Ball v Larorb Pty Ltd trading as Sunshine Office Supplies [2003] QIRC 234 (2004) 175 QGIG 23

9 January, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 23 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 74 – application for reinstatement Allan Thomas Ball AND Larorb Pty Ltd trading as Sunshine Office Supplies (No. B633 of 2003) DEPUTY PRESIDENT BLOOMFIELD 16 December 2003 -- 1 of 7 -- 24 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 January, 2004 Application for reinstatement – Witness evidence – Witness credibility – Allegation applicant resigned – Finding that applicant terminated – Allegations about conduct and performance – Allegations not raised at, or prior to, termination – Most allegations exaggerated or found wanting – Whether elements of s. 77 complied with – Termination found to be harsh, unjust or unreasonable – Reinstatement impracticable – Compensation awarded. DECISION Background Mr Allan Thomas Ball has applied to the Queensland Industrial Relations Commission for relief in relation to his alleged unfair dismissal by Larorb Pty Ltd trading as Sunshine Office Supplies (the Respondent). Mr Ball became an employee of the Respondent when a previous business in which he had been a partner merged with Larorb Pty Ltd in or around December 2000. As a result of the merger Mr Ball became a director and shareholder (with 24% of the issued shares) of the Respondent. The other directors were Mr Owen Green (the former partner of Mr Ball, also with 24%), Mr Michael Field (26%) and his wife, Mrs Heather Field (26%). Prior to the merger Mr and Mrs Field had been the sole shareholders and directors of the Respondent. At the time of the merger Mr Michael Field became the Managing Director of the Respondent, Mr Ball became the Sales Manager, Mr Green became the manager of the printing side of the business, while Mrs Field took no day-to-day role. In mid-2001 Mr Ball was moved (see below) from his role as Sales Manager to take charge of the Respondent’s warehouse operations. In early 2002, Mr Ball resigned his position as a director, but maintained his 24% shareholding. Mr Ball claims he was unfairly terminated by Mr Field on 21 March 2003. The applicant’s contentions Mr Ball said he was called to a meeting involving Mr Field, Mr Green and himself on 21 March 2003 which he understood to be a meeting to discuss the Respondent’s financial position and ways to improve its profitability and liquidity. Mr Ball said during the course of this meeting his suggestions were rejected by Mr Field, who described them as being “penni-anti”. Mr Ball said Mr Field told him the cure to the Respondent’s problems was for Mr Green and he (Mr Ball) to put more money into the business in order for the liabilities to be more evenly distributed. Mr Ball said he declined the invitation indicating he would not put money into a business in circumstances where he had no control over its expenditure. Mr Ball said the meeting ultimately reached the point where Mr Field tabled a hand-written document setting out the Respondent’s alleged financial position and also tabled a letter (dated 19 March 2003) directed to the directors and shareholders of the Respondent. This letter recorded Mr Field’s proposals for change. They included: • reducing the hours of work of the sales representatives back to a 4 day week; • reducing the hours of the accounts staff member by 4 hours per week; • reducing the hours of the external bookkeeper by 3 hours per week; • cancelling the car allowances of Mr Ball, Mr Green and Mrs Field.; and • an “ultimatum” to Mr Ball as follows: “4/ I hereby Give Mr Allan Ball notice that he has the option of resigning and receiving 2 week (sic) salary in lieu of notice or having his salary reduced to be more in line with his responsibilities, that is store person telephone sales. Mr Ball’s current duties do not justify his salary and this leaves me with little option but to reduce his package to $600.00 week (sic) plus gateway bridge toll and $85.00 weekly to cover fuel and motor vehicle expenses.”. Mr Ball said after he rejected the ultimatum Mr Field shouted at him “well I am firing you, I want your keys now as I don’t want you here at the weekend causing damage and don’t turn up on Monday”. Mr Ball said he handed in his keys and was advised that he was no longer a signatory of the company cheque account. The Respondent’s contentions Mr Field said the company experienced a “very tight cash flow crisis” in or about January 2001. His fellow directors refused his request to refinance the operation with Mr Ball saying he was going through a divorce and had no equity in any assets. Mr Field said he arranged an additional $50,000 overdraft using his home as security on the basis that the other directors would adjust the imbalance as soon as they could. In or around mid-2002 the Respondent again fell onto hard times. Mr Field said despite this second financial crisis Mr Ball again refused to inject additional funds into the business. Mr Field claimed cash injections were made by Mr Green and himself, with his own contributions coming from borrowings on his credit cards where the debit balances ranged between $20,000 and $60,000 per month. [As a digression I record that Mr Field admitted under cross-examination that Mr Green had not actually injected additional funds until May 2003.]