Edwards v Castle Bay Projects Sales and Marketing Pty Ltd [2004] QIRC 194 (2004) 177 QGIG 681

26 November, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 681 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 74 – application for reinstatement Gail Edith Edwards AND Castle Bay Projects Sales and Marketing Pty Ltd (No. B734 of 2004) DEPUTY PRESIDENT BLOOMFIELD 17 November 2004 Application for reinstatement – No appearance by respondent – Dismissal found to be harsh, unjust and unreasonable – Reinstatement impracticable – Compensation awarded in respect of unfair dismissal – Application for costs – Respondent’s behaviour found to have caused the applicant to incur costs – Costs awarded with respect to the respondent’s unreasonable acts or omissions in connection with the conduct of the application – Compensation of $22,750 and costs of $14,193.74 to be paid within 22 days. DECISION This decision relates to an application, pursuant to s. 74 of the Industrial Relations Act 1999 (the Act), lodged by Ms Gail Edith Edwards. Ms Edwards was employed as a Customer Relationship Manager by Castle Bay Projects Sales and Marketing Pty Ltd (ACN 099 109 305) (Castle Bay) between 18 August 2003 and 19 April 2004. The applicant’s duties were to sell and promote several building development projects that the respondent had either completed or was in the process of building and completing. She enjoyed a salary of $50,000 per annum (inclusive of superannuation and annual leave loading) with additional remuneration by way of commission on sales. Although witness statements were prepared and filed on behalf of the respondent a week prior to the hearing, three days later, on 14 October 2004, the solicitor engaged by the respondent wrote to the Commission in the following terms: “… On Tuesday 12 October 2004, and after various discussions with various company representatives, I was given certain instructions with which I could not, in all conscience, comply. … As a result, I indicated to the company it had left me in a position where I had no alternative other than to withdraw from the matter. … I therefore formally seek leave to withdraw from the matter.”. The solicitor lodged a formal Notice of Withdrawal of Appointment of Lawyer or Agent (Form 23) under Rule 103 on the following day. When the matter came on for hearing on 18 October 2004 there was no attendance by the respondent. On my instructions, my Associate attempted to make contact with the respondent to ascertain its intentions. After unsuccessfully attempting to contact several of Castle Bay’s directors, on whose behalf witness statements had been filed, my Associate spoke to Mr Andrew Wayne Cook, Castle Bay’s Corporate Communications Manager. Mr Cook informed my Associate that he would check what the respondent’s intentions were regarding the proceedings and would telephone her back in a few minutes. When he called back a few moments later, he informed my Associate – and later myself, by speaker-phone, in the presence of my Associate – that he had spoken to the respondent’s Financial Controller, Mr Ross Chapman, about the company’s intentions in relation to the matter. -- 1 of 4 -- 682 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 26 November, 2004 Mr Cook said the information he had been given by Mr Chapman was to the effect that the company would not be attending the proceedings and on that basis it was his (Mr Cook’s) assumption that the case was not to be contested on the basis that the company had decided not to appear. On the basis of this advice, I proceeded to hear the matter ex parte. In doing so, I nonetheless admitted all of the affidavits which had been filed by the applicant and by the respondent prior to the proceedings so that I could consider all of that material in arriving at my decision. The applicant’s case Counsel for the applicant, Mr Alford, made the applicant available for cross-examination. However, as there was no one available to cross-examine her, her statements were admitted as being uncontested, and have been treated accordingly. In her evidence, Ms Edwards said she was primarily engaged to market the “Sonoma” project at Noosaville for off-the-plan sales through an associated company of the respondent. At the time of her engagement the respondent had a sole agency agreement with a real estate agent in Noosa Heads which impacted upon her ability to market the project. In the initial weeks of her employment she was also asked to arrange the furnishing of 4 of the completed units in the development as a means of gaining rental income for the company, as well as for the purposes of marketing. At the same time, she assisted in furnishing several other properties being marketed by the respondent, as well as its new company offices in Noosaville. Ms Edwards said she met with Mr Andrew Cook and Mr Marc Withnall, the Principal Director of the respondent, on or about 15 December 2003 to discuss the potential holiday lettings of the 4 furnished units in the Sonoma project over the Christmas/New Year period. She