DECISION NO:665/96
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - no point of principle
Industrial
Relations Act 1988 (Cth):
ss 170db, 170dc, 170db
ANNE MAHER v CHINATOWN
PHOTOGRAPHICS
JOHN JOSEPH MAHER v CHINATOWN PHOTOGRAPHICS
WI 1274 of 1996
WI 1275 of 1996
Before: MADGWICK J
Place: BROOME
Date: 29 OCTOBER 1996
IN THE
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
WI 1274 of 1996
WI 1275 of 1996
BETWEEN:
|
JOHN JOSEPH MAHER |
AND
|
CHINATOWN PHOTOGRAPHICS |
BEFORE: MADGWICK J
PLACE: BROOME
DATE: 29 OCTOBER 1996
MINUTES OF ORDERS
THE COURT ORDERS THAT:
1. The respondent is to pay the first applicant, Anne Maher, the sum of $1,850.
2. The respondent is to pay the second applicant, John Joseph Maher, the sum of $900.
3. The amounts in (1) and (2) are to be paid within 28 days.
4. The respondent is to pay any tax that arises from the payment of the amounts in (1) and (2).
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
WI 1274 of 1996
WI 1275 of 1996
BETWEEN:
|
ANNE MAHER JOHN JOSEPH MAHER |
AND
|
CHINATOWN PHOTOGRAPHICS |
BEFORE: MADGWICK J
PLACE: BROOME
DATE: 29 OCTOBER 1996
REASONS FOR DECISION
Delivered ex tempore (revised from transcript)
[1] HIS HONOUR: Mrs Maher was engaged by Mrs Nott to be the Manager of the latter's small business in Broome known as Chinatown Photographics.
[2] The money making engine of this business was the development and printing of photographic films, the sale of films, and the sale of cameras and other related equipment including frames. Mrs Nott is a woman who has had the benefit of tertiary education and has practised as a professional person. She has also had wide experience in other forms of economic activity, having been a partner in a primary production enterprise and in another successful small business. She was able to perceive that there ought to be good money in a photographic business such as I have described, and she set it up, by way of an adjunct to a shop housing another business which she operated in Broome, with the purchase of some developing and printing machines.
[3] Her first manager was unsatisfactory for reasons that I need not mention. Mrs Nott was not well and she deputed the manager of her other business to interview prospective managers for the photographic business. Mrs Maher was the successful applicant. The terms of her employment were that she be paid $400 a week plus tax, that she would have the use of a dwelling rent free (the rental value being $200 per week), and that she would have the use of a Mini Moke motor vehicle.
[4] Mrs Maher's husband was a person of some varied experience also looking for work in Broome. Mrs Nott was a kindly and compassionate person and also wished to see her new manager satisfied. In effect, matters were originally left on the basis that there might be some part time work in the future for Mr Maher. Such an opportunity later arose and he was originally employed by Mrs Maher (with Mrs Nott's assent) for 2 or 3 hours per day during the off-tourist season in Broome. With the advent of the tourist season, he began to work full time and this continued until the employment of the pair was terminated on 25 July 1994.
[5] It was rightly said in the course of argument that this case is a monument to misunderstandings, and the more remarkable because misunderstandings occurred between two women who were honest, who were not unintelligent and who liked each other. An example will suffice. Mrs Nott was troubled in her mind about sales tax as she did not understand how it applied to manufactured goods such as developed film. It was a matter of detail with which, in her ill condition, she did not wish to have to contend. She desired that Mrs Maher would attend to this, and asked her whether she understood the sales tax requirements in relation to a photographic business. Mrs Maher said that she did.
[6] Mrs Nott believed that by this conversation she had conveyed to Mrs Maher that she wished her to deal with the matter entirely. Mrs Maher, I deduce from the tenor of the evidence and from having seen her, was the sort of person who wishes, so far as she can, to put others at their ease and to take on small burdens herself that might save others distress. She was in the habit of telling Mrs Nott not to worry about things and that she would see to them. Mrs Nott really understood that Mrs Maher was to deal with sales tax. This seems the clearer because an effort was made on behalf of Mrs Nott to prove that Mrs Maher had in effect been derelict in her duty as to sales tax by the production of a document showing that the taxation authorities had conducted a sales tax audit of the business and that correspondence in connection therewith was addressed to Mrs Maher. All that correspondence shows is that, naturally enough, correspondence was addressed to Mrs Maher as the person who was both manager of the business and physically in charge of the premises. If Mrs Maher had the faintest idea that she was to attend to sales tax then that audit would have spurred her into action even had she been dilatory or ignorant about it. The truth is, in my opinion, that she did not understand that she had to deal with sales tax.
