Andrew Souter v Mornington Peninsula Junior Football League Inc [2023] FWC 3471

1 Fair Work Act 2009 s.394—Unfair dismissal Andrew Souter v Mornington Peninsula Junior Football League Inc (U2023/9001) DEPUTY PRESIDENT COLMAN MELBOURNE, 22 DECEMBER 2023 Unfair dismissal application –Small Business Fair Dismissal Code – application dismissed [1] This decision concerns an unfair dismissal application made by Andrew Souter under s 394 of the Fair Work Act 2009 (Act). From January 2022 until 28 August 2023 Mr Souter was employed by the Mornington Peninsula Junior Football League Inc (League) in the position of general manager. He had previously served as a volunteer for some ten years. Mr Souter was summarily dismissed by the League after it concluded that he had committed misconduct, including by entering into contracts not authorised by the board and disabling security cameras. Mr Souter denies any wrongdoing and contends that his dismissal was unfair. He seeks compensation. The League contends that its dismissal of Mr Souter complied with the Small Business Fair Dismissal Code (Code) and that the dismissal was in any event not unfair. [2] Mr Souter’s employment as general manager was initially governed by a written contract of employment made in January 2022, pursuant to which he was engaged for a 12 month period. In November 2022, the League, which had previously been run by an executive group, created a board. In January 2023, the board offered Mr Souter a new contract for a further period of 12 months, which he accepted. The new contract, which increased Mr Souter’s salary, was a substantially different document from the first contract and contained various new terms. [3] Mr Souter’s evidence was that on 4 August 2023 he attended a performance review meeting with Mark Barrow, the chairman of the board, who raised a number of concerns about his conduct and suspended him on full pay pending an investigation. On 19 August 2023, Mr Souter received a letter from Mr Barrow which stated that initial findings had been made against him in respect of eight instances of misconduct. First, he was said to have disabled security cameras for a number of weeks at various times in June and July 2023 without justification, thereby compromising safety. Secondly, it was alleged that following his suspension, Mr Souter remotely accessed the security cameras. Thirdly, it was said that Mr Souter had incurred $12,750 in unauthorised expenditure; this was a reference to a deposit that Mr Souter had paid to a travel agency for flights to New Zealand in 2024. Fourthly, the letter stated that Mr Souter had entered into an unauthorised contract with the travel agency valued at $73,695. Fifthly and sixthly, Mr Souter was said to have failed to exercise proper financial oversight of club tours to Tasmania and New Zealand that had occurred in March and April 2023, and that this had resulted in the League sustaining losses of over $22,000. Seventhly, it was said that Mr Souter [2023] FWC 3471 DECISION -- 1 of 6 -- [2023] FWC 3471 2 had outsourced certain of his basic responsibilities as general manager to a service provider called Sports Admin Plus without notifying the board. Eighthly, he was said to have failed to correct misleading information about these matters. The letter directed Mr Souter to show cause by 25 August 2023 why he should not be disciplined or dismissed. [4] Mr Souter said that on 25 August 2023, his lawyers wrote to the League stating that a response would be provided by 1 September 2023 and requesting that no disciplinary action be taken before that time. But on 28 August 2023, he received a letter from Mr Barrow stating that he had failed to respond to the League’s letter of 19 August 2023, and that the League considered his conduct to constitute serious misconduct warranting summary dismissal. Mr Souter’s employment ended that day. [5] As to the eight allegations in the show cause letter, Mr Souter’s evidence was as follows. First, Mr Souter said that he had disconnected the security cameras because the owner of the security firm had told him that he was able to log in anytime and see whatever anyone was up to, and Mr Souter was concerned that the cameras could be used inappropriately. Secondly, although he had remotely accessed the security cameras after being suspended, he had done so only momentarily and then deleted the app. [6] As to the third and fourth allegations, Mr Souter said that he believed he was authorised to make the deposit for the flights as he was expected to organise the annual League trip to New Zealand for the following year. He said that he had not been questioned by the League about making such arrangements in 2022, and that he had implied authority to do so again. Mr Souter said that he had been told by Mr Barrow and board member Colin O’Neill that he should go ahead and organise the trip for 2024. Generally as to the allegation