Cree v Evabond Pty Ltd trading as Tiltcorp [1991] QIRC 236 (1991) 137 QGIG 304

304 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE [6 July, 1991 QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1990 - 1991 s. 11.11 - application for reinstatement Gregory Robert Cree AND Evabond Pt}:. Ltd trading as T1ltcorp (No. B82 of 1991) COMMISSIONER DEMPSEY 24 June 1991 Termination of Employment - Dismissal - Reinstatement - Harsh, Unjust or Unfair Dismissal - Manai;ing Director - Appointment as Sales Manager - Financial Position of Companv - Employment Offered Without Pay- Abandonment of Employ- ment - Question as to Whether Employer or Employee - Def- inition - Employer/Employee Relationship - Commission Found Employer/Employee Relationship existed for Certain Period - Dismissal Harsh, Unjust and Unreasonable - Irretrievable Break- down in Relationship - Re-employment Ordered or Compensa- tion to be Paid. DECISION In this matter the applicant Gregory Robert Cree has sought his reinstatement to the position of Sales Manager with the Company Evabond. Mr Cree has claimed that his dismissal was harsh, unfair and unreasonable. During the course of this case the Commission heard evidence from three witnesses, Mr Cree himself, a Mr Gregory Lindores, a Director of Evabond and Mr Tattler the recently appointed Man- ager of Evabond. It is not my intention to traverse in this decision the evidence of the witnesses. However in taking into consideration the evidence and submissions of the advocates I believe that the following summation can illustrate the facts and details I have had to consider. A company under the name of Joinbridge Pty. Ltd. traded under the name ofTiltcorp (later referred to as Tiltcorp I). The company was involved in the business of the manufacture, supply and erection on site of prefabricated concrete building panels. The applicant in this matter was the Manager of that company from I July I 988 until 4 July I 990. At this point, 4 July I 990, Mr Cree was transferred from Joinbridge Pty. Ltd. to another company by the name of Evabond who traded as Tiltcorp (hereafter referred to as Tiltcorp 2). At this same point in time Mr Cree negotiated a new salary package which is claimed to be of a lesser value than that which he enjoyed previously. Minutes of a meeting held on 3 July were tendered and marked exhibit 2. These minutes record those who were present including the applicant. The minutes reveal that Tiltcorp I had encountered serious hard- ships through bad debts and that the purpose of the meeting was to come to an agreement as to the establishment of a new entity, Tiltcorp 2 who would acquire the plant and equipment and take over the operations from Tiltcorp I. The final arrangements were to be as follows. A company would be incorporated, the ownership of which would be as follows:- Russell Woodrow Frank Dobson Gregory Cree (the applicant) Vince Corry 10% 10% 12.5% 12.5% 45% Greg Lindores, Peter Lindores, Edward Lindores and Greg Kelly 55% The Directors of this new entity were Vince Corry, Greg Kelly, Greg Lindores, Peter Lindores and Gregory Robert Cree (the applicant). The minutes also reveal that there would be projected cash shortfalls for Tiltcorp 2 in the initial months of operation. The company operated from 4 July 1990 with Mr Cree as the Manager and Director and this position was maintained until 16 January I 991. On 16 January a meeting of Directors was held. Apologies were received from Messrs Woodrow and Corry. The remainder were present and so was a Mr J. Tattler who on behalf of Mr Kelly put forward a new management proposal which incorporated the fol- lowing. Tiltcorp 2 would be run by a General Manager with senior support in the form of an Operations Manager and a Sales Manager. The Sales Manager position was offered to Mr Cree and he was to be answerable to Mr Tattler who would take over the position of General Manager. His salary was not altered at this stage, however Mr Cree was presented with a document that has been described as a service agreement and required of him certain undertakings. The document contained the following:- "! hereby undertake - to provide my services exclusively to Tiltcorp during period of employment. - not to resign for a minimum of 9 months (from this date). - not to enter into any similar or related business for a period of 12 months subsequent to any cessation of employment. - to comply with instructions of the management of Tiltcorp (or its controlling owners). - to ensure confidentiality of all matters arising from employment by Tiltcorp. - to assign back to the company any employment entitlements should the other items of this undertaking be contravened by me. - that I accept that the consequences of failure to honour this undertaking have no limitations at law or other- wise.". Mr Cree disputed the terms contained in the service agreement and has claimed that he signed the document under duress irre- spective of the fact that the