FEDERAL COURT OF AUSTRALIA

Sperandio v Lynch [2006] FCA 1648   

INDUSTRIAL LAW – Termination of employment – Whether by reason of employee’s temporary absence because of illness or employee’s physical or mental disability – Appropriateness of reinstatement – Workplace Relations Act 1996 (Cth) ss 170CK, 170CR

EMPLOYMENT – Summary dismissal – Whether justified by conduct of employee

CONTRACT – Offer and acceptance – Whether contract complete before attempted withdrawal of offer 

Workplace Relations Acts 1996 (Cth): s 170CK(2)  

JOSIE SPERANDIO v DRS JAMES AND SANDRA LYNCH T/AS DOCTORS OF NORTHCOTE

VID715 OF 2005

JESSUP J

1 DECEMBER 2006

MELBOURNE

THE COURT ORDERS THAT:

1.                  On or before 8 December 2006, the applicant file and serve –

(a)    a minute of the orders which she proposes to give effect to the reasons of the court published this day;

(b)   a memorandum of the particulars of the calculations, if any upon which she relies in support of the orders which she seeks; and

(c)    a brief note of the contentions which she proposes to make on the date fixed under order 3 below.

2.                  On or before 15 December 2006, the respondents file and serve –

(a)    a minute of the orders, if any, which they propose by way of variation of or substitution for the orders proposed by the applicant;

(b)   a memorandum of the particulars of the calculations, if any, upon which they rely in support of the varied or substituted orders; and

(c)    a brief note of the contentions which they propose to make on the date fixed under order 3 below.

3.                  The proceeding be fixed to hear the parties’ submissions on the orders to be made by the court at 4.15pm on 19 December 2006.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The respondents, Drs James and Sandra Lynch, are medical practitioners who have conducted a general practice in Northcote, a suburb of Melbourne, for many years.  In 1979, they employed the applicant, Ms Josie Sperandio, then aged 17, as a receptionist.  The applicant remained so employed until 2001, when she was appointed to the position of Practice Manager, in which position she remained until dismissed from her employment in circumstances described below. 

2                     On 4 March 2005, while absent from work on sick leave, the applicant received a letter from the respondents in the following terms:

We express sincere regret that after such a long period of service and assistance over twenty five years it appears that over the last twelve months mutual communication, trust and cooperation has deteriorated to such an extent that we believe that you should not return to our workplace.  We greatly appreciate the years that you have served us well and we have over those years considered you a friend.  We believe that you have excellent skills and will readily find employment elsewhere.

We had anticipated that you would as discussed settle back after holidays and long service leave into the position of trust and responsibility that you once experienced.  We have asked you to meet and discuss the issues of concern and possible resolutions but have received no response to this request.

We now offer you a final opportunity to contact us to discuss your entitlements in the next five working days.  Alternatively we will have no option but to dismiss you as of 4^th March 2005 for the following reasons:

1.                  Verbal threat of violence to another employee

2.                  Failure to address disruptive workplace practice in spite of repeated counselling

3.                  Loss of income to the workplace due to your incompetent workplace practices

4.                  Involvement in ‘verbal racial discrimination’ reported by a client of the workplace

5.                  Incompetence in following a directive from your employer on 7/2/05 and leaving the workplace while on duty to which you later reported “I lost it”

We repeat that we regret having to take this course of action and hope that we can come to an agreement to allow future reconciliation and mutual movement forward.

That letter was treated, both by the applicant and by the respondents, as a dismissal of the applicant from her employment without notice.  I consider that the letter did have that effect.

3                     In this proceeding, the applicant alleges that the termination of her employment was done either by reason of her temporary absence from work because of illness or injury or by reason of her physical or mental disability and was, therefore, in contravention of s 170CK(2) of the Workplace Relations Acts 1996 (Cth) (as the relevant provision was numbered at the time).  She also alleges that the respondents had no legitimate basis for summary termination, and that she should have been given reasonable notice of the respondents’ intention to terminate her employment, which she fixes, in the circumstances, at 24 months.  The respondents deny that the applicant was dismissed by reason of her temporary absence on sick leave, or by reason of any physical or mental disability, and say that she was dismissed for the reasons stated in their letter dated 4 March 2005 as set out above.  They assert that they were entitled to dismiss the applicant from her employment summarily, but if they were not, they contend that the applicant was employed on a fixed-term contract which would have ended on 25 October 2005; or, if the question of reasonable notice arises, that the applicant was entitled to no more than about five or six weeks in the circumstances.

Background

4                     For many years, the respondents carried on their practice from a clinic in St Georges Road, Northcote.  In 2003, they decided to move the practice to a new clinic which they proposed to establish in High Street, Northcote – a move which eventually took place on 25 October 2004.  For the respondents, the move would involve both an expansion in the size and turnover and the practice and, it appears, a significant modernisation in their methods of operation.  Dr Sandra Lynch said that the move involved a huge financial risk for them.  The respondents were concerned that the skills of their staff in a number of respects were less than would be required at the new clinic.  This related in part to the ability to operate with the new practice management computer system which was proposed for High Street, and in part to what was referred to as customer relations.  By 2004, the respondents had their concerns about the applicant in particular in each of these respects.  Dr Sandra Lynch expressed the view that the applicant was a good receptionist, but, notwithstanding that she had been appointed the Practice Manager, did not do any actual practice management, which was done by Dr Lynch herself.  Dr Lynch gave as an example that she drafted her own letters and spent many hours in administration. 

5                     About 12 months before the proposed move, Dr Lynch engaged a consultant to assess the skills of the existing staff, to talk to them about their concerns, to identify what up‑skilling procedures were necessary and to institute change.  Dr Lynch engaged consultants to provide training for the staff.  One of them, Ms Paula Febey (to whom I shall refer again later) provided instructions on customer relations.  The focus of these training sessions and generally in the practice was, according to Dr Lynch, that “this was a new place, … a different standard – a higher standard of professionalism was required.”  The respondents alleged that the applicant had, in the past, refused to undertake training to improve her skills, and that it was only very late in the piece in 2004 that she undertook some training in relation to the new methods proposed for High Street.  The exact extent of the applicant’s co-operation in this and similar respects was never satisfactorily resolved as a matter of evidence.  However, I infer from the whole of the evidence that the proposed move to High Street was an event of such significance for the respondents, and was such a preoccupation for them by about mid-2004, as to sharpen their underlying concerns as to the applicant’s general level of competency to perform at the higher levels of efficiency that would be required in the role of Practice Manager.  Likewise the applicant, I infer, felt herself under somewhat greater pressure in her job as a result of the higher expectations that the respondents had of all the staff at the practice, and the sense of anticipation which pervaded the practice about the move to High Street.

6                     In mid-2004, the applicant consulted Dr Sandra Lynch professionally.  Dr Lynch found the applicant to have high blood pressure and referred her to a consultant physician, Dr Stewart.  In her report to Dr Lynch dated 7 July 2004, Dr Stewart noted that the applicant had complained of headache, light headedness and fever, and was found to be hypertensive.  Dr Stewart’s report referred to a number of tests which she had caused to be conducted, and concluded that the applicant had “recent sustained hypertension”, and other conditions.  Dr Stewart provided further written reports to Dr Lynch on 20 July, 3 August, 24 August and 14 September 2004.  No further reports were made by Dr Stewart to Dr Lynch in relation to the applicant.  There is nothing in the evidence which would justify the conclusion that the applicant’s medical condition over these months was particularly related to any pressures which she may have been experiencing at work.  However, the applicant’s own comment about her well-being at the time of her first consultation with Dr Stewart in July 2004 was that she was tired, and was under a lot of stress, because they were trying to get everything organised.  She meant, I take it, “organised” for the move to High Street.

7                     In the circumstances obtaining at the St Georges Road clinic in about the second half of 2004, including those to which I have referred, the general state of the relationship between the applicant and the respondents was not a happy one.  For their part, the respondents say that the applicant was becoming increasingly negative, surly, unco-operative and resistant to change.  For her part, the applicant says that Dr James Lynch in particular was not being very pleasant towards her and the other clerical staff.  Some of the issues which were of concern to her in this respect arose in the context of the particular matters which, according the respondents, led to her dismissal in the following March.  It is to those matters that I shall now turn.

Conversing in Italian

8                     An issue which Dr James Lynch had had cause to raise with the applicant while the practice was at St Georges Road was, according to him, her practice of talking in Italian to other Italian-speaking staff members behind the reception desk in front of patients in the waiting room.  He said that she should stop doing that, and asked her to instruct the other staff members to stop doing that, because the patients who reported it were disturbed and distressed by the practice.  Some Italian-speaking patients who had heard the applicant had told Dr Lynch that they would never return to his clinic while the applicant was there, because they had heard her talking about other patients in Italian.  Dr Lynch told the applicant that the practice was insulting and offensive to the non-Italian-speaking patients.

