Curnow v Professional Body Corporate Management Pty Ltd [2000] QIRC 32 (2000) 163 QGIG 610

610 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 28 April, 2000 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 74 – application for reinstatement Susan Jane Curnow AND Professional Body Corporate Management Pty Ltd (Case No. B1601 of 1999) COMMISSIONER BLADES 17 April 2000 Dismissal – Duty of fidelity and good faith – Suspicion of leaking of valuable and confidential information to competitor – Duty to provide information to employer – Failure to provide – Dismissal for operational reasons – Loss of business to competitor – Conduct of employee – No warning – Opportunity to defend – Termination reasonable – Application dismissed. DECISION Susan Jane Curnow commenced employment with the respondent company on 2 January 1990. At the time of her dismissal on 15 November 1999, she was six weeks off attaining her pro rata long service leave. The respondent company is owned by Ms Lenore Elliott who operated the business of a Body Corporate Manager which was commenced in 1981 and purchased by her on 1 July 1988. The business was built up from the management of 67 buildings to approximately 180. It is a small operation employing about five staff. At the time of termination, Ms Elliott advised Ms Curnow verbally that her Accountant had been hassling her for a couple of weeks and she “had to let her go”. She further told Ms Curnow she had been “losing too many buildings”. Ms Elliott also handed Ms Curnow a termination letter which said, in part: “You may recall that I asked you to sign a statutory declaration on Tuesday 28 th September 1999. I note that you have not signed it. Although this is a matter of concern, and it led me to taking legal advice, it is not my ultimate concern right now. As of the present time I have lost 15 buildings under my administration and am about to lose couple more. If I do not take immediate and dramatic steps to arrest the decline in my business, I will not have a business. My only choice is to cut overheads, and I have decided that my business is not in a financial position to continue your employment.”. Ms Curnow’s employment was terminated with four weeks pay in lieu of notice together with annual leave payments. The applicant alleges she was dismissed because of the approach of the long service leave entitlement or for retribution by Ms Elliott for the business lost by her to Ms Bender, a friend of the applicants who had set up a business in opposition. Ms Elliott maintained in oral evidence that the applicant was dismissed because of the operational requirements of the business. I did not consider either Ms Curnow or Ms Elliott to be beyond criticism and Ms Elliott particularly, was guilty of embellishment and prevarication. Her recitation of complaints about Ms Curnow’s abrupt telephone manner over the years, first mentioned to anyone in her oral evidence, was more likely to have been recent invention. There were inconsistencies in the evidence of both witnesses and patent unlikelihoods and Ms Curnow’s evidence was in conflict with the evidence of an independent witness. Ms Elliott clearly strongly suspected (and still does) Ms Curnow of leaking valuable and confidential information about her business to her competitor, Ms Naomi Bender who also happened to be a former employee. The following facts are not really in dispute. I am satisfied that Ms Curnow had worked for the company since leaving school. In April/May 1996, Ms Naomi Bender was the office manager and in mid 1999, Ms Elliott entered into negotiations with Ms Bender for Ms Bender to purchase the business. Ms Bender was heir apparent, had been introduced to all Body Corporate Managers and chaired as many meetings as Ms Elliott could arrange. Whether this occurred as a consequence of the proposed sale to Ms Bender or had already been part of her duties is not all that clear. The purchase did not eventuate. Another purchaser became interested and Ms Elliott made arrangements for Ms Bender to be employed by that purchaser. The offer was rejected, Ms Bender resigned and set up a similar business in opposition on the same day. It seems that purchase has also failed to ripen into fruition. Ms Bender then commenced to “poach” Ms Elliott’s customers and to the date of hearing had successfully obtained about 25. All but one lost to the respondent over the period went to Ms Bender. To the date of dismissal, about 15 customers had been lost. Ms Bender and Ms Curnow are friends and Ms Curnow has been employed on a part-time basis with Ms Bender since 9 February. Ms Elliott suspected that Ms Curnow was divulging valuable and confidential information to Ms Bender. To support her suspicion, a Ms Melinda Interlandi, a former employee, was called to give evidence. Ms Interlandi left the employment of the respondent about a week before the hearing to pursue full–time studies. She commenced employment with the respondent in August 1999. Because she answered the telephone, she was aware that Naomi Bender was regularly telephoning the respondent, at least once a day, or every couple of days and sometimes several times on the one day. She asked to speak with Sue Curnow or Cindy Oliver, another friend of both Ms Curnow and Ms Bender. Whilst on these calls, she would observe Ms Curnow go to filing cabinets and retrieve information, read from the file and speak into the telephone. During these telephone calls, Ms Curnow would also