Bagnall v Gold Coast Montessori House [1996] QIRC 716 (1996) 153 QGIG 631

r 630 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 8 November, 1996 8 November, I 996 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 631 ########################################################## QUEENSLAN D IND USTR IAL REL ATIONS COMMISSION lnd,mrial Reluti,m.< Act 1990 s. 295 - app li ca tion for reins tat ement Linley Bagnall AND Gold Coast Montessori House (No. B896 of /996) COMM ISSIONER BLOOMF I ELD 25 October 1996 Remstatemcnt - Dismissal - Termination of Employmem - D irector of Child Care Cen tre - Fixed tcm1 of employment(l 4/8/95 to 6/9/96) - Applicant to rep lace owner whilst owner overseas - Let1er to applicant indicating extension uniil end of 1996 - Financial difficult ies of Cemre - Respondent claims situation ·•dire" - Owner stud ying in Italy - Ow ner abandoned studies to return to Cent re a, Director - Applicant given one month·s notice of termination - Applic:un paid add itional four week·s pay - Applicant given .. very good reference•· - Respo ndent claimed dismissal because of financial position of Centre - Art>itrated Maner - Dismissal was nol for conduct or performance - Dismissal was for operat i onal requirements of cmployei-' s undenaking, establishmen t or service - Implied tern1 in contract that engage ment for duration of owner's absence in I ta ly - Dismissal was for valid reason within meaning of s. 291( I )( b)( i i) of Act - Termination not harsh. unjust or unreasonable - Applica11on dismisse.d . DECISI ON This is an appl ication by t he Australian Liquor, Hospitality :m d Miscellaneous W orkers Unio n, Queensland Branch. Union of Employees (ALHMWU) on behalf of Ms Linley Bagnall which seeks relief regarding her dismi ssa l from her position of Direcwr with the Gold Coast Montessori House by one month's notice which expired on 24 April 1996. Background Gold Coa,t Monte..sori H ouse (Montessori) is a fully licensed long day care cent re providing individual educational programs and care for children up to 5 years of age . II is a partnership between a Ms Nelson and a Ms Beverley. In May 1995 they agreed that Ms Nelson should pursue fun her s1ud1es, at the Montessori IMt1tute in Italy, 10 enable them 10 en han ce the educational programs ava ilable at Montessori. Th ey advenised for a replacement Director 10 cover this absenc,e. Ms Bagnall was referred to the joint ow ners by a parent of one of the stu dents in ear ly June 1995 and was interviewed along wit h other applicants. An emp loym en t offer wa, subsequently made verbally by Ms Julia Nelson an d co nfumed by letter on I August 199.5. The lener of offer stnted that the tenn of employment would be from 14 August 1995 until 6 Sep tember 19 96. Ms Beverley. the other pan owner, resigned her position a, Assistant Director/Group Leader :md left Montessori in mid- Decembe r. Ms Nelson borrowed money and returned to Australia to inlerview for the Group Leader's position vacated by her panner and a replacement wa, appoimed on 29 January I 996. However, the primilfy reason for her re turn wa., tha t she was con cerned about losing her partner from the ~hool and the affoc1 that Ihai would have on the parent, of children at Montessori. She fe ll 1ha1 she needed to deal with the parents' questions. about her partner's departure. directly and 10 show that she had a responsibili ty for the school. She also fell that she needed to demonstrate suppon and confidence in Ms Bagnall and shield Ms Bagnall from any negative reaction from parents about her co- owncr' s departure. Ms Nelson said that during the co urse of her visit she wa, infonned by Ms Bagnall th at she h ad applied for several positions over the Christmas recess because she fe lt unable to cope with the posi tion and found the role tiring. I acce pt th is evidence. D uring the course of this discussion the hours that Ms Bagnall was working were discussed and Ms Nelson indi cated that it was Ms Bagnall" s responsibility to staff the premises to maintain t.he appropria te stuff/st ud ent ratios. In the context of the discussion I take this to mean that only the mi nimum requirements needed 10 be met and that there wa, no need for Ms Bagnall to be present at Montessori when the appropriate teaching ratios were eviden t. Ms Nelson also said that she was told by Ms Bagnal l after the discuss ion and before her return 10 Italy t hat she (Ms Bagnall) felt quite cle:u· about her role and responsibilit ies and I haI she felt happy about the hours t hat she wou ld now be working I also accept this evidence. During the cou rse of February Ms Nelson had a number of conversations with Ms Manin. Monte,sori 's bookkeeper. about a drop in enrol me nts and financial difficulties w hich were stan ing to become apparen t. However. on 19 March Ms Nelson faxed Ms Bagnall a, a conseq uence of questions being asked of Ms Manin, by Ms Bagnall, about he r future role at Montessori. In the fax Ms Nel son ind icated that she p lam1cd 10 exp:u1d the