WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES CLIVE VICTOR CALDWELL, APPLICANT v. CLOVEROAKS PTY LTD, RESPONDENT CORAM COMMISSIONER S WOOD DELIVERED MONDAY, 18 MARCH 2002 FILE NO. APPLICATION 1421 OF 2001 CITATION NO. 2002 WAIRC 05045 _________________________________________________________________________________________________________ 618 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 82 W.A.I.G. Result Applicant dismissed unfairly; compensation awarded Contractual entitlement granted Representation Applicant Mr K Chilvers as agent Respondent Mr P Brown _________________________________________________________________________________________________________ Reasons for Decision 1 This is an application made pursuant to section 29(1)(b)(i) and (ii) of the Industrial Relations Act, 1979 (“the Act”). The applicant, Mr Clive Caldwell, says that he was summarily dismissed in a harsh and unfair manner on 18 July 2001 by Mr Peter Brown, a co-director of the respondent. The applicant, in his application does not seek reinstatement instead he seeks six months pay in compensation and in denied contractual benefits the figures of $900 for unpaid annual leave and $1196 for two weeks pay in lieu of notice. 2 Many of the facts in this matter are agreed between the parties. The substantive disagreement is about the meaning of the actions of Mr Caldwell on 18 July 2001 and whether his subsequent dismissal was unfair. Mr Caldwell was employed as a farmhand on Cloveroaks Farm at Cuballing from 1 March 1999 until the time of dismissal. The farm is owned and operated by Mr Peter Brown and his wife Mrs Jennifer Brown. Mr and Mrs Falls, the parents of Mrs Brown, also live on the property. It is common ground that a contract was struck between Cloveroaks Pty Ltd and Mr Caldwell and his wife Jean [Exhibit A1]. 3 The contract reads— “CLOVEROAKS PTY LTD P.O. BOX 16 CUBALLING 6311 ACN 008 840 079 We the Directors of Cloveroaks Pty Ltd, have made this employment agreement with Clive and Jean Caldwell. This agreement will commence on the 1st of March 1999 for a period of 12 months. Conditions of agreement are; Gross salary of $30,000.00 per year. Split 60% Clive and 40% Jean for taxation purposes. Sheep Value 10 @ $20.00 = $200.00 Beef Value @ $3.50 pre kg approx 200kg = $700.00 Usage of farm vehicle to travel to and from work plus some private use with discussion approx cost $2000.00 One truck load (12 tonne approx) of oats at harvest to be sold by Clive and Jean. No leave loading. 4 weeks annual leave to be discussed to fit into farm programme Agreement between, Clive Caldwell …………………….. Jean Caldwell …………………….. Directors of Cloveroaks Peter Brown …………………….. Jennifer Brown …………………….. Raymond Falls …………………….. Rosemary Falls ……………………..” It was signed by Mr and Mrs Caldwell, Mr and Mrs Brown and Mr and Mrs Falls. 4 The contract included a gross salary of $30,000. That contract provided also for a 60/40 split of income between Mr Caldwell and his wife for taxation purposes. This split was later revised to an 80/20 arrangement. Irrespective of the above, it is common ground that at the time of dismissal Mr Caldwell was being paid through this arrangement the sum of $1,056 per fortnight net into his bank account (Transcript pg 53). There is no direct evidence of the other amounts of remuneration. Mr Caldwell performed general farmhand duties and when Mr and Mrs Brown were absent from the property, he supervised the property. 5 On 18 July 2001, Mr Caldwell was working on the property. He says he entered the house of Mr and Mrs Falls and made a telephone call to his wife. Mrs Brown arrived at the house after Mr Caldwell and saw the door of the house open. She entered the house and found Mr Caldwell there. Mrs Brown did not challenge Mr Caldwell about his presence there, a brief conversation ensued outside the house and then both Mrs Brown and Mr Caldwell went about their respective duties. 6 Later that day after discussion between Mrs Brown and her father and, Mrs Brown and her husband, Mr Brown summarily dismissed Mr Caldwell for being in Mr Falls house. In the employers’ minds, trust had broken down between Mr Caldwell and themselves. Mr Caldwell collected his personal belongings and was driven home by Mr Brown. Mr Caldwell then wrote to Mr and Mrs Brown seeking his final payments. There was some delay in receiving his payments, however, Mr Caldwell was paid up for the work he had performed. There is some variance in the evidence as to the date to which Mr Caldwell was paid. Mr Caldwell says he was not given notice nor was he paid any outstanding annual leave. 7 Mr Falls was so concerned by Mr Caldwell’s actions that he advised the Police who later questioned and charged Mr Caldwell. These charges were heard for mention and dismissed. 8 Simply put this matter rests on whether Mr and Mrs Brown had a valid reason for terminating Mr Caldwell summarily, and whether the manner in which this dismissal occurred was in any way harsh, oppressive or unfair. Beyond that point the simplicity of the matter disappears with both parties entrenched in opposing views of Mr Caldwell’s innocence or guilt. The Browns say there could be no reason or excuse for Mr Caldwell entering a locked house. In Mr Caldwell’s view he had approval to enter the house on emergency occasions and did not see a major problem with his actions. The breach of trust between parties, arising from the opposing views of this one incident, is clearly significant and lasting. It has led to a thorough souring of relationships, including prosecution, actions by the respondent which the applicant says cast doubt on his credibility in a rural community and the end of employment for Mr Caldwell. 