Castellana v Byrne Ford Pty Ltd [2002] QIRC 77 (2002) 170 QGIG 104

104 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 31 May, 2002 ######################################################################################################################### ## QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 74 – application for reinstatement Leonardo Castellana AND Byrne Ford Pty Ltd (No. B2230 of 2001) COMMISSIONER FISHER 20 May 2002 Repudiation of Contract of Employment – Termination at the initiative of the employer – Misconduct – Demotion – Dismissal not harsh, unjust or unreasonable – Offer of new contract – Costs not granted. DECISION The Events On Wednesday 17 October 2001, Jamie Eyles, an employee of Byrne Ford, Chermside, saw the applicant, Leonardo Castellana, Retail Services Manager of Byrne Ford, Chermside, drive a white Ford Laser up to the fuel bowser on the site and fill something in the boot of the car with petrol. As he did not witness Mr Castellana putting fuel into the petrol tank of the Laser, he thought Mr Castellana’s behaviour to be unusual. After Mr Castellana had driven the car away, Mr Eyles checked the documentation and saw that the fuel had not been booked out to the Laser. In the circumstances Mr Eyles reported the event to his Supervisor who advised him to speak with the newly appointed Services Manager, Martin King. Mr Eyles asked whether Mr Castellana’s behaviour in filling drums with fuel and putting them into a loan car followed usual procedure. Mr King replied that it was not. Mr King said he would follow the matter up. After Mr Eyles left the office, Mr King rang Peter Byrne, the Dealer Principal, to advise of the events and to ask whether this was normal procedure. Mr Byrne said it was not. Mr King then said he would talk to Mr Castellana about the matter. Before speaking to Mr Castellana he found the Laser but could not see the fuel drums. Mr King then contacted Mr Castellana to ask him to come to his office. Mr King was in his third day of employment when this incident occurred. Until that time, Messrs King and Castellana had only spoken once, when Mr Castellana had introduced himself to Mr King on Monday 15 October 2001. There is an argument about the manner and language used by Mr King to query Mr Castellana’s actions but I do not think anything turns on that. Mr Castellana was taken aback about being asked about his actions. In any event Mr Castellana agreed he had put fuel in two plastic drums and placed them in the Laser. Mr Castellana said he was entitled to the fuel. Mr King asked him where that authority came from. Mr Castellana left the office and returned with a handwritten document that was the broad outline of the salary package prepared by the then Fixed Operations Manager, Bill Lee. This document listed salary, incentive and relevantly “car and fuel ($9000.00).”. Mr King told Mr Castellana he would speak to Mr Byrne about the matter. This conversation between Mr King and Mr Castellana lasted no more than five to ten minutes. Mr King advised Mr Byrne of Mr Castellana’s response. They decided to speak to Mr Castellana again. It is fair to say that Mr Byrne was very angry. Mr Castellana was a long serving employee of Byrne Ford – about twenty-one years. Mr Byrne was firmly of the view that Mr Castellana had no entitlement to take fuel in the manner described. He believed that Mr Castellana was provided with a vehicle and unlimited fuel for that vehicle. The vehicle could not be considered in the same way as many other company cars which employees are also able to use for private purposes as this car was to be available to lend to customers as required. In addition, Mr Byrne has final authority over salary packages and was adamant that he had not given approval for Mr Castellana to take fuel for private usage, especially in drums. -- 1 of 4 -- 31 May, 2002 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 105 It was against this background that Mr Byrne and Mr King called Mr Castellana to another meeting. This meeting, though short, was heated. Mr Byrne commenced by accusing Mr Castellana of stealing and suggesting the police be called. He also raised the safety of fuel being stored in drums in a sealed car. Mr Castellana was even more disconcerted than in the meeting with Mr King. He said he had been taking fuel in this manner for about four and a- half years and believed he had an entitlement to it. He repeated that Mr Lee had given him authority and again produced the salary package document. Mr Castellana said he would conform with Mr Byrne’s requirements regarding the fuel entitlement. Mr Byrne and Mr King left the office to discuss what action should be taken. Although Mr King had only been in Byrne Ford’s employ for a few days he told Mr Byrne that he had lost faith in Mr Castellana. Mr Byrne agreed but bearing in mind Mr Castellana’s lengthy period of employment did not wish to dismiss him. They agreed to remove Mr Castellana from the position of Retail Services Manager and direct him to take his accrued annual leave of three weeks while they developed an alternative position for him. This position would be at a lower level. Mr King then asked Mr Castellana to