schoul 10 accommodate 6 to 9 year olds and that she would like Ms Bagnall 10 stay a, th e Director at least until the end of the year. N a re.suit of two faxes during late February from Ms Manin. and several subsequent conver sati ons with her on the telephone. Ms Nelson became co nvinced 1hnc the financial position of the school had become "d ire". Consequently, on 24 March (Austral ian time) she made a decision to abandon her stud ies and 10 return to Australia in an attempt 10 increase enrolments and thereby ens ure the viability of the school. In her evidence Ms Nelson told me that she had decided that if she waited until the completion of her course at the Montessori Institu te in August and th en returned she was co ncerned t hat she would not have a business to retum to. The decision to return was apparently not taken lightly . Resignation from the course before i t, completion meam tha t there was no refund of fees. funhe r, anyone resigning was not permitted to re-enter the program at any lime in the future. Stmight after the decision wa, made Ms Nelson phoned Ms Manm 10 infom1 her. Immediately after that - early in the morning on 24 Milic h - she phoned l'vl s Bagnall to advise her of the decision and to indicate that she could no longer offer continued employment. Ms Nelson explained to Ms Bagnall that t he financi al position wa, dire and that unless this step was taken the cen tre would close . Ms Bagnall was given one month's noti ce of her termination. Unbeknownst to Ms Nelson a Mr Poole of the A LHMW U had met with Ms Manin on 2 1 March about the hours, and wages . of Ms Bagnall. Mr Poo le had been invited to attend Montessori by Ms Man in after Ms Bagnall complained about her hours and wages . Ms Bagnall said that she ba...:d her complaint on information supplied by Mr Poole. During the discussion between Ms Martin and M r Poole he explained 1ha1 Ms Bagnall wa, being un derpaid a< a Director and that she was also working more hours than she was required IO. He also said th at an amount of bac k pay was owing 10 Ms Bagnall. A fter making the necessary arrangements 10 settle her affairs in Italy and 10 arrange nights Ms Nel son returned to Australia on I 9 April 1996. She immediately returned to the centre and establi shed that the financial position wa, indeed dire. 21576_1.DOC -- 1 of 2 -- 632 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 8 November, 1996 Ms Bagnall cea.o;ed employment on 24 April 1996 in accordance with her notice and wa.~ given what Ms Nel son described as "a very good reference" . On th at same day Ms Bagnall is al leged to have made approaches about some financial compensation which M s Nelson understood 10 relate 10 the 1emiinat i on. Ms Nelson said that she would discu ss the claim with her accountant. Ms Bagnall stated that the claim also related to underpaid wages. On this point I accept the evidence of Ms Nelson over that of Ms Bagnall, whom th e evidence shows had a tendency not to be "up front" in her intentions. A discus~ion also occurred oo 26 April between Ms Nel son and Mr Poole with Mr Poole advancing a "wit hout prejudice·• offer to senle the unfair dismissal claim. He !'l!YS that he also canvassed the underpayment maner although Ms Nelson thought that the discussion only related to compensation for the dismis!'lll. After di scussions with her accountant, Ms Nelson agreed to make available four weeks of "termination pay" paid in instalmenl~ over each of the next four weeks . This was unacceptable to Ms Bagnall and she instructed that an unfair dismissal application be lodged. The Evidence Mr Reed, of the ALHMWU, who represented Ms Bagnall. called the ap pli cant and Mr Poole a.~ witnesses. Their ev i dence went 10 the issues generally demibed above . The respondent called three witnesses , namely Mr Ludowici, Ms Nelson and Ms Martin. Mr Lucl owici's evidence went to confimiing that Ms Bagnall had infomlCd him on 25 March of her tennination and 1he reasons for it (v iz. financial). Ms Nelson' s evidence generally went to confirming what I have se t out above as background. The evidence of Ms Martin was two-fold. It wa.s, firstly, 10 confimi that ce rtain material had been sent to Ms Nelson and. in particular, the dmes upon which she was apprised of particular infonnation. Secondly, her evidence wa.s designed to confinn that the financial position of the employer was "dire". Unfortunately, Ms Martin's evidence on the second aspect w~ somewhat confusing and necess i tated the production of add itional material which was designed to clarify particular entries which appeared in the profit and loss statements originally produced. However, because Ms Martin's knowledge of certain correcting journal entries was scant the Commission ha.s been required to draw its ow n conclusions from the material presented. I stres;; that the conclusions drawn have been based upon the original material within the knowledge of Ms Martin - and consequently by relay through her to Ms Nelson - at the time that the decision