Duncan v ICI Australia Operations Pty Ltd [1995] QIRC 357 (1995) 150 QGIG 65

64 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE [ I September, 1995 I September, 19951 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 65 ####################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1990 s. 295 - application for reinstatement Dennis Allan Duncan AND ICI Australia Operations Pty Ltd (No. 8861 of 1995) CHIEF INDUSTRJAL COMMISSIONER HALL 155224-5 18 August I 995 Application for Reinstatement - Transfer of Employee - Identity of Employer - Dismissal or Separation by Agreement - No Valid Reason - No Procedural Fairness - Long Serving Employee - Compensation A warded. DECISION Dennis Allan Duncan is a 46 year old married man with dependent children. lie commenced his career as a painter. On or about 1975/76 Mr Duncan commenced employment with what he seems to regard as the ICl!Dulux Group. He was initially employed as a Shop Assistant at a Paint 'n ' Paper Store at Stones Comer, a suburb of the City of Brisbane. Mr Duncan steadily rose through the ranks. By 1988 he was the group 's heavy duty industrial coatings representati ve in th e City of Townsville. At about t11at time the Berger/British Paints Group was taken over by the ICJ/Dulux Group. Some staff rationalisation followed shortly thereafter. In particular, Mr Duncan was offered a redundancy payment. Mr Duncan tells me that he had succeeded in soliciting an offer from another company dealing in paint. He was not cross-examined on that answer and I accept i t. In the event, Mr Duncan d id not receive a redundancy payment and did not accept the offer from the other paint company. His then immediate supervisor (Mr Millisan) drew his attention to a vacancy within the !Cl/Dulux Group in Papua New Guinea. Mr Duncan to ld Mr Miligan that he would "go to Papua New Guinea" and "have a look''. He told Mr Miligan that if he liked what he saw he would accept the position in Papua New Guinea. If he did not like what he saw he would accept the offer from the other paint company. Presumably, Mr Duncan did like what he saw. He did take up the vacancy in Papua New Guinea. I have hitherto utilised the expression ICJ/Dulux Group. I have done so because it seems tolerably clear to me that Mr Duncan has not come to grips with the doctrine of corporate personality. However, he does allege that wh ilst based in Australia he was employed by !Cl Australia Operations Ply Ltd. As is commonly the case in this Commission, the Respondent has not exercised its right to file a Response. I cannot avoid noticing that t11c Respondent has not disputed that ICI Australia Operations Pty Ltd was Mr Duncan 's employer until he moved to Papua New Guinea. The Respondent was plainly in a position to explain the corporate structure of t11e group. It seems to me that in the circumstances I should proceed on the basis that fCI Australia Operations Pty Ltd was the employer of Mr Duncan until such time as he went to Papua New Guinea. At the time when Mr Duncan went to Papua New Guinea two corporations within the group were conducting operations in that country, viz !Cl Dulux Papua New Guinea Pty Ltd and British Paints (PNG) Pty Ltd. The latter corporation had of course come into the group a5 part of the take over to which I have previously referred. Shortly after Mr Duncan commenced working from the offices of IC! Dulux Papua New Guinea Pty Ltd in the city of Lae he received a letter purporting to set forth t11e tenns of his engagement. It is a letter which, I musl confess, I find it more than a little difficult to comprehend. The letter is on the letterhead of !Cl Dulux Papua New Guinea Pty Ltd. It is addressed to Mr Dennis Duncan Cl- ICI Dulux PNG Pty Ltd, PO Box I 105, Lae. If one stops there, the natural conclusion would be that IC! Dulux Papua New Guinea Pty Ltd was the em ployer. One cannot stop there. One must read the entire letter. The first paragraph is in the following tem1s: "This letter fonnal ly confinns your appointment as Sales Manager, British Paints (PNG) Pty Ltd, based in Lae." That passage on il~ face indicates that the employer is British Paints (PNG) Pty Ltd, unless one commences to muse why !Cl Dulux Papua New Guinea Pty Ltd is formally confinning Mr Duncan's appointment as the Sales Manager of British Paint (PNG) Pty Ltd. The next paragraph takes the mailer further. It says: l 6223_ l. DOC -- 1 of 3 -- 66 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE [ 1 September, 1995 "This is an initial appointment to get you into Papua New Guinea by the quickest way which in this case is to use an existing approved position in that company.". The reference to "approved position" is given content by