preamble in the document has a contrary statement. Following Mr Cree's protests the last point in the undertakings was deleted. On 17 January 1991 Mr Cree tendered his resignation as a Director of the Company. Under this new arrangement Mr Cree continued to work as Sales Manager until this arrangement was altered on 18 February when he was advised by Mr Tattler that the Company could not afford to pay him any more, however they wished to retain his services for the next three or four weeks to complete some unfinished matters. Mr Catchpole on behalf of Evabond (Tiltcorp 2) suggested in his submissions that the question of dismissal was in some doubt. At page 121 of transcript at lines 34 and 35 he said, "then there is sufficient grounds, if in fact the company did dismiss Mr Cree.". This argument was pursued further where at page 124, lines 7 and 8 it was also said, "Now Mr Cree was not dismissed on the 18th. Let us get that perfectly clear. Nobody in authority dismissed Mr Cree.". In order to support this contention reference to evidence adduced from two witnesses, Mr Cree and Mr Tattler was relied upon. It has been suggested that a significant factor to be considered by the Commission is whether Mr Cree is an Employer or an employee and to this extent reliance has been placed on the definition of "Employer" that can be found in the Industrial Relations Act 1990-1991 at section 2.1:- "2.l Meaning of terms. ( l) In this Act, except where a contrary intention appears - 'employer' means - (a) a person employing, or who usually employs, one or more employees, on behalf of that person or of any other person; (b) the chief executive of a department of govern- ment in relation to employees employed in that department; 6 July, 1991] QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 305 and includes - (c) a person carrying on a calling in which employ- ees are usually employed notwithstanding that for the time being employees are not employed therem; (d) a person who is managing director, manager, secretary or member of the governing body (ho:,v- ever called) of any body corporate, partnership, firm or association of persons; (e) in relation to persons referred to in paragraph (c) of the definition of 'employee', the partnership firm constituted, or claimed to be constituted, be such persons; (f) in relation to proceedings for payment or recov- ery of moneys, a former employer;". Particular reliance has been placed on paragraph (d) in the afore- mentioned terms that relate to the meaning of an Employer. It has been suggested that Mr Cree joined Evabond which _was to trade as Tiltcorp 2 as an Employer, as a shareholder, as a director. An emphasis has also been placed on the financial position of Tiltcorp 2 that was identified in January 1991. It has been estab- lished that in November 1990 Mr Cree reported to the Board of the company a cash shortfall of approximately $9,000. In December a shortfall of approximately $20,000 was reported, then so~e th1rt_y one days later the loss had escalated to $300,000. Fmdm_g this financial position Mr Cree made overtures to call a, mee~mg of directors. The respondent has suggested that Mr Cree s act10ns_ m calling a meeting of the Board of Directors is hardly an act10n taken by an employee. The advocate for the respondent has also submitted that should the Commission find that Mr Cree is an employee he was not diligent in reporting the losses to the company. It should be noted that this particular argument was not pursued heavily, however what was pursued was that should the Commission have a basis for regarding Mr Cree as an employee then 1t should only be from the period 16 January to 18 February or thereabouts. On behalf of the applicant it has been argued that Mr Cree was dismissed and that the dismissal was harsh, unjust and unreasonable. Mr Moloney the advocate for the applicant made a fairly lengthy submission and went into a great deal of detail as 1s reqmred m these matters. The following points were made, no reason for termination was given, the Employer's actions were improper and harsh on the basis that employees entitlements were not paid on termination, there was no offer to the employee to permit or grant him the option of resigning and an alternate offer of settlement to this matter was not considered seriously. It has been argued that Mr Cree's employment as sales manager emanated from his relationship with Joinbridge Pty. Ltd. Th1_s was extended to Evabond trading as Tiltcorp 2 and that the Comm1ss10n should regard Mr Cree as an employee from I July 1_988 as there was a continuation of the terms of his contract and this content10n is supported by virtue of the conduct of the parties_ as the re_mu- nerative terms of his contract of employment were rem forced given that salary and benefits were not altered when he was _requested to sign the document that has been prev10usly _descnbed as a "service agreement" on 16 January. The Comm1ss1on has. also been