. Mr Field expressed the view that Mr Ball was under an “obligation” to inject funds to adjust the imbalance in capital contributions and liabilities between the shareholders. He alleged the cash flow would have improved by up to $2,000 per month had Mr Ball contributed, which would have gone a long way to solving the Respondent’s problems. Mr Field said he felt Mr Ball’s resignation as a director in early 2002 was “appropriate” given he (Mr Ball) did very little to assist management or the efficient running of the business. Indeed, “he disrupted the staff, contravened various directions (such as smoking) and damaged morale and goodwill. He did not further the best interests of the Company and was a very poor director. In truth, he was a director in title only and his conduct was in complete contravention to what I expect a co-director to do.”. Mr Field said he convened a meeting on 21 March 2003 to try to find a solution to the Respondent’s financial difficulties. Mr Ball’s plan was to sack the Respondent’s most productive sales representative (Ms Horsburgh) ”who was the woman making sexual harassment charges against him”. Mr Field said he and Mr Green rejected this suggestion stating Ms Horsburgh was maintaining the Respondent’s two largest accounts which they stood to lose if she was dismissed. Mr Field said he then tabled an alternative approach namely the letter referred to above. He said Mr Ball’s reaction was that he would not accept a reduced salary under any circumstances; would not accept his car allowance being cancelled; would not be resigning his employment; and, would not participate in any further changes to the business as proposed by Mr Field. -- 2 of 7 -- 9 January, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 25 Mr Field said he tried to “rationalise” with Mr Ball, discussing the severity of the financial position, but Mr Ball would not listen. Mr Ball asked if he was being fired and did so several times. Mr Field said he replied in the negative informing Mr Ball “that it was his decision to make” but also testifying “… if he was refusing to adopt our attempts at salvaging the business we had no other alternative but to let him go.”. Despite this comment in his written statement, and repeating the sequence of events under cross-examination, Mr Field continued to assert Mr Ball had resigned his employment. This refusal was despite Mr Field being referred to documents he had written in which he said “… Mr Ball’s employment was terminated on 21 st March 2003 …” (Exhibit 8) and “… I advised him there was no longer a position for him” (Exhibit 9). Presumably in anticipation of the likelihood that the facts would not support a conclusion that Mr Ball resigned, the Respondent led a considerable amount of additional evidence designed to establish that if a termination had occurred it was not harsh, unjust or unreasonable having regard to Mr Ball’s conduct, capacity and performance during his period of employment. Such evidence about Mr Ball’s work performance came from a number of current and past employees as follows: • Mr Michael Field. • Mr Owen Green. • Ms Cynthia White, who previously worked in a part-time position in the warehouse and in an administrative role before becoming a sales representative. • Mr Scott Bovey, a former employee. Mr Bovey worked for the Respondent from 1995 until 2002. Although a previous manager, he became a sales representative upon the merger in late 2000 with Mr Ball taking the sales manager role. After Mr Ball was moved to the warehouse Mr Bovey became the sales manager. Mr Bovey said he resigned his employment “primarily because of Mr Ball and his abhorrent behaviour. I could no longer stand to be working with the man. Mr Ball had turned a very happy, productive and enjoyable workplace into a miserable, unproductive place to work. I would not have left the employment of (the Respondent) but for Mr Ball.”. • Ms Wendy Horsburgh, also a former employee. Ms Horsburgh had worked as a sales representative for the Respondent for 10 months between October 2000 and July 2001 and for a further 12 months from April 2002 until April 2003. • Ms Roslyn Riley, another former employee who worked for the Respondent from early 1999 until about September 2002. During that time she performed a variety of duties in the warehouse, in an administrative role and as a sales representative. Without being exhaustive, this evidence dealt with the following points: • Mr Ball was rude and aggressive towards the sales representatives, particularly Ms Horsburgh; • he told the female staff they were “useless”; • he made sexist comments, remarks and jokes to the female staff. This included telling some of the female staff that they were “naughty girls” and “they should bend over so that he could smack them on the bum”; • he slapped, or attempted to slap, female staff members on the back or behind with his hand or ruler; • he was rude to the customers, both in the warehouse and over the telephone; • he told dirty and sexist jokes to customers either on the telephone or face to face at the counter; • he played computer games on his computer “all day” according to one witness, and “during the busy hours of the day” according to several other witnesses, and would not serve customers even if other staff members were busy; • he hardly ever answered the telephone, let the telephone ring 5 to 10 times and still did not pick it up; • he spent a lot of the time on the telephone to his wife; • he failed to order adequate stocks so that products were out of stock a lot of the time; • he failed to ensure that orders going out to customers were complete and accurate; • he gave customers substituted products without clearing whether the substitute was acceptable to the customer; • he would pick a customer’s order but require another staff member to pack and invoice the order contrary