9                     Dr Sandra Lynch also gave evidence on this subject.  She had had complaints from patients that the Italian receptionists were conversing about the doctors or the patients in a derogatory manner.  She said that the complaints came from Italian patients who could understand what they were saying.  She said she counselled the applicant several times, and instructed her that she was not to speak in Italian with the other receptionists, other than to communicate with Italian patients.  Under cross examination, Dr Lynch said that although there were a number of Italian-speaking staff members who conversed in Italian in the way she described, none (other than the applicant) was dismissed for it.

10                  It was the applicant’s alleged practice of conversing in Italian that constituted the ‘disruptive workplace practice’ referred to in item 2 on the respondents’ list of reasons for dismissing the applicant as stated in their letter of 4 March 2005.

11                  The applicant accepted that she had been counselled not to speak in Italian with other Italian-speaking staff members while members of the public were in the waiting room, but said that this had occurred only once, and denied that the counselling related to her speaking derogatively about patients and other doctors.  When the matter was put to the applicant under cross examination, she was, to my observation, somewhat evasive about it.  It was clear that it had not previously occurred to her that item 2 in the respondents’ letter of 4 March 2005 related to her conversing with other staff members in Italian.  One could be sympathetic with the applicant in that regard, since the item gives no hint of the subject with which it is concerned. 

12                  It was submitted on behalf of the applicant that the conduct with which item 2 is concerned was “hardly worthy of dismissal”, and that that conduct had not been the subject of any written warnings.  I agree that merely to converse with others in Italian (ie where no question of a failure to obey an instruction was involved) would not justify summary termination.  I allow for the possibility that the subject matter of what a person in the applicant’s position might have said in the presence of patients might be such as to warrant summary termination, but the evidence in this regard was of the broadest and most imprecise nature, the result of which was that I could make no finding against the applicant based on the content of what she actually said.  Neither could I make any finding that she either disobeyed a direct instruction or persisted in unwanted behaviour after counselling.  I do, however, accept that the practice of speaking in Italian to other Italian-speaking staff members, and of doing so on subjects which included some patients and practitioners, had been reported to the respondents, and that they were concerned about it.  I accept that they counselled the applicant about the matter.

Loss of income

13                  Dr Sandra Lynch gave evidence that, at St Georges Road, she had repeatedly requested the applicant to provide a printout of what was outstanding from Medicare as shown on the computer program then being used.  This related to Medicare payments that were due to the practice.  Dr Lynch said that the applicant was the only one who seemed to have any knowledge of the program.  She said that she either ignored her request or “simply refused”.  Dr Lynch was very anxious about what was outstanding because, with the forthcoming move to High Street, that program was going to be closed down.  She was being pressed by the accountants for this information, and she was getting no response from the applicant.   Dr Lynch said that the issue remained after the move.  They had to keep the old computer program running, because there was income coming in that had to be adjusted and marked off.  She said that the applicant “was attending to it when she could”.  

14                  Some time after the termination of the applicant’s employment on 4 March 2005, Dr Sandra Lynch employed someone to look at the data generated by the computer program that had been used at St George's Road.  Dr Lynch said that this person discovered about $120,000 of outstanding bills at that clinic.  Dr James Lynch, who referred to the total amount involved as being about $100,000, said that, by the time they identified the error, they were able to recover only about $7,000.  The remainder was written off as bad debts.

15                  At one point in her evidence, Dr Sandra Lynch said that, at St Georges Road, the applicant did not actually do any of the practice management – that was done by Dr Lynch herself.  The applicant simply followed her instructions.  When reminded of this in the context of her being critical of the applicant in relation to her failure to provide a printout of Medicare accounts owing, Dr Lynch said that the applicant had a job description which said that she was responsible for the Medicare batching, for the billings, for the accounts, for WorkCover, for sending off accounts for billing patients, for making appointments for patients, and for carrying out reception duties.  She said that the applicant, although supposed to do all of those things, could not draft a letter, could not “administrate”, and could not “carry out any of the normal business activities of taxation, whatever”.

16                  The applicant accepted that she had been asked to provide a printout of the outstanding accounts, but insisted that that request was made only after the practice moved to High Street, and then she was unable to comply because the printer was out of order for some weeks.  When this point with raised with Dr Sandra Lynch in cross examination, she responded that the computer itself was still working.

17                  I accept much of the respondents’ case on this aspect.  I accept that the applicant had failed to comply with the requests of Dr Sandra Lynch to provide a printout of the amounts owing from Medicare.  Since I find that this occurred substantially while the practice was at St Georges Road, the applicant’s excuse (that the printer at High Street was not working) should not be regarded as acceptable.  I am not, however, persuaded that the applicant acted wilfully in these respects.  It is more likely that this was an example of the generally poor standard of work which the respondents were experiencing from the applicant.

18                  I am not satisfied, however, that the loss of income which the respondents claim to have suffered – the difference between $120,000 or $100,000 and $7,000 – should be laid at the feet of the applicant.  As her counsel pointed out, the respondents’ case in this respect was broad and general in the extreme.  It involved no calculations, no hard data, no books of account, and generally no precision.  How the failure to produce a printout should lead to the permanent loss of moneys legitimately owing from a government body was unexplained.  There was no attempt to demonstrate how, as a matter of law, the amounts had become “bad debts” by the time a proper audit was conducted in the first half of 2005.

19                  The issue arises under item 3 in the respondents’ letter of 4 March 2005.  While I would not resist the suggestion that there was some degree of incompetence involved on the applicant’s part, I am not prepared to accept that the respondents’ loss of income has been either established as a fact in any satisfactory way or, to the extent that it did occur, sheeted home to the applicant as a matter of causal responsibility.

Cleaners

20                  Dr Sandra Lynch gave evidence that the cleaning of the premises at St George's Road, was “very unsatisfactory”.  When the previous cleaners left, apparently at the applicant’s suggestion, a receptionist employed by the respondents to whom the applicant was fairly close, Ms Cundari, was engaged to clean on Saturdays because she wanted the extra money.  Dr Lynch said that she complained to the applicant several times about the standard of Ms Cundari’s cleaning.  Dr James Lynch said that he told the applicant that, even though he was paying time and a half for Ms Cundari to do the cleaning, he was not getting value for money.

21                  When the practice moved to High Street, new contract cleaners were engaged.  At some point, it seems, the applicant told Dr Sandra Lynch that she did not think that the new cleaners were doing an adequate job.  The applicant gave evidence that she discussed the poor standard of the new cleaners’ work with two other members of the staff (including Ms Cundari).  She said that Dr James Lynch overheard that conversation, as a result of which he wrote her a note dated 31 October 2004, shortly after the move to High Street.  Whether or not because of having overheard the conversation – a matter to which Dr Lynch did not refer – the fact is that he did write such a note to the applicant.  It was in the following terms:

Re the cleaners.  Please make them welcome.  They are part of my plan for this complex.  They are professional and will do an honest job.  If you look at the dust and dirt at [St Georges Road] you can see why I would never consider [Ms Cundari] again.  She took my money at time + ½ on a Saturday and the place is filthy.  I know she needed the money but did you really think I didn’t notice.  I hope her standard of work improves over the next 3 months.  All the new staff have the skills that I need at High St, this is a different organization to [St Georges Road] and I need happy bright enthusiastic people, not grumpy lazy ones who don’t think I notice that they have not improved their skills at all.  Please make all the new staff welcome because they will stay.

Dr Lynch gave evidence that the applicant allowed this note to come to the attention of Ms Cundari, who became angry about it.  He said that he told the applicant that he felt it was totally unprofessional, unconscionable and inappropriate for her to have allowed Ms Cundari to see the note.  Dr Lynch thought that the applicant was creating an issue with a view to having the new contract cleaners terminated.  He said that he made it clear to her that that would not happen, and, according to him, “she was sullen and walked off”.

22                  The issue concerning the cleaners was not relevant in the respondents’ termination letter of 4 March 2005.  It was, however, typical of the direction which the relationship between the applicant and the respondents was taking at about that time.  It was an example of Dr James Lynch not being very pleasant, as the applicant claimed.  It was also an example of the applicant’s sullenness, as the respondents claimed.

Unsent warning

23                  According to Dr Sandra Lynch, by about the middle of November 2004, “the situation had become almost intolerable for all concerned and I was at my wits end as to know what to do”.  She said that the applicant was not responding to counselling or requests to improve her behaviour.  Dr Lynch rang the industrial relations officer at the Australian Medical Association, and was told that, if the applicant was not following instructions, if her behaviour was not improving, or if she was not responding to Dr Lynch’s requests, then she should be issued with warnings.  As a result, on about 22 November 2004, Dr Lynch drafted a letter addressed to the applicant in the following terms:

Dear Josie,

After much deliberation and advice concerning the disturbing events over the last few weeks we have been advised to document our concerns and in the relationship of employee/employer this is in the form of a first warning.