that he had entered into unauthorised contracts, Mr Souter said that he had throughout his period as general manager entered into a range of contracts, including for example with trophy companies, and that he had believed it was within his authority to do so. [7] As to the fifth and sixth allegations, Mr Souter denied that he had failed to exercise financial oversight and due diligence concerning the trips to Tasmania and New Zealand in early 2023 or any other matter. As to the cost of the travel arrangements, the tickets had needed to be purchased at a particular time in order for the trips to occur, and he had taken care to ensure that tickets were bought on good terms. He said that there was no evidence that he had cost the League money or that it had paid too much for the travel arrangements. [8] Seventhly, Mr Souter denied outsourcing work without authorisation and said that it was within his authority to engage contractors to ensure the overall efficiency of the League. The particular contractor referred to in the show cause letter, Sports Admin Plus, was one that he had engaged previously without any adverse comment from the League. Finally, Mr Souter denied providing anyone with misleading information about his activities and was unsure what the alleged misleading information was said to be. [9] Mr Souter said that he believed the board had embarked on a witch hunt against him and that the board, and in particular Mr Barrow, wanted simply to get rid of him. [10] Mr Barrow’s evidence was that at the time of Mr Souter’s dismissal the League employed two people and did not have any associated entities. He said that in or around April -- 2 of 6 -- [2023] FWC 3471 3 2023 the board requested Mr Souter to undertake a comprehensive review of the 2023 trip to New Zealand and to provide a briefing to the board. A number of concerns had been raised about the trip, including in relation to finances, safety, documentation and insurance. Mr Barrow said that despite the board’s repeated requests, Mr Souter failed to do what was asked of him. The board later became aware that Mr Souter had paid a deposit for 85 tickets for a trip to New Zealand in 2024, which had not been authorised, and of which the board had no prior knowledge. Further, Mr Souter had paid the deposit for the 2024 trip at a time when he had still not conducted the review of the 2023 trip as directed by the board. Mr Barrow strongly denied telling Mr Souter that he should go ahead and arrange a trip for 2024. Mr Barrow said that after becoming aware that Mr Souter had paid a deposit on flights for 2024, he began looking more broadly into Mr Souter’s conduct, which led him to identify the eight concerns that he set out in the letter to Mr Souter on 19 August 2023. [11] In relation to the matters raised in the letter of 19 August 2023, Mr Barrow said that the League’s security company had contacted the board to advise that someone had disabled the CCTV cameras for various periods. It was established that it had been Mr Souter who did this. The board had not approved it. After Mr Souter was suspended, he had remotely accessed the security cameras, thereby breaching his suspension. Mr Barrow said that Mr Souter had incurred losses to the League in connection with the 2023 tours, by which he meant that Mr Souter had spent too much money on them. Mr Barrow also said that Mr Souter did not have any authority to enter into contracts with service providers without board approval. [12] Mr Barrow’s evidence was that since the termination of Mr Souter’s employment, the League had discovered other misconduct. The board had sought further information from the travel agent and uncovered that Mr Souter had used his League credit card to pay for private car hire during the trip to Tasmania in 2023. Mr Souter’s evidence was that Mr Barrow had authorised this, which Mr Barrow denied. Mr Barrow also said that the League later identified many withdrawals that Mr Souter had made from the League’s account which did not have any notation or explanation, including some $4000 in cash withdraws, one of which, made in November 2022, was for $1230. The League’s debit card had also been used to buy alcohol, as well as meals from McDonalds, Red Rooster and other places. Mr Souter had made a payment of $375 for Jim Scrown of the Crib Point Junior Football Club, but Mr Scrown had told the League that he never received any payment. In response to these matters, Mr Souter said that the cash withdrawals were for miscellaneous League expenses, such as looking after volunteers and having meetings over lunch; the $1230 withdrawal was to pay umpire fees for an off-season competition; and that the $375 payment for Mr Scrown was to purchase a gift for Mr Scrown in recognition of his assistance to the League. [13] James Arundale gave evidence that the board had various concerns about the 2023 trip to New Zealand, including in