to the Respondent’s policy that the one person performed the whole task; • he continually smoked in the warehouse, offices, toilet and around the sales counter contrary to the Respondent’s no smoking policy; • he flicked ash and cigarette butts in and around the warehouse, offices and toilets – which was a fire hazard; • he spent “at least half an hour every day” in the toilet smoking; • he told one female staff member “her bra would probably fit her better if she put it on backwards”; • he told another staff member “his wife’s boobs would look better in that top than hers did”; • he stated to another female staff member, when he observed a young girl wearing white pants walk across the street in front of them both, that he “wouldn’t mind a piece of her”; • he arrived late for work; and • he left right at 4.30 p.m. regardless of whether all orders had been attended to for that day. Mr Field, Ms Horsburgh, Ms Riley and Mr Bovey referred to an incident in mid-2001 when Mr Ball allegedly yelled at, and abused, two of the female sales representatives (including Ms Horsburgh), slamming books on the desk as he did so. This led the two sales representatives to threaten to resign unless Mr Field changed the reporting structure so that they were no longer accountable to Mr Ball. As a result, Mr Ball was moved from the position of Sales Manager to Warehouse Manager and Mr Bovey was reappointed to his former Sales Manager position. Several of the witnesses also gave evidence about an incident in or around September 2002 when Mr Ball had allegedly unnecessarily asked Ms Horsburgh to come downstairs from the office to meet with 3 customers. One of the witnesses said Mr Ball had positioned himself and the 3 male visitors underneath the stairs so they could watch Ms Horsburgh walk down the stairs in a short skirt. Ms Horsburgh said she was greeted with “snide, lurid remarks and much jeering from Mr Ball” when she came down the stairs. She said she felt she had been called downstairs purely so Mr Ball could “parade her” in front of the men. Ms Horsburgh said she lodged a verbal complaint with Mr Field about Mr Ball’s behaviour. Mr Field called both parties to his office to talk about the incident. During that discussion Mr Ball said Ms Horsburgh “needed to be taught a lesson for wearing short skirts to the office”. Ms Horsburgh said she later lodged a written complaint with the Respondent and even sought legal advice about Mr Ball’s treatment of her. Mr Field claimed he had warned Mr Ball on a number of occasions about smoking in the workplace but Mr Ball had persisted with his behaviour. Mr Field said he had also told Mr Ball on “15-20 occasions” that the type of behaviour mentioned in the third dot point above was inappropriate and would not be tolerated. He said he “chastised” Mr Ball about his language and the way he spoke to people after the mid-2001 incident with the sales representatives. Similarly, he said he “chastised” Mr Ball on “numerous occasions” about his smoking habits but Mr Ball always had excuses. Evidence was also given by Mr Field and Mr Gorringe, the Respondent’s part-time bookkeeper, about Mr Ball’s behaviour in respect of his wage entitlements and a loan to the company. -- 3 of 7 -- 26 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 January, 2004 Mr Field said from the start of the merger “Mr Ball put a great deal of energy into obtaining benefits that he was not entitled to” which included: splitting his wage with his wife to save tax, employing his wife on a part-time basis paying cash in hand; demanding a $500 per month car allowance; demanding the Respondent pay for his petrol, car registration, insurance, bridge tolls and running repairs on top of his car allowance; and demanding “quite strongly” that the Respondent pay off his credit card balance and cover it up in the books. Mr Field said he “resisted” most of Mr Ball’s “outlandish demands” but did agree to the car allowance provided all directors received it. Mr Field also referred to an arrangement entered into with Mr Ball whereby records were adjusted to show that Mr Ball had been repaid an $18,000 loan by altering his group certificate to reduce his wages for the financial year ending 30 June 2002 by a similar amount. Mr Field said this gave Mr Ball several advantages, including a healthy tax rebate and reducing the taxable income on the group certificate which was needed for a child support hearing Mr Ball was about to attend. Mr Gorringe confirmed he had made the changes to the books and to the group certificate, as outlined immediately above, at the request of Mr Ball and Mr Field. Mr Gorringe also said Mr Ball was constantly requesting his credit card debts be paid by the business, and that some payments were actually made by the company. Mr Gorringe confirmed that Mr Ball’s salary package included a wage component of $849.98, a weekly car allowance of $115.30 and weekly fuel expenses of $50. Findings Although I might not have specifically referred to all aspects of the evidence (above) and have not specifically referred to the helpful submissions of Mr Reed and Mr Jurth, I have, nonetheless, considered all of the material advanced in the course of reaching my findings and ultimate conclusions in this matter. Was Mr Ball dismissed or did he resign? The circumstances under which an employment relationship can come to an end were discussed by Northrop J in Cooper v Darwin Rugby League Inc. (1994) 1 IRCR 130 as follows: “In the context of the employment of an employee, the termination of this employment of the worker may be brought about at the initiative of the employer, at the initiative of the employee, by involuntary act, at the death of the employee or by agreement between employer and employee.”