Nicholas Richard Lynam v Lataga Pty Ltd [2001] WAIRComm 2420 (19 February 2001)

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Respondent Mr A J Prentice (of Counsel), by leave

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1. These are the unanimous reasons for decision of the Full Bench.
2. This is an appeal brought by the abovenamed appellant, Mr Nicholas Richard Lynam, against the decision of the Commission, constituted by a single Commissioner, contained in an order made on 7 December 2000 and deposited in the office of the Registrar on 7 December 2000.
3. The decision in this matter was made on an application by Mr Lynam in which he claimed that he was harshly, oppressively and unfairly dismissed, and was denied contractual benefits to which he was entitled. He made application pursuant to s.29(1)(b)(i) and (ii) of the Industrial Relations Act 1979 (as amended) (hereinafter referred to as "the Act").
4. The order, formal parts omitted, was made in the following terms:-

"(2) ORDERS that the said respondent do hereby pay within seven days of the date of this order, as and by way of compensation, the amount of $3,510.00 to Nicholas Richard Lynam, less any taxation that may be payable to the Commissioner of Taxation.

(3) ORDERS that the said respondent do hereby pay within seven days of the date of this order, as and by way of denied contractual benefits, the amount of $1,579.50 to Nicholas Richard Lynam, less any taxation that may be payable to the Commissioner of Taxation."

1. It is against that decision and part of it only, that Mr Lynam now appeals on the following grounds:-

"1) The Commission erred in fact and in law in finding that the appropriate measure of compensation for the harsh, oppressive and unfair dismissal of the Appellant was four week's remuneration, in that -

a) The quantum of four week's remuneration was assessed on the basis that it was more probable than not that the Appellant's employment could and would have been fairly terminated by the giving of four week's notice or payment in lieu, when there was no evidence adduced by the Respondent or derivable from the evidence to show that a termination with such notice would have been likely to occur or could or would have been fair if it had occurred;

b) The dismissal of the Appellant was found to have been substantively rather than merely procedurally unfair and the measure of loss and injury was demonstrated to be greater than 4 weeks remuneration;

c) The Commission failed to assess the loss and injury suffered by the Appellant by reason of the dismissal in the face of uncontested evidence of the Appellant's quantifiable loss and injury;

d) The Commission wrongly found that there was no injury to the Appellant and that the Appellant was aggrieved prior to the termination of his employment when the uncontested evidence of the Appellant was that he was injured by the dismissal.

2. It is in the public interest and consistent with sections 26(l) and 23 of the Act for a decision of the Commission to be overturned if it is wrong in law and provides incentives for an employer to act unfairly in the manner in which an employee is dismissed.

2. That the decision of the Commission that the Respondent pay to the Appellant compensation of four week's wages ($3,510) be set aside and in lieu thereof, the Respondent be ordered to pay to the Appellant compensation of $17,500."

1. This appeal is against the quantum of compensation ordered to be paid, only, and against no other part of the order. The was no cross appeal.

1. At all material times, Mr Lynam was an employee of the respondent company at its record selling store, "Wesley CD Megastore" in the city of Perth in this State. In fact, he was employed from 13 December 1999 until 27 March 2000 by the respondent who had bought the business from the previous owner who had also employed Mr Lynam since October 1995.
2. Mr Lynam gave evidence that he was, at the time of the respondent's purchase of the business, Stores Manager and Sales Manager. This position included the following duties: opening and closing the store, staff supervision, general shopkeeping and retail operations.
3. It was common ground that, when the new owner, the respondent, took over from the administrator of the business on 13 December 1999, that it agreed to pay Mr Lynam on the same terms and conditions as he had enjoyed with the previous employer.
4. On 27 March 2000, when Mr Lynam arrived for work, he was dismissed and he said that he was unfairly dismissed. It was common ground that there was, prior to this event, an ongoing dispute about the contract of employment insofar as it related to overtime.
5. It was the evidence of both parties that Mr Lynam was then paid his salary and overtime for the additional hours worked.
6. The respondent submitted and there was evidence from Mr Peter Wilkinson, a Director of the respondent, that Mr Lynam claimed and was wrongly paid overtime which he should not have received. The respondent also alleged that Mr Lynam should have continued, on the transfer of the business, with his salary of $667.00 per week and no overtime. Mr Lynam, on the other hand, said that he was to continue on $667.00 per week but that he was paid overtime, queried it, and was told that the respondent intended to pay him overtime.
7. The Commissioner found that Mr Lynam was asked to and, in fact, did work six days a week from late January 2000. He also found that Mr Lynam had conversations with Mr Wilkinson where they agreed that Mr Lynam would be paid overtime for all hours worked in excess of 38 hours. That overtime was found to be paid initially at the rate of time and a half and later at the single time rate (see page 4 of the appeal book (hereinafter referred to as "AB")).
8. After the respondent purchased the business, Mr Lynam gradually lost duties to others, with Ms Sonya Kuhari commencing as Promotions Manager and subsequently as General Manager which, effectively, was a demotion of him. He raised a pay issue on behalf of another staff member, Mr Adrian Mansfield, and this resulted in his being presented with a letter, signed by Mr Wilkinson, dated 15 March 2000 advising him that his salary was to be reduced. He was asked to sign that letter, but refused. He was then asked to take a week off and return his keys to the store and leave without speaking to other members of the staff, which he did.