see him where he was advised of the decision. Mr Castellana asked for the decision to be put in writing, which Mr King agreed to do. After receiving the letter Mr Castellana left the premises. That night Mr Castellana sought counselling. After the leave had expired he applied for and was granted Workcover. Mr Castellana was still on Workcover at the time of the hearing. Jurisdictional Issue The primary issue to be determined is whether Mr Castellana was dismissed so as to enliven the dismissal provisions of the Industrial Relations Act 1999 (the Act). The applicant argued that as he had been demoted to a position which attracted a lesser salary and conditions than his position of Retail Services Manager and that this was so substantial and such a fundamental change to his contract of employment that he had been dismissed. In support of this contention the applicant relied on the decision of the Supreme Court of Victoria in Quinn v Jack Chia (Australia) Ltd (1992) 1 VR 567 and the decision of the Full Court of the Industrial Relations Court of South Australia in Russian v Woolworths (SA) Pty Ltd (1995) 64 IR 169. The respondent acknowledged that a termination of employment had occurred but argued this was not at the initiative of the employer. By his own actions, the respondent argued, Mr Castellana repudiated his contract of employment. For these reasons, the dismissal provisions of the Act could not be enlivened. This argument needs to be considered. In Advertiser Newspapers Pty Ltd v Industrial Relations Commission of South Australia and Grivell (1999) 90 IR 211, the Full Court of the Supreme Court of South Australia considered whether a demotion constituted a dismissal under the Industrial and Employees Relations Act 1994 (the S.A. Act) in circumstances where the employee protested the demotion but continued to work for the employer in the job to which he was demoted. The judgement of Bleby J, with whom Doyle C J, and Martin J, agreed, provides a useful discussion about the repudiation of a contract of employment by either an employee or an employer and the circumstances where a repudiation could constitute a termination at the initiative of the employer so as to enliven the dismissal jurisdiction under the S.A. Act. Section 107 of that Act required the Commission to have regard to the Termination of Employment Convention in deciding whether a dismissal was harsh, unjust or unreasonable. At the time of the decision the Act did not however adopt the terminology of the Convention nor did it import any definitions from the Convention. Given that the South Australian dismissal jurisdiction did not take its colour from the ILO Convention, I consider the decision in Advertiser Newspapers to have relevance to dismissals considered under the Industrial Relations Act 1999. The decision in Advertiser Newspapers provides authority for the proposition that where an employer accepts the repudiation by an employee, the employer lawfully terminates the contract of employment. Continued employment cannot survive the termination of the contract. The question remains as to whether the dismissal is harsh, unjust or unreasonable. Where an employer repudiates the contract and this is accepted by the employee there is again a dismissal. The same question about the fairness of the dismissal could then be asked. Even where there is a subsequent reengagement of the employee by the employer under a fresh contract of employment, there will still have been a dismissal by the employer. Applying these principles to the present matter, it is the case that a dismissal at the initiative of the employer has occurred so as to enliven the dismissal jurisdiction of the Commission. Accordingly, the respondent’s jurisdictional issue is dismissed. I shall now proceed to determine whether Mr Castellana’s dismissal was harsh, unjust or unreasonable. Conclusions The matter to be determined is whether the employer had fair and reasonable grounds on which to dismiss Mr Castellana. A decision on that rests with an examination of the evidence about the fuel entitlement and the manner in which it could be taken. I have difficulty with Mr Castellana’s contention that his salary package provided him with an entitlement to take fuel for use in his private vehicle. The document on which Mr Castellana relied simply states “car and fuel ($9000.00)”. He claimed Mr Lee gave him that authority. Mr Lee was not called to give evidence, although on answering a question by the Commission, Mr Castellana said he had not made any attempt to contact Mr Lee, who had retired from Byrne Ford. Mr Castellana was aware of Mr Lee’s address. Mr Lee has first hand knowledge of Mr Castellana’s salary package. His evidence might have easily resolved the point of argument one way or another. The applicant’s case was not assisted by the failure to call an important and available witness. Instead of Mr Lee, Mr Castellana relied on evidence from Rod Evans, who held the position of General Service Manager until the position was declared redundant on 12 October 2001. Mr Castellana reported to Mr Evans who in turn reported to Mr Lee, until his retirement in October 2000. It was the evidence of Mr Evans that he