. It is clear from any analysis of the evidence, let alone the supporting material contained within Exhibits 8 and 9, that Mr Ball did not resign his employment on 21 March 2003 and that his services were terminated on that date by Mr Field. Mr Ball was presented with an ultimatum that he could either accept a significant reduction in his remuneration package (of the order of $300.00 per week) or resign and be paid two weeks’ salary in lieu of notice. Even had Mr Ball accepted the ultimatum, which he did not, his resignation in such circumstances would have been a termination at the instigation of the employer because it was without the genuine consent of Mr Ball (Thomas v Power Electric Switchboards Pty Ltd (149 QGIG 493); Cowan v Trinolea Pty Ltd (148 QGIG 639); Hodges v Buderim Sugar (148 QGIG 644); Cooper v Darwin Rugby League Inc. (1994) 1 IRCR 130; Allison v Bega Valley Council, Industrial Relations Commission of New South Wales (Patterson J., Marks J., Connor CC. 1 September 1995). The evidence shows that Mr Field clearly advised Mr Ball that his services were no longer required after the ultimatum was rejected. The proposition that Mr Ball resigned is simply preposterous and indefensible. Mr Field terminated him. Mr Jurth conceded as much in his final submissions. The allegations about Mr Ball’s conduct, capacity and performance The task of reaching specific conclusions in this matter was made more difficult because of the fact that significant parts of the Respondent’s witnesses’ statements were hearsay and clearly inadmissible. Further, to compound the problem, the Respondent’s witnesses (to a person) tended to exaggerate the matters on which they were giving direct evidence in an obvious attempt to discredit Mr Ball. A number of examples come readily to mind. Firstly, Mr Field said he had witnessed Mr Ball yelling at and abusing staff on “numerous occasions”. When put to the test he could recount the single incident with the sales representatives described above. Similarly, Mr Field claimed Mr Ball had ignored customers who came into the warehouse on “numerous occasions” but couldn’t recount a single incident. Additionally, he claimed to have spoken to Mr Ball about his failure to answer the telephone on between “50 to 100 occasions” and said he didn’t have “a big enough filing cabinet” to recall all of the incidents covered in the second, third, and fourth dot points listed in the summary of the Respondent’s evidence. Secondly, different witnesses said Mr Ball was playing games on his computer “all day”, “during the busy hours of the day”, “for countless hours”, and for “a large portion of his work hours”. When the various witnesses were cross-examined it became clear that the accusations were highly exaggerated. Thirdly, several of the witnesses claimed that Mr Ball had frequently called them “a naughty girl”, had told them to bend over and had slapped, or attempted to slap, them on their behinds. Again, when their allegations were put to the test under cross-examination the frequency and actual nature of Mr Ball’s actions were seen to be markedly different to the accusations. The context in which they occurred was also different to that which was suggested. The Respondent’s witnesses clearly did not like Mr Ball and attempted to further discredit him by recounting the above incidents (sometimes word for word), whether they were within the witness’ direct knowledge or not. A lot of evidence was also given about matters which were not relevant to Mr Ball’s conduct, capacity and performance (e.g. his salary arrangements, the loan “offset” and the fact he allegedly received an allowance for using a “silver Land Cruiser … when he would often drive to work in a small green Daewoo car” (Miss White – paragraph 7)). Again, this material was simply designed to try to discredit Mr Ball or to paint him in a bad light. Some of the witnesses accused Mr Ball of “sexual harassment” of themselves and other staff (which they had heard about by hearsay). Under this heading they placed such things as Mr Ball’s habit of telling dirty jokes to customers over the telephone, telling some of the staff members that they were “naughty”, or that they should “bend over so he could smack them on the behind” and making the comments attributed to him in the 17 th , 18 th and 19 th dot points listed in the summary of evidence (above). Whilst such language is clearly inappropriate in this day and age, it was not sexually motivated and was not, strictly, sexual harassment. I had the clear impression the various matters were gathered up by some witness under the general heading of “sexual harassment” to make them sound worse than they really were. Importantly, very few complaints were allegedly made about Mr Ball’s alleged ongoing behaviour. However, that is not to say that some of the events did not occur (see below). It seems to me that many of the incidents referred to by the witnesses (summarised above) had assumed the mantel of folklore. Incidents that might have occurred were discussed between staff members to such a degree that the perceived number of incidents was vastly more than the reality, with the final version of events often bearing little resemblance to that which had actually occurred. One would have been entitled to assume, if one believed all of the Respondent’s witnesses’ evidence, that Mr Ball spent half of his day playing computer games, 20% of his day smoking and flicking ash at