C2005/5158, Transcript of Proceedings [2005] AIRCTrans 2316 (8 November 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 13320-1

SENIOR DEPUTY PRESIDENT ACTON

C2005/5158

APPEAL BY GUARDIAN HALL PTY LTD
s.45 - Appeal to Full Bench
(C2005/5158)

MELBOURNE

4.18PM, WEDNESDAY, 26 OCTOBER 2005

PN1

MS S McKINNON: I appear as agent for the appellant and seeking leave to appear today.

PN2

MR B STEVENSON: I'm appearing for myself today.

PN3

THE SENIOR DEPUTY PRESIDENT: Ms McKinnon, you're a lawyer?

PN4

MS McKINNON: No, I'm an agent, your Honour.

PN5

THE SENIOR DEPUTY PRESIDENT: Yes, Ms McKinnon?

PN6

MS McKINNON: Your Honour, this is an application for a stay of the decision of Commissioner Tolley of 27 September 2005. In relation to the application it's submitted that there are two thresholds to be met to warrant the granting of the stay. The first is that there's an arguable case that leave to appeal will be granted and that the appeal will succeed, and secondly that there is a balance of convenience in favour of the stay. In relation to, firstly, the arguable case, that both leave to appeal should be granted and that the appeal will succeed, there are four grounds for appeal in essence.

PN7

There is firstly the ground that the Commission erred in mistaking the fact that the applicant, or the respondent in this appeal, was constructively dismissed. That is a matter that goes to whether or not the appellant was guilty of conduct which is a significant breach going to the root of the contract of employment, or alternatively which shows that the employer no longer intends to be bound by one or more essential terms of the contract and I'm relying on the matter of West v Grating & Sharp for that proposition. It's submitted that the evidence in this matter does not demonstrate a constructive dismissal, either as a significant breach going to the root of the contract, or conduct which shows the employer no longer intends to be bound by the contract.

PN8

The appellant submits that the Commission erred in finding (a) that Mr Zammit, who was the person appointed around about the same time that the respondent to this appeal was dismissed was appointed with responsibility for the restaurant's operations which he found was previously the applicant's principle duty and responsibility. Also that the Commission erred in finding that Mr Zammit was employed to take over Mr Stevenson's duties and responsibilities at Strada and that by its actions this effectively demoted the applicant and that the demotion was a repudiation of the contract of employment.

PN9

These are findings of fact which it is submitted cannot be supported on the evidence and a mistake of fact is an appealable error that is sufficient to warrant reconsideration by a Full Bench and in that respect, your Honour, I'm relying on the matter of House v King confirmed in this Commission in Coal & Allied Operations v The Commission. The second ground for leave to appeal, your Honour, is whether or not the Commission was guided or affected by extraneous or irrelevant matters. The Commission, in its decision, allowed the applicant's hours of works and his level of remuneration and in particular the fact that he wasn't paid overtime, to guide or effect the decision making process.

PN10

It is submitted that neither of the applicant's hours of work, nor his level of remuneration or the fact that he was not paid overtime were relevant to the question of whether his employment was terminated at the initiative of the appellant and subsequently whether or not the termination was harsh, unreasonable or unjust. The focus on those hours of work and the level of remuneration caused the Commission to be guided by what in his view were unreasonable hours of work and/or unreasonable level of remuneration for the respondent to this appeal in finding that he was treated unfairly in respect of the termination of employment.

PN11

Allowing extraneous or irrelevant matters to guide or effect the decision making process is an error or principle sufficient to cause the matter to be of such importance that in the public interest leave should be granted. I'm again relying on that proposition from House v King and Coal & Allied v The Commission. The third ground for leave to appeal is that the Commission must have regard to the matters outlined in section 170CG(3)(d)(a) and (d)(b). It is submitted that the Commission did not have regard to those matters. Specifically that the Commission failed to have regard to the fact that an issue of unsatisfactory performance by the applicant was related to the termination. The degree to which the size of the appellant's undertaking was likely to impact upon the procedures follow by the appellant. And thirdly, the degree to which the absence of dedicated human resource management expertise in the undertaking was likely to impact on the procedures followed by the appellant.

PN12

It is submitted that the failure to have regard to matters which are material considerations under the Act in the decision making process was an area of principle sufficient to cause the matter to be of such importance that in the public interest leave should be granted. Again, relying on House v King and Coal & Allied v The Commission.