You have been over the last 25 years a most loyal and trustworthy employee.

This relationship has deteriorated over the last six weeks and trust between us is eroded.

We document the following concerns.

1.      You were unable to induct new staff in a professional, responsible and timely manner.

2.      You have demonstrated a lack of understanding of simple billing procedures in place for at least 12 months which when documented and checked by Dr Sandra Lynch revealed significant income loss in one 24 hour period.

3.      You have failed over the last few years to undertake appropriate training to maintain your skills to a level now required by your job description.  Computer training to improve your skills has been offered and has been readily available upon request at the divisions of general practice.  We have no knowledge or documentation that you have taken advantage of any computer training over the last 2 years apart from recent training for the new computer program at Doctors of Northcote.

We have verbally attempted to address the issues documented.

We acknowledge that you have made some effort over the last 12 months to attend training/information evenings offered.

As we had not received word or notice that you were happy to accept the contract offered and negotiated after 6 weeks the offer of that contract was withdrawn as per the letter dated Monday 22^nd Nov 2004.  We note that you then offered us a signed contract dated 20/11/04 on 23/11/04.  By that time we had sought further advice and had decided that we would without a contract in place offer your continued employment according to the award as of the next pay period.  This means that you work a fixed 38 hour week roster on award rates and we would expect that you would be able to complete your work within that time.  We have asked for further advice to assess your work skills and determine which level of the award will apply to your job description.  We will also review your job description and the areas of concern will be managed in other ways.  We hope that our working relationship can be redeemed and that you will be agreeable to further discussion and some assistance to implement the above proposal.

We are distressed that this has been the outcome of a long and mostly satisfactory working relationship.

Yours sincerely,

James and Sandra Lynch

24                  As is apparent from the dates set out in the penultimate paragraph of the letter, the letter may indeed have been drafted, or at least amended, after the date it bears, 22 November 2004.  Nothing turns on that, since the letter was never provided to the applicant.  It was printed and placed in an envelope.  Dr Sandra Lynch had it in her bag ready to give to the applicant, but she never did so. I mention it here because it reflects the way the respondents were thinking about the applicant at the time.  It will also become relevant for other purposes, to which I shall come later.

Racial Vilification

25                  Dr James Lynch gave evidence in chief that, on the evening of 29 November 2004, he saw a patient whom he described as a well-educated, articulate individual.  She was a visitor from overseas who had been travelling for a couple of years.  At the end of the consultation, the patient said that she wanted to raise an issue with Dr Lynch.  She said that she had just experienced the worst case of racial vilification of which she had ever heard.  She said that she had come to Australia as a visitor, and had not expected that Australians would be so bigoted and so racist.  She said that, while she was waiting to see Dr Lynch, the two receptionists had been engaged in a discussion with another woman, and she could hear what was said.  She said that they had vilified Muslims, Greeks and new migrants.  She said that she was appalled.  According to Dr Lynch, he told the patient that their practice was set up in order to provide the best possible medical environment, that they were there “to heal body and soul”, and that he was very disturbed by what she had said.  He told her that he owed her an apology.  He said that what she had heard was not the attitude of Australians to ethnic minorities, as the receptionists should have been aware.

26                  The staff to whom Dr Lynch’s patient referred as receptionists were the applicant and another staff member called Patricia.  When the evening consulting session was over, Dr Lynch called them both in to see him in his room.  He gave evidence that he told them that he had had a most serious complaint from a believable person, who was intelligent and articulate, to the effect that they had engaged in racial vilification and that the applicant was the ringleader.  He told them that he considered it the worst experience of his 25 years of medical practice.  He said that he believed that things like that had probably been happening before, but because they were usually couched in Italian, only a few people were able to understand it.  He said that he was absolutely appalled and disgusted.  He said that if he could terminate their employment immediately, he would do so, without hesitation or regret.  He told them that they were on notice:  if they breached the “guidelines” he had given them, he would terminate their employment.  He said that he expected them to provide a written apology.

27                  Under cross examination, Dr Lynch was pressed to relate exactly what, according to his patient, the applicant and Patricia were alleged to have said that amounted to racial vilification.  He said only that he had been told that they were “demeaning Greeks, Muslims, new immigrants”.  He said they “admitted it at the time”.

28                  For her part, the applicant gave evidence that, while she was at the counter with Patricia, there was a patient who, after her consultation, desired to make another appointment.  She asked whether the clinic would be open on Christmas day.  The applicant said no.  The patient said:  “It's ridiculous how Muslims and so forth are opening up on Christmas day.”  According to the applicant, a general conversation followed.  Patricia mentioned that she had seen something in the newspaper about a policewoman who was a Muslim and “had to wear the scarf”.  The applicant said that her little boys went to a Catholic school where there were lots of Muslim children, and they did not “make any heads or tails of anything, as long as they just get on with each other”.

29                  Under cross examination, the applicant was taken to the admonition about the incident that Dr James Lynch said he administered at the end of the evening session.  Her evidence was that Dr Lynch said that one of the patients – an American backpacking lady – was upset by what she had heard the applicant and Patricia saying.  Dr Lynch said that she thought it was a racist conversation.  The applicant denied that Dr Lynch said that the patient had said that she (the applicant) had denigrated and insulted “Turks [sic], Muslims and new immigrants”.  She said that she told Dr Lynch that she had said nothing racist.  She denied being told by Dr Lynch that, if he could terminate her employment, he would.  The applicant gave evidence that she said to Dr Lynch, “speak to the patient”.

30                  Dr Sandra Lynch gave evidence in chief that she had spoken to Dr James Lynch on the evening of the incident and that he was very distressed by the patient’s complaint of racial vilification, of the worst kind she had ever heard, that involved the applicant.  Dr Sandra Lynch drafted a letter of apology and took it to work the following day for signing.  Her own name was printed on to the foot of the letter as a proposed signatory, together with that of each of the applicant and Patricia.  The apology was in the following terms:

We must express our apologies to you concerning possible racial comments which were made in your presence in the waiting area during a visit to the Doctors of Northcote Medical Clinic on 29th November 2004.  We pride ourselves on being a culturally diverse establishment and we can assure you that all steps will be taken to ensure that such incidents do not occur in future.

 Dr Lynch also drafted a written warning addressed to the applicant, which read as follows:

It is regret that we must issue a written warning:

The accusation by a patient to Dr James Lynch of your ‘loudly pronounced, 15 minute, racial vilification of Muslims and Greeks” while she waiting in the waiting room on the evening of 29/11/94 has shocked us.

Your behaviour in reception is a reflection of our practice and is in fact as we have tried to make clear to you with recent customer service education is our presentation to the public.  We cannot tolerate any form of racial discrimination of any manner at Doctors at Northcote.

We request that you apologise to the patient concerned and that we have your guarantee that such behaviour will not occur again.

31                  On the following day, 30 November 2004, Dr Sandra Lynch took the drafted letter of apology to work.  She signed it herself, and she noticed that Patricia too had done so.  As for the applicant, Dr Lynch instructed Heather Fisher, a staff member who was working part time at the clinic at the time, to have the applicant sign and post the letter.  Ms Fisher was not called.    Dr James Lynch gave evidence that, on 30 November 2004, he saw the letter signed by the applicant.  The applicant gave evidence that she was asked to sign the letter, but refused to do so.

32                  Dr Sandra Lynch also brought the drafted warning to work on 30 November 2004.  She did not give the warning to the applicant.  Nor did she instruct Ms Fisher to do so.  She said that the warning was not Ms Fisher’s business.  Although the evidence of Dr James Lynch suggested that he assumed that the applicant had received the warning, he did not provide it to the applicant himself, and the applicant denied receiving it.

33                  This matter of racial vilification is item 4 in the respondents’ letter of 4 March 2005.  As a matter of fact, I cannot uphold the respondents’ allegation against the applicant.   There is no admissible evidence of what the applicant actually said in the subject conversation which would amount to racial vilification on any view.  The only such evidence is that of the applicant, and her comment, although it related to Muslims and others, was quite innocuous (at least in the way she related it to the court).  On the other hand, I think I must accept Dr Lynch’s evidence in so far as it goes.  That is to say, I should accept that an act of serious racial vilification, in the perception of one of his patients, was reported to him.  I accept that he acted promptly to admonish the applicant, and Patricia, about it.  Indeed, the applicant does not deny that this was done.  I also accept the evidence of Dr Sandra Lynch that she prepared the warning in draft.  It serves at least as an indication of the seriousness with which the respondents viewed the event which had been reported to them.