people, 20% telling dirty jokes, sexually harassing people and being rude to (or ignoring) customers and only working for the remaining 10% of his time. -- 4 of 7 -- 9 January, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 27 Probably the most telling feature about the whole of the Respondent’s case, and whether the alleged warnings were given, was that Mr Field, as the Managing Director, could only specifically refer to one meeting with Mr Ball (other than the meeting about the sales representatives in mid-2001) where any matters concerning his performance and behaviour were allegedly raised. That was the meeting held between he, Mr Ball and Ms Horsburgh following the stairs incident (referred to above). After listening to and observing all of the Respondent’s witnesses, I have reached the conclusion that only a limited number of the allegations levelled at Mr Ball about his conduct, capacity and performance had any truth or substance. In respect of the evidence on these matters I conclude: • Mr Ball was rude and aggressive towards several sales representatives in the meeting in mid-2001 which, ultimately, led to his removal from the sales manager position. There is no evidence that he was rude and aggressive towards any person after that event; • Mr Ball from time to time did describe staff members as “useless” if they made a mistake. I do not accept that Mr Ball was warned about this behaviour; • Mr Ball clearly did tell X-rated jokes to staff members and customers alike and has admitted as much. However, there is no evidence that he was given any specific warnings about this behaviour. Mr Field simply told him to “keep the sexual innuendo out of things” and to “tone it down”, or words to that effect; • Mr Ball did touch or slap Ms White’s bottom with his ruler on two occasions. Again, I am not satisfied Mr Ball was warned about this behaviour, Mr Field simply telling him to moderate his behaviour and “tone it down” (see his evidence at pages 56 and 57); • Mr Ball did have a habit of telling some staff members that they were “naughty” and that they deserved a smack. However, this behaviour seemed to be Mr Ball’s inappropriate, old-fashioned, way of telling staff they had made a mistake and deserved to be punished. I am not satisfied Mr Field specifically warned Mr Ball about this behaviour. Indeed, Mr Field’s evidence seems to suggest that he thought a lot of Mr Ball’s behaviour was innocent, that he did it for a laugh and that “some of the girls misinterpreted what he was saying” (see page 57); • Mr Ball did make 3 inappropriate comments to female staff during his employment, being the allegations raised at points 17 to 19, inclusive, in the summary of the Respondent’s witnesses’ evidence. I can find no evidence he was spoken to about this behaviour; • Mr Ball did have a habit of smoking in and around the office area, including the toilets. However, I am convinced that the Respondent’s allegations are clearly exaggerated. Whilst I accept that Mr Field might from time to time have asked Mr Ball to moderate or watch this practice I do not accept that Mr Ball was ever given a warning about his actions; • Mr Ball did play games on his computer from time to time (and admitted as much) but, again, I think the Respondent’s witnesses vastly exaggerated the extent to which this occurred. In addition, I conclude that Mr Ball was never warned about this practice by Mr Field or anyone else; and • Mr Ball did inappropriately call Ms Horsburgh down the stairs in around September 2002 generally in the circumstances as alleged. However, it does not appear from the evidence that Mr Ball was specifically warned about this incident. I have not recorded any findings in respect of the other allegations raised by the Respondent’s witnesses. It seemed to me that many of the allegations were only raised in an attempt to discredit Mr Ball regardless of how important the particular matter was in the overall scheme of things. In any event, there was so little information given about most of the allegations, and the nature and frequency of them was often so exaggerated, that I could not reasonably reach any conclusions in respect of them. In this category I include such matters as the allegations about speaking to his wife on the phone, his timekeeping habits and the way he went about ordering stock and picking orders. Because of the way the evidence was presented, and consequently the way I have dealt with it in this decision, I have not specifically referred to evidence given by particular witnesses and whether I accepted or rejected that evidence. Accordingly, I record that I rejected Mr Ball’s evidence where his evidence conflicts with the findings made above. Otherwise, I believed Mr Ball was generally telling the truth. I also record that I did not find any of the Respondent’s witnesses to be particular credible. They were all (as noted above) prone to exaggeration and they all attempted to present hearsay as fact. For those reasons I did not accept much of the evidence which was given. That which was accepted has led me to reach the conclusions recorded above. Was the termination harsh, unjust or unreasonable? I found (above) that Mr Ball’s employment was terminated by Mr Field on 21 March 2003 and noted Mr Jurth’s concession on that point in his closing address. As such, it is necessary to consider whether the termination was harsh, unjust or unreasonable within the meaning of s. 77 of the Industrial Relations Act 1999 (the Act). (a) Was Mr Ball notified of the reason for dismissal? The only apparent reason given to Mr Ball for his dismissal