PN13

Finally, the fourth ground is the exercise of the discretion under section 170CH(6). Section 170CH(6) leads on to 170CH(7) which provides that the Commission must have regard to a number of elements. Those elements are material considerations and must have regard - in particular, those matters are the effect of the order on the viability of the appellant's undertaking under section 170CH(7)(a). Secondly, the length of the employee's service with the appellant, section 170CH(7)(b). And finally, the remuneration that the employee would have received or would have been likely to receive if the employee's employment had not been terminated, and that's 170CH(7)(c).

PN14

As I have said, your Honour, these are material considerations and in failing to have regard to those sections of the Act the Commission erred. In relation to section 170CH(7)(c) the commission failed to give sufficient consideration to the remuneration the applicant would have received if his employment had not been terminated. The Commission estimated that the respondent to this appeal would have been employed for the next five years. It's not sufficiently manifest from the language used in the decision that consideration was given to section 170CH(7)(c) in any real sense, and that is a requirement of the consideration.

PN15

There was no evidence according to the finding that Mr Stevenson would have been employed for five years. There is evidence relating to events immediately prior to the termination which suggests that may not have been the case. It is submitted that the failure to have regard to matters which are material considerations in the decision making process was an error of principle sufficient to cause the matter to be of such importance that leave to appeal should be granted in the public interest, and similarly, the failure to give sufficient consideration to the matter in section 170CH(7)(c) again was an error of principle which justifies the granting of leave to appeal.

PN16

On that issue I am relying on the matter of Sprigg v Paul's Licensed Festival Supermarkets and that is PR951565. So those are the grounds, your Honour, for submitting that there is an arguable case that leave to appeal should be granted. In the event that there is an arguable case for leave to appeal, we then have to meet the next threshold which is that there is no real case that the appeal will succeed. The questions are firstly whether the applicant in the original matter, the respondent in this matter, was constructively dismissed. The onus is on the applicant to demonstrate that the termination was at the initiative of the employer and to do so, first he has to establish the essential terms of this contract of employment, and secondly, he has to establish that those terms have been repudiated.

PN17

The question as to whether the constructive dismissal occurred turns on whether the conduct was sufficient to go to the root of the contract of employment, or to demonstrate that the employer no longer intended to be bound by one or more of those essential terms. The evidence in the matter does not demonstrate that the conduct of the appellant was either a significant breach going to the root of the contract of employment or, secondly, conduct which shows that the employer no longer intended to be bound by the contract.

PN18

On this point the appellant submits that the Commission erred in finding at paragraph 15 that Mr Zammit was appointed with responsibility for the restaurant's operations which had been previously the applicant's duty and responsibility. At paragraph 16, that Mr Zammit was employed to take over Stevenson's duties and responsibilities at Strada. At paragraph 18, that the employer's action is "effectively removing the applicant's work responsibilities", and then that those findings caused an effective demotion of the applicant and the demotion was sufficient to justify a finding of repudiation of the contract of employment.

PN19

With respect to the Commission, the evidence does not support these findings. The evidence points to a finding that Mr Zammit was employed with overall responsibility for both restaurant and conference facilities in the same way as Mr McArthur was employed with overall responsibility for the restaurant, conference facilities and motel operation. The evidence points to the fact that Mr Stevenson's responsibility was the day to day running of the restaurant and this responsibility was to remain unchanged following the appointment of Mr Zammit. The change in reporting structure proposed by the appellant did not alter Mr Stevenson's fundamental terms and conditions of employment and the appellant submits that on this basis there is an arguable case that the appeal will succeed because Mr Stevenson was not constructively dismissed and therefore the Commission erred in finding that constructive dismissal took place.

PN20

The next ground on which it is said that this appeal is likely to succeed is whether the Commission was guided or affected by the hours of work and level of remuneration of the applicant. Quite simply hours of work and level of remuneration of the applicant were not matters relevant to the termination of his employment. Notwithstanding on seven separate occasions in the decision, which is a 28 paragraph decision, Commissioner Tolley referred to the hours of work and the level of remuneration of the applicant and specifically I draw your Honour's attention to paragraph 7 of the decision, a comment by the Commission that the fact that bonuses would be paid is not disputed by the respondent and presumably accounts that the applicant agreeing to work for what appears to be a comparatively low level of base salary, that's paragraph 7, and not that point there was no evidence, it is submitted, in relation to comparative salaries in the industry notwithstanding the finding of the Commission on that point.

PN21

Paragraph 9 of the decision, your Honour, states that the applicant's evidence went to his long working hours, 50 to 60 hours per week, against stipulated hours of 38 per week, without any overtime payments. Again, paragraph 10, the long hours were worked so that the restaurant, which was in the doldrums prior to his employment, could be rejuvenated. Paragraph 11, no payment was received for overtime for the additional work beyond 38 hours. Paragraph 14, obviously an onerous work load requiring a high level of dedication. Paragraph 22, the applicant worked 50 to 60 hours per week increasing to 70 to 80 hours a week, seven days a week and did not receive payment for overtime.