requested to take into consideration the fact that the_ applicant has never been cautioned or counselled with respect to his conduct or diligence as an employee. It was further argued that the Commission should at the very least conclude that Mr Cree was both an Employer and an employee. To support this contention it was asserted_ that with respect to section 2 I of the Act it should not be read m such a fash10n that the term· "employer'' and "employee" are mutually exclusive. Firstlv consideration should be given to section 11.36 of the Act where the long service leave prescriptions say that:- "Person may be 'employer' and 'employee"', then reference was made to a decision of the Commission reported QGIG 10 November 1962 (Cribb Island Bus Case) which was an appeal decision before the President which determined that the manager of the Cnbb Island Bus Service who was a shareholder was an employee and was therefore entitled to long service leave. Emphasis has been placed on Mr Cree's past performances with all of the organisations that feature in this matter and It 1s contended that he carried out his duties with a significant degree of diligence and was a responsible employee. It is contended that his duty to report the company's financial status was in fact done and that evidence given supports this contention. His requirements to work to the levels of skills he had acquired was also done. There was no breach of duty of care and there was no breach of the duty of fidelity. There were no guidelines available to Mr Cree as a manager and the company had not identified any areas of failure. In fact he had been left to rely on his own knowledge and expertise and this had been confirmed by Mr Lindores and Mr Tattler as they had confidence in Mr Cree's ability. In response to allegations that Mr Cree had created circumstances whereby there was a conflict of interest, his advocate refuted this by claiming that Mr Cree was not and has not been an employee of any other Employer in Tiltup Construction Products. Arguments have also been adva_nced to the extent that should the Commission find that the d1sm1ssal was harsh, unJust and unrea- sonable that there has been a breakdown in the relationship between the parties to the extent that reinstatement is not a reasonable option. However given the circt_1mstances in the matte_r the Com- mission should award the maximum 1t possibly can m terms of compensation. Conclusions. Firstly, I am required to determine whether Mr Cree was in fact dismissed. Secondly, was he an employee or an Employer. Thirdly, if in fact he was dismissed and was an_ employee was the dismissal harsh, unjust and unreasonable and given these c!fcum- stances consideration has got to be given as to whether remstate- ment or re-employment is appropriate relief and the alternative of compensation offered. With respect to the first question I have concluded that the separation of the parties (Mr Cree and Tiltcorp 2) was not vol- untary. This is demonstrated by the fact that Mr Cree had reluc- tantly accepted new arrangements offered on 16 January and _had further protested at or about 18 January that he could not contmue his role as sales manager without some form of support. In response to these protestations the compa~y offered to contmue to supply a vehicle. It was not contested , m fact 1t was substantiated that Mr Cree had been requested to work for no remuner~tion what- soever. The fact that this request was put on the basis that th)S was only to be for the next three or four weeks m my view is irrelevant because what has m fact happened 1s that Mr Cree s contract ~f employment has been altered from a position where on one day he was being paid as normal employees are to the next instance where he is not in receipt of any form of remunerat10n. Given the fact that separation was not voluntary and the remu- nerative package no longer existed I must conclude that for the purposes of the matter that is before the Comm1ss10n that Mr Cree was dismissed. The second matter to be determined is the contention of whether Mr Cree was an Employer or an employee. The applicants relationship with the coml?any foinbridge Pty. Ltd. is uncontested, he was an employee. His relat10nsh1p with that organisation was voluntarily severed and Mr Cree went mto part- nership with a number of people who formed a company that traded as Tiltcorp 2. Within that company Mr Cree was a share- holder he was the manager and was a director. The combination ofthe;e factors leads me to the conclusion that he was an influential individual in that company as he controlled the day to day directions of the company and moreover part1c1pated and had an influence in the policy and directions of the company. I accept Mr Moloney's view that an individual could be an Employer and an employee, however, the degree to which one is to the other and which is the most significant must be considered and in matters such as this needs to be