enquire as to what agendas were being sent out that day. The emphatic denials by Ms Curnow are not accepted. As Ms Interlandi could be regarded as an independent witness, I accept her evidence on the balance of probabilities. It was submitted that it was an aspect of ordinary everyday life for Ms Curnow to go to the filing cabinet. But the fact that she was speaking on the telephone to Ms Bender at the time is what raises the suspicion. Ms Interlandi said, to her credit, that she was not 100% sure that Ms Curnow revealed “things from the office”. If she had been 100% sure, there would have been no suspicion. It would have been fact. -- 1 of 3 -- 28 April, 2000 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 611 I am also satisfied that Ms Curnow took it upon herself to ring Ms Bender to ensure that a motion to appoint Ms Bender’s business in place of Ms Elliott’s business as the Body Corporate Manager at the next A.G.M. of a body corporate be included on the agenda. This motion had previously been mislaid. Ms Curnow exhibited more than just a passing interest in Ms Bender’s business. The result was that Ms Elliott’s business lost the management of that body corporate. It was submitted that Ms Curnow was effectively working for those committee members who were causing the faxes to be sent. With respect I disagree. She was working for Ms Elliott. Ms Elliott also testified as to a belief that Ms Curnow and Cindy Oliver were spending some of their lunch hours at Naomi’s office at Ashmore. The basis for this belief was attacked but Ms Curnow herself admits enough so that it can be inferred (and I do) that she was having lunch at Ms Bender’s office. For example, Ms Curnow says in her last statement that “The calls would be to tell us that they (i.e. Naomi and Maureen, another former employee) were ordering in lunch (pizza) etc and did they want us to order for them(sic)”. Ms Curnow also says she told Ms Elliott that she had lunch with Naomi and Maureen and would continue to do so as she had known Maureen for nearly 10 years and Naomi for three. Together with this evidence, Ms Elliott was losing business to Ms Bender. In her files, she possessed the names of the Body Corporate committee and Chairmen, the dates of their annual general meetings and other information that would be most useful to someone poaching business. Ms Elliott was aware that instead of her company being reappointed as Body Corporate manager, the business of Ms Bender was being appointed. I am satisfied on the balance of probability that it was reasonable for Ms Elliott to hold a strong suspicion that Ms Curnow was passing confidential information to her friend. In the absence of sufficient proof, Ms Elliott, on 27 September 1999 suspended both Ms Curnow and the other employee Ms Cindy Oliver without pay. Both employees objected and obtained legal advice and soon after Ms Elliott also obtained legal advice. Both employees were reinstated without loss of pay on condition that they signed a statutory declaration saying that they did not give out information and that they would not do so in the future. In Ms Curnow’s application, she stated that she thought the request for the declaration was unfair and intimidatory but that she was prepared to sign the declaration. However, she also requested that Ms Elliott sign a declaration stating that she was satisfied that Ms Curnow and Ms Oliver did not leak information. She said she made the signing of her declaration conditional upon Ms Elliott signing her declaration. Ms Curnow also advanced in her sworn statement the reason that she did not sign the declaration was because “I felt put out and wrong (sic) by the incident and saw no reason why I should be signing bits of paper about something I had nothing to do with in the first place”. I am satisfied that Ms Elliott never produced a document directly to Ms Curnow to sign but one was left on her desk. Reference was made in the submissions to s. 77 of the Industrial Relations Act 1999 and to whether the employee was notified of the reason for the dismissal, whether the dismissal related to the operational requirements or the employee’s conduct, capacity or performance and whether the employee had been warned and given an opportunity to respond. Mr Treherne referred to The Law of Employment 3 rd edition and to the employees duties of fidelity and good faith. He referred to the case of Blyth Chemicals Ltd v. Bushnell (1933) 49 C.L.R. 66. Dixon and McTiernan JJ said: “Conduct which in respect of important matters is incompatible with the fulfilment of an employee’s duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal.”. Had Ms Elliott had the proof of this conduct, she was entitled to summarily dismiss Ms Curnow for breaching that duty of fidelity and good faith. However, she only had a suspicion which in her mind, fell short of the proof she needed. What she did then was to request that a statutory declaration be provided. The comments of Herron J in Associated Dominion Assurance Society Pty Limited v. Andrew and Others 49 S.R. N.S.W. 351 are then apt. At page 357 his Honour said: “Furthermore, a duty lies upon an employee in general terms to give information to his employer such as is within the scope of his employment and which relates to the mutual interest of employer and employee. If an employee is requested at a proper time and in a reasonable manner to state to his employer facts concerning the employee’s own actions performed as an employee, provided that these related to the master’s business, the employee is bound, generally speaking, to make such disclosure.”