[7] Another example is worth mentioning. By late 1993 the Mahers had taken no annual holidays and either just before or just after a plan to take a week or two of leave, there was a discussion about the taking of and/or payment for unpaid holiday pay and the undesirability that it simply mount up as a contingent debt for Mrs Nott. It probably suited everybody that the Mahers not take many holidays but be paid in lieu thereof. That way, Mrs Nott would neither have a continually mounting contingent debt nor would she have the trouble of organising replacement staff, and the Mahers, who were not especially hard pressed in the off season or apparently greatly in need of leisure, would have their finances augmented a little. Whether or not this accords with the State industrial law on the subject, it is a common enough approach to such a matter in small businesses. Mrs Maher believed that she had been authorised from time to time to take moneys and apply them against the couple's entitlements to holiday pay. If she took money out of the till she would quite openly make an entry "AHP" standing for annual holiday pay. On another occasion, when she needed to pay for some glasses, she wrote out a cheque for the optometrists on a Chinatown Photographics cheque and endorsed on the butt "AHP". She was clearly signalling to anybody who might read the accounts that she had taken moneys for a purpose that would reduce her ultimate entitlements from her employer. Thus, she was not proceeding dishonestly but honestly and foolishly.
[8] Because she was ill, Mrs Nott did not take as close an interest in supervising the management of the business by Mrs Maher as would have been usual. She seems to have liked and trusted Mrs Maher. Also, the Mahers were interested in possibly buying the business and Mrs Nott was interested in possibly selling it, so everybody had an economic interest in remaining on good terms, and the Mahers had an economic interest in trying to husband the business so that it would be prosperous for them if they bought it.
[9] In 1994 Mrs Nott had some concerns as she had a fairly large payment to make on the photographic developing equipment (the Minilab), and she also became aware that there was a large debt to a supplier and that liquidity was not good in the business. She interested herself rather more closely in what was going on and could not understand the “AHP” entries and various other matters. She arranged a meeting with Mrs Maher, who straightforwardly told her what she had done. Mrs Nott was upset as she had not intended to authorise an employee to have a discretion to decide to pay herself and her husband on account of unpaid holiday pay as and when she saw fit and without specific reference to her, Mrs Nott.
[10] Mrs Nott jumped to the conclusion that Mrs Maher had been dishonest. In my opinion, there was not demonstrated even a whiff of dishonesty. Having decided that there was dishonesty in that respect, much was made by Mrs Nott of a couple of other incidents. One was that Mrs Maher sold herself some picture frames, including some damaged ones, from the business. She made an invoice to herself, obviously intending to pay it at a time convenient to her. She had overlooked doing so up to the time that her services were terminated. Thereafter, I think probably rather miserably and spitefully, she just neglected to do so.
[11] Another trivial matter was that Mrs Maher wanted some mulch delivered by a gardening landscape supplier to a property she and her husband owned in a Broome suburb. She gave an account of how this was delivered and a perfectly understandable explanation as to how an invoice for the amount of the mulch might have come to the shop made out as if the business had ordered the mulch. Mrs Maher had explained to the supplier that she was employed by a business in town and that he could therefore safely trust her to pay if the mulch was delivered. There is no suggestion in the evidence that Mrs Maher sought to have the business pay for the mulch. There are other instances, yet none of them even raise a suspicion of dishonesty before an impartial person.
[12] At the said meeting, one matter that was not discussed was the possible sale of the business to the Mahers. That was because the parties had exchanged offers which were a long way apart and Mrs Nott had come to the view that there was no prospect of reaching a sensible agreement with the Mahers as to price and mode of payment. With that in the background, the relationship between the two women was souring. Mrs Maher did not like the tone of the questioning. She felt unappreciated and snapped that she did not wish to work for Mrs Nott any more, or words to that effect.
[13] She did not really mean that she resigned, but simply that, if she was to be treated in this way, she would not find working for Mrs Nott pleasant. She was upset and hurt when she reacted in the way she did. Mrs Nott took her literally and went on to try to counsel her against buying another particular business that Mrs Maher mentioned might become available, and generally about the pitfalls of running a small business. I accept that Mrs Nott was kindly motivated in this regard but that is not how matters appeared to Mrs Maher. She thought that her general capacities were being impugned and she bridled at it. It is yet another example of the way these women seem to have been fated to misunderstand each other. So far as Mr Maher is concerned, Mrs Nott had never had a great opinion of his capacities. Mrs Nott complained of the amount that he was being paid. She indicated that she wanted his hours of work to be reduced. Mrs Nott told Mrs Maher that she could no longer provide rent-free accommodation and would have to charge $100 per week for it. Mrs Maher had no option but to agree to this and did so. By the end of the conversation, and more so when both women had gone away and had time to brood about it, the good relationship between them was finished.
[14] Worried about money, sick, disappointed at the way the business had been going, displeased that she had to involve herself deeply in the business rather than be free of it by sale on an equitable and comfortable basis, Mrs Nott jumped to the conclusion that Mrs Maher had been dishonest and that she would be justified in dismissing her.