suggested she and her husband move into possession of the “manager’s unit” within the complex so as to provide on-site management of the project and maintenance of its facilities until a full-time manager purchased the management rights. She said Mr Withnall was very satisfied with this proposal and instructed her to put these arrangements in place as soon as practicable. Ms Edwards said a verbal on-site management agreement was also entered into between Mr Withnall and her whereby she and her husband would carry out all caretaking and associated duties for an initial term of 12 months at an annual salary of $60,000 per annum with an ability to reside in Unit 10 until all units in the Sonoma project had been sold and settled. The use and occupation of Unit 10 was to be on a rent free basis until all the units in Sonoma were sold, and thereafter on a rental basis. It was Ms Edwards’ understanding that Mr Withnall saw the offer as an opportunity to develop the letting rights for the complex, which would further increase the price at which the management rights could ultimately be sold. Ms Edwards said she continued to work conscientiously, marketing the respondent’s product until she was called into a meeting at 2.30 p.m. on 19 April 2004 with Ms O’Keefe, Director of Operations for Castle Bay, and Ms Swan, a consultant engaged by Castle Bay. During the course of that meeting, Ms O’Keefe verbally advised her that: (i) the respondent wished to terminate her, and her husband’s, employment agreements; (ii) it was no longer feasibly viable for the respondent to employ both her and her husband; (iii) Ms Swan had recommended to Mr Withnall that the arrangement between the respondent and herself was no longer working satisfactorily; and (iv) it would be much cheaper for the respondent to employ outside contractors instead of continuing her, and her husband’s, employment. Ms Edwards said she was then handed a sealed envelope, as well as a second sealed envelope addressed to her husband. The first envelope contained a letter, of even date, which informed her: “… you have not been performing your duties in accordance with the position description detailed in clause 3.3 of your employment agreement and (we) note the following specific occasions when you are advised by Dianne Swan that your performance was unsatisfactory: 1. 24 March 2004 in regard to inspections with clients; and 2. 7 April 2004 in regard to the proposed opportunity to promote a sale of another client’s property for commission gain. As a result of the above, pursuant to clause 7.2 of the terms and conditions of your employment agreement and in accordance with the Industrial Relations Act your employment is hereby terminated. Enclosed is a cheque for 2 weeks salary in lieu of 2 weeks notice.”. Ms Edwards said that at no time from the date of commencement of her employment was she given any guidelines, or provided with required performance criteria, associated with her job description. Further, the respondent did not conduct a review of her performance at the conclusion of her 3 month probationary period as was required by her employment agreement. In addition, Ms Edwards refuted that she had ever been informed by Ms Swan, or anyone else, that her performance was unsatisfactory. Similarly, she rejected the comments in the letter of 19 April 2004 that Ms Swan had warned her that her performance was unsatisfactory. I accept Ms Edwards’ uncontested evidence on these points. Mr Alford said it had taken a considerable period of time for the respondent to pay the 2 weeks’ notice mentioned in the termination letter. Further, it had taken a considerable period of time for Ms Edwards to recover commissions which were due on several sales which were completed just several days prior to her termination. The respondent’s position As noted above, the affidavits filed prior to the proceedings on behalf of the respondent were admitted by the Commission notwithstanding the non- appearance of the respondent, or any of its witnesses. Mr Alford, rightly, said that the material contained within such affidavits should be treated cautiously by the Commission because none of the contentions could be tested by cross-examination. In particular, Mr Alford indicated that some of the contentions set out in the respondent’s statements were totally rejected by the applicant, as was recorded in her statement-in-reply. On the basis that the applicant was available for cross-examination and none of the respondent’s witnesses were, I have taken the view that I should prefer the evidence of the applicant over that of the respondent wherever there is any inconsistency. Without being exhaustive, the general tenor of the respondent’s evidence was to the effect that it was unhappy about the length of time it was taking to sell the various units in the Sonoma complex. Because of its general concerns it retained Ms Dianne Swan, an experienced sales and marketing consultant, to conduct a review of the current marketing of the project. Ms Swan’s report seems to have laid much