for the rebuilding of his mustang and he was reliant on the editorial coverage in return for that sponsorship. Also, as he had been discussing his idea for many months with persons who he regarded as his clients because he had brought some with him to Express, it could be difficult to explain why what they had discussed was not going to proceed as he had not anticipated such an outcome.

[71] I find that Mr Wellington's conduct during the course of the discussion with Mr Richard Vella on 23 June 2009 amounted, in legal terms, to a deliberate disobedience of a lawful and reasonable direction.

[72] Although Mr Richard Vella's response to Mr Wellington's refusal to accept the decision may have appeared to Mr Wellington to be an overreaction, it must be considered in the context of the surrounding circumstances.

[73] Mr Richard Vella had been liberal in his approach on 20 June 2009 by agreeing that Mr Wellington could seek to overturn his ruling by going directly to the General Manager. In that respect I do not accept Mr Wellington's assertion that such action by Mr Vella represented some untoward 'total reveral/backflip.' [80]

[74] Ms Screpis' decision reaffirmed Mr Richard Vella's original advice to Mr Wellington and Mr Vella had previously warned Mr Wellington in the strongest terms that he if he persisted with his proposal it would mean the end of his employment.

[75] Mr Wellington had been employed for less than 12 months. He had shown poor judgment by discussing his proposal with Express' clients over approximately six months without the knowledge of his direct supervisor and without some more concrete indication that editorial staff would insert the coverage of the rebuilding of his mustang in an Express magazine.

[76] I am of opinion that this is not a case where a decision to terminate employment was made in the heat of the moment on an 'fire bullets, clean up later' basis.

[77] I find that the evidence does not support Mr Wellington's conspiracy theory, that he was called to Mr Vella's office because his proposal would have been detrimental to the interests of the editorial staff who built project cars in exchange for editorial coverage without having to obtain products from sources who advertise in Express' magazines. [81]

[78] I have already found that Mr Wellington's refusal to comply with the decision involved a deliberate refusal to follow a direction that was both lawful and reasonable. Therefore it involved a breach of an implied term of his contract of employment to obey lawful directions.

[79] After considering all the circumstances, including the nature and degree of Mr Wellington's conduct, I find that, as well as it being inconsistent with the maintenance of the employment relationship, it involved a matter of sufficient seriousness as to provide a valid reason for the termination of his employment.

[80] According to Ms Screpis the policy/practice that advertising staff were not to have project cars, although unwritten, was well known through discussion and practice. [82]

[81] Mr Richard Vella's evidence was that Mr Wellington should have known of the policy and he would be very surprised if that were not the case. However under cross-examination he conceded that it was possible that Mr Wellington might not have known of the policy. [83]

[82] In the absence of evidence that anyone told Mr Wellington of the practice/policy I am prepared to accept that he did not know of such policy and therefore did not knowingly and wilfully act in breach of an Express policy.

[83] However even if that was the case, did Mr Wellington's actions in, without appropriate authority, canvassing advertisers or potential advertisers to ascertain their willingness to provide him with free or discounted goods to enable him to rebuild his mustang in exchange for their receiving editorial coverage of the project provide a valid reason for the termination of his employment?

[84] It is beyond doubt that Mr Wellington had been canvassing Express clients from at least mid December 2007 to ascertain their willingness to provide him with such goods. On his own evidence Mr Wellington did this:

(a) Without any formal approval that editorial coverage of the rebuilding of his mustang would occur;

(b) On the basis that advertisers would gain some advantage from Express for participating in the rebuilding exercise; and

(c) Without the knowledge of his direct supervisor, Mr Richard Vella.

[85] In response to Mr Velardi's question to Mr Wellington 'why would you go out and try and get all this hundred thousand dollars worth of advertising if you didn't have approval on a car to get built and featured in the magazine', Mr Wellington responded: 'I'd already spoken to Paul Beck for about four months with this and he promised that he was supporting it with no piece of paper, that's when I went to Roy and I said Roy, what's your feeling?' [84]

[86] At best, Mr Wellington had such high regard for his 'high profile' mustang that he assumed that it would be accepted as a project car because he saw others obtaining such benefits and did not understand the conflict of interests issue for advertising staff. Further he assumed that because Mr Beck had indicated that he would be prepared to cover the rebuilding of his mustang editorially in Extreme Street [85] and Mr Hosking had not given him a firm decision that it could not be done, he could make it happen.

[87] Although I have accepted that Mr Wellington did not know of the Express policy/practice, it was reasonable to expect that he should have recognised the conflict of interest between his discretion in the pricing and giving of advertising to clients of Express, and his acceptance of free or discounted goods from them.