had discussed Mr Castellana’s taking fuel for private use with Mr Lee who had confirmed this was an entitlement for Mr Castellana. Mr Evans allowed this practice to continue after Mr Lee’s retirement. Initially Mr Castellana brought his private vehicle onto the Company premises to fill it with petrol. Mr Evans believed this practice might raise suspicions from other staff particularly as there was a baby seat in the vehicle. He suggested to Mr Castellana that he fill drums with petrol and take these home for use in his private vehicle. The witnesses Evans, Castellana and Byrne each had a different opinion about the quantity of fuel Mr Castellana was entitled to take. Mr Evans said he understood the entitlement to be 50 litres per week, Mr Castellana said it was a tank per week while Mr Byrne said the amount of fuel was unlimited. I find Mr Byrne’s view on the quantity of fuel and the salary package arrangements to be the most probable for the following reasons. As mentioned the vehicle provided to Mr Castellana included private usage but also needed to remain available for use by customers. Mr Byrne said private use would amount to approximately 15% in the case of Mr Castellana. Given the conditions under which the car was provided, the Commission -- 2 of 4 -- 106 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 31 May, 2002 believes that to impose a limit on fuel would be unreasonable. Mr Castellana could not be expected to know how long the vehicle he had been allocated would be lent to a customer or the distances that customer might travel. It does not logically follow in my view, that loss of access to a Company car for a period then allows fuel to be taken for use in Mr Castellana’s private vehicle. If he was without his allocated Company car then an alternative would be made available to him. This was the case on 17 October 2001 when Mr Castellana had the Ford Laser. It was not the case that Mr Castellana would be expected to drive his own vehicle if the company car was on loan elsewhere. The other telling point against Mr Castellana is Mr Byrne’s evidence that at no time did he approve any arrangement as described by Mr Castellana. He authorises every salary package and as he noted, there is no indication on either the document produced by Mr Castellana or the employee’s file that such an arrangement has been approved. Moreover, Mr Byrne said that very few employees were allowed to take fuel for their private vehicles, only those who are rostered “on call” or similar. He was aware of and had given approval to relevant employees in such circumstances. Given this was not a common practice, any and every departure would be known to him. Although reference was made by Mr Castellana to one employee who has allegedly used the Company bowser for private purposes, Mr Byrne had no knowledge of this. This evidence was not contained in the witness statement of Mr Castellana but was given orally. As a result Mr Byrne had no opportunity to make enquiries into the allegation. I also do not believe that it follows that if the entitlement of a tank per week, as alleged by Mr Castellana to be his entitlement, is not used in the Company vehicle, that he is allowed to take the balance in drums for use in the private car. That would require Mr Castellana to keep records of his fuel useage in the Company vehicle each week and there is no evidence to this effect. There was evidence about the records kept by the Company to track petrol usage. When an employee puts fuel into a vehicle, they are required to note on a standard form the vehicle registration, the quantity of fuel, the department to which the fuel was charged and the signature of the person taking the fuel. Any unusual circumstances are also required to be recorded e.g., a person filling a vehicle not usually allocated to them. On 17 October 2001 Mr Castellana recorded the fuel he put into drums against another vehicle, not the allocated Ford Laser or his personal vehicle. When he had filled drums in the past, the fuel was recorded against his work vehicle and not his private vehicle. Given that Mr Byrne believed Mr Castellana’s fuel allocation to be unlimited, his practice of recording the fuel for private use against his work vehicle would not have been detected in the accounting for fuel. But in light of Mr Castellana’s belief that he was entitled to a tank of fuel per week, filling two 20 litre drums for private usage would have gone close to exceeding his understanding of his petrol allocation. In any event, the practice employed by Mr Castellana impeded proper accounting of fuel usage and casts doubt on his evidence. I am not able to be satisfied on the evidence that Mr Castellana stole petrol or that he acted wilfully or in flagrant disregard of his salary package. I am prepared to conclude that Mr Castellana believed he had an entitlement where none in fact existed. I have reached this conclusion on the basis of Mr Castellana’s reaction to being asked about the taking of the fuel in the manner described and his ongoing reaction seems to be attributable to more than just being caught out. Mr Castellana gave evidence that he is on medication for anxiety and insomnia and has