a paragraph which appears subsequently on the first page of the letter. It appears that the appointment of Australian citizens to positions in Papua New Guinea required approval by the PNG Department of Labour and Employment. A willingness to use corporate seals as convenient hosts is plainly apparent. At the bottom of the page the letters DULUX appear inside a box resembling a 1950 surfboard with the ends sawn off. The words which appear next to the box are "Reg. Trademark ICI Australia Operations Pty Ltd". One's natural inclination is to wonder whether the vehicle of convenience policy extended so far that ICI Dulux Papua New Guinea Pty Ltd and British Paints (PNG) Pty Ltd were both discharging functions in relation to Mr Duncan on behalf of ICI Australia Operations Pty Ltd which at all times remained the actual employer. Such an arrangement is by no means unusual. Compare Morgenstern, International Conflicts of Labour Law, 1984 International Labour Organisation Publications at 63, "a triangular relation, with one undertaking normally responsible for the supervision of the work and for carrying out the obligations of the employer at the workplace and a second responsible for tenure of employment, for wages and for Social Security, is now recognised in a number of countries as typical of personnel leasing. Within groups of companies, also, a division of the responsibilities of lhe employer between two or more entities is not uncommon-··". There are other factors which suggest that the true employer remained ICI Australia Operations Pty Ltd. At paragraph 3 of the letter the expression "when we have completed integration of the two companies" appears. The two companies referred to are plainly the two New Guinea companies. The plural pronoun "we'' can only refer (inaccurately) to ICI Australia Operations Pty Ltd. The purported terms of the arrangement refer to the ''company". That reference appears to be to ICI Operations Australia Pty Ltd. The relocation expenses clause encourage Mr Duncan to use ''the company's current contractors" and advised him to obtain names of same from the Personnel Officer in the Brisbane suburb of Rocklea. Of the three entities, ICI Australia Operations Pty. Ltd. was most likely to have Australian contractors. Further. the termination clause contains, inter alia, the following passages: "This is a term appointment to the position described with !Cl Dulux PNG Pty Ltd. The parent company, ICI Australia Ltd has no obligation to accept the employee into the company in Australia. After the original contract period is completed, the employee may wish to put himself forward for a position with a parent company. if such position was available he'll be considered in the light of performance, experience and skills with other candidates at that time:·. If indeed the contracting patties were ICI Dulux Papua New Guinea Pty Ltd and Mr Duncan, one might wonder at the inclusion within the contract of terms going to a relationship between Mr Duncan and ICI Australia Operations Pty Ltd. By way of explanation, the Respondent's sole witness, (Mr Lynch) gives evidence that is the practice for ICI Dulux PNG Pty Ltd to disclose to ICI Australia Operations Pty Ltd the terms upon which local staff of ICI Australia Operations Pty Ltd have been ·'taken into Papua New Guinea''. which I hope is a neutral phrase, and to take advice upon the terms of those contracts from that company. It seems to me that at least as to the matter of repatriation the inference is resistible that ICI Dulux Papua New Guinea Pty Ltd was acting as an agent for ICI Australia Operations Ply Ltd. Extrinsic evidence is admissable to ascertain whether or not a party to an agreement was acting as an agent for another, see Gilberto v Kenny (1983) 48 ALR 620 and also 771e Swan (968] 1 Lloyds LR5. The subjective intentions and assertions of the parties are, of course, irrelevant in determining their relationship, Connelly v Wells (1994) 54 IR 73. There are certain factual matters which indicate that at all times ICI Australia Operations Pty Ltd was the employer. When Mr Duncan moved from Townsville to Lae he was not paid any money in respect of accrued entitlements to Long Service Leave. Given Mr Duncan's length of service (in excess of 10 years) s. l 7(2)(b) of the then the Industrial Conciliation and Arbitration Act 1961 operated to give him an entitlement to a proportionate sum. if indeed his employment was terminated. Mr Lynch, who was Mr Duncan's immediate superior at the time of the alleged dismissal, gave evidence that he was "the country manager for ICI Dulux in Papua New Guinea" and that he had been employed with ICI "for 15 years". As a matter of mathematics the 15 