to tem1ina1e Ms Bagnall wa.s made on or about 24 March I 996. I have not considered the amended profit and loss statements. From my consideration of the evidence I have detemiined a~ follows:- • that Ms Nelson was broadly apprised, by Ms Martin. of the progressively deteriorating financial pos ition of Montes sori during the course of February and March 1996. that she concluded on 23 March, after some deliberation, that the position wa.s dire and that she needed to return 10 Australia. • that at the time that she made such decision to return to Australia and to tem1inate Ms Bagnall she was unaware that Ms Martin and Mr Poole had spo ken about underpayment of wages on 21 March. In this regard I acce pt the evidence of both Ms Nelson and Ms Martin that Ms Nelson was first apprised of this issue in a fax on 28 March. • that Ms Nelson infonned Ms Bagnall on 24 March (Australian time) that she wa.s returning to Australia because of the financial position of Montessori and that, a, a consequence, Ms Bagn al l was being given o ne month's notice. that in detemiining 10 pay an additional four week's payment t0 Ms Bagnall, Ms Nelson believed that she was paying compensation in respect of the tennination of Ms Bagnall's employment. • that the position of Montessori was inde.ed dire at the time that Ms Nelson made a decision to return to Australia in that the inwme being generated was insufficient to meet total outgoings. In this regard 1accept that, although the profit and loss statements were far from accurate, Ms Martin had the ability 10 determine the broad financi al position based upon income, actual payments. the position at the bank and the accumulating unpaid invoices. • that urgent steps were required to address the financial position if Montessori wa.s to remain viable. • that since her return Ms Nelson has drawn no money from the business notwithstan ding that she has resumed her position as Director. Submissions The submissions of Ms Nelson, who repre.sented the responden t employer, were very brief. In them Ms Nelson submitted, inter ulia, that "Linley Bagnall was dismissed for a lawful and va li d reason because of the financial position of the business. ". Further, she also submitted that her evidence had demonstrated that the bu siness did not have enough income to pay its bills and that she had treated Ms Bagnall fairly and had been totally hone.~ t w i1h her at all times. Mr Reed submitted that the onus rested with the respondent to show that the di smissal wa.s for a valid rea.son contained within the Act. It was sug gested that no issue had been raised about conduct or perfonnance and that the respondent. by its opening remarks. wa~ pre.~umed to have put that the tennination wa.s ba,ecl upon operational requirements. Mr Reed's submissions seemed to accept that the termination was for that rea.~on and he accepted that the o nus rested with the applicant to show that the dismissal "based on th ose alleged operational requirements" was hars h, unjust or unreasonable. Mr Reed submitted that the question in this case was "Was Ms Nelson being fair to Ms Bagnall when she tenninated her?". It wa~ submitted th at she was not. Thi s wa.s said to be because of a number of reasons :- • Ms Bagnall was engaged on a fixed tcmi contract commencing 14 August 1995 and terminating on 6 September 1996. • Ms Bagnall wa.s told by fox on 19 March th at Ms Nelson would like her to stay a.s the Director at lea.~t until the end of the year. • Ms Bagnal l' s serv ices concluded on 24 April and she was paid (only) up until 24 May I 996. • Ms Nel son dtd not consider any alternative other than dismissal. • Although Ms Bagnall, the only pennanent employee. wa.s tenninated a number of casual employee., continued to be engaged. Ms Bagnall could have occupied one of the positions being perfom1ed by the ca~ual employees. Finally, it was argued that the business was run poorly, from an accounting and economic perspective. and that had Ms Nelson been better advised she may have taken other decisions - including deciding to remain in Australia when she visited the centre in January. It wa~ submitted that Ms Bagnall should not pay the price for such bad managemen t and bad decisions. Decision There is no suggestion whatsoever that Ms Bagnall was tenninated because of any concerns about her conduct, capacity or perfomiance. The excellent reference provided by M s Nelson to Ms Bagnall makes this plain . The sole ground advanced for the termination was that the decision was taken for financial reasons and, on that basis, the termination was based on lhe operational requiremenls of the employer's undertaking, establishment or service. After considering the evidence presented I accept that the tennination was on that ground and that the decision to temiinate Ms Bagnall was for a va lid reason within the meaning of s. 291(1 )( b )( ii) of 1he lndusrriul Relmions Act 1990. The question arises, however, whether " having regard to the . . operational req uirements, the disrrli ssal (was) harsh, unjust or unreasonable'' (s. 291 (2)(a)). 