of the blame for the poor sales results at the feet of Ms Edwards. Mr Withnall said Ms Swan informed him that the reason for the units not selling was that Ms Edwards was not trying to sell the property. Ms O’Keefe said Ms Swan’s report recommended that Ms Edwards’ and her husband’s contracts be cancelled and also recommended that the ground services contract be outsourced, with the on-site management to remain with a particular real estate agency. It appears that as a result of some discussions about Ms Swan’s report, between the directors of the respondent, a decision was taken on 18 April 2004 to effect Ms Edwards’ termination on the following day. Ms O’Keefe was assigned that task and effected Ms Edwards’ termination, as above. -- 2 of 4 -- 26 November, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 683 Submissions on behalf of the applicant Mr Alford submitted that the applicant’s termination was harsh, unjust and unreasonable “in the extreme”. He said the respondent failed entirely to communicate in an effective and fair minded way with Ms Edwards that her position was under review or that there was any possibility of dismissal. Nor was she given any opportunity to respond to any complaint Castle Bay might have had about her conduct, capacity or performance before she was peremptorily dismissed. In such circumstances, he argued, the respondent failed to accord any procedural fairness to Ms Edwards in accordance with the 5 rules set out in Byrne v Australian Airlines Ltd. (1994) 120 ALR 274 per Beaumont and Heerey JJ, following Hill J, as follows: “a. to conduct a reasonable investigation to determine what circumstances should be taken into account when deciding whether to dismiss the employee; b. to be clear about what the employee has done or failed to do; c. all allegations should be put to the employee; d. the employee must be given a fair opportunity to be heard on the allegations; if the employee is regarded as guilty, she must be given a fair opportunity to be heard on whether a dismissal should take place; e. the employer must take into account matters not directly connected with the alleged offence which might mitigate the penalty.”. Mr Alford also said the respondent’s evidence suggested the termination was based largely on hearsay and unsubstantiated opinion. I agree with that submission. On the available material it seems the respondent had some concerns about the success of the project and decided to retain Ms Swan to examine the situation and to make recommendations in an endeavour to turn things around. The applicant was given no notice that such a review was underway and was not invited to participate in Ms Swan’s deliberations. Ms Swan’s report makes a series of allegations and conclusions, many of which are based upon personal observation and/or opinion, which are not necessarily supported by the facts. Her conclusions are also based upon certain conclusions about Ms Edwards’ role and authority when the assumptions upon which the conclusions are based appear to be plainly wrong. Mr Alford submitted: “The evidence strongly suggests that the reason for termination was a management decision concerning the structure of the organisation, a desire to reduce costs, and the management on-site, and a wish to appoint a different marketing ‘entity’ more to the personal style of Ms Swan, not related to the employee’s competence, conduct or performance. Redundancy was not the reason as the applicant was immediately replaced in the then vacant position.”. I totally agree with that submission. The respondent appears to have accepted the recommendation of Ms Swan, that Ms Edwards (and her husband) be terminated, without query or challenge and has immediately set in train a course of events which led to Ms Edwards’ termination, as above, on 19 April 2004. On the information available the termination was completely without merit and was conducted without any regard to the requirements of s. 77 of the Act whatsoever. It was thus harsh, unjust and unreasonable. Remedy In the circumstances of this case, I have decided it is impracticable for me to order the applicant’s reinstatement to her former employment. Not only has the employment relationship broken down, the employer has been placed into administration (see below). Accordingly, I turn to consider the only other remedy available, viz. compensation. At the time of her termination the applicant, and her husband, had taken up residence in one of the units at the Sonoma complex in accordance with the agreement reached in mid-December 2003 with Mr Withnall. As a result of that agreement, they had taken steps to lease their own house for a period of 12 months. Because of that lease commitment they could not return to their own house when they were forced to relocate themselves from Sonoma several weeks after Ms Edwards’ termination. As a consequence of the termination Ms Edwards (and her husband) have been forced to pay for a second set of relocation costs (said to be $1,570.40) in circumstances where those costs should not