year period has to include Mr Lynch's service in Papua New Guinea. He refers to ICI Australia Operations Pty Ltd a<; "the company" and refers to himself as having been "seconded" to Papua New Guinea. The materials supplied to Mr Duncan relating to his "notional salary, for superannuation and for return homes purposes" was generated within the Melbourne based business services group of ICI Australia Operations Pty Ltd. It is accompanied by a memorandum which refers to Mr Duncan as a "secondee·'. The actual figures appear on a page headed "calculation to detern1ine secondment remuneration". It seems to me that in the circumstances of this case the conclusion that ICI Australia Operations Pty Ltd was the true employer at all material times is inescapable. I accept that Mr Duncan was carrying out activities in Papua New Guinea for ICI Dulux Papua New Guinea Pty Ltd and was under the supervision and control of persons who held various appointments within that corporation. It may well be that if the question of vicarious liability arose IC] Dulux Papua New Guinea Pty Ltd would (rightly) be held to be the employer. It does not follow that ICI Dulux Papua New Guinea Pty Ltd was the employer for the purposes of Division 5 of Part 12 of the Industrial Relations Act 1990. In Denham v Mid/um Employers Mutual Assistance Ltd [1955] 2QB437, at 443-444 Denning LJ (as he then was) said: "Much of the difficulty which surrounds this subject arises out of the 19 century conception that a servant of the general employer may be transferred to a temporary employer so as to become for the time being the servant of the temporary employer. That conception is a very useful device to put liability on the shoulders of the one who should probably bear it, but it does not affect the contract of service itself. No contract of service can be transferred from one employer to another without the servants consent: and this consent is not to be raised by operation of law but only by the real consent in fact of the man, express or implied: see Nokes v Doncaster Amalgamated Colliery Ltd. In none of the transfer cases which have been cited to us has the consent of the man been sought or obtained. The general employer has simply told him to go and do some particular work for the temporary employer and then he is gone. The supposed transfer, when it takes place, is nothing more than the device a very convenient and just device, mark you to put liability onto the temporary employer; ••• it is a device designed to cast liability on the temporary employer. The real basis of the liability is, however, simply this: if a temporary employer has the right to control a manner in which a labourer does his work, so as to be able to tell him the right way or and the wrong way to do it, then he should be responsible when he does it the wrong way as well as in the right way. The right of control carries with the burden of responsibility.". 16223_1.DOC 1 September, 1995] QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 67 See also Savory v Holland and Hannen and Cubitts (Southern) Limited [1964] I WLR 1158 at 1165, "The doctrine of master and servant pro /we vice today seems to me to be relevant only to a question of vicarious liability" per Dip!ock LJ. Before proceeding to the circumstances in which Mr Duncan's employment terminated, it is necessary that I say something further about the terms of his engagement. By the letter to which I have previously referred at some length, Mr Duncan's initial period of appointment was fixed at 2 years "subject to review and continued approval by the PNG Department of Labour and Employment''. It is further asserted "subject to the above and performance. the appointment may be renegotiated on an annual basis thereafter". In fact, from time to time, the contract was extended. It was most recently extended in September 1993. It was extended to 3 August 1995. Clause 17 of a letter dated 10 September 1993 from ICI Dulux Papua New Guinea Pty Ltd, to which I have nut referred on the question of identity of the employer because it seems to me to add nothing, is in the following terms: "On completion of your contract, there may be the opportunity of placement with ICI Australia. However, this is dependent on satisfactory performance during the contract period, and employment opportunities available at the time of termination. In the event of your terminating within the original contract period or within the agreed period of extension the company reserves the right to withhold the costs of return airfares and return of personal effects to the place to which you are returning., •. It is submitted by Mr Bedford who appears for the Respondent that because the introductory