1. In relation to the question of compensation, the Commissioner found as follows:-
   1. Mr Lynam's evidence, which was unchallenged and supported by exhibit NL5, was that he had actively sought employment since his dismissal.
   2. Mr Lynam found work some 7 weeks and 2 days after dismissal and has been earning less than his former position.
   3. Mr Lynam calculated his lost income on the basis of an income of $667.00 per week on the basis that the employer could have given him reasonable notice of a change to work five days per week.
   4. The Commissioner calculated Mr Lynam's loss as $4,932.00 for the period up until he gained employment and $6,409.00 for an ongoing loss over a twelve month period.
   5. The Commissioner also found that, at the time of dismissal, Mr Lynam did not want to work under a revised and reduced contract put forward by the respondent, even though this had been his contract on the initial engagement on 13 December 1999.
   6. Mr Wilkinson handed Mr Lynam a letter on 20 March 2000 (exhibit NL2) which sought to reduce his weekly rate of pay. In those circumstances, the Commissioner found that Mr Wilkinson should have provided Mr Lynam with reasonable notice of change. However, the Commissioner was convinced and found that the employment relationship was bound to terminate.
   7. The Commissioner also found that, in all of the circumstances of the dismissal, and given Mr Lynam's age, and that he had previously been a manager in the store and had worked there for over four years (although only for a short period for the respondent), he should have been granted four weeks' notice of the change. This was a total of $3,510.00 by way of compensation.
   8. The Commissioner held that he would not award Mr Lynam any money for injury. This was because Mr Lynam's evidence was that he was aggrieved prior to the date of termination and the Commissioner considered that this was due largely to him no longer managing the store.

1. That part of the decision appealed against, namely the finding as to quantum of compensation and, indeed, the decision as a whole, was a discretionary decision, as it is defined in Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513. Since the decision was a discretionary decision, the Full Bench may not interfere with it unless the appellant establishes that, by application of the principles in House v The King [1936] HCA 40; [1936] 55 CLR 499 and Gromark Packaging v FMWU 73 WAIG 220 (IAC), there was a miscarriage of the exercise of discretion.
2. The law relating to findings of loss and injury and the assessment of compensation is well and clearly settled in this Commission (see Manning v Huntingdale Veterinary Clinic 78 WAIG 1107 (FB); Bogunovich v Bayside Western Australia Pty Ltd 79 WAIG 8 (FB); Capewell v Cadbury Schweppes Australia Ltd 78 WAIG 299 (FB); and Gilmore and Another v Cecil Bros and Others 78 WAIG 1099 (IAC)).

1. There was a complaint in Ground 1 that:-
2. The Commissioner's findings were inconsistent and in error because, having found that Mr Lynam's evidence was to be preferred to that of Mr Wilkinson, the Commissioner then made findings which relied on Mr Wilkinson's account of events being accepted. From those findings, the Commissioner then made findings about the likely future employment of Mr Lynam with the respondent, which was not open on the evidence, so the submission for Mr Lynam went.
3. It was submitted that the Commissioner purported to accept the respondent's account of the events of 27 March 2000, when he had earlier said that he accepted the evidence of Mr Lynam; then he accepted Mr Wilkinson's account of the events of that day, namely that, on that date, there was a discussion of what terms of employment would apply to overtime when Mr Lynam returned to work and, therefore, when no agreement could be reached on that point, Mr Lynam was lawfully dismissed.
4. This in turn, so the submission went, led to an erroneous finding as to the loss or injury suffered. It was submitted that, having erroneously accepted the respondent's account of events on the date of termination, the Commissioner found that, in such circumstances, it would have been fair to terminate Mr Lynam's employment by the giving of four weeks' notice of the change in his employment conditions.
5. It was also submitted that the Commissioner erred in so finding and, further, erred in failing to find what was the loss and injury suffered by Mr Lynam by reason of the dismissal.
6. The first ground of the appeal was based on an allegation, supported by submissions, that the Commissioner's findings were inconsistent and in error. The basis of that submission was that, having found that Mr Lynam's evidence was to be preferred to that of Mr Wilkinson, the Commissioner then made findings which relied on Mr Wilkinson's account of events being accepted. Put shortly, his finding that four weeks' notice and, therefore, an amount equal to four weeks' salary as a compensation for the failure to give notice, was made in error.
7. There was, it was submitted, no evidence adduced by the respondent derivable from the evidence to support a finding that Mr Lynam's employment was bound to terminate. As the Commissioner found, having accepted Mr Lynam's evidence, Mr Lynam was presented with a proposal to vary the contract. He was put off for a week without pay and, when he would not agree to the variation of his contract, he was dismissed on one week's notice.