Rose

34                  At the beginning of November 2004, a new receptionist, called Rose, was taken on.  Dr Sandra Lynch gave evidence that Rose had customer relations skills that they felt the clinic was lacking, and that Rose had experience in that area.  It appears that, thereafter, the quality of the interaction as between the applicant and Rose was not what it might have been.  The applicant gave evidence that Rose refused to do anything she asked her to do.  The applicant would ask her to answer the phone nicely, and Rose would get upset.  She did not listen to the applicant.  She made the applicant feel very uncomfortable.  However, Dr Sandra Lynch gave evidence that Rose came to her several times upset, distressed and in tears because she felt she was being treated unfairly at the front desk and was not being instructed appropriately as to how to use the new computer program.  Dr Lynch said that Rose complained that the applicant and Ms Cundari were “bitchy” towards her.  Dr Lynch said that she counselled the applicant about the matter several times, telling the applicant that it was her job to instruct Rose in an appropriate and professional manner and that she should make Rose welcome.  The applicant accepted that she was counselled about her interactions with Rose once only, on an occasion when Rose took three days off and Dr Lynch said, “Just be sympathetic with her because she's had a few problems.”  The applicant denied that she made Rose cry.

35                  A couple of days before the applicant commenced her leave (which would have been shortly before Christmas 2004), she was in conversation with Dr Sandra Lynch and Ms Cundari.  According to Dr Lynch, she asked the applicant how Rose was going, whether she had settled down, and whether she was getting on better with her.  The applicant replied, “Rose needs a kick up the arse”.  Dr Lynch said that, while making that comment, the applicant was pale with gritted teeth, and was angry.  She said that Ms Cundari laughed, but she herself (Dr Lynch) did not know how to respond.  She thought that she would address it on the following day, but did not.  Since the applicant was about to go on leave, Dr Lynch thought she would counsel the applicant about the matter on her return.

36                  The applicant placed a different complexion on this incident.  She said that she, Dr Sandra Lynch and Ms Cundari were laughing at how Rose had “mucked up so much”.  She said that she made the comment, “She needs a good kick up the backside”, and they “just laughed it off”.  The applicant denied saying this in an aggressive manner, or through gritted teeth.  Ms Cundari agreed that the applicant had said that Rose needed, in the respondents’ counsel’s words, “a kick up the butt, words to that effect”.  However, she said that they had a laugh about it.

37                  Dr James Lynch gave evidence that he originally thought that Rose was Italian, because “Rose” was an Italian name.  He didn't realise until the applicant threatened to kick Rose that Rose was Croatian, at which time he knew that there was no prospect of them working together.  He described Rose as a “bright and cheerful” woman, but as “a fairly fine woman, fairly thin”.  He took the issue of Rose being kicked by the applicant very seriously.  He said:  “If I have got someone who is going to assault somebody else, I feel that I am exposed to all sorts of actions subsequently for not providing a safe work environment.”  When it was put to Dr Lynch under cross examination that he did not honestly believe that the applicant (who, according to cross examining counsel, was about 5’ 4”) would “physically kick Rose”, he replied that he had no hesitation in believing it.  He said that Rose was “tiny”.

38                  The applicant’s comment about Rose needing a kick in the nether regions (however described) is item 1 in the respondents’ letter of 4 March 2005.  It is common ground that some such comment was made.  Although Ms Cundari supported the applicant in describing the comment as one made almost in jest, I am cautious about treating her evidence as corroborative, because of the friendship between the two.  The respondents had employed Rose to give the practice some customer relations skills which it previously lacked, yet there had been a certain friction as between the applicant and Rose.  It is more than understandable that Dr Lynch would have enquired of the applicant how Rose was coming along.  I think it was a subject in which Dr Lynch was keenly interested.  It is likely that she would have had a rather sharp recall of the dynamics of the conversation in question.  I consider it less likely that the applicant and Ms Cundari would have had any particular reason to remember the specifics.  In the case of Ms Cundari in particular, there is no apparent reason why she should have regarded it as significant that she was present when Dr Lynch asked the applicant how Rose was coming along.  As a witness, Ms Cundari did not leave me with the impression that she had a particularly accurate recall of this conversation.  She gave a general impression of off-handedness about the subject – as though it was something that happened while she was present, but really none of her concern.  In the circumstances I accept that Dr Lynch’s evidence as to the demeanour and manner of the applicant at the time of making the comment about Rose was substantially accurate.  I believe that the applicant made her comment in no joking way.  The comment conveyed to Dr Lynch a stern and serious negative opinion about Rose, as was the applicant’s intention.

39                  On the other hand I do not think that the applicant made the comment literally, or intended it to be so understood by Dr Lynch.  The applicant used a very common, though coarse, metaphor.  She used it with ill-will towards Rose, but it would be stretching credibility to suggest that Rose should in fact be kicked by someone and that it would be the applicant who did it.  Thus I cannot interpret the comment as a threat.

Incompetence

40                  I turn finally to item 5 on the respondent’s list in their letter of 4 March 2005.  Before coming directly to the circumstance referred in that item, however, it will be necessary to refer again to the applicant’s medical condition in November 2004.  Unbeknownst to the respondents, in that month the applicant again consulted Dr Stewart.  Dr Stewart, who gave evidence, diagnosed the applicant as suffering from severe agitated depression.  It was, apparently, events occurring at her workplace that the applicant related to Dr Stewart as being responsible for her condition.  Dr Stewart said that she was not aware of any non-work-related issues which were involved.  Dr Stewart did not inform the respondents that the applicant had consulted her on this subject, as she considered that would have been a breach of patient confidentiality.  Dr Stewart said that the applicant was resistant to her suggestion that she might take anti-depressants.  Apparently, it was proposed that the applicant should take a period of annual leave, and possibly some accumulated long service leave, to recuperate from her depression.  The applicant did take a period of leave, and was absent from work from shortly before Christmas 2004 until 7 February 2005.

41                  Shortly before departing on leave, the applicant found a note in her tray which was addressed to the person who was going to be acting as Practice Manager in the applicant’s absence, Ms Heather Fisher.  This note was never produced in evidence;  nor did the respondents say anything about it.  According to the applicant, the note at least hinted that it was about time to “get rid of” the applicant, because she was not changing with the times.  The note upset the applicant:  for the weeks which followed while she was on leave, all she could think of was what she had done wrong.  If there was such a note as the applicant said, the sentiments which she read into it would indeed have reflected the way the respondents were then feeling about her, as disclosed in the evidence.

42                  In order to understand the next event which became controversial, it is necessary to consider one aspect of the day to day dynamics of the interaction between the administrative staff and the medical practitioners at the clinic.  Traditionally, when the volume of work was such that some patients had been attending in the waiting room for a considerable period, a member of the administrative staff might think it appropriate to use the intercom system to notify the practitioner concerned that there were patients waiting for him or her, or to point out for how long certain people may have been waiting.  Although some practitioners doubtless valued the benefit of being notified in this way, it appears that others interpreted such notifications as a form of irritation, and as a distraction from their professional exertions.  In the new computer system employed at High Street, each practitioner, in his or her consulting room, had the facility to observe, on his or her own computer screen, who were the patients that were then waiting for a consultation, and for how long each had been waiting.  It seems that the respondents took the view that this was a satisfactory substitute for the traditional method of notification by intercom, and should be so regarded by the administrative staff. 

43                  There was to be a new practitioner, Dr Linda Chen, commencing at the High Street Clinic on 7 February 2005.  For reasons which were not disclosed, the respondents appear to have apprehended that Dr Chen might be particularly sensitive to being notified by the administrative staff that patients were waiting for her.  That same day, 7 February 2005, was the day upon which the applicant was due to return from her leave.  The respondents themselves, however, were contemporaneously departing on leave.  In those circumstances, on the previous Friday, 4 February 2005, Dr James Lynch wrote a memorandum, in his own hand, to the applicant, in the following terms:

We have a permanent new doctor starting Monday – Dr Linda Chen is very nice and experienced.  However she will not tolerate being told to “Hurry up or be quick or complaints about waiting time for patients” – nor will I.

So it will be an Automatic warning if this happens – even in the form of a joke.  If I hear of it happening even later it will be an automatic warning in writing.  This is not just for this next few weeks this is a permanent instruction from me.  We all have Prac Soft and so we know what is happening.

Also do not book her more than 4 (Four) patient per hour including emergencies.

He left that memorandum for the applicant’s attention on her return from leave on Monday 7 February 2005. 

44                  When the applicant arrived at work on 7 February 2005, she read the memorandum from Dr James Lynch.  She said that the note made her very upset.  She could not understand why Dr Lynch had written the note.  She said that she started to cry and started shaking, and one of the other receptionists and a doctor took her into another room.  They tried to calm her down.  She said to them:  “I can't understand.  Instead of saying to me: welcome back, you know, we've missed you, let's have a good year or something, he writes me a note about a doctor that I haven't even seen yet.”  The applicant said that she could not stop crying, and that she just wanted to vomit.  She spoke to Ms Fisher, who appears to have been acting as Practice Manager in the applicant’s absence, and asked her whether she had seen the note from Dr Lynch.  Ms Fisher said that she had not, and told the applicant that she was really upset.  She said to the applicant, “Josie, I've said to Dr James he's supposed to give me the notes and then I will address it with the girl, I'm sorry about that.  I can't believe he did that.”  Ms Fisher added, “Look, do you want to go on WorkCover, you are so stressed?  Do you want to go on WorkCover leave?”.  The applicant replied, "No.  I will just go home and I will go and ring Dr Mary Rose Stewart and speak to her.”  The applicant said that she was shaking, and did not know what was happening. 