lost a considerable amount of weight as a result of the events of 17 October 2001. I am satisfied however that Mr Byrne had a genuine basis to believe that Mr Castellana had breached his employer’s trust. There was no credible evidence to support Mr Castellana’s position at the time and none has emerged subsequently. That Mr Castellana indicated he was prepared to abide by any direction from Mr Byrne about fuel was not sufficient to save his position of Retail Services Manager. The damage had been done. Mr Byrne could not reasonably retain an employee in a management position who had overstretched his fuel entitlement. Moreover, the manner of taking fuel and the way in which it was recorded suggested subterfuge. Although the applicant criticised the duration of the two meetings held on 17 October 2001 it is clear Mr Castellana had the opportunity to respond to the allegations. Moreover, the evidence is clear that a decision about Mr Castellana’s employment future was not made until after the second meeting had concluded. Accordingly, I am satisfied that the Company did not act harshly, unjustly or unreasonably in dismissing Mr Castellana. Much was made by Mr Byrne in his evidence about the unsafe aspect of Mr Castellana storing fuel in drums that were not fuel safe and in a locked vehicle in the sun. Records from the Bureau of Meteorology tendered in evidence do not show that 17 October 2001 was a hot, sunny day. I am prepared to accept there were some sunny patches and it was probably humid. In any event I am not satisfied that the safety issue, while a matter of concern, was a substantive matter raised in the questioning of Mr Castellana or in Mr Byrne’s ultimate decision. This view is supported by the evidence of Mr Byrne and Mr King when discussing Mr Castellana’s fate in light of his actions of taking fuel in drums for private purposes. It is the case the respondent was in breach of s. 12 of the Act in directing Mr Castellana to take annual leave while it determined the position it wished to offer. In the circumstances of this case I am not of the view that Mr Castellana repudiated his contract, or, in the language of s. 83(1)(b) of the Act, that Mr Castellana engaged in misconduct of a type that would make it unreasonable to require the employer to continue the employment during the notice period. The decision of the respondent to offer an alternative position, albeit, a lesser position, supports this view. The more appropriate course would have been to give notice under s. 84 of the Act. Mr Castellana’s injury has prevented him from resuming work with the respondent in any capacity. It is however clear from the dispute conference before the Commission and ultimately filing of an application for reinstatement that Mr Castellana protested and continues to protest his demotion. A fresh contract remains on offer to Mr Castellana. It is for him to determine whether he wishes to accept it. Regardless of Mr Castellana’s decision and in light of my earlier comments regarding the employer’s breach of the Act in directing Mr Castellana to take leave in circumstances where there was no agreement from the employee to do so, it would seem to be appropriate for the period of annual leave taken from 17 October 2001 be re-credited to his leave account. The period in question should be treated as notice and it may be that a further period of notice is due. Costs In the event the Commission found that Mr Castellana was found not to have been unfairly dismissed or that an award of compensation exceeded a specified sum, the respondent made an argument for costs to be awarded against the applicant. The respondent relied on s. 335(1)(b) of the Act. It is the case that the applicant refused an offer of settlement for compensation. The applicant has not received an award of compensation nor indeed any other remedy as a result of these proceedings. I am not disposed to order costs in this case simply because of the nature of the allegation that lay at the heart of this matter. Mr Castellana had been effectively accused of stealing. While a dismissal hearing is not a criminal proceeding and the standard of proof is the balance of probabilities, the Commission concluded that Mr Castellana believed he had an entitlement to fuel but that he was seriously mistaken about that. His taking of the fuel without authority was serious enough for him to be dismissed but alternatively not construed as gross misconduct by his employer such -- 3 of 4 -- 31 May, 2002 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 107 that all chance of employment with the respondent was lost. The applicant believed he needed to have a finding on the allegation made given its nature of impact on him. He was entitled to argue his case in the circumstances. That the final decision went against the applicant is not sufficient in the context of this matter to award costs to the respondent. G.K. FISHER, Commissioner. Released 20 May 2002 Appearances:– Mr R. Steinitz (R.H. Steinitz & Associates Advocacy and Industrial and Advisory Services) for the applicant. Ms K. Prior and Mr P. Watterson (Karen Prior and Associates) and with them Mr P. Byrne on behalf of the respondent -- 4 of 4 --