determined. It is my opinion that in these circumstances Mr Cree must be regarded more as an Employer than an employee. That determination cannot apply to the position that existed from I 6 January to I 8 February or thereabouts given that Mr Cree's position with the company changed from the position of director as he resigned from that position on 17 February. It must also be accepted that as he was offered and accepted the position of sales manager from 16 January, that he was an employee from that date and had what has been referred to previously as a service agreement. The content of the service agreement does not impact on the determination that will ultimately be made, however if its contents were to be considered as a factor in determining whether Mr Cree had been treated harshly, unjustly and in an unfair manner, I believe I would have had no option but to find in Mr Cree's favour. -- 1 of 2 -- 306 QUEENSLAND GOVE RNMENT IND USTRIAL GAZETTE Fo r the pu rposes of the matter tha i is before the Commi ssio n and for reasons previously giv en the period of employm ent wi !l be co nsider~d a~ bei ng from i 6 Ja nuary unt il 18 Feb rnary. T he final matter to be determined is whether the di sm issal was harsh, unjust a nd unfa ir. With respect to this matter I have taken into consideration the fact that M r C ree was never cauti one d nor counselled. the fact that he was not fonnall y ad vised of t ermin atio n and not given reasonable not ice, given his status wit h T iitco rp 2. In order 10 de fend its actions the company has sugi;est ed th at the Commissio n should take cognisance of the financial position of the' com pan y at J anuary !9 91. The on ly mailer referred to by the compa n y that is questi on able is the cash shortfalls found in January I 99 1 a nd while M r Cree mus t accep1 some re spo nsibility for this so must his fe llow di rectors. I ha ve al.so taken into cons ideration the minu tes o f the rneciing held o n Tu esda y 3 July 1990 and given particular co nside rat io n to paragraph 2(c) where the following is stated:- "2(c) Th ere are project ed cash shortfa!is for Til!corp 2 in the iniiial months of operation . ". From the ti me the companv was estab li shed through to the time of Mr Cree's dismissal ;i period of eight months has e lapsed. Th is in my opinion falls with in the ini tial monihs of oix;ration and consequently it follows that li11Ie weight could be given to the cash short fa lls if indeed th is was a reason for dismi ssal. Given that l have previouslv determined that the peri od of em ploy- men t shou ld he regarded trom 16 Januarv 199 I to l 8 Feb ruary 199 l the item suggested abov e wou ld ha,:c to be disregarded in an y event. I ha ve duly considered th e subm issions of the applicant with respect iO the Emp loyer, employee relationship together w ii h the provisions o f section l ! . l l ( 2) (c) of the Act an d havi ng furth(' r considered all of the fa ct ors rele,an t to the period of cmp ioyrncnt I d o find that the d1smis5al was harsh. unfair and unjust and t hat the intervention of th is Commiss ion is a ppro pri ate. I-la ving cons idered ail the rdevan t circums1ance5 and a ft er consid- ering whether to make an O rder under parag raph (a) or (b) of se, tion I l. l 1(2) of the Ac t I consid er th at reinsta 1~11wn t o, r~- cmp loyment of ttic appiicam by the Empl oyer in ar,v p ositio n wou ld not be approp ri ate relief primarily du e to dift, cu lties in re- es tabl ishing ih e Employer. employee relatio nship . Ho ,":vcr. I am satisfied that pu rsuant to s~c tion l I. l l (2)(<: ) o f the An that I ,hou!r.l make an Order that the Em ployer e ither re-em plo, the ap r,lica n\ in his former position as fro m 1 Jul y l 99 ! or alle rnat ivcly pay to th,: ap plicant co mpensation a , assessed by me. In assess111g compensation l am bo und hy the pro vi sions o f 1h~ Industrial Rl'l111ions A<'I !990 - l99i and as previousl v d ctcrm inc:d the period of em pioymem o f Mr Cree should be con·sidered from l 6 January 19 9 l to 18 F~bruary I 991. Wher<· an emp loyri.' has less than one yea rs service th e maxim urn a mount of co mpens at io n is one months wages. Th erefore p ur~uant to the provisions of sectio n I l . 1 l(2'l(r.:} I order that ihe re~pondenl either re-e mplo y \1r ('rec in hi s fo rm er position from I fo iy 199 i or pay the ,um of $ i .250.00. I further d irect that >.h e rcsp vn de!ll Empl oyer notify Mr Cree and !he Registrar in writ irig on or before 28 June i99! of the election made. Jf an cle ct1 011 is mad e to pay compensatio n th t>n such co mpensation sha l! he paid on or before 1 July l 99 l. Order a,cordingl1. H. DEMPSEY. Co rnrni,sir;ner Mr L Mo loney of Livingswne and Associat es fo r the Applicant. Mr L. Ca khiX)le with h1,n l\1r V. Dobmsor. for Evabond P:y. Llct trading as Tii.eorp. Opera ti veda tr::I foiy 1991 De,ision •- Reinstateme nt [6 July, 1991 6 July, I 99 I] QUEENSLAND GOVERN.t\·1ENT TNDUSTRIAL GAZETT E 307 -- 2 of 2 --