1. We now turn to Ground 1(d), which deals with the question of injury.
2. The Commissioner found that he would not award Mr Lynam any monies for injury and expressed his reason for so finding as follows:-

"His evidence is that he was aggrieved prior to the date of termination and I consider that this was due largely to him no longer managing the store."

1. He was, of course, so aggrieved, but there was ample evidence that he was aggrieved after the dismissal, which the Commissioner accepted, because he expressly said that he accepted Mr Lynam's evidence.
2. The manner of the dismissal is best described in Mr Lynam's evidence at pages 28-29(AB). We quote a portion of his evidence at page 29(AB)):-

"I was told that I was no longer able to be in the store, that if I went in the store the police would be called and I would be thrown out. I was given one week's notice, and told to contact Peter with what I believed to be owing and sort out a redundancy or a termination package, and his words were, "Whatever you want to call it"."

1. The locking of him out of the premises and the threat to call the police to throw him out, on their own or coupled with the earlier events, were unnecessary, humiliating and hurtful.
2. That, of course, followed on his being sent home a few days earlier on 17 March 2000 after he refused to agree to a reduction of his wages (his duties having already been unilaterally eroded), with a direction not to talk to other staff members, with his being excluded from the premises during the week when he delivered a letter about the matter, and the non-payment to him of wages during the week. This conduct was directed clearly to him because he would not agree to enter a new contract on less favourable terms than that which he had. We would also add that he had, previous to that, been effectively demoted from Store and Sales Manager to Sales Manager, it was open to find.
3. There was a course of conduct which, it was open to find, was directed to pressuring Mr Lynam and, at very least, to be contrary to the implied obligation of the employer not to conduct itself without reasonable cause in a manner likely to damage or destroy the relationship of confidence and trust. That plainly occurred here, but is more a matter, in the circumstances of this case, directed to unfairness than the question of injury (see Burazin v Blacktown City Guardian Pty Ltd [1996] IRCA 371; 142 ALR 144 at 151-152 (FCFC), and the approval by the Full Court of the dicta of Lee J in Aitken v CMETSWU (1995) 63 IR 1 at 9).
4. As was said by the Full Court of the IRCA in Burazin v Blacktown City Guardian Pty Ltd (op cit), there is an element of distress in every dismissal and restraint is required. There must be evidence that the dismissed employee has sustained damage of the kind claimed.
5. There was ample evidence of the stress occasioned to Mr Lynam (see page 33(AB)). Mr Lynam has been under stress and has been grinding his teeth at night. He has never been dismissed before. He feels very hard done by. He was upset at being dealt with in an underhanded way, but he was not losing control (see page 34(AB)).

1. Ground 2 is not a ground of appeal but a submission and not a relevant one.

1. It was open to find as follows, on the evidence, that:-

(a) Between the date of the dismissal and the obtaining of other employment, seven weeks elapsed during which Mr Lynam was without income. Had he remained in employment, he would have earned $667.00 per week. That element of the loss, therefore, can be found to be $4,669.00.

(b) The next item is the ongoing loss of wages, being the difference between what Mr Lynam received in his new employment compared with the wages which he received in his old employment for a period of at least one year. That amount is $6,409.00.

(c) There was also the loss of pay in lieu of reasonable notice, which was conceded to be four weeks. That amount is $2,668.00.

1. There is no evidence of any event which might affect, adversely or otherwise, the loss. There is nothing in the evidence which might lead to a conclusion that the vicissitudes and contingencies of life would affect, adversely or otherwise, the finding as to loss, insofar as the vicissitudes and contingencies of life are applicable.
2. Any allowance for the fact that the compensation is paid in a lump sum is properly offset in this case by the period of time in which the losses and injury have gone uncompensated. To that, one must add a figure for "grossing up" and we accept the appellant's calculation in that respect, although the question of reduction of compensation for a lump sum payment and the use of "grossing up" are questions which remain open as far as we are concerned.
3. We would uphold the appeal and vary the order made at first instance to order compensation to be paid as follows:-

(a) From dismissal until the obtaining of a new job

(b) Ongoing loss of wages being the difference in wages

(c) Loss of reasonable notice - four weeks $ 2,668.00