Stephen Mark Middleton and Valvoline (Australia) Pty Limited [1995] IRCA 118

INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N0. NI 908 of 1994

BETWEEN Stephen Mark MIDDLETON Applicant AND VALVOLINE (AUSTRALIA) PTY LIMITED Respondent MINUTES OF ORDER 31 March 1995 WALKER JR THE COURT DECLARES: 1. The termination of the employment of the applicant did contravene s170DE of the Industrial Relations Act 1988. AND THE COURT ORDERS THAT: 1. The respondent is to pay to the applicant the sum of $9,100.00. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules. INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N0. NI 908 of 1994

BETWEEN Stephen Mark MIDDLETON Applicant AND VALVOLINE (AUSTRALIA) PTY LIMITED Respondent Reasons for Judgement 31 March 1995 WALKER JR The applicant Stephen Mark Middleton commenced employment with the respondent on the 13 December 1989 as a sales representative. He was subsequently transferred to Brisbane in March 1991 and on the 7 March 1994 was transferred to Newcastle. On the 17 August 1994 he was promoted to acting branch manager, Newcastle with a probationary period of three months, on his existing salary. The applicant gave evidence that he was very happy working for the respondent however he was concerned that his salary of $34,466.00 plus a fully maintained car was insufficient for the responsibility of his position. On the 8 September 1994 the applicant was contacted by Mr Gavin Prendegast, the manager of Independent Fuel Suppliers in Queensland, a customer and friend of the applicants and was asked if he was happy. The applicant said that he loved working for the respondent but they were not paying him the money that he was worth. Although counsel for the respondent maintained that the applicant had indicated that he was not happy working at Valvoline the applicant was emphatic that it was only the salary that was the cause of any discontent. During this conversation with Mr Prendagast it was suggested to the applicant that he should ring Mr Lowe as it could be to the advantage of the applicant. It appears that Mr Prendagast's position was to become available in the near future and the Independent Fuel Suppliers were looking for a replacement. On the 22 September 1994 the applicant received a telephone call from Independent Fuel Suppliers inviting him to come to Queensland for an interview on Sunday 25 September. He flew to Coolangatta at lunch time on the Friday 23 September and attended the interview at Mr Mark Lowe's home, the Managing Director of Independent Fuel Suppliers on the Sunday. The applicant denied the respondent's assertion that the "job was in the bag" and maintained that he was unaware as to whether he had been successful. He also insisted that he was not going to accept the position as he was disappointed with the salary package and that it was his intention to only test the water as to what his real worth would be on the market in any case. On his return to Newcastle the applicant became aware that a Miss Brown had informed the respondent that he had attended an interview in Queensland. In his evidence he said: "I had been set up a beauty from a girl who I thought was a friend and I knew I was going to be fired, I knew." When asked why he did not pre-empt his concerns by telephoning Mr Lownds, his immediate superior and very good friend at Valvoline when he discovered that his attendance at the interview had been revealed, he replied that he had thought about it but decided to wait until Mr Lownds came up to Newcastle on the next Wednesday and discuss it face to face. THE MEETING OF 28 SEPTEMBER Mr Lownds and the applicant gave evidence as to this meeting between them on Wednesday 28 September and they are at odds with each other as to what happened. The applicant is emphatic that he was unilaterally terminated for breaching company policy by attending an interview for a position outside the respondent's organisation. Mr Lownds says the applicant resigned. There was no witness to the meeting between the two men and this case turns on the credibility of the evidence given by each of the witnesses and the various events and circumstances surrounding the affair. The applicant gave evidence of the meeting as follows: "Well, when he said, is it true that you flew to Queensland for an interview, I said, yes it is. He then said, I'm shattered, why would you do that? I said, I wasn't happy with your salary package I was on, I was vulnerable, and he then very quickly said, you know what company policy is, I have to ask you to write a note. And I said what sort of note? And he said, you know. He said, lets go for a drive. I said what for, and he said, come on... He then drove me home. When he dropped me off he asked me to write a note again and I said, what kind of note, he said, of resignation, and I said, I can't do that Nigel, I'm sorry. He left, he came back later in the afternoon after