[15] Mrs Nott decided, without telling the Mahers at the time, that they should go once she had made arrangements to replace them. These arrangements were that she was going to buy a more modern developing machine capable of much simpler operation and which would be amenable to one-person operation of the business. None of this was vouchsafed to either of the Mahers. When she had the machine ready for delivery and had arranged the employment of a replacement, Mrs Nott told Mrs Maher that her services were terminated because of her dishonesty, and that she no longer wanted her husband employed either. Strangely, both women thereupon showed the better sides of their natures. Mrs Nott handed over $1000 cash and said the Mahers could continue to use the Mini Moke for a fortnight or so, and Mrs Maher took home some work to get it in order so that customers of the business would not be disappointed, and so that her replacement would not be walking into a disorganised mess.
[16] On the material before me, the employer has failed to prove dishonesty or anything near it and thus there was no valid reason for the termination of the services of Mrs Maher. Once Mrs Nott had, in her own mind, categorised Mrs Maher's behaviour as allegedly dishonest, she was obliged to raise this with Mrs Maher. Mrs Maher might, for example, have raised one or a dozen instances of conduct consistent only with honesty. She might have pointed out that, if she was going to steal, she would not be such a fool as to leave the distinct paper trail that she did. The law is that she was entitled to have that opportunity and she did not have it.
[17] I do not need to decide whether there was a valid reason to terminate Mr Maher's services because he too was not given the opportunity to defend himself against the allegations which were being made that he was more or less useless. He was not dealt with justly or properly.
[18] For these reasons, the terminations of the two employees' services were unlawful and the question arises of what compensation should be made to them.
[19] Regardless of Mr Maher's performance, once the new machine was ordered, Mrs Nott was determined not to have a person in his position any longer. That was a reasonable approach to running the business, and she might have accomplished it by giving him the notice to which he was entitled under the Act. If her attention had been drawn to the law, I think that is what she would have done. As his pay rate was $300 per week net, she should pay him $900. It will of course be a matter for her to pay the tax on that $900 if the income tax laws make tax payable on it.
[20] In the case of Mrs Maher she obtained another job in Broome, at lesser pay, within a fortnight of her termination. This was no mean achievement in a small town for a person dismissed for alleged dishonesty. She is personable and would have been readily able to find alternative employment had she not been dismissed. Her employment would not, in my view, have lasted beyond about mid September, approximately the end of the tourist high season for business in an establishment such as Mrs Nott's business in Broome. Had Mrs Nott's attention been drawn to the law, I think that she would have probably given Mrs Maher notice, in which case her valid reason for terminating Mrs Maher would have been that she had simply lost confidence in her as manager.
[21] I think that once the relationship soured, and had Mrs Nott not terminated it, very probably Mrs Maher would have found it too unpleasant to continue such employment for very long, and would have begun looking for other work.
[22] In answer to the claims nevertheless, it is argued on behalf of Mrs Nott that accord and satisfaction has been given because, in the process of negotiations for the settlement of a claim for alleged underpayment under an award in a State tribunal, Mrs Nott's then solicitor made efforts to exact an undertaking that the moneys to be paid would be in full and final settlement of all claims howsoever arising. The solicitor's own language was not as clear as that; nor did it follow any of the recognised incantations which lawyers are wont to use in such situations. It is a pity that that was not done. Whether there was accord and satisfaction or whether there was not, I think that, on the whole of the evidence, at least subjectively the parties were not ad idem on this matter. Quite surely Mrs Nott did believe, because she had been led to think that there would never be a claim in respect of any allegedly unlawful termination per se, that she was settling all claims that might come to her from the Mahers. However, the Mahers had received advice, before agreeing to the final settlement of the award claim, that they might have rights, despite earlier advice to the contrary, for money compensation in respect of unlawful termination of their employment and they would have wished to preserve those rights. Having regard to the legal costs, trivial sums are involved, but I have been anxious to do substantial justice in the matter. I therefore proposed to the parties that it might be sensible if the total amount of compensation which I would otherwise award to the Mahers were reduced by a few hundred dollars and all parties have very sensibly accepted this proposal. I therefore need not decide the precise legalities of that matter.
[23] I would have, apart from this matter, awarded Mrs Maher $2350 being for 2 weeks' notice and for the difference in the total value of her remuneration in her new job compared with that in her employment with Mrs Nott, for a period of 7 weeks. As it is, I will award her $1850. Mr Maher, it seems to me, is entitled to the 3 weeks' notice that was due to him under the Act, a sum of $900. This money should be paid within 28 days. I make it clear that the liability is on Mrs Nott to pay tax in relation to these payments if tax is payable. There will be no order as to costs.