[88] Mr Wellington's submission that shortly before his termination Mr Velardi gave him the green light that he would approve and run with an editorial on the rebuilding of his project car (subject to the approval of Mr Hosking) does not assist Mr Wellington explain why he had the authority for many months to approach clients of Express canvassing whether they would supply him with goods for the exercise. [86] In fact, Mr Wellington appeared to concede that all he wanted from Mr Velardi was his agreement to run the editorials as Mr Wellington accepted that 'editorial looked after the editorially and the advertising looked after the advertising.'[87]

[89] Whilst Mr Wellington relies on Mr Beck's unrealised indication that he would provide editorial coverage in Extreme Street of the rebuilding of Mr Wellington's mustang, that begs the question who within the company had approved that Mr Wellington could use his mustang as a project car for such purpose. During the proceedings I saw no evidence of any such approval.

[90] After considering Mr Wellington's evidence, I am not convinced that all he was doing was preparing a business case or business proposal which he would present to Mr Vella showing the advantages that Express would gain through increased advertising revenue by his rebuilding his mustang. If this had been so, Mr Wellington might have been expected to have elaborated on this in his email to Ms Screpis. [88] I concur with the Express submission that the email was requesting much the same type of project car build that approved editorial staff had enjoyed in the past.

[91] Also, Mr Wellington did not satisfactorily explain why he had not mentioned what he was doing to, or sought the concurrence of, his direct supervisor, Mr Richard Vella who managed all advertising related matters.

[92] There was no evidence of how the purported business case would provide Express with hundreds of thousands of dollars and I found the description of its purported advertising component to be vague. It was quite unremarkable and by no means unique for Mr Wellington, as a salesman, to seek to increase the amount of advertising he could sell as that was his job and he was expected to do so in accordance with arrangements imposed by his employer.

[93] During a period of approximately six months Mr Wellington canvassed Express' clients to ascertain their willingness to provide him with free or discounted goods whilst withholding what he was doing from his direct supervisor. In doing so he foreshadowed that the clients would receive editorial coverage in an Express magazine without having adequate authority to do so. Such conduct was approaching (if not bordering on) a breach of his obligations as an employee not to conduct oneself in a manner calculated or likely to destroy or seriously damage the relationship of mutual trust and confidence between the employer and employee and to act with fidelity and good faith towards his employer - that were implied terms in his contract of employment.

[94] Taking all of the surrounding circumstances into consideration, including that I have accepted that Mr Wellington did not knowingly and wilfully act in breach of an Express policy and that I have made no finding that Wellington received any personal benefit from his approaches, I find that such conduct, although unsatisfactory, falls short of being a valid reason for the termination of his employment.

S.652(3)(b) - WHETHER THE APPLICANT WAS NOTIFIED OF THE VALID REASON?

[95] The reference in s.652(3)(b) to that reason is a reference to the valid reason for the employee's termination. [89] The reason must be given prior to the decision to terminate.[90]

[96] The evidence supports a finding that during the exchange between Mr Wellington and Mr Richard Vella it was made clear that the reason for his termination was his refusal to accept the decision that his mustang was not to be used as a project car with Express' editorial support.

S.652(3)(c): WHETHER THE EMPLOYEE WAS GIVEN AN OPPORTUNITY TO RESPOND TO ANY REASON RELATED TO THE CAPACITY OR CONDUCT OF THE EMPLOYEE

[97] Section 652(3)(c) provides that the Commission must have regard to whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee. The opportunity to respond refers to an opportunity that is provided before a decision is taken to terminate the employee's employment. [91] The 'any reason' refers to the valid reason for the employee's termination.[92]

[98] In cases where an employee's conduct is involved, this opportunity serves two purposes. Firstly, it gives the employee the opportunity to demonstrate that the allegations have no foundation. Secondly, it gives the employee the opportunity to persuade the employer that, while the allegations are of substance, there are factors that should persuade the employer not to terminate the employment. Those factors may be extenuating personal circumstances or they may involve undertakings about future conduct. [93] The following comments of Moore J (when considering s.170DC of the Industrial Relations Act 1998) are relevant to the second purpose:

" ... the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend." [94]

[99] On 20 June 2008 Mr Wellington was put on notice that if he persisted with the initiative it could mean the end of his employment.

[100] I accept Mr Vella's evidence that a prior warning was given to Mr Wellington during their verbal exchange on 23 June 2008 and prior to the termination of his employment.

[101] Therefore at the time of his termination (during the discussion on 23 June 2008), Mr Wellington had known that by refusing to accept the decision this would result in the termination of his employment.

[102] However it is clear that Mr Wellington was not given an opportunity to put his case of why his failure to comply with the decision should not result in his termination.

[103] Further, Mr Vella's evidence that 'I had sort of made up my mind' [95] suggests that at least to some extent he had decided that should Mr Wellington continue not to accept the decision he would terminate his employment without giving him 'an opportunity to defend'.

[104] Because of these deficiencies Mr Wellington was not afforded adequate procedural fairness in the termination process.