relation to expenditure, and that Mr Souter was told about these concerns. Mr Arundale said that he estimated that the League had in fact sustained a loss of around $50,000 on the 2023 trip, meaning in effect that it had paid far too much. In particular, the participants on the trip had stayed at the President Hotel in Auckland which was much too expensive and that for future trips the League was now planning to stay at the YMCA. Mr Arundale said that Mr Souter had not applied due diligence, such as comparing prices from different travel agents. -- 3 of 6 -- [2023] FWC 3471 4 [14] Colin O’Neill’s evidence was that the board was not consulted by Mr Souter about the purchase of the 85 tickets to New Zealand in 2024 and that after Mr Souter’s dismissal the board looked into his financial activities. Mr O’Neill said that he was particularly shocked to discover that Mr Souter had used the League debit card to make large withdrawals of cash. He strongly denied saying or suggesting to Mr Souter that he should go ahead with a trip to New Zealand in 2024 and said that he had several conversations with Mr Souter about his performance and had told him to focus on operational matters, including ensuring that there were matches each Sunday. Consideration [15] I accept Mr Barrow’s evidence that the League had only two employees at the time of Mr Souter’s dismissal, and that it has no associated entities. The League was a small business employer within the meaning of s 23 of the Act. It is therefore necessary to determine whether, as the League contends, the dismissal was consistent with the Code. If it was, the dismissal was not unfair (see ss 385(c) and 388(2) of the Act). [16] The League relies on the first of the Code’s two limbs, which states: ‘It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.’ [17] The League contends that it reasonably believed that the matters in the show cause letter were serious enough to warrant immediate dismissal. Mr Barrow said as much in the termination letter. I find that this was the League’s belief. The question then is whether this belief was held on reasonable grounds, as the Code requires it to be. [18] It is not necessary to demonstrate that the employer had reasonable grounds for believing that each of the relevant instances of alleged misconduct was sufficiently serious to justify immediate dismissal. It is sufficient that the employer believes on reasonable ground that any of the relevant conduct was sufficiently serious to warrant this course. [19] In my view, it is clear that there were reasonable grounds for the League to believe that Mr Souter had entered into contracts on behalf of the League without the board’s approval and that this was a serious matter justifying immediate dismissal. It was reasonable for the League to expect that Mr Souter would comply with his contract. In January 2023, the board had offered Mr Souter a new contract in respect of his position as general manager, and he accepted it. The board had been created in November 2022 as part of an effort to make the League more professional. Clause 1.2 of schedule 1 of the new contract stated: ‘The employee, except as expressly authorised by the employer, must not enter into any agreement or contract on behalf of the employer and must not make on the employer’s behalf any promise or representation or pledge the employer’s credit without the employer’s express authority in writing.’ [20] It is not in dispute that the board never gave Mr Souter authority in writing to enter into an agreement with the travel agency for a 2024 trip to New Zealand, or to pay the deposit. Mr -- 4 of 6 -- [2023] FWC 3471 5 Souter’s evidence was that Mr Barrow and Mr O’Neill said or suggested to him that he should proceed to arrange a trip to New Zealand for 2024, and that he therefore had oral authority. I do not accept this. Mr Barrow and Mr O’Neill strongly denied this and I believe them. They were credible witnesses and their evidence on this score was entirely persuasive. Further, I find it highly improbable that they would authorise Mr Souter to plan a 2024 trip when the review of the 2023 trip had still not occurred, in circumstances where a range of concerns had been raised about the earlier trip, as described by Mr Barrow and Mr Arundale in their evidence, which I accept. Mr Souter said that he had implied authority, because during 2022 he organised the League trips to New Zealand and Tasmania that occurred in early 2023. But these trips were organised before the board was established, and before Mr Souter agreed to the second contract. Any implied authority he might have had in 2022 ceased when Mr Souter entered into the new contract with the board, which now governed the League. Not only did he require authorisation to bind the League, he needed express authority in writing. Mr Souter said that the deposit he paid to the travel agent for the 2024 tickets was