work and asked me again to write a note of resignation, which I strongly objected to... I felt devastated. I thought, this is the end of the road for me at Valvoline. I thought, I'm fired... the next day I had a phone call from Carl Antoine, who was one of the new recruits... he said Steve, your personal belongings are here, I suggest I bring them home to you. There was a photo of my three kids, my wallet with all my credit cards, even a set of keys to the house. And they were delivered to me 24 hours later." When asked if he ever signed a letter of resignation, he replied: "No, I did not. It never ever entered my head that I would resign from Valvoline truefully. I was asked by the national sales manager, Peter Besgrove, I think the second day, he phoned and strongly suggested that life would be a lot easier for me if I had done that. I said, I won't be doing that, Peter, I have not resigned." Mr Lownds gave evidence that he had discovered that the applicant had flown to Queensland to attend an interview for a position with Independent Fuel Suppliers when he arrived at the Newcastle branch on the morning of the 28 September. The managing director of Valvoline telephoned him and Mr Lownds gave evidence that: "Well the phone call came from the managing director. I said to Michael, I don't know anything about it, I said, Steve's upstairs speaking to the new representative, I'll have a chat with him, I'll bring him downstairs and find out, get to the bottom of it." Mr Lownds then asked the applicant if he had attended Queensland for an interview for a position with another firm to which the applicant replied, that he had. Mr Lownds then said that he was shattered to hear that the applicant had gone for an interview with another company. He gave further evidence that the applicant said to him: "Nigel, what would you do? He said, "I had to apply for the position and I haven't been offered any more money," and I said to him, "Look, Steve it's only a formality, just a matter of time, you know, it's a three month probation and you'll be well looked after." ... I said, "Have they offered you the job?" He said, "Yes," I said, "I suppose you know what happens now," and he said, "Yes," and my meaning there was that I would have to report the situation to my superiors... I suggested he do the right thing and resign which he said, "Yes, you'd better take me home." When Mr Lownds arrived at the applicant's home he noticed a for sale sign erected outside. THE FOR SALE SIGN Mr Lownds gave evidence that when he drove Mr Middleton home on the 28 September 1994 he observed a for sale sign erected outside the applicant's home. At first sight this would give the impression that the applicant had already made up his mind to move back to Queensland and I am sure Mr Lownds was satisfied that this was the case when he first saw the sign. The applicant on the other hand produced evidence that his home was put on the market on the 6 September 1994, a full month before he was confirmed as the successful applicant for the position with Independent Fuel Suppliers, in Queensland and several weeks before he was invited to apply for the position. He also gave evidence that the reason for putting his home on the market was because of the problems he was experiencing servicing his mortgage. He explained his situation as follows: "When we first moved to Newcastle I went down first, I went house hunting and purely under the belief that I was going to be the branch manager there and on a considerable higher salary I lashed out and got a mortgage which was $35,000 more than the one I was on in Queensland for a 20 year older home... but very quickly we realised that it was a little bit tough there and we put it on the market. We planned on moving out to somewhere fairly cheaper so we could have something a bit bigger and a lot cheaper." In light of his salary of $34,466.00 and the fact that he has three children, one in school, one in pre-school and one baby it is quite reasonable to expect that he may need to place his home on the market in order to reduce the burden of his mortgage. For these reasons, I am satisfied with the evidence given by the applicant with regard to the sale of his home in Newcastle. WHAT AMOUNTS TO A RESIGNATION The requirements in the case of a resignation by an employee are very similar to those for a dismissal. It is important for employers to know whether an employee has resigned, since if they treat the employee as having resigned when that is not in fact the case, they may be held to have dismissed the employee. If the employee's resignation is prompted by a repudiatory act or breach of contract by the employer, that may be treated as a constructive dismissal by the employer. As with dismissal, similar questions have arisen as to what amounts to a resignation, particularly where there has been a row between the employer and the employee and it is not clear