45                  The applicant waited for a few minutes, calmed down, and then went home and rang Dr Stewart.  When the applicant rang her, Dr Stewart said, “Josie, I want you to stay home and just calm down and come and see me Monday.  I'm going to write you a medical certificate and I want you to be off until I see you Monday”.  The day of this conversation was a Monday:  Dr Stewart was referring to the following Monday, thereby implying that the applicant would be off work for a week.  The applicant then rang Ms Fisher and told her that she was off work until the following Monday, when she would see Dr Stewart.  She said that her husband would deliver the medical certificate work as soon as she had received it, which happened the following day.  That certificate stated that the applicant was “medically unfit for work”, and covered the period from 7 to 15 March 2005.  Dr Stewart subsequently provided certificates in the same terms for the period from 15 February to 6 March 2005, and for the period from 7 to 20 March 2005.  As events transpired, the applicant never returned to work. 

46                  Dr Stewart gave evidence that, on 7 February 2005, she provided the applicant with a medical certificate for a specific illness, namely, agitated depression, which she regarded as “severe”.  She said that the applicant’s depression was agitated by her return to work.  She said that, in the applicant’s employment, “there were incidents that occurred that upset her enormously, and that triggered her whole illness”.

47                  In the period following 7 February 2005, the applicant remained away from work.  She said that she was “sitting at home”.  Ms Fisher, telephoned her once or twice.  The applicant said that she told Ms Fisher that she did not know what to do.  The applicant was also, apparently, telephoned by one of the other doctors at the clinic, Dr Fabio LoGiudice.

48                  As I have said, the respondents themselves were absent from the clinic for at least half of February 2005.  Dr James Lynch could not recall the actual day on which he returned from leave.  He did not see the medical certificates that had been provided by the applicant – he just “heard about them”.  When referred to those certificates and asked whether he reached any conclusion as to whether or not the applicant was able to continue in her employment, he replied:

As far as I was concerned, the racial vilification was the end of it.  If I had known that I could have terminated her then, I would have.  If I had known subsequently, that I could have terminated her, I would have.  There was no prospect of me working with her.  I had no respect for her whatsoever.  I thought what she was doing brought disgrace on my country, cause angst amongst my staff and it was simply because she didn't like the colour of their cloth and I was disgusted.  Every time I saw her, I was disgusted, and still am.  My father would have been disturbed if I - if I - he would have said, "Thus far and no further."  He would have drawn the line in the sand and I didn't do that.  I should have.  I should have done it in November and I didn't and he would be ashamed.

According to Dr James Lynch, he and Dr Sandra Lynch had “multiple conversations of what was happening with regard to the [medical] certificates and the [applicant].  As to item 5 in the letter of 4 March 2005, Dr James Lynch said:

Incompetence in following a directive from the employer.  That was from me.  And leaving the workplace while on duty, to which she later reported, “I lost it”.  That was the written directive that I wrote, in my own handwriting.

49                  Dr Sandra Lynch could not recall the exact date upon which she returned to work after taking leave:  it was either 14 or 21 February 2005.  When she did return, the medical certificate provided by the applicant came to her attention.  She tried several times to contact the applicant by phone, but the applicant was not answering her home phone.  Dr Lynch said that, in part, she rang the applicant because she was concerned about her health.  The purport of her evidence was that she had no idea what was wrong with the applicant, or why she was off work.  She said it was a mystery to her.  All she had were medical certificates (two, by that stage) which gave no indication as to what was wrong with the applicant.  Dr Lynch said that she did not know if the applicant had “fallen down the stairs and injured her leg”. 

50                  Finally, on about 22 February 2005, Dr Lynch succeeded in contacting the applicant on her mobile phone.  Dr Lynch told the applicant that she had been trying to contact her.  The applicant said that she had been “out and about”.  Dr Lynch asked the applicant what was happening, and if she had any idea of when she would return to work.  According to Dr Lynch, the applicant said:  “No, I don't know.  I don't know what I am doing.  I will see Dr Stewart again.  I am not sure when.  Next week or some time.  And then I will let you know.”    Dr Lynch asked the applicant what was wrong with her, and whether it was a WorkCover matter.  The applicant said it was not, adding:  “I am off on work stress”, or more specifically, as Dr Lynch accepted under cross examination, “I have a medical certificate for stress leave”.  Dr Lynch gave evidence that the applicant told her that she had seen the note from Dr James Lynch on 7 February 2005 and “lost it”.  Dr Lynch could not recall whether, as the applicant said in her evidence, she (the applicant) had told Dr Lynch that she saw the note and became “sick and distressed”.

51                  In her conversation with the applicant on 22 February 2005, just what Dr Sandra Lynch said to the applicant about returning to work, and why she said it, were not entirely unambiguous in the evidence.  According to Dr Lynch, having been told by the applicant that she was on stress leave, she (Dr Lynch) said:  “Well, can you please get back to us and come in and discuss it and – so that we can sort out the stress.  Please ring myself or ring Heather Fisher so that we can sort this out.”  However, Dr Lynch also said that she wanted the applicant to come to work because she “had issues to discuss with her”.  Those issues, it seems, included at least some of the matters referred to in items 1 – 4 in the letter of 4 March 2005.  Dr Lynch described them as “issues about her employment”.

52                  What is clear is that the conversation of 22 February 2005 ended with Dr Sandra Lynch asking the applicant to ring herself or Ms Fisher with a view to making an arrangement to come to work for a meeting.  The applicant did not do so.

53                  If item 5 in the respondents’ letter of 4 March 2005 is intended to allege a wilful abandonment of the workplace, the use of the category “incompetence” is inapt.  Manifestly, the events of 7 February 2005 had nothing to do with incompetence.  Neither do I think that the conduct of the applicant on that occasion constituted disobedience or defiance.  The respondents attempted to justify item 5 on the basis that the applicant’s conduct amounted in effect to a rejection of Dr James Lynch’s instruction to be diplomatic in her relations with Dr Chen.  The facts do not bear such a construction.  There was nothing in the evidence that would sustain any suggestion that the applicant would have been unwilling to comply with any reasonable direction as to the way in which communications with Dr Chen should be handled.  As the applicant said, Dr Chen was a practitioner who was unknown to her, yet Dr Lynch’s note carried an unambiguous tone of rebuke, as though the applicant already had a record of disobedience in relevant respects.  The only evidence about the applicant’s reaction to the note on 7 February 2005 was that of the applicant herself.  The respondents provided no explanation of why Ms Fisher was not called.  In the circumstances I accept the applicant’s evidence as to the events of that day.  I also accept Dr Stewart’s evidence as to the illness which was brought on by those events.  I find that, as a result of reading the note left by Dr Lynch, the applicant became distressed and depressed – in the medical sense – as described by Dr Stewart.  She left work for those reasons, and not in any way that implied a rejection of her employers’ lawful authority.

The fixed-term contract

54                  I propose to consider next the question of the terms upon which the applicant was employed when she was dismissed on 4 March 2005.  As I have said, the respondents contend that the applicant was employed on a fixed-term contract that expired on 25 October 2005.  The applicant contends that she was employed on a contract of indeterminate length – in effect a contract from week to week that could be terminated only on reasonable notice.

55                  Dr Sandra Lynch said that, at St Georges Road, she was doing most of the administration, but she did not want to continue doing that.  So she sought to recruit someone with the skills for that function.  She was not able to recruit such a person.  However, in July 2004 she engaged a project manager to oversee the new staff contracts, to help with the marketing of the new clinic, to help with the smooth and efficient change from St Georges Road to High Street and to help improve the skills of the existing staff in customer relations.  The project manager was Ms Paula Febey.

56                  One of Ms Febey’s responsibilities, it seems, was to prepare and distribute to existing staff new contracts of employment that would apply to them at High Street.  In the case of the applicant, the proposed contract took the form of a letter addressed to her and dated 7 October 2004.  The letter commenced with the normal greeting and then proceeded:  “We write to offer you …” the position in question.  The letter set out a regime of terms and conditions of employment.  The letter concluded with a line upon which the applicant was intended to place her signature, besides which the words “I accept the above terms” appeared.

57                  The letter of 7 October 2004 had some curious features.  First, it stated that the applicant was being offered a “full-time, permanent position”, but the period of the contract was for 12 months only, from 25 October 2004 until 25 October 2005.  Secondly, the position being offered was that of Practice Manager, but the letter stated that the applicant, if appointed to the position, would report to the Practice Manager.  Thirdly, the letter finished with the words, “we look forward to you joining the company team”, but, at least as far as the evidence disclosed, no company was involved (and none is referred to in the letter).