by Mr Field was his failure to inject funds into the Respondent’s operation and his subsequent refusal to accept a significant reduction in his salary package and/or his refusal to resign his employment. It is clear, but was only reluctantly conceded by Mr Field under cross-examination (see page 48), that Mr Ball was not notified his dismissal had anything to do with any issues the Respondent might have had about his conduct, capacity or performance. It is also clear that Mr Field did not have the issue of Mr Ball’s conduct etc. in his mind when he effected Mr Ball’s termination (see page 48). (b)(i) Was the dismissal related to the operational requirements of the Respondent’s undertaking? The Respondent argued it was not required to establish whether or not the restructuring of its operations, which included the applicant’s dismissal and/or downgrading of his position, was the only appropriate or possible action. It was submitted the Respondent only needed to establish that a decision to dismiss or downgrade Mr Ball was bona fide and reasonably open to it based upon its operational requirements (Automotive, Metals, Engineering, Printing and Kindred Industrial Union of Employees, Queensland v Inghams Enterprises Pty Ltd (2001) 168 QGIG 198 at 200). It was argued there was nothing capricious in the Respondent’s decision to make the applicant redundant and to offer him an alternative position. In that respect, it was put that Mr Field’s letter dated 19 March 2003 clearly referred to the Respondent’s “great difficulty in paying its creditors” and that it was “against the law to trade while insolvent”. It was submitted the Respondent was entitled to take the action of terminating Mr Ball’s employment as part of its attempts to reduce costs and ensure its viability. In addition, it was highlighted that Mr Ball’s previous position had not been filled, and would not be filled, and that 2 other employees had left the employ of the Respondent – one voluntarily and one through redundancy. The Respondent also generally submitted it had not acted unfairly towards Mr Ball, in all of the circumstances, because it had offered him continued employment, albeit in a downgraded position, notwithstanding its financial circumstances. -- 5 of 7 -- 28 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 January, 2004 With respect to Mr Jurth, Counsel for the Respondent, his submissions have been developed with the benefit of hindsight and he has attempted to fit the circumstances as they have unfolded to the events at the time, rather than looking at what actually happened at the time. Mr Ball’s termination would never have occurred if he had agreed at the meeting on 21 March 2003 to inject additional funds into the Respondent’s operations. Although each of Mr Field and Mr Green might have harboured some concerns about Mr Ball’s overall performance, his relationship with the staff and whether he deserved to be paid the money he was being paid, there was no suggestion they would have presented him with any ultimatums about his future position if he had, for example, agreed to put $50,000 into the business. The ultimatum about Mr Ball’s reduction in salary, or his resignation, only arose after he rejected Mr Field’s initial approaches for more funds. As a consequence, it is an absurdity to suggest that the dismissal related to the operational requirements of the Respondent’s undertaking. That suggestion has only arisen because the Respondent has attempted to directly link the termination to the Respondent’s alleged financial plight. Whilst there might be some remote, or indirect, link between the Respondent’s financial position and the ultimatum presented to Mr Ball, that link is somewhat tenuous and has not been proved. Whilst it was asserted that the Respondent had cash flow problems it is not clear how those problems developed. Material presented in evidence suggested the Respondent made a meagre profit in the year ended 30 June 2002, a profit to 28 February 2003 and was on-target to produce a similar result to 2001/2002 in the financial year ending 30 June 2003. The Respondent certainly did not establish that it was an operational requirement for it to dispense with Mr Ball’s services. (b)(ii) Was the dismissal related to the applicant’s conduct, capacity or performance? The Respondent submitted that the applicant’s misconduct, as set out in the series of allegations recorded above, amounted to a breach of the conditions of the applicant’s contract of employment with the Respondent which went to the essence of the contract. It was further submitted the applicant’s contract of employment with the Respondent contained the implied duty not to commit misconduct (Blythe Chemicals Ltd v Bushnell (1993) 49 CLR 66 at 81). It was thus argued that the facts of this case disclosed that the applicant “had a tendency towards and history of aggressive (at times amounting to assault), disrespectful, uncooperative, neglectful and generally unacceptable behaviour in relation to all aspects of his employment with the respondent”. It was claimed this behaviour amounted to unsatisfactory conduct, capacity and performance within the meaning of the Act and justified the decision to terminate Mr Ball’s employment. Again, with respect to Mr Jurth’s skilful advocacy, he cannot alter the facts. They are clear. As noted above, none of the Respondent’s alleged concerns about Mr Ball’s conduct, capacity or performance were raised with him prior to his termination. Indeed, had Mr Ball agreed to inject funds, as requested by Mr Field on 21 March 2003, the termination would never