from the language used whether the employee was in fact intending to resign. If the employee's words are not ambiguous (eg. "I am resigning") or, when construed, have a clear meaning, he or she will be treated as having resigned, irrespective of whether they were intended to bear that meaning, unless the words of resignation were uttered in the heat of the moment or as a result of pressure exerted by the employer. In Sovereign House Security Services Ltd. v. Savage [1989] I.R.L.R. 115 at 116, May L.J. said: "...Generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned... However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee himself, to entitle the tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear at first sight." This area of possible exception suggested by the above dicta was further considered by the E.A.T in Kwik-Fit (G.B.) Ltd. v. Lineham [1992] I.C.R. 183. In that case, the E.A.T. said that there may be "special circumstances" which may make it unreasonable for an employer to assume a resignation. They said: "Words may be spoken or actions expressed in temper or in the heat of the moment or under pressure... and indeed the intellectual make-up of the employee may be relevant... These we refer to as "special circumstances." Where "special circumstances" arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if the circumstances arise during that period which put the employer on notice that further inquiry is desirable to see whether that resignation was really intended and can properly be assumed, then such enquiry is ignored at the employer's risk... Thus where words or actions are unambiguous an employer is entitled to accept the repudiation at its face value at once, unless these special circumstances exist, in which case he should allow a reasonable time to elapse during which facts may arise which cast doubt upon that prima facie interpretation of the unambiguous words or action. If he does not investigate these facts, a tribunal may hold him disentitled to assume that the words or action did amount to a resignation..." On the other hand, if the words used are ambiguous, it becomes necessary to look at all the circumstances of the case, in particular, the intention with which the words were spoken, and consider how a reasonable employer would, in all the circumstances, have understood the employee's words Southern v. Franks Charlesly & Co. [1981] I.R.L.R. 278. The E.A.T. suggested an approach to these kinds of cases in Tanner v. D.T. Kean Ltd. [1978] I.R.L.R. 110. A resignation will be treated as a dismissal if the employee is invited to resign and it is made clear that, unless he or she does so, he or she will be dismissed East Sussex County Council v. Walker (1972) 7 I.T.R. 280. In Martin v. Glynwed Distribution Ltd. [1983] I.C.R. 511 at 519. Sir John Donaldson M.R. said of these kinds of cases: "...Whatever the respective actions of the employer and the employee at the time when the contract of employment is terminated, at the end of the day the question always remains the same, "Who really terminated the contract of employment? If the answer is the employer, there was a dismissal within section 55(2) (a) .... If the answer is the employee, a further question may then arise, namely, "Did he do so in the circumstances such that he was entitled to do so without notice by reason of the employer's conduct?..." (The Law of Termination of Employment, Fourth Edition, Robert Upex, Sweet & Maxwell 1994) MEANING OF TERMINATION OF EMPLOYMENT in DIVISION 3 of PART VIA In Siagian v. Sankel Pty Ltd (1994) 122 ALR 333 Wilcox CJ came to the conclusion that: "Bearing all these matters in mind, and given that the courts have sometimes recognised the possibility of a difference between a termination of employment and a termination of the contract of employment, it seems preferable to treat the words, "termination of... employment" in Division 3 of Part VIA of the Industrial Relations Act as including any act that brings to an end the employer-employee relationship, whether or not the act, or any acceptance of it, also brings to an end the contract of employment." In Association of Professional Engineers, Scientists and Managers Australia and Anor v. Skilled Engineering Pty Ltd (1994) 122 ALR 471 Gray J was of the opinion that: "Both the requirement that expressions in division 3 of Part VIA be given the same meaning as in the Convention and the form of the provisions of the division 3 therefore suggest that "termination" refers to what is done by an employer attempting to bring about the end of the employment. The legislative intention is to permit application under s170EA of the IR Act if an employer has done some act terminating or purporting to terminate the employment, irrespective of whether the act is effective to bring about the termination without some further act on the part of the employee. The "termination" referred to in