58                  The applicant did not immediately sign and return the contract which had been offered to her.  She stated that she was hesitant about it.  Dr Sandra Lynch gave evidence that she asked the applicant whether she had returned the signed contract to Ms Febey, but received responses that were either negative or non-committal.  In the days following 20 November 2004, however, a number of relevant things happened.  They were:

·          The applicant signed her contract and put it into Ms Febey’s pigeonhole.

·          Dr Sandra Lynch wrote a memorandum to the applicant dated 21 November 2004 in the following terms:

As you have not returned the contract that has been under negotiation for at least 6 weeks we acknowledge that you are not prepared to sign and have reservations about the contract.  As such we withdraw our offer and will review the contract over the next few weeks.

·          Dr Sandra Lynch and the applicant had a discussion about the return of the applicant’s signed contract.

·          Dr Sandra Lynch prepared the draft warning letter to which I have referred in par 23 above.

59                  The respondent’s letter of 7 October 2004 was an offer intended, if accepted, to create legal relations.  If and when she signed the acceptance line on that letter and returned the letter to the respondents, the applicant would thereby have brought a contract into existence.  However, if, by her memorandum of 21 November 2004 or some other indication, Dr Lynch withdrew the offer before it was accepted, any purported acceptance by the applicant would have been ineffective. 

60                  The applicant’s evidence was that, after her initial hesitation, she signed the contract and returned it to Ms Febey’s pigeonhole.  As to the time relationship between that event and the applicant’s receipt of Dr Lynch’s withdrawal memorandum of 21 November, the applicant’s evidence in chief was that when she was given the memorandum by Dr Lynch, she responded that she had already put her contract into Ms Febey’s pigeonhole.  The evidence of Dr Lynch was broadly consistent with the applicant’s.  Dr Lynch said that, upon giving the applicant her memorandum of 21 November, she asked the applicant for the contract.  The applicant replied that she had put it in Ms Febey’s pigeonhole.  Dr Lynch said that she looked in the pigeonhole and found the contract, duly signed by the applicant.

61                  It is at this point that the draft (but unsent) warning letter dated 22 November 2004 becomes helpful in resolving the times at which various things happened.  It is first necessary to point out that, although dated 22 November, that letter refers to events which are stated to have occurred on 23 November 2004.  When this was drawn to her attention, Dr Lynch accepted that the letter was probably written on or after 23 November, not on 22 November as the date on the letter suggested.  If the terms of the letter are otherwise to be believed (and, save for another obvious error – the reference to the withdrawal memorandum as having been dated 22 November when it was dated 21 November – the contrary was not suggested), the signed contract which the applicant placed in Ms Febey’s pigeonhole was dated 20 November 2004.  That was a Friday.  Although there was some uncertainty in the evidence as to whether the applicant worked on Saturdays, Dr Sandra Lynch made it clear that she did not do so.  The draft warning letter stated that the signed contract was “offered” to Dr Lynch on 23 November – the following Monday.  It is probable, therefore – and I find – that it was on 23 November that the applicant and Dr Sandra Lynch had their conversation in which Dr Lynch handed the withdrawal memorandum dated 21 November to the applicant, the applicant told Dr Lynch that the signed contract was to be found in Ms Febey’s pigeonhole, and Dr Lynch found it there.

62                  On this evidence, I find that, on 20 November 2004 the applicant signed her contract and placed it in Ms Febey’s pigeonhole.  As Ms Febey was the respondent’s agent, I should treat the return of the signed contract by the applicant as an acceptance by her of the terms offered by the respondents.  On 23 November 2004 the applicant was presented with the withdrawal memorandum by Dr Sandra Lynch, but by then a contract, in the legal and not merely the popular sense, had come into existence.  Did anything happen subsequently to alter the contractual relations thus established? 

63                  There is disagreement as to what happened after Dr Lynch saw the signed contract in Ms Febey’s pigeonhole on 23 November.  Dr Lynch said that she put the contract back into the pigeonhole and said “we will see about it”.  She did not follow it up again with Ms Febey, and it was some time later – December or possibly even January – that she realised that the contract was missing and could not be located.  The applicant said that, having found the contract in Ms Febey’s pigeonhole, Dr Lynch gave it back to her (the applicant), saying that it was “no good any more” or that it was “too late”.  Dr Lynch denied giving the contract back to the applicant, but did not, at least in terms, deny making the comment alleged by the applicant.  The applicant said that she kept the contract at home, and then gave it to her solicitor.  Counsel for the respondents called for the contract, but it was not produced.

64                  Once a contract had come into existence on 20 November 2004, unilateral comments by Dr Lynch of the kind alleged by the applicant would be ineffective to terminate or revoke that contract.  However, there may be an argument that, if Dr Lynch did hand the contract back to the applicant and the applicant accepted it, the parties had thereby consensually revoked the contract into which they had so recently entered.  The argument would, in my view, be a weak one.  It would be based on the proposition that, if her intention was that the contract would not thereafter subsist, Dr Lynch, acting reasonably, would have returned the executed original to the applicant.  The proposition is manifestly suspect:  I find it hard to see how a reasonable person, not wanting to be in a contractual relationship with another, would arm that other with the best evidence of the existence of the relationship.

65                  On the other hand, it is clear that, by the time of her conversation with the applicant on 23 November 2004, Dr Lynch had, in her own words in the draft warning letter, “decided that we would without a contract in place offer your [sic] continued employment according to the award”.  She was apparently unhappy with the applicant’s general performance, and expressed, in that draft, the “hope that our working relationship can be redeemed”.  These may have been Dr Lynch’s thoughts:  they were not communicated to the applicant.  They cannot, in other words, be taken as Dr Lynch’s part of a consensual revocation of the contract.  They do not make it any the more likely that Dr Lynch returned the signed contract to the applicant on 23 November;  they are consistent with Dr Lynch’s own evidence that she returned the contract to Ms Febey’s pigeonhole and said “we will see about it”.

66                  Finally on this aspect, there is the applicant’s failure to produce the contract, notwithstanding that she claimed to have given it to her solicitor.  That failure opened the way for the respondents to prove the contract otherwise (a copy of it was actually tendered on behalf of the applicant).  But it also significantly compromised the applicant’s case that Dr Lynch handed the contract back to her on 23 November 2004.

67                  In the circumstances, I am not prepared to accept that Dr Lynch did hand the signed contract back to the applicant.

68                  Since I have found that a contract came into existence on 20 November 2004 when the applicant returned the signed form of contract to Ms Febey’s pigeonhole, the applicant carries the evidentiary onus of proving that that contract was terminated or revoked by a later agreement between the parties.  While the facts leave some scope for such a conclusion, if anything the factual case to the contrary is somewhat stronger.  It is, however, sufficient for me to hold, as I do, that the onus has not been discharged.

69                  It follows that, on and from 20 November 2004, the applicant was engaged by the respondents for a fixed term expiring on 25 October 2005.

Dismissal for cause?

70                  I turn now to the respondents’ case that, on 4 March 2005, they terminated the applicant’s employment summarily for cause.  They base their case on two categories of justification.  First, they say that the five items of alleged misconduct and the like in their letter of that date warranted summary dismissal.  Secondly, they refer to circumstances which came to light subsequently, and for which they could have dismissed the applicant summarily, had they known about them at the time.  On this second aspect, the respondents are on solid jurisprudential ground; whether they are on solid ground factually remains to be seen.

71                  Turning first to the items listed in the respondents’ letter of 4 March 2005, it is apparent from my findings above that there is no admissible evidence of misconduct such as would justify summary dismissal in relation to items 2 and 4.  I have found that the events to which item 1 referred did not involve an actual threat of violence, so that cannot be relied on by the respondents.   I have held that the matters raised by item 3 do involve a degree of incompetence, but the case that income has been lost has not been established.  Those matters are not such as would justify summary termination.  Finally, I need say nothing more about item 5 than that the facts disclosed in the evidence are a very long way from amounting to a case of misconduct or disobedience.  In the circumstances I hold that the respondents were not justified in their summary termination of the applicant’s employment for the reasons set out in their letter of 4 March 2005.

72                  I should add that, were the conclusions I have just expressed otherwise, there would be a very real question whether the respondents could still, on 4 March 2005, rely on events which occurred no more recently than 7 February 2005, and in some cases months previously, as a justification for summary termination.  The matters covered by items 1, 2 and 4 were concluded – and known to the respondents – before the applicant went on leave before Christmas 2004.  The respondents appear to have taken the position that the applicant should be given an opportunity to have a break from work and to return with renewed commitment in February 2005.  I do not consider that it was open to the respondents thereafter to rely upon those items as repudiatory conduct on the part of the applicant.  Item 3 may be in a different category, in that it was not until some months into 2005 that the extent of the applicant’s omissions became apparent to the respondents – at least on their case.  Item 5 is also probably in a different category, since, putting the respondents’ case at its highest for these purposes, it should be assumed that, when they themselves came back from leave, the respondents decided to confront the applicant with their concerns face-to-face, but could not do so because of her absence from work.