. As far as I am aware, there is no requirement in law that Ms Elliott should have been required to make more than one demand for that statutory declaration to be signed. Ms Curnow had refused to sign – if not outright, then by insisting upon an unreasonable and unnecessary condition being fulfilled. It was rather audacious and impertinent for Ms Curnow to insist upon a declaration from Ms Elliott. I am satisfied on balance that the failure to provide the declaration in response to a lawful and reasonable direction served to strengthen the suspicion which was already strongly held and which was based on reasonable grounds. Ms Elliott was probably entitled to dismiss for the breach by the employee of the duty of fidelity and good faith. However, whether that is so or not, I am satisfied she was certainly entitled to dismiss the employee for the failure to provide the reassurance that she was entitled to have. Ms Elliott did not dismiss her for that reason. She expressly said in her letter of dismissal, when referring to the failure to sign the declaration, “. . . it is not my ultimate concern right now”. She dismissed her for “operational reasons”. She was losing business, could not afford to lose any more and had to cut overheads and needed to take immediate and dramatic steps. Operational reasons usually means redundancy but the meaning of the phrase is not limited to redundancy. For example, in Quality Bakers of Australia Ltd v. Goulding (1995) 60 IR 327 it was put that the phrase “may include redundancy”. I accept that the reasons advanced by Ms Elliott justified a dismissal for “operational reasons”. When an employee is dismissed for “operational requirements” in circumstances where the employer takes into account the conduct of the employee, the provisions of the Act relating to “conduct, capacity or performance” will apply – Kenefick v. Australian Submarine Corporation Pty Ltd (No 2) (1996) 65 IR 366. Thus in terms of s. 77 of the Industrial Relations Act 1999 the Commission must consider:– “(c) if the dismissal relates to the employee’s conduct, capacity or performance – (i) whether the employee had been warned about the conduct, capacity or performance; or (ii) whether the employee was given an opportunity to respond to the allegation about the conduct, capacity or performance;”. I am satisfied Ms Curnow was provided with reasons, both oral and written, for her dismissal. A failure to afford an employee the opportunity to explain apparent misconduct where there is an innocent explanation available would result in the dismissal of the employee being in breach of the Act. In my view, there was no such failure here. The employee denied any complicity at the time of her suspension and then further refused to provide evidence by way of the declaration. She had ample opportunity to defend the allegations. -- 2 of 3 -- 612 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 28 April, 2000 No warnings were given to Ms Curnow about the conduct but that is not fatal to this dismissal. It has been said that there needs to be flexibility in determining the appropriate process. Jenkinson J said in Gregory v. Philip Morris (1988) 24 IR 397:– “The question whether the termination was unreasonable is, I think, one of fact. This question requires a determination, by reference to moral values and prudential considerations current in the community, of what the tribunal of fact thinks a reasonable employer in the circumstances would have decided to do at the time when the respondent terminated the appellant’s employment. The process is similar to that by which the questions whether a personal injury or damage to a chattel has been caused by a person’s negligence are resolved: what does the tribunal of fact think that a reasonable person placed in the circumstances in which that person was placed would have done?”. The employer strongly suspected a breach of fidelity and good faith. The employee refused to provide a statement in response to a lawful and reasonable direction, a statement which may have assisted in the removal of the suspicion. Although entitled to dismiss at that point, the employer waited almost another two months for reasons that are not explained. She then affected a dismissal for “operational reasons” which were directly connected with the loss of business to the competitor. That she chose the applicant to dismiss because of the applicant’s perceived conduct is understandable. She had given the applicant an opportunity to defend against the suspicions that had a reasonable basis, an opportunity which was not taken up. I am satisfied that the reasons for dismissal were genuinely held and were not just an excuse to avoid the payment of long service leave benefits nor as retribution against Ms Bender. I am satisfied that a reasonable employer placed in this position should not have been expected to have acted otherwise. On the whole of the evidence I am not satisfied on the balance of probabilities that the dismissal was harsh, unjust or unreasonable and the application is dismissed. The Commission orders accordingly. B.J. BLADES, Commissioner. Appearances:– Mr M. Anderson, Counsel, instructed by Mr R. Percival of Baker Johnson Lawyers, for the Applicant. Released: 17 April 2000 Mr M. Treherne, of Mark Treherne & Associates, for the Respondent. -- 3 of 3 --