s170EA and in s170EE is the act of the employer. If the act of the employer is effective to terminate the contract of employment, remedies appropriate to that situation can be granted. If the contract remains on foot, the Court still has the power under s170EE (1) to "make such orders as it thinks appropriate in order to put the employee in the same position (as nearly as can be done) as if the employment has not been terminated." Division 3 of the I.R. Act concerns termination of employment at the initiative of the employer and I am of the opinion that taking into account the circumstances and evidence given by Mr Middleton and Mr Lownds that, on the balance of probability, the employment of Mr Middleton was in fact terminated by Mr Lownds at the meeting held on the 28 September 1994. The following matters add heavily in favour of this proposition: · There was no written resignation; · No period of notice was given or mentioned; · Mr Lownds drove the applicant directly home after the short meeting; · The applicant was not given time to collect his personal belongings from the office before he was taken home by Mr Lownds; · Mr Lownds gave evidence that he suggested to the applicant that he, "should do the right thing and resign;" · It is common practice to serve out the period between a resignation and commencement of employment with the other company; · The salary of the position at Independent Fuel Suppliers was substantially the same as the applicant was receiving at Valvoline; · ­­ Mr Lownds had little experience with working with employees as his background was in sales as a representative; and · Mr Lownds stated in evidence-in chief that he was shattered when he was told that the applicant had attended an interview with another company but in cross examination, when asked, if he felt any personal upset at all about this, he answered: "No personal upset, no." This contradiction gives strength to the applicant's claim that Mr Lownds felt betrayed and terminated the applicant for that reason. If in fact Mr Middleton had said that he resigned then I am of the opinion that such a resignation, taking into account the circumstances of the meeting and the evidence given by Mr Lownds would not amount to an acceptable form of resignation. Mr Lownds said in his evidence that he returned to the applicant's home shortly after he had driven him home. His purpose was to collect some keys he had left behind. He said: "Steve, we've had a problem before. Could you give me a written resignation just for the record because of the problems we had with Chris Moore and it was at this stage he said to me, "Look, Nigel I haven't resigned, you just took me home." Taking into account the pressure placed on the applicant to resign and the evidence given by the applicant, that he denied any resignation within a short period after the alleged resignation also adds weight to the conclusion that there was in fact no resignation by the applicant. The act of taking the applicant home and the suggestion that he should resign all amount to a termination of the applicant's employment at the initiative of the employer.

ACCEPTANCE OF POSITION OF BRANCH MANAGER, NERANG INDEPENDENT FUEL SUPPLIERS. Subsequent to his termination on the 28 September 1994 the applicant was offered the position he had applied for with Independent Fuel Suppliers. This offer was put to him on the 4 October 1994 and he commenced employment with them on the 10 October 1994. He was asked in examination in chief if he made any effort to secure employment between the 28 September 1994 and the 4 October 1994 and gave the following reply: "I rang my brother who has a business in Newcastle and he had nothing for me. I also rang Independent Fuel Suppliers, against my better judgment, and said, "Has there been a decision yet?" I made two phone calls. One to my now supervisor and one to Mark Way, the managing director, and they both said, "We have got a couple of guys we want to talk to. We can't make a decision at this time. We will let you know soon. We will know within - hopefully within a week or two." So, yes, I did make an effort... I scoured papers, I went into the CES and had a look and there was really nothing there for me." This evidence, which was not challenged by the respondent, except for the assertion that the position at Nerang was, "in the bag" gives credence to the applicant's claim that he was terminated. Throughout his evidence the applicant impressed me as a truthful witness and I therefore accept his version of the events of the 28 September rather than Mr Lownd's version. CONTRAVENTION of SUBDIVISION B of PART VIA The termination of the applicant was based on the fact that the applicant had attended an interview with another company. Whether the decision to dismiss the applicant was that of Mr Lownds, on his own volition because he felt the applicant had betrayed him or on the instruction