HIC issues

73                  I consider next the respondents’ reliance on circumstances which they discovered after the applicant had left their employ and which, they contend, would have justified summary termination if known about at the relevant time.

74                  In July 2005, the clinic at High Street was “raided” by representatives of the Health Insurance Commission (“the HIC”).  Their concern related to Medicare reimbursement claims by the practice which were suspect in one way or another.  About 39 or 40 patients were involved.  Examples referred to in evidence were claims for nursing home consultations with patients who had previously died or been discharged from the home.  It was Ms Cundari’s primary responsibility to enter into the computer the details of nursing home consultations by Dr James Lynch.  On 21 December 2004 he sent two electronic messages to Ms Cundari the substance of which was that he was unaware that the patients in question had been discharged, and “the error has been corrected”.  Although not greatly significant in itself, this communication referred to omissions which, it seems, were happening on a broader scale.

75                  Dr James Lynch gave evidence that his practice was to go to a nursing home, to make an entry in his house call book and, on return to the clinic, to give the page to Ms Cundari and to tell her that he had seen everyone at the home.  Typically that would be for a “standard visit”, which was item number 35, although once a year he would, in co-operation with the nursing staff at the home, do a more detailed plan with respect to the management of his palliative care patients, which was item number 712.  It seems that Dr Lynch’s practice did not involve him writing the name of each patient he had seen at the nursing home on the page which he gave to Ms Cundari:  rather, the system relied upon the staff in the clinic, principally Ms Cundari it would seem, being aware of the names and details of the patients at the nursing home in question.  It was her task to remove the name of a patient from the list for a particular nursing home if that patient died.  According to Dr Lynch, she did this either when notified of the death by the home or as a result of “making direct contact with the nursing home on a fairly regular basis”. 

76                  Ms Cundari was cross examined about her role in the removal from a nursing home list of the names of patients who had died or been discharged.  If her evidence is to be believed, she thought very little about the task with which she had, according to Dr Lynch, been entrusted, but simply did what she was told.  For example, she was shown a memorandum from Caritas Christi Hospice headed “Clinical Summary – RIP”.  The name of the patient to whom it referred was stated, and in the third block line of the heading there appeared the notation:  “Date of death:  21/07/04”.  At the foot of the memorandum the word “SCAN” appeared in bold, beside Dr Lynch’s initials (which Ms Cundari recognised).  When asked what she would have done on receipt of such a document, Ms Cundari said, “well, he has just got ‘scan’ on it … we just look at the name and scan it and file it ….”  When she was asked, “wouldn't you at least look at the first couple of lines and see that, in fact, that is recording that that patient is dead?”, Ms Cundari answered, “not really, no”. 

77                  Ms Cundari’s approach was effectively corroborated by the applicant.  She said that a dead patient’s name would be taken off the billing list in the computer when Dr Lynch instructed the staff to do so but not, apparently, merely in response to the receipt of a memorandum of the kind referred to in the previous paragraph.  She said that the staff did not look at the correspondence – they only scanned.  The applicant was shown the Caritas Christi memorandum, and her cross examination proceeded:

And then just below that, it says that he is dead?‑‑‑But that, to any staff member, can mean anything.

You haven't trained Ms [Cundari] to say that when somebody's got RIP they know they are dead?‑‑‑But I don't know who scanned that into the computer for a start.

Right?‑‑‑And Dr James and all the doctors would write a note or come out and tell us that that patient was deceased.  When they have got the document, they would come out and tell us to mark it off the computer.

78                  Whatever the limits of the role of Ms Cundari in relation to deceased or discharged patients, it seems that the applicant’s task was to transmit the practice’s claims to the HIC, and to receive any rejection and error notices.  There were such notices.  In evidence were several advices from the HIC notifying the practice that it had been paid in relation to particular claims.  In some instances the payment was recorded as “$0.00”, coded with the number “211”.  Dr James Lynch explained that this code number meant that the Medicare number of the patient in respect of whom the practice was claiming payment for a particular consultation was invalid.  One example related to the patient referred to in the memorandum from Caritas Christi as being deceased.  That memorandum was dated 5 August 2004.  The practice claimed for consultations with that patient on 29 October and 1 November 2004.  Each claim was rejected, and coded 211, by the HIC.  Another example was that of a patient in respect of whom claims by the practice for consultations on 26 July, 9 and 30 August, 20 September and 4 October 2004 had all been rejected, and coded 211.  According to Dr James Lynch, these error codings came to his attention only after the HIC raid in July the following year.  He said that he would have would have expected that the error messages would have been chased up by the applicant, and the reason for them clarified.

79                  The applicant accepted that, if a claim in relation to a patient was rejected by the HIC, she would “tell the girls that there was something wrong with that number, to check”.  However, she said that if the notes were coming back that Dr James had seen all the patients at the nursing home in question, claims would be made accordingly.  Under cross examination, the applicant was taken in some detail to the claims which had been made and rejected five times between July and October 2004, and, although she accepted that, generally, it was her job to attend to such matters, she justified the fact that nothing had been done about this patient by saying either that the HIC was not authorised to inform them that someone had died, or by saying that the doctor in question had not informed her that the patient had died, or by saying that the information to which she was taken did not demonstrate upon what date the 211 codes had actually been returned to the practice.  I am bound to say that I consider that the applicant was dissembling in this area, and that she did not have a legitimate explanation for what was prima facie a failure to perform an element of her job as practice manager.

80                  For all of that, I am unable to find that the applicant’s failings in the area of the HIC rejections had any such element of wilfulness as would make them justification for summary termination.  It was an instance of inadequate performance on the part of the applicant – no doubt the respondents would say yet another instance.  The authorities, however, make it clear that, for conduct to justify summary dismissal, it must go to the root of the relationship or, in contractual terms, be repudiatory.  The applicant’s conduct in presently relevant respects was not in that category.

Section 170ck

81                  Unless the respondents establish that the reasons for the dismissal of the applicant did not include the “prohibited reasons” on which she relies, she is entitled to judgment under s 170CK of the Act: see s 170CQ. 

82                  The respondents have both denied that the applicant was dismissed by reason of her absence from work because of her illness or by reason of her physical or mental disability.  Rather, they say, she was dismissed for the five reasons stated in their letter of 4 March 2005.  They say that that letter was the act of dismissal, it was a statement by the employers effecting the dismissal, and it should be taken at face value.

83                  Counsel for the applicant submits that I should not regard any but the fifth reason as in any way credible.  He submits that, when properly understood, the gravamen of the fifth reason is that the applicant absented herself from work on 7 February 2005, promptly placed herself on sick leave, and refused to return to work thereafter, notwithstanding having been invited to do so by Dr Sandra Lynch and other members of the administrative and professional staff at the clinic.  He submits, therefore, that a significant reason – although he needs only to say a reason – why the applicant was dismissed was that she remained absent from work on sick leave.

84                  Counsel for the respondents submits that the respondents had very real concerns about the applicant even before she went on leave in December 2004.  He says that the burden of the fifth item in the respondents’ list of 4 March 2005 was not absence from work per se, but the applicant’s peremptory departure from the workplace on 7 February 2005 in apparent defiance of the memorandum from Dr James Lynch requiring her to behave in a particular way with respect to Dr Chen.  He submits that the applicant was dismissed only when the respondents were unable to have her participate in a meeting, or counselling session, where her concerns may have been discussed.

85                  It is clear that, by the time the applicant went on leave before Christmas 2004, the respondents had reached a point where they had very substantial reservations, to say the least, about keeping her in their employ.  I need not reiterate the factors referred to earlier in these reasons which brought the respondents to this point.  In a number of respects in which I have held that the respondents’ contractual defence is not made out, I nonetheless accept that they held an actual belief that the applicant had acted in a way which they should not tolerate.  I accept that Dr James Lynch was mortified by the overseas visitor’s reports of what she described as racial vilification.  I accept that Dr Sandra Lynch was shocked by the content and tone of the applicant’s suggestion as to the kind of cautionary assault that should be administered to Rose – even if only metaphorically intended.  I also accept that both respondents genuinely objected to the applicant and other staff conversing in a foreign language in the presence of patients.  I accept too that Dr Sandra Lynch was becoming increasingly frustrated with the applicant’s continued failure to provide a printout of the debts owing by Medicare, and with the applicant’s proffering of what she (Dr Lynch) regarded as an inadequate excuse by way of printer malfunction.  I am, therefore, prepared to accept that each of items 1-4 in the respondents’ letter of 4 March 2005 was a reason why the applicant was eventually dismissed.