paragraph of a letter of I O September 1993 asserts that the letter "confirms the current conditions of employment", clause 17 does not modify the repatriation provisions of the 19 July 1988. I am content to accept that where the parties to a contractual arrangement summarise their understanding of that upon which it is that they have agreed, regard should (must?) be had to the summary in resolving uncertainty and ambiguity. I am not content to accept that the terms of the letter accompanying a contract control the subsequent clauses to the point of prevailing over express words. I accept Mr Bedford's submission that clause 17 makes it plain to Mr Duncan that he is not guaranteed placement with ICI Australia Operations Pty Ltd upon return to Australia. However, clause 17 is part of the contract and in my view is to be construed as a contractual promise to grant Mr Duncan the opportunity of placement with ICI Australia Operation Pty Ltd if an employment opportunity 1s available al the time of termination of the New Guinea engagement and Mr Duncan's performance has been satisfactory during the period of that engagement. In the light of subsequent events, the construction of clause 17 became significant. Mr Lynch went to Papua New Guinea in 1993. Ile took with him knowledge which Mr Duncan did not have and which Mr Duncan did not acquire. Mr Lynch was aware that ICI Australia Operations Pty I ,td had taken the policy decision that henceforth staff seconded to Papua New Guinea would not be granted an extension on the initial ( or current) engagement. While Mr Lynch did not disclose that information to Mr Duncan, he did have discussions with Mr Duncan about Mr Duncan's career prospects. For reasons which it is not necessary here to explore, Mr I ,ynch decided that Mr Duncan would best serve his (Mr Duncan's) interests by "getting out of Papua I\ew Guinea". He told Mr Duncan so. L'ltimately, at a meeting in Wewak on or about later October/Early November 1994 Mr Lynch and Mr Duncan reached an agreement about Mr Duncan's future. Mr Duncan's evidence. as I understand it, is that he agreed to leave his New Guincan employment and to return to Australia by the end of March 1995 subject to his being found a job with ICI Australia Operations Pty Ltd or to his having found a suitable position with another Australian employer. Lengthy cross-examination ultimately induced Mr Lynch to say that his understanding was that Mr Duncan had agreed to leave his New Guinea employment and to return to Australia if found a job with ICI Australia Operations Pty Ltd, or if he (Mr Duncan) found himself a suitable position with another employer in Australia, and that he (Mr Lynch) agreed that if Mr Duncan did find a suitable position with another Australian employer he would be released early from his employment in order to take up the position. Mr Lynch says that the discussion did not touch upon what would happen if ICI Australia Operations Pty Ltd did not find a position for Mr Duncan and Mr Duncan did not find one for himself. There was of course no reason for the parties to enter into an agreement upon that matter. There is no lacuna. If Mr Duncan failed to find alternative employment and ICI Australia Operations Pty Ltd was unable to find Mr Duncan a position, the agreement entered into in September 1993 would simply run its course and come to an end on 3 August I 995. In fact ICI Australia Operations Pty Ltd did not find a position for Mr Duncan. In fact Mr Duncan did not find employment with an alternative employer. In fact Mr Duncan's employment came to an end on I O April 1995. What substantially occurred, or so it seems to me, is that the Respondent wrongly asserted that the agreement was that Mr Duncan would leave at the end of March in any event, and insisted upon performance of that agreement. The Respondent shored up its position, once again wrongly in my view, by asserting a contractual agreement that Mr Duncan had no right to placement with ICI Australia Operations Pty Ltd in any circumstances. In the end Mr Duncan's resistance was overcome. He left Papua New Guinea. If the purpose of the Respondent's conduct was to lay a basis for an argument that the engagement came to an end by mutual agreement and that there was no dismissal within the meaning of Division 5 of Part 12 of Industrial Relations Act 1990, the Respondent did not achieve its object. No particular terms of art are required to indicate notice of termination of employment Walnsley v Ferguson Ltd [1989] IRLR 112 at 114. It was plain that Mr Duncan did not wish to leave his employment and depart from New Guinea and that the Respondent was insisting that he do so. In any event by a letter from