of the managing director arising out of the telephone call on the 28 September matters not. The termination of employment of the applicant was not for a valid reason, connected with his capacity or conduct or based on the operational requirements of the undertaking, establishment or service and therefore contravenes s170DE of the I.R. Act 1988. REMEDY The reinstatement of the applicant to his position prior to termination is in the circumstances impractical and I am therefore required to award an amount of compensation as I think appropriate. With regard to the method of calculation of this amount, I take the view as expressed by Gray J in the Full Court decision in Liddell v. Lembke and Gibson v. Bosmac Pty Limited NI200 of 1994 & 380 of 1994 of the 15 December 1994. In this decision His Honour was comparing the remedies of the New South Wales legislation with the Commonwealth, and in explaining the situation with regard to the Industrial Relations Court of Australia, was of the opinion that: "Only if reinstatement is impractical is the Court to turn its attention to the remedy of compensation. In such a case, the Court will not have an unfettered discretion to refuse compensation. Nor will it be able to adjust the measure of compensation according to its opinion of the conduct of the employee. It is required to order the employer to compensate the employee as far as possible, up to the limit specified, in respect of any loss which the employee has suffered by reason of the termination. It is to be noted that the limit specified is a limit on what the Court can order by way of compensation, not a limit on what the employee can receive from the employer. Thus, even if an employer has already paid a sum of money designed to compensate the employee for dismissal, if the employee is entitled to greater compensation, the Court must award it up to the limit specified." COMPENSATION The applicant submitted that in calculating compensation the Court should have regard to the following: (1) The manner in which the applicant's employment was terminated which involved a high degree of humiliation, anxiety and distress for the applicant; (2) That because of the unlawful termination of his employment by the respondent the applicant incurred legal, removal, transport, agents and rental costs in moving his family's residence from Newcastle to a new residence near his new employment in Brisbane; (3) The salary which the applicant would have received from the respondent but for the unlawful termination in the period from 28 September 1994 to 10 October 1994; (4) The annual bonus, in an average amount of $1,500.00 for 1994 promised to all of the Respondent's employees in February 1994 but not received by the applicant in his "termination pay"; and (5) That in his new employment the applicant is not provided with a motor vehicle by his employer. In his employment with the respondent he was provided with a motor vehicle which was fully maintained by the respondent. Although he receives a car allowance of $600.00 per month in his new employment it has been necessary for him to lease a motor vehicle and to be responsible for a residual value of $9,600.00 if he wishes to retain the vehicle at the end of the lease period; It was also submitted by the applicant that compensation under the Industrial Relations Act 1988 is broad enough to include the common law concept of general damages and there was authority for this in the New Zealand High Court case of Whelan v. Waitaki Meats Ltd [1991] 2 NZLR 74. In this case Gallen J declined to follow the rule in Addis v. Gramophone Co. Ltd [1909] AC 488, that an employee is only entitled, to such damages as will compensate him or her for remuneration lost during the period of notice to which he or she would have been entitled under the contract. It was further submitted that the High Court of Australia discussed without disapproval, Whelan v. Waitaki Meats Ltd., in Baltic Shipping Co v. Dillon (1993) 111 ALR 289, and that therefore general damages are available for matters arising under the Industrial Relations Act 1988. The circumstances of this case are not such as to warrant me to make a decision with regard to that proposition and I will not do so. In the particular circumstances of this case I find that the appropriate amount of compensation to be paid to the applicant is the sum of $9,100.00, arising from the unlawful termination, and I do so order.

I certify that this and the proceeding nine (9) pages are a true copy of the Reasons for Judgment of Judicial Registrar Walker. Associate: Kerry Harrison ______________ Date signed: 31 March 1995 Appearances Counsel for the applicant: G. Warburton Solicitor for the applicant: Anthony & Associates: M. Raush Counsel for the respondent: P. M. Kite Solicitor for the respondent: Worthington Storey Solicitors: R. Storey Date of Hearing: 6 February 1995 Date of Judgment: 31 March 1995