recoverable until October 2023, and that the flights could be cancelled, but even if this is the case, it is beside the point. He entered into a contract with the travel agent on behalf of the League without approval. Mr Souter did not comply with the terms of his new contract. [21] Mr Barrow, as chairman of the board, expected that Mr Souter would obtain the board’s approval before entering into contracts on behalf of the League, as the contract plainly required. Mr Barrow believed that Mr Souter’s failure to do so was a serious matter warranting summary dismissal. This was a reasonable belief. The reasonableness of the belief is underscored by the fact that Mr Souter had been asked by the board to review the 2023 trip to New Zealand and to provide a briefing to the board, but this did not occur. Mr Souter suggested that he had provided sufficient information to the board about the 2023 trip so as to have complied with its request. The League disagreed. But on any view of the matter, the board had not reached any conclusions about the lessons learned from the 2023 trip and a 2024 trip should plainly not have been arranged until that had occurred and the board had given its approval. Despite this, and contrary to the terms of his contract, Mr Souter entered into a contract with the travel agent to purchase flights, and paid a deposit. [22] Mr Souter said that he believed that Mr Barrow or the board wanted to get rid of him. If that were so, it would call into question whether the League really did believe that his conduct was sufficiently serious to warrant immediate dismissal. However I find that this was not the case. I find that Mr Barrow and the board were genuinely concerned that Mr Souter had proceeded to make contractual arrangements for a 2024 New Zealand trip without its authority and without having conducted a proper review of the 2023 trip. Mr Barrow believed that Mr Souter’s conduct was sufficiently serious to warrant immediate dismissal. He acted on his belief, which was plainly a reasonable one. I note that Mr Souter also entered into a contract with Sports Admin Plus without the board’s approval and this too constituted a breach of his contract of employment. [23] I conclude that the League had reasonable grounds for believing that, in the respects identified above, Mr Souter’s conduct was sufficiently serious to justify immediate dismissal. It is not necessary to consider the other allegations. The employer complied with the first limb of the Code and the dismissal was therefore not unfair. -- 5 of 6 -- [2023] FWC 3471 6 [24] Even if I had concluded that the League had not complied with the Code in dismissing Mr Souter, and that it was necessary to consider whether the dismissal was harsh, unjust or unreasonable with reference to s 387, I would have concluded that the dismissal was none of these things. The League had a valid reason for dismissal constituted by Mr Souter’s entering into an unauthorised contract with the travel agent and making an unauthorised deposit on behalf of the League, and by entering into an unauthorised contract with Sports Admin Plus. As noted earlier, I reject Mr Souter’s contention that he was the subject of a witch hunt or a desire on the part of Mr Barrow and the board to get rid of him. In my opinion, a second valid reason for dismissal was the disabling of the security cameras for a number of weeks. The cameras had been installed as a safety measure following a spate of burglaries. The disconnection of the cameras created a safety risk, even if Mr Souter may have had good intentions. A further valid reason for dismissal was the fact, discovered only after the dismissal but still very much relevant to the consideration of whether the dismissal was unfair under s 387, that Mr Souter had made some $4000 in cash withdrawals from the League’s funds and had failed properly to record the expenditure. This was the League’s money, Mr Souter was the general manager, and he needed properly to account for it. [25] Mr Souter was notified of the valid reason for dismissal and was afforded an opportunity to respond, of which he did not avail himself. Mr Souter was not refused a support person. He was dismissed for conduct, not performance, therefore it is not relevant to consider whether he received a warning as contemplated by s 387(e). The employer is a small business however I consider the matters in ss 387(f) and (g) carry little weight here. There are no other relevant factors that outweigh the gravity of each of the valid reasons for dismissal. Conclusion [26] The dismissal was consistent with the Code. The employer’s jurisdictional objection to the application is upheld. The application is dismissed. DEPUTY PRESIDENT Hearing details: 2023 Melbourne 20 December Appearances: A. Souter for himself M. Barrow for the respondent Printed by authority of the Commonwealth Government Printer <PR769823> -- 6 of 6 --