the Group General Manager (Mr Walker) dated 24 January 1995 - and I might add posted from Victoria - Mr Duncan was informed that the Respondent ''after discussions with Mr Brian Lynch, has agreed that you finish your employment with ICI Dulux PNG Pty Ltd effective from 31 March 1995. Should you require any assistance in tem1s of time off to job search, I am sure Brian will be helpful" There was no valid reason for dismissal. There is evidence of some dissatisfaction by Mr Lynch and by previous supervisors with Mr Duncan's ability to organise and to plan. Whether there was any factual basis for the dissatisfaction the evidence has not enabled me to say. But that dissatisfaction is irrelevant. The evidence was that because of that dissatisfaction Mr Duncan was denied promotion. There is no evidence that the short-comings (if there were any) were thought by anyone to justify dismissal. Indeed, if they had been thought to justify dismissal. one wonders why so much effort was put into securing Mr Duncan's "agreement" to leave and to insisting upon performance of the ·'agreement". Further. although the short- comings were put to Mr Duncan, they were always put to him as a reason for his failure to advance. At no time was it brought home to Mr Duncan that the short-comings (if there were any) placed his employment in peril. There is a dear denial of the opportunity to defend vested by s.292( l) compare Johns v Gunns Ltd. unreported, No. TI-J48R of 1994, 18.5.95, at 26 per Northrop J. It is unnecessary for the purpose of this case to examine whether non- compliance with s. 292(1) will always breach 291(2)(a). In this case the Respondent drew the Applicant into an agreement by which he gave much and received little, misrepresented the effect of the agreement and earlier contractual arrangements and by force of will 16223 _ 1.DOC -- 2 of 3 -- 68 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE [1 September, 1995 drove the Applicant from his place. The d ismissal was unjus t. No reasons may be valid. s. 291 (2)(a). The remedy of reinstatement here is quite impracticable. A reinstatement order puts the employee in the same position as the employee would have been in if a dismissal had not occurred. Here, that cannot be done. Mr Duncan 's engagement would in any event have expired with the efluxion of time on 3 August 1995. This matter was not called for hearing until 2.15 p. m. on IOAugust 1995. In those circumstances I consider it my duty to order the Respondent to pay to the applicant an amount by way of compensation in order that, so far as the payment of money may do it, the Applicant may be placed in the position which he would have occupied if dismissal had not occurred. If a dismissal had not occurred Mr Duncan's employment would have continued until 3 August 1995. The possibility that he might have been found a job with ICI Australia Operations Pty Ltd or have found himself a position with another employer may be put aside. The Responden t's evidence is that at no time over that period has a position suited to Mr Duncan' s talents been available with IC( Australia Operations Pty Ltd. Driven by unemployment and tlie need to provide for his family, Mr Duncan has been unable to find alternative employment. There is no reason to believe that he would have been any more successful if he had made his enquiries from Papua New Guinea. Further, even if Mr Duncan's employment had continued unt il 3 August 1995 he wou ld, if not repatriated to a pos ition witl1 ICJ Australia Operations Pty Ltd, had had the opportunity to test !CJ Australia Operations Pty. Ltd's conclusion that no su itable position was available in an action for breach of contract. And I must say that on the evidence before me, I have some reservations about the conclusion that no suitable position has been available in the period since l OApril 1995. Mr Duncan. it must be remembered, is a long serving employee. On balance. I consider this to be a case which I am justified in awarding th e Applicant a substantial sum. It is agreed between the parties that J should proceed on the basis that Mr Duncan 's notional salary was $A46,057 plus $525 leave loading. I order that the Respondent ICJ Operations Australia Pty Ltd pay to the Applicant Dennis Alan Duncan the sum of $20,250. Dated this eighteenth day of August, 1995. D.R. HALL. Chief Industrial Commissioner. Appearances:- Mr T. Bradley. of Minter Ellison for the Applicant. Mr R. Bedford, for the Respondent. Operative date: 21 August 1995 Decision - Compensation Awarded Released: 18 August 1995 ####################################################### I September, 1995] QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 69 -- 3 of 3 --