PN22

Paragraph 27, the applicant accepted employment with the respondent at a comparatively low rate of remuneration. In addition he worked excessive long hours without compensation. It's clear from those seven references that the Commission was guided or affected by the applicant's low level of remuneration. The appellant submits that on this ground there is an arguable case that the Commission was guided or affected by that matter which was a matter not pertaining to whether or not the termination of the employment itself was harsh, unreasonable or unjust.

PN23

The third ground that we submit, your Honour, in support of the appeal is whether or not the Commission erred in omitting to have regard to sectio 170CG(3)(d)(a) and (d)(b). There is no evidence from the language of the decision that these matters were considered at all. In fact, it is a finding in the decision at paragraph 27 that the applicant was given no warning about any alleged poor performance issues and none were raised during the evidence in the proceedings. That is inconsistent with the evidence and contributed to a failure to properly consider the matters which are material considerations in section 170CG(3)(d)(a) and (d)(b).

PN24

On this basis we submit that there is an arguable case that the Commission failed to properly have regard to the matters in section 170CG(3). The next ground, your Honour, is whether the Commission erred in omitting to have regard to section 170CH(7)(a) and (b). There is no evidence from the language of the decision that these factors were considered. These are material considerations of the Commission. There is no reference to section 170CH(7)(a) or (b). The only reference is at paragraph 3 on page 5 of the decision which says:

PN25

The Commission has regard to the matters outlined in section 170CH(7) of the Act.

PN26

It is submitted that that is not a sufficient consideration of the matters. There must be consideration given to that section in a real sense and we rely on the decision of Sprigg v Paul's Licensed Festival Supermarket. It is not sufficient to refer generally to the section and proper consideration is required and on this ground again the appellant submits that there is an arguable case that the Commission failed to properly have regard to the matters in section 170CH(7).

PN27

Finally, your Honour, whether the Commission erred in assessing the amount the applicant would have earned if his employment had not terminated. The remuneration the employee would have received or would have been likely to receive is a matter for consideration under section 170CH(7)(c). The only evidence on this issue is Mr Stevenson's evidence at paragraph 65 of the transcript and that is:

PN28

I had foreseen that I had a long career at the Elphin Gateway.

PN29

There is insufficient evidence to justify a finding that Mr Stevenson would have been employed for five years following the date of termination. Five years is a long time in any position, your Honour.

PN30

The appellant submits that there was an arguable case, that the Commission failed to properly have regard to the matter in section 170CH(7)(c) on the basis that the Commission did not give sufficient consideration to the amount of remuneration Mr Stevenson would have been likely to receive had his employment not been terminated. Again, it is submitted that this is evidenced by the language of the decision. Finally, your Honour, the matter of the balance of convenience. The order made against the appellant is a significant amount of money, $24,525, which is the maximum amount available to the respondent to this appeal.

PN31

If the appeal is successful this amount will either not be payable or will be much reduced. To deny granting the stay will require the appellant to pay this significant sum to Mr Stevenson on the basis that it has no certainty that it will be able to recover the sum should the appeal succeed. We submit that traditionally that the Commission has been reluctant to decline a stay in such circumstances where there is a difficulty of recovering payments in the event that the appeal is successful, and in that respect, your Honour, I rely on the matter of re Building Services Victoria Award 1994, which is Print S2247 dated 30 December '99.

PN32

So, in summary, your Honour, there is an arguable case that leave to appeal should be granted. There is an arguable case that the appeal will succeed and there is a balance of convenience in favour of granting the stay and we formally seek that a stay be granted in this matter.

PN33

THE SENIOR DEPUTY PRESIDENT: Ms McKinnon, is there any undertaking that the amount will be placed in trust?

PN34

MS McKINNON: We certainly are able to do that, your Honour.

PN35

THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Stevenson, what do you say?

PN36

MR STEVENSON: I'd just like to say that, your Honour, I agree with the Commissioner's decision in full and that I would prefer for the award of compensations be paid to me immediately. I have a large family to support and although I think I will win the appeal, my barrister will be representing me at that appeal, I do believe that I'm entitled to the compensation. This matter has been going on for over a year now and it's caused me undue stress and periods of unemployment following my dismissal and I think the Commission's award to me of the $24,000 was sufficient and I don't see why it should be stayed until an appeal date which could be well into the new year. Thank you, your Honour.