have been incurred. Mr Alford invited me, by way of a well reasoned written submission, to take the applicant’s commission income into account in determining the compensation I might award pursuant to s. 79 of the Act. He sought compensation in the amount of $37,850 being 6 months’ “wages”, calculated by reference to her earnings during the period of her employment. However, by virtue of the President’s decision in Bettina O’Connor v Electroboard Administration Pty Ltd 168 QGIG 90, I am limited to the actual wages (not remuneration) Ms Edwards was receiving at the time of her termination. At that time, Ms Edwards was in receipt of a wage of $50,000 per annum (including 9% superannuation and annual leave loading) plus commissions. The object of compensation is to restore an unfairly dismissed employee, as far as practicable, to the financial position in which he or she would have been but for the wrongful dismissal (Atkin v Hymix Industries (1999) 160 QGIG 165 at 167 and Stewart v Creek Gold Pty Ltd (2003) 174 QGIG 104). The maximum amount of compensation which I am able to award is capped at $22,750, being one-half of $45,500 ($50,000 less 9% superannuation in the amount of $4,500). In the circumstances, I have decided to award that amount. The applicant’s employment was terminated without warning in a pre-meditated way. There was an absence of merit and a total lack of procedural fairness. She (and her husband) were also effectively “thrown out of” the unit she occupied, on 2 weeks’ notice. She was also forced to incur additional relocation costs in the order of $1,500. She only found alternative employment a few days prior to the hearing at what appears to be a lesser rate of pay. She was thus deprived of income for virtually 6 months and will also suffer some on-going loss. She should be compensated for the whole of that loss – including the relocation cost – but the maximum amount I can award is dictated by s. 79 of the Act. Costs On behalf of the applicant Mr Alford asked the Commission to make an Order requiring the respondent to pay the following costs incurred by the applicant in her pursuit of the application: • costs of one up-lift and removal $1,520.40* • costs to regain entitlements earned up to date of dismissal $1,687.40 • costs of the application up to and including the hearing $18,967.18 • costs of one day’s pay for Ms Edwards to attend hearing on 18 October 2004 $153.84 Total $22,328.82 * This has already been considered above. With respect to Mr Alford it is not a “cost”. -- 3 of 4 -- 684 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 26 November, 2004 In his written submissions in support of his application that costs be awarded pursuant to s. 335 of the Act, Mr Alford stated: “A Full Bench of the Commission in Doyles Construction Lawyers v. Serratore (No 2) 2002 170 QGIG 103 considered that the decision of McKenzie President, in Goldman v. Data General Australia Pty Ltd 144 QGIC (sic) 379, albeit based upon the provisions of Industrial Relations Act 1990 was descriptive of the correct approach to be adopted in assessing whether there had been unreasonable acts or omissions in connection with the conduct of an application. In Goldman, McKenzie P said: ‘Nonetheless it does make the point that some reinstatement cases by reason of the procedural steps involved and their nature, length and complexity have rather got away from the ideal of inexpensive dispute resolution. There may be cases where at the end of the day it can be seen that a party has acted unfairly, unreasonably or improperly in or in the course of pursuing or resisting such relied and that those actions were so unjustified that the proceedings have worked as an act of oppression to the other side. It goes almost without saying that cases where such a finding could properly be made will be rare and would have to fit the description frivolous, vexatious or otherwise abnormal. The mere fact that a party fails to succeed would be far removed from this kind of case and would be far from sufficient to found an argument for costs. No one with a reasonably arguable case need be deterred from proceeding by fear of the consequences of costs unless abnormal unfair aspects enters into the conduct of the proceedings…’.”. Mr Alford said the respondent’s behaviour – involving the applicant in a costly exercise to recover her entitlements, its refusal to settle the matter through the conciliation process, and then putting the applicant through the entire legal expense to prepare for the full hearing only then to fail at the hearing, and to only then inform the Commission that it did not seek to contest the matter – certainly met the definition of a continuing act of oppression and abnormal and unfair conduct of the proceedings. Further, he said, the respondent’s failure to advise the Commission of its decision on or around 12 October 2004 not to contest the matter was contemptuous of due processes and the rights of the applicant. At that juncture, the respondent should have informed the Commission and the applicant