8 November, 1996 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 633 After considering all of the circumstances of the ca.se ,nost carefully I have ultimately reached the conclusion that the temiinalion was not harsh, unjust or unreasonable. My reasons for this are as follows:- (!) Ms Bagnall was engaged for the sole purpose of "filling in" for Ms Nelson during the period that she wa.s to be studying at the Montessori Institute in Italy. (2 ) It is reasonable to impl y a term into the contract that the continuation of the contract depended upon Ms Nelson remaining in Italy ( BP Refinery (Western Port) Pty Lid v Hustings Shire Counc il (1977) 52 AUR 20). Indeed, it is a classic ca.se of how an "officious bystander" would have expected the panics 10 agree had they discus.scd what would happen in given circumstances when they had reached their original agreement in August 1995 (see BP R~finery at 27, 28 and Codelfu Constructions Pry Lrd v State Rail Authority 11/'NSW (1982) 149 CLR 337 at 374. 405). ( J) That although Ms Nelson did indicate to Ms Bagnall on 19 March that she would like her to stay until the end of the year such view should be seen in the context that Ms Nelson was responding to a request from Ms Bagnall along the lines "What plans do you have for the school and where do I fit in?". The evi dence does not show that Ms Nelson considered her response to Ms Bagnall's enqmry in any other li ght. (4) Ms Bagnall was given one month's notice and an additional four week 's pay following her departure. (5) At no time during the month of notice did Ms Bagnall challenge her tennination or make any approaches herself, or through Mr Poole, to discuss possible mitigation. In other words there was accept.ance, or implied acceptance , of the termination and the rea.sons which underpinned it. Further, the evidence discloses that Ms Bagnall did not contact the ALHMWU about her termination until a few days prior to the expiry of her notice. These factors, in my view, provide reinforcement for the position recorded in (2) above. (6) In direct discussions with Ms Nelson on 24 April Ms Bagnall did not canva.~ any alternative arra.ngemenrs suc h as replacing one of the casual employees but instead sought to reach some fonn of settlement in respect of her separation. ( 7) Mr Poole acted in a similar way in his di scussions with Ms Nelson on 26 April 1996. Having reached the conclusion, taking all circum5tances into account (sec Byrne and Frew v Au .Hraliun Airlines Ltd 69 ALJR 797 at 82lr-7 per McHugh and Gumrnow JJ), that the termination was not harsh. unjust or unreasonable I dismiss the application. In deciding that the termination was 1101 harsh, unjust or unreasonable I have considered the impact of the decision on the applicant as well but have decided, in the overall circumstances of the case, that whil st there was clearly some harsh effect on her, such effect is not conclusive in detemiining whether, viewed objectively, the termination was harsh, unjust or unreasonable (see B11.<tik (Australia) Pry Lid v Gorgevski [No. I] ( 1992) 36 FCR 20 at 28). I think it also worthwhile to record that had I reached a different conclusion and found that the terrnination was harsh, unjust or unreasonable I would, in all of the circumstances, have declined 10 exercise any discretion in favour of the applicant pursuaJlt to s. 297 of the /ndu.miul Relutions Act 1990 This would have been because of: the ba.~is upon which the engagement was made in the first instance (i.e. to replace Ms Nel so n); the period of noti ce given: the payment of an additional four weeks in lieu: and the fact that the applicant accepted her termination, although upset, without dis.~nl. Such acceptance. accompanied by a belated request for additional recompense on the last day, gave the respondent no opportu nity to discuss mitigation with the applicant. Indeed, there was no suggestion that Ms Bagnall's continued employment was ever raised with Ms Nelson. Rather, the emphasis seemed to be for monetary compensation because of the alleged breach of comract and because it seemed to have been perceived that the dismissal was related to the underpayment of wages claim. ( In this regard l have decided (above) that Ms Nelson was unaware of this claim when she made the decision to tenninate Ms Bagnall.) All of these factors, taken together. would have ca used me not to exercise my discretion to order reinstateme nt of the applicant or the payment of additional compensation. The Commission det ennines and orders accordingly. A.L. BLOOMFIELD, Commissioner. Appearam: es:- Mr R. Reed , of the Australian Liquor, Hospitality and M isce llaneous Workers Union, Queensland Branch. Union of Employees, for the applicant Ms L . Bagnall. Ms J. Nelson for the respondent Gold Coast Montessori House . Operative Date: N/A Decision - Reinstatement Released: 25 October 1996 ########################################################## 2 I5 76_1.DOC n j -- 2 of 2 --