82 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 619 9 Mr Caldwell’s evidence is that on the morning of 18 July 2001 he was working on the farm and received a call on his mobile phone from, he thought, the bank concerning a problem with mortgage payments. His mobile phone cut out as the battery was low. Mr Caldwell was in some financial strife at that time and he wanted to contact his wife urgently to sort out the matter. He says that as he was near Mr and Mrs Falls house and away from his own home he decided to enter their house to make a telephone call. He wanted to save time as he had earlier lost time having to return to his house that morning to pick up goods. He says he had been told where the key was and had approval from his employer in the event of an emergency to enter the house. Similarly he says he had been in the house many times before for morning tea or lunch or been asked to go and put the kettle on. 10 His evidence is as follows— “Knocked on the door. No answer there so I got the key, let myself in, made the phone call. The first time I phoned, it didn’t connect straight away. I knew that somebody would have been at my wife’s work because it’s the funeral directors. So I just waited - - I don’t know, a minute, couple of minutes. While I was waiting I heard a vehicle pull up outside. It was Mrs Brown, and I’m not sure if it was as I was dialling or I’d already dialled, she walked in the back door, asked me where her dad was. I said “I don’t really know.” Explained to her that I had to make a phone call to my wife pretty urgent. She didn’t seem too worried. She turned around and walked outside. I finished my phone call to my wife, locked up, followed her up to the shed where I’d sort of seen her go and told her again why I had to do it. She made a comment that she was getting some wool organised for a wool buyer, what was I going to be doing. I said “I’m going back to do the - - finish off my fencing” and that was it.”(Transcript pg 10) 11 Later that day he advised Mrs Falls that he had made the telephone call and he says she did not seem to have a problem with this. Around 5pm Mr Brown approached him and advised him that he was dismissed. He queried Mr Brown as to whether it was over his use of the telephone and Mr Brown replied “yes”. Mr Caldwell was angry and they exchanged some words. Mr Brown then drove Mr Caldwell home, Mr Caldwell removed his personal goods from the car and they parted company. Mr Caldwell was visited by the police that evening and taken for questioning. 12 Mrs Brown’s evidence of the incident is— “I got out and I walked in. The slide door was open, the back door was open, and I looked in and there was no one there and I thought “Jeez, that’s funny.” So I went to the bathroom looking for Clive, just seeing if he was okay, and as I walked back into the back door Clive dived from the lounge room area to the telephone and started dialling out. He wasn’t on the telephone when I arrived there. From there he started talking to Jean about a personal financial problem and I didn’t want to be there, so I walked out the back door. I then went to the shearing shed where Clive come up and he goes “Oh, Jenny, I’m really sorry I was in there. I had to make an emergency telephone call,” and that’s all he said to me.”(Transcript pg 41a) 13 Mrs Brown says she was gob-smacked to find Mr Caldwell in her parents’ house. Earlier that day she says that he had contacted her on the two way radio and asked where her husband was. She says she did not advise him at any stage where the key was and it was quite clear that he was not to be in any of the four houses on the property. 14 It is clear from the evidence that Mr Caldwell had a good record of employment with the Browns for approximately 2½ years. The notice of answer and counter proposal lodged by the respondent complains of some performance issues however, these clearly bear no relationship to the decision to dismiss Mr Caldwell. It is also clear from the evidence that Mr Caldwell was dismissed without any opportunity to explain his actions or in fact any allegation having been put to him. He was dismissed based on Mrs Brown’s viewing of him lunging for the telephone and her shock that he should be in the house at all. This led to her discussion with her father and then her husband, calling in the police and the decision of the Browns to terminate Mr Caldwell’s employment. The matter from the Brown’s point of view was straightforward and that is, as there was no reason for Mr Caldwell to be in the house, and as it was in fact off limits it was very suspicious for him to be there. It being a farming property this led to a breach of trust which could not be repaired. 15 Mr Brown says that there were instances to do with disappearance of property prior to this about which they were suspicious. However, there is no evidence to suggest that this related to Mr Caldwell or if it did that he was in any way monitored or queried about this. These are all matters of suspicion after the event. 16 Similarly Mr Brown sought to put before Mr Caldwell some documents which were discovered after the dismissal and which he says go to prove that no call was made from the bank to Mr Caldwell on that day and no call was made to his mobile telephone. Hence impugning the credibility of Mr Caldwell. The Commission sought to make allowances for the fact that the Browns were unrepresented at hearing and could not be expected to know the procedure of the Commission. However, leaving aside the fact that the maker of the affidavit was not present at hearing, the document itself on inspection of the Commission did not shed any light on the matter. Mr Caldwell’s evidence in respect of this, under cross-examination, is that the message he received was garbled, he had a number of claims for money at the time and believed the call could be from his bank. He says in his application that the call was from the bank regarding his mortgage payments. 