have taken place. Further, Mr Field made it clear in his evidence that the issue of Mr Ball’s conduct etc. had not featured in his decision to terminate Mr Ball. What the respondent has tried to do, after the event, is to bundle up a whole series of allegations about Mr Ball’s conduct and performance and attempt to use those allegations to support the decision to terminate Mr Ball’s employment in circumstances where the various alleged misbehaviours were tolerated during the period of Mr Ball’s employment and never featured in the decision to terminate. In my view, only events of misbehaviour which were outside the Respondent’s knowledge at the time of termination, but which later came within it’s knowledge, can be used to support any decision to terminate which would have otherwise been without merit (see the comments of McHugh and Gummow JJ in Byrne and Frew v Australian Airlines Ltd 185 CLR 410 at 466-467). Even if I be wrong on that point, there is not enough substance in the various incidents to justify Mr Ball’s termination. Most of them related to relatively infrequent and comparatively minor incidents and taken collectively would not have warranted Mr Ball’s termination without any prior warnings and without any opportunity to rectify his behaviour. In any event, bar one or two comparatively minor items, all of the allegations which the Respondent attempted to rely upon to support the decision to terminate were within its knowledge at the time of the termination. Up until 21 March 2003 the Respondent had not regarded the allegations as being of sufficient importance for it to warn Mr Ball the continuity of his employment was at risk. As a consequence, the same allegations can assume no greater importance after the dismissal. The dismissal had nothing whatsoever to do with the alleged concerns about Mr Ball’s conduct, capacity or performance. Mr Field said as much in his evidence (see page 48). (c)(i) Was Mr Ball warned about the conduct, capacity or performance? If I have not explicitly made it clear by my observations and comments above, I now formally record that I totally reject Mr Field’s evidence that he “warned” or “chastised” Mr Ball about any concerns he may have had about Mr Ball’s conduct, capacity or performance. Mr Field could only point to 2 meetings where he could be said to have formally raised any concerns about Mr Ball’s conduct. These meetings were the ones which followed the abuse incident with the sales representatives and the stairs incident involving Ms Horsburgh. The truth of the matter is that Mr Field only had a few general discussions with Mr Ball where he told him to “tone down” his behaviour or to “cut out the sexual innuendo”, or words to that effect. Indeed, the whole tenor of Mr Field’s evidence suggests that he only held those discussions with Mr Ball because he felt some sort of obligation to do so. The evidence suggests that Mr Field only thought Mr Ball had gone a little over the top in his attempt to be funny and that the female staff, in particular, had misunderstood him. In addition to the two formal meetings and other general discussions mentioned above, Mr Field may have spoken to Mr Ball about his smoking habits, and expressed his frustration if Mr Ball did not answer the telephone, but there were certainly no meetings or performance reviews where Mr Field laid his concerns out, warned Mr Ball that he needed to mend his ways or made it clear to Mr Ball that his employment was, in any way, in jeopardy. As a consequence, I conclude that Mr Ball was never warned that the Respondent had any concerns about his conduct, capacity or performance and he was certainly never warned that if he did not change or moderate his behaviour in some way his employment could be terminated. (c)(ii) Was Mr Ball given the opportunity to respond to the allegations about his conduct, capacity or performance? It is clear from Mr Field’s evidence (see page 48) that Mr Ball was not given a chance at the time of his termination to respond to any allegations the Respondent might have had about his conduct, capacity or performance. This was because such matters were not in Mr Field’s mind at the time of termination. However, because of that the Respondent attempted to rely upon the discussions which had previously been held with Mr Ball (following the incident with the sales representatives and the stairs incident) to argue that he had been given a prior opportunity to respond to the allegations about his conduct before his termination. -- 6 of 7 -- 9 January, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 29 The submission is untenable. Firstly, each of the incidents was in the distant, or relatively distant, past. Secondly, the Respondent had demoted Mr Ball after the first incident and taken no action against him in respect of the second incident. In the absence of any new issue going to Mr Ball’s conduct, the Respondent was not entitled to rely upon incidents and discussions which had occurred in mid-2001 and September 2002, respectively, to justify the termination. The opportunity to rely upon those events had long since passed. For these reasons, I conclude Mr Ball was not given the opportunity to respond to the allegations about his conduct, capacity or performance prior to his termination. (d) Any other matters the Commission considers relevant As noted above, Mr Ball became a director, shareholder and employee of the Respondent in or around December 2000 when his previous business merged with the Respondent. [As a digression I should record that Mr Ball worked for the previous business through a