there would be a “no-contest”. Mr Alford said the applicant should be paid her full costs in the matter, including all of the items mentioned above. In support of his contention he referred me to a number of other decisions of the Commission where costs had been awarded, which I do not propose to repeat here. Nonetheless, all of those decisions have been considered in reaching my conclusion on the matter (see below). Post hearing events By way of letter dated 22 October 2004 (the same day Mr Alford’s written submissions about costs and the maximum amount that might be awarded under s. 79 of the Act were received) the Commission received correspondence from Horwath Sydney Partnership advising that Neil Robert Cussen of Horwath Sydney Partnership and Gerald Thomas Collins of Horwath Jefferson Stevenson were appointed Joint Administrators of SCPM Pty Limited (Administrators Appointed) (formerly known as Castle Bay Projects, Sales and Marketing Pty Ltd) ABN 81 099 109 305 on 15 October 2004. The letter indicated the Joint Administrators were aware of the proceedings before the Commission and sought to be informed of its current status. The only conclusion that can be drawn from that correspondence is that the respondent knew prior to 18 October 2004 of the appointment of Joint Administrators. Not only were the directors of the respondent remiss in not informing the Commission of that appointment but Mr Chapman, the respondent’s Financial Controller, should have informed Mr Andrew Cook, and in turn the Commission, of that fact when my Associate attempted to contact the senior executives of the respondent on Monday, 18 October 2004. One is entitled to assume, and I do assume, that the respondent had no intention of alerting either the applicant’s solicitor or the Commission to the facts because either they did not care that the applicant was incurring extra costs or, alternatively, that they wanted her to incur those costs. Whatever the respondent’s reasons, it’s behaviour is reprehensible and the applicant should not be forced to carry the whole of the costs of her conduct of the matter. In my view, the respondent caused the applicant to incur costs because of its unreasonable act or omission connected with the conduct of the application by failing to inform her solicitors, of the appointment of Joint Administrators to the respondent. Further, the material available to the Commission suggests that the respondent should have known that its defence of the application was doomed from at least 4 weeks prior to the date of hearing i.e. approximately 17 September 2004. That was the date upon which it engaged an agent/solicitor to act on its behalf in its preparation of its defence of the matter. Accordingly, the respondent’s actions in attempting to defend the matter, on the basis of the case it presented, was an unreasonable act connected with the conduct of the application. On the material filed, the respondent had no defence to the claim for unfair dismissal. While there might have been some argument about whether Ms Swan had spoken to Ms Edwards about her performance, the way that the termination was effected – and the principle reasons for the termination – meant that there was always going to be a finding that the termination was harsh, unjust or unreasonable. In such circumstances, the respondent’s behaviour was always going to cause the applicant to incur costs, for a potentially limited outcome. In the circumstances, I propose to award the applicant all of her costs in connection with the conduct of the reinstatement application (only) from 17 September 2004 onwards on a party to party basis. On my calculations, this amounts to $12,903.40 plus GST of $1,290.34, equalling $14,193.74. The Commission has no jurisdiction – in these proceedings – to award costs related to Ms Edwards’ pursuit of her unpaid entitlements ($1,687.40). I do not propose to award Ms Edwards her income foregone as a result of her attendance on 18 October 2004. Ms Edwards was always going to have to attend the hearing, whether the application was defended or not. Summary of the Commission’s decision As stated above, the Commission has determined that the applicant was terminated harshly, unjustly or unreasonably on 19 April 2004 and has awarded her $22,750 in respect of her unfair dismissal. The Commission has also decided the applicant should be awarded costs of $14,193.74 (as above) because of the respondent’s unreasonable acts or omissions connected with the conduct of the application. It is the Commission’s order that the amount of $36,943.74, being the total of the amounts described immediately above, be paid, in accordance with Australian taxation laws, within 22 days of the date of release of this decision. The Commission determines and orders accordingly. A.L. BLOOMFIELD, Deputy President. Hearing Details: 2004 18 October 22 October (Written submissions) Appearances: Mr L. Alford, Counsel instructed by McKenzie Lawyers for the Applicant. No appearance for the Respondent. Released: 17 November 2004 -- 4 of 4 --