86                  That leaves item 5 in the letter of 4 March 2005.  The difficulty with the respondents’ position in this regard is that the item, as set out in the letter, assumes a state of affairs which I have found to be contrary to the facts.  The applicant did not in fact depart from her workplace on 7 February 2005 in defiance of her employers’ instructions, in rejection of their authority or in a fit of pique.  She departed because she became, rather suddenly, afflicted by a condition which Dr Stewart diagnosed as agitated depression.  Even then, she did not depart immediately upon reading Dr James Lynch’s memorandum: she remained at work for a time, comforted, it would seem, by Ms Fisher.

87                  In item 5 of their letter dated 4 March 2005, the respondents left no doubt but that the applicant’s departure from the workplace on 7 February 2005 was a reason why they terminated her employment.  If they had an actual, albeit mistaken, belief about the character of the applicant’s departure from the workplace, their reason for the termination would not have been the applicant’s absence on sick leave.  The question is whether I should accept that they had an actual, but mistaken, belief in that respect.  The question concerns the respondents’ state of knowledge on 4 March 2005.  By then they were well aware that the applicant was absent on sick leave, and had been so absent since 7 February 2005 – there were medical certificates to prove it.  They also knew, from what the applicant told Dr Sandra Lynch on 22 February 2005, that the applicant’s medical reason for being absent was based on stress.  The applicant’s comment, upon which the respondents relied in item 5, that she “lost it” was, as stated by Dr Lynch in her evidence, related to the applicant having seen the note from Dr James Lynch.

88                  If all the respondents knew about the events of 7 February 2005 (when they were themselves on leave) was what the applicant told Dr Sandra Lynch on the telephone on 22 February 2005, there might be some room for misunderstanding on the respondents’ part.  Even that would require that I reject the evidence of the applicant that she told Dr Lynch, in that conversation, that the note made her “sick and distressed”.  If I did so, however, it would be possible to find that, at all times up to 4 March 2005, the respondents actually believed that the applicant had left the workplace on 7 February in an act of defiance, rather than because of her illness.  I say “possible” because it would by no means follow that such a finding would be made: the medical certificates supplied by Dr Stewart would raise the strongest doubts, to say the least, about the existence of such a belief.

89                  But there is another factor of considerable importance.  Ms Fisher was acting as Practice Manager while the applicant was on leave.  In the absence of the respondents themselves, I can think of no reason why I should not infer that Ms Fisher was in effect in charge of the office pending the applicant’s return, and again after the applicant re-departed on 7 February.  She was the respondents’ representative in their dealings with the applicant on that day.  The evidence of the interaction between her and the applicant to which I have referred in par 44 above was not challenged by the respondents.  Ms Fisher was not called.  That Ms Fisher would not have accurately related the events of 7 February to the respondents on their return from leave (or before that time) is, I consider, a most unlikely possibility.  The subject was not the subject of any evidence on behalf of the respondents.

90                  I am compelled to the conclusion, on the probabilities, that Ms Fisher informed the respondents of the applicant’s reaction to the note left for her by Dr James Lynch, and of the real reason why the applicant left work on 7 February 2005.  I do not accept the evidence of Dr Sandra Lynch that, immediately before she spoke to the applicant by telephone on 22 February 2005, she had no more reason to believe that the applicant was on leave because of an illness of the mind than because she had, for example, fallen down the stairs and injured her leg (as she put it).  If there were any room for doubt in that respect, it was removed by what the applicant said on that occasion.  More significantly, I find that, as a result of what Ms Fisher most probably told them (together with the medical certificates and the information given by the applicant herself on 22 February), on 4 March 2005 the respondents did not actually believe that the applicant’s departure from work on 7 February was by way of an act of defiance.  They then well knew that the applicant had left work in a state of distress, that Ms Fisher had advised her to take some time off on WorkCover, and that the circumstances of her departure led directly to the provision of medical certificates by Dr Stewart.

91                  Turning to s 170CK(2)(a) of the Act, the “reason” to which that provision refers is, I consider, the temporary absence from work.  For an employer to act in breach of the provision, there must be an awareness that the absence was because of illness or injury, and the absence must be the reason for the termination.  Or, to put it defensively, an employer will succeed in avoiding an adverse finding under the provision upon proving either that he or she did not know the reason for the absence or that he or she did not terminate the employment by reason of the absence.  In the present case the respondents have not proved either: indeed, I find the contrary in each case.

92                  It follows that I should find that a reason why the respondents terminated the employment of the applicant was that, on 7 February 2005, she absented herself from work because of illness.  Since the respondents accept that her absence thereafter was, as at 4 March 2005, temporary within the meaning of s 170CK(2)(a) of the Act, it likewise follows that the respondents have contravened that section.

93                  As for the applicant’s reliance on par (f) of s 170CK(2) of the Act, the respondents have both denied that they terminated the applicant’s employment by reason of her physical or mental disability.  Dr Sandra Lynch, who took the lead in attempting to discover why the applicant was absent from work in February 2005, gave evidence that she was unaware of any physical or metal disability which the applicant had.  I accept that evidence.  Indeed, I do not consider that the applicant has established that she did in fact have any such disability at any relevant time.  In this part of her case, she sought to rely on conditions which were in the nature of illnesses rather than disabilities.  For these reasons I would reject so much of her case as was brought under s 170CK(2)(f) of the Act.

Remedies

94                  Having succeeded under s 170CK of the Act, the applicant has established at least a prima facie entitlement to one of the remedies referred to in s 170CR(1) of the Act.  I shall not deal with the question of any penalty at this stage.  I shall give the parties, and in particular the respondents, an opportunity to address me on that subject in the light of the reasons which I have given above. 

95                  During the course of the parties’ submissions at the trial, I indicated that, whatever the outcome of the case, I would not order the reinstatement of the applicant in her former employment.  My reasons for declining to order reinstatement are as follows.  First, within about a month of being dismissed by the respondents, the applicant secured further employment as a medical receptionist.  It is true that this was for only 20 hours per week, rising to 25 hours per week in March 2006.  It is not, however, as though the applicant would be without employment altogether if not reinstated by the respondents.

96                  Secondly, quite apart from their breach of s 170CK of the Act, I accept the respondents’ case that they no longer have the necessary trust and confidence in the applicant, particularly for an important position such as Practice Manager in their clinic.  Albeit that the clinic at High Street is a larger operation than was the clinic at St Georges Road, it remains the fact that the respondents are medical practitioners in the way of working proprietors, and I infer that they are required regularly to interact, at the personal level, with their Practice Manager.  Having seen both respondents give their evidence in this case, I am confident in the conclusion that any attempt by the Court to restore a genuine employer/employee relationship would be futile.  I also observed the applicant give her evidence.  On the subject of reinstatement, she said “I would like to, but it would be really difficult after a year and a half … to go back there, but if it was to happen, I would love to.”  She gave this evidence tentatively and, I thought, somewhat rigidly.  It was as though she was doing what was required to secure the highest level of success in the proceeding.  I was not left with any real conviction that she wished to work for the respondents again. 

97                  Thirdly, I am persuaded by the respondents that the other four reasons which they proffered for the applicant’s dismissal, although insufficient to justify summary termination as a matter of law, were genuine, actual, reasons for their wish to have the applicant out of their employ.  The terms of s 170CK of the Act are such as to contemplate that an employee may be dismissed for a number of reasons, only one of which is a prohibited reason.  I can think of no reason why, in an appropriate case, the non-prohibited reasons which lay behind a dismissal should not be relevant at the point of considering the discretionary remedy of reinstatement.  As I have found in these reasons, by the time the applicant went on leave at the end of 2004, the respondents had come close to the point of deciding that she should no longer be in their employ.  It is true that they had not reached that point, but an order of reinstatement would effectively indicate to them that they could not terminate the employment of the applicant, even lawfully, for those non-prohibited reasons.  Although not conclusive of itself, this is a consideration which, in my judgment, tends against the making of an order for reinstatement. 

98                  In the light of the conclusion I have reached on the applicant’s common law claim, I propose to defer consideration of the question of compensation under s 170CR(1)(c) of the Act, and to invite the parties to address me on that subject at the same time as I hear them on the matter of penalty. 

99                  With respect to that common law claim, I have held that none of the circumstances relied on by the respondents was sufficient to justify the summary termination of the applicant’s employment.  It follows that the applicant is entitled to damages for wrongful dismissal.  Since I have held that the applicant was employed on a fixed term contract terminating on 25 October 2005, the starting point for the calculation of damages would be the remuneration which she lost from the date of her dismissal until that date.  I shall, however, say nothing further on that subject here, but give the parties an opportunity to prepare their calculations and to address me further on the terms of a damages order that is appropriate in the circumstances. 

100               I shall order that the parties exchange outlines in which they state the orders which they propose to give effect to the foregoing reasons, and in which they provide all necessary particulars.

Associate:

Dated:         1 December 2006