service company and was not an employee. The issue of continuity of employment does not arise.] In mid-2002 he resigned as a director but continued to be a shareholder. Notwithstanding his resignation as a director he apparently continued to receive a similar salary package to the other directors worth about $1,015.30 per week. At the risk of being overly repetitious, it is important to record that Mr Ball’s employment would never have been terminated if he had agreed to inject some additional funds into the business on 21 March 2003. Any alleged concerns the Respondent might have had about his performance, and any alleged operational need which might have required it to review Mr Ball’s position and salary, would have been satisfied, or ignored, had he made the cash injection. That fact alone points to the absolute hypocrasy of the Respondent’s attempted defence of the decision to terminate. In all of the circumstances, and for all of the reasons cited above, I conclude that Mr Ball’s termination on 21 March 2003 was harsh, unjust or unreasonable within the meaning of the legislation. Remedy Mr Reed, Counsel for Mr Ball, submitted that the relationship between the parties had irretrievably broken down and that reinstatement was impracticable. The submission was supported by Mr Jurth. Having witnessed the clear animosity which exists between Mr Field and Mr Ball in particular, as well as between the current employees who gave evidence and Mr Ball, I agree that reinstatement would be impracticable. In those circumstances, I turn to the only other available remedy viz. compensation. After his employment was terminated Mr Ball took immediate steps to try to mitigate his loss. He was partially successful in the sense he found new employment from 14 April 2003 but at a significantly reduced salary of $640.00 per week, the level at which it remained until the beginning of September 2003 when it increased to $660.00 per week. As a result, Mr Ball has suffered a considerable reduction in his weekly income package and all of the indications are that he will continue to suffer a similar level of loss into the future. Mr Reed asked the Commission to award the maximum amount of compensation to Mr Ball available to him pursuant to the provisions of s. 79 of the Act. In this respect, Mr Reed argued that while Mr Ball had only suffered losses up to the time of the trial of approximately $7,900.00, his loss, in the amount of about $350.00 per week, would be ongoing. Mr Reed said there was nothing which prevented the Commission from taking into account the ongoing loss and determining to award the statutory maximum. On the other hand, Mr Jurth generally submitted that Mr Ball’s employment with the Respondent would not have lasted for very long beyond the actual date of termination because the Respondent would have had ample grounds upon which to terminate Mr Ball given the “frequency and severity of the applicant’s misconduct”. In addition, it was argued that the purpose of compensation was to restore the employee as far as practicable to the financial position in which the employee would have been but for the wrongful dismissal. In this regard, it was generally suggested that Mr Ball had substantially mitigated his loss and he should only be compensated for any difference between his previous and current earnings for a limited period of time. After considering the matter most carefully I have decided to award Mr Ball the amount of $12,183.60 (less the monies paid after termination in respect of notice) as compensation for his harsh, unjust and unreasonable dismissal by the Respondent on 21 March 2003. I have arrived at this figure after taking into account two possible approaches to the assessment of compensation which the facts of this case seem to support. Firstly, the Respondent has attempted to argue that Mr Ball was, in effect, redundant because the Respondent’s financial position did not warrant it continuing to employ someone on Mr Ball’s salary package to carry out the duties he was performing. Even if that argument had any merit, Mr Ball would have been entitled to 5 weeks’ notice and 6 weeks’ redundancy pay, a total of 11 weeks under the applicable Termination, Change and Redundancy Policy at the time. This converts to $11,168.30 (11 x the weekly package of $1,015.30). Secondly, had the Respondent wished to terminate someone with Mr Ball’s seniority and background it would, at common law, have had to provide him with reasonable notice or payment in lieu. In the circumstances of the relationship between the parties in this case I assess such reasonable notice at 3 months, or 13 weeks. This is equivalent to $13,198.90 (13 x $1,015.30). It seems to me to be reasonable to take the average of those two alternative approaches and to award Mr Ball the amount decided. Mr Ball was paid 2 weeks’ notice, in an unquantified amount, after his termination. This amount should be deducted from the amount awarded. The Commission orders that the Respondent, Larorb Pty Ltd trading as Sunshine Office Supplies, pay the amount of $12,183.60 (less the monies paid after termination in respect of notice) to the applicant, Allan Thomas Ball, within 22 days of the date of release of this decision. The Commission determines and orders accordingly. A.L. BLOOMFIELD, Deputy President. Hearing Details: 2003 24, 25 September Released: 16 December 2003 Appearances: Mr R. Reed, Counsel, instructed by Mr. B Gray of Macfie Curlewis Spiro, Solicitors, for the Applicant. Mr L. Jurth, Counsel, instructed by Ms S. McNeil of Irish Bentley, Lawyers, for the Respondent. -- 7 of 7 --