PN37

THE SENIOR DEPUTY PRESIDENT: Mr Stevenson, my reading of the transcript at the time the Commissioner heard the case indicated that subsequent to the termination, there was a period in which you were unemployed, there was a period in which you had some part time or casual employment, then you had some full time employment and that ceased, but subsequently, and I think it might have been 20 July, you gained full time employment.

PN38

MR STEVENSON: That's right.

PN39

THE SENIOR DEPUTY PRESIDENT: Does that continue?

PN40

MR STEVENSON: Yes, it does, your Honour.

PN41

THE SENIOR DEPUTY PRESIDENT: And it wasn't clear to me from the transcript, or at least I can't recollect at this point, whether the remuneration in this position that you currently have is more or less than you were earning with the appellant?

PN42

MR STEVENSON: It's more, your Honour.

PN43

THE SENIOR DEPUTY PRESIDENT: Right, yes, thank you. You say you'll be represented at the appeal?

PN44

MR STEVENSON: Yes, I will.

PN45

THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Stevenson, one of the arguments that Ms McKinnon raises is that should she be successful on the appeal and paid over the money to you, then it could be difficult to get back. What do you say about that?

PN46

MR STEVENSON: I'm very confident that the appeal will - we will win the appeal, your Honour, but I assure you that we lose or the compensation be reduced, we're not going to spend the $24,000 in the next couple of months. It will be in a deposit account but we will be drawing on it to subsidise our living expenses, because obviously I've had to catch up over the last year and the income that I'm having now is enough to live on, but we have had expenses over the last year which have dented our ability to do anything other than live.

PN47

THE SENIOR DEPUTY PRESIDENT: What's the level of your remuneration now?

PN48

MR STEVENSON: I'm currently on $60,000 a year.

PN49

THE SENIOR DEPUTY PRESIDENT: Gross, is it?

PN50

MR STEVENSON: Gross, and I have an opportunity to add bonuses as well. I'm three months into my new position. We're currently negotiating bonuses that we'll be paid from six months, so in the next three months we will have bonuses paid.

PN51

THE SENIOR DEPUTY PRESIDENT: One of the issues that I raised with Ms McKinnon was that whether she was prepared to accede to an arrangement whereby the money, the $24,000-odd was put into a trust account. What do you say about that?

PN52

MR STEVENSON: I would prefer the money to be paid to me so we could use it to feed our family, to run our life, but if that was to be the case, then that's your decision, your Honour.

PN53

THE SENIOR DEPUTY PRESIDENT: Thank you. Ms McKinnon, is there anything else?

PN54

MS McKINNON: No. Only just to confirm, your Honour, that I do have instructions to accede to the trust account arrangement if that's the preferred position.

PN55

THE SENIOR DEPUTY PRESIDENT: Sorry, what was the last bit?

PN56

MS McKINNON: If that's the preferred outcome, your Honour.

PN57

THE SENIOR DEPUTY PRESIDENT: You have instructions to - - -

PN58

MS McKINNON: I do have instructions to put the money into trust.

PN59

THE SENIOR DEPUTY PRESIDENT: Thank you. I've reached a decision in this matter which I give as follows. In the matter, Guardian Hall Pty Ltd has sought a stay against the order issued by Commissioner Tolley arising from his decision in Barnaby Stevenson v Guardian Hall Pty Ltd of 27 September 2005. The principles for the granting of a stay order are well established and were recently set out by Vice President Ross in Vitasoy Australia Products Pty Ltd decision of 14 October 2005 PR963903 at paragraph 20. I have regard to those principles.

PN60

In light of what has been put to me I am satisfied there is an arguable case with some reasonable prospect of success in respect of both the question of leave to appeal and the substantive merits of the appeal, in light of the requirement under the Workplace Relations Act, for the Commission to have regard to the matters in section 170CH(7) of the Act in determining an amount in lieu of reinstatement and having regard to the Commissioner's approach to determining the amount in lieu of reinstatement as set out in paragraph 5 of his decision on remedy.

PN61

As to the balance of convenience, I am satisfied that balance of convenience lies with the granting of the stay order sought, given the potential for difficulty in recovery of the monetary amount ordered should the appeal succeed. Accordingly I will grant a stay order in this matter. The stay order will be subject to the amount of $24,523 being placed in a trust account and the stay order will so provide. I will issue the stay order shortly.

PN62

The appeal proper will be listed for hearing on a day between 12 and 14 December 2005 in Melbourne and a notice of listing and directions in that regard will also issue shortly. I now adjourn.

<ADJOURNED INDEFINITELY [4.51PM]