S.652(3)(d): IF THE TERMINATION RELATED TO UNSATISFACTORY PERFORMANCE BY THE EMPLOYEE - WHETHER THE EMPLOYEE HAD BEEN WARNED ABOUT THAT UNSATISFACTORY PERFORMANCE BEFORE THE TERMINATION

[105] This consideration is not relevant to these proceedings given that the valid reason relates to Mr Wellington's conduct rather than his capacity. [96]

[106] Although Mr Wellington suggested that Mr Richard Vella had threatened him with termination several times prior to his actual termination, [97] there was insufficient evidence of the reasons for those 'warnings'.[98]

S.652(3)(e): THE DEGREE TO WHICH THE SIZE OF THE EMPLOYER'S UNDERTAKING, ESTABLISHMENT OR SERVICE WOULD BE LIKELY TO IMPACT ON THE PROCEDURES FOLLOWED IN EFFECTING THE TERMINATION

[107] Express did not suggest that it could rely upon its size as a justification for any defects in the procedures followed in effecting the termination of Mr Wellington's employment.

S.652(3)(f): THE DEGREE TO WHICH THE ABSENCE OF DEDICATED HUMAN RESOURCE MANAGEMENT SPECIALISTS OR EXPERTISE IN THE UNDERTAKING, ESTABLISHMENT OR SERVICE WOULD BE LIKELY TO IMPACT ON THE PROCEDURES FOLLOWED IN EFFECTING THE TERMINATION

[108] Express does not employ dedicated human resource management specialists.

[109] I accept Mr Wellington's submission that he had no opportunity to access any human resources resolution process.

'My management style is pretty straightforward, people generally understand where I'm coming from, they know what's required to be done, I'm very straightforward and they've got obviously the ability to respond in a straightforward fashion. Straight shooter, let them know what's going on, this is what's required. Let's just get on with the job.' [99]

[111] Mr Cutajar described Mr Richard Vella's management style as being of 'old school style of management'. [100] He stated: "Look, Richard does put his points clear to you. At the end of the day it's obviously up to you - up to myself or whoever to agree with it all but if he was - if there was something that he wanted to say, he would say it to me quite clearly and then I'd agree or not agree with it …"[101]

S.652(3)(g): ANY OTHER MATTERS THAT THE COMMISSION CONSIDERS RELEVANT

[112] I am required to have regard to any other matters I consider relevant.

[113] During the proceedings Mr Wellington did not display any remorse for his actions on 23 June 2008 in failing to accept Ms Screpis' decision.

[114] Whilst the termination process did not include adequate opportunity for Mr Wellington to provide his employer with reasons why his failure to accept Ms Screpis' decision should not result in the termination of his employment, the evidence and submissions in these proceedings and my observations of Mr Wellington's conduct during the proceedings leaves me in no doubt that if the process had involved such opportunity, the outcome would have been the same. That is, Mr Wellington would not have accepted Ms Screpis' decision and his employment would have been terminated.

[115] I find that the evidence does not support Mr Wellington's assertion that he was terminated in order to give Mr Richard Vella the opportunity to rebuild the mustang that Mr Vella owned as a project car 'via hijacking my business proposal'. [102] Indeed the evidence was to the contrary.[103] I accept Mr Vella's evidence that the reference he made to his mustang during the discussion with Mr Wellington on 23 June 2009, in the company of Mr Cutajar, was made tongue in cheek.

[116] There was insufficient evidence for me to find that other sales representatives were building project cars in exchange for free filler advertisements on an 'under the table basis' as proposed by Mr Wellington. [104] Certainly Exhibit W5, a purported statement by a former Express advertising coordinator that filler ads had been run for (name of company not published) on approximately 8 occasions, is insufficient to draw such an inference at law. In any event according to Mr Wellington this was being done without Mr Richard Vella's knowledge and Mr Vella had advised him that: 'If they're doing it they'll be sacked as well, ok?'[105]

[117] Whilst I have found that Mr Wellington's conduct in approaching clients of Express to canvass their willingness to provide him with free or discounted goods for his mustang fell short of being a valid reason for the termination of his employment, this is a factor which does not go in favour of a finding that the termination of his employment was harsh, unjust or unreasonable.

[118] I have had regard to the economic consequences for Mr Wellington of the decision to terminate his employment.

CONCLUSION ON HARSH, UNJUST OR UNREASONABLE AND A FAIR GO ALL ROUND

[119] After having regard to my findings in relation to each of the matters in paragraphs 652(a) to (g) of the Act in so far as they have application or are relevant to the circumstances of this case, including the procedural deficiencies identified in relation to s.652(3)(c), [106] I am satisfied that the termination of Mr Wellington's employment by Express was not harsh, unjust or unreasonable.

[120] In arriving at that decision I have been conscious of the objects of Division 4 (Termination of Employment) of Part 12 of the Act, including ensuring that both Mr Wellington and Express are accorded a fair go all round.

[121] This ground of the application is dismissed.

Ms L Panucci for Express Publications Pty Limited

[1] 106 The Commission is not required to give any want of procedural fairness conclusive weight - Crozier, in the matter of an application for Writs of Certiorari and Mandamus against the Australian Industrial Relations Commission [2001] FCA 1031 (1 August 2001) at para 15.

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