17 The substantive difference in the evidence between Mrs Brown and Mr Caldwell was whether he was advised where the key was kept, had permission to be in the house in case of an emergency, whether he lunged for the telephone or simply reached for it. There is also difference in the evidence as to whether, in following Mrs Brown out of the house, Mr Caldwell apologised to her or not. The difficulty in assessing the credibility of the witnesses is that my assessment is that each gave what they view as the correct account of what occurred. They clearly hold very different view points on the meaning of the events. The meaning of the events I am sure having been enhanced by being reviewed many times prior to the Commission hearing; both in dealing with the matter with the police and in hearing before the Magistrate. None of this is evidence before me but it is apparent from the answers that I have, that they have gone over the reasons in their mind many times. The answers provided by Mr Caldwell are consistent with the application he made on 24 July 2001. Mrs Brown was clearly shocked to find him in the house on that day. She gave a genuine account of this in her evidence. However, where there are differences in the evidence I would prefer the evidence of Mr Caldwell who was unshaken in his account of events. 18 I am guided in my judgment by a number of matters. Mrs Brown says in her evidence it would be easy for someone who was following someone else to know where the key was in the bathroom. Mr Caldwell had been to the house many times previously, albeit in the company of the owners. Mr Caldwell was seemingly a trusted employee for 2½ years so much so that he could look after the farm in the employer’s absence. There was no real history of performance related problems or of suspicion about Mr Caldwell’s actions or honesty. The only matter that arose in that context were some missing items. The real suspicion about those items arose after the termination and have, I consider, little foundation to cast doubt on Mr Caldwell. Mrs Brown gave Mr Caldwell a reference dated 4 May 2001 [Exhibit A3] which in part states of Mr Caldwell— “… we have found him to be an honest hard working and dedicated person to his job. Many times Clive has been left to work by himself and we have had no problem with this as he is a thinking kind of person and can work unsupervised.” 620 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 82 W.A.I.G. The reference was later a point of contention between the applicant and the Browns, however, it does represent what the Browns thought of Mr Caldwell only some 10 to 11 weeks prior to his summary dismissal. 19 In simple terms Mrs Brown’s astonishment that Mr Caldwell was in the house alone arose from the fact, in her mind, that he was not allowed to be there. She did not see him immediately when she entered the house and she says she later saw him lunge for the telephone. It is apparent from the respondent’s notice of answer and counterproposal that Mr Caldwell was allowed to be in the house in case of an emergency. On the respondent’s evidence he also at times attended the house for “smokos” and to feed pets. Given the history of employment and relations which had been good I consider that Mr Caldwell was entitled to the benefit of the doubt as to why he was in the house at that time. Having weighed the evidence I cannot find some bad intent or act of dishonesty such as to warrant Mr Caldwell’s summary dismissal. This view is also not altered by Mrs Brown’s evidence that Mr Caldwell lunged for the telephone and apologised for his actions later. Both impressions gained by Mrs Brown, which are different to the account given by Mr Caldwell, might lead to a suspicion on her part. Her suspicion was aroused prior to entering the house and she did not convey this to Mr Caldwell on any of the evidence given. 20 If it were the case, and I do not find so, that it was very clear between the parties that Mr Caldwell was not entitled under any circumstances to enter the house alone, then I still in those circumstances do not believe that a summary dismissal was warranted. To warrant summary dismissal the nature of the act of the employee must be such as to show that the employee is repudiating the contract or one of its essential conditions BGC (Australia) Pty Ltd v Ian Phippard 81 WAIG 2865. The test in a matter of summary dismissal is laid out also by the Full Bench in Graham Sargant v Lowndes Lambert Australia Pty Ltd 81 WAIG 1149 at 1156-1157 as follows— “As to the question of summary dismissal, the Commission, constituted by Full Benches, has applied the well known principles expressed in North v Television Corporation Ltd (1976) 11 ALR 599 at 609 (FCFC) per Smithers and Evatt JJ, as follows:- “For purposes of the application of the common law principles to the facts of this case, the remarks of the Master of the Rolls in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 at 287 and 289 are in point. He said— ‘... since a contract of service is but an example of contracts in general, so that the general law of contract will be applicable, it follows that, if summary dismissal is claimed to be justifiable, the question must be whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service ... I ... think ... that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and ... therefore ... the disobedience must at least have the quality that it is “wilful”; it does (in other words) connote a deliberate flouting of the essential contractual conditions.’ ... Until the terms of the contract are known and identified it is impossible to say whether or not any particular conduct is in breach thereof or is a breach of such gravity or importance as to indicate a rejection or repudiation of the contract. One cannot begin the inquiry without ascertaining what work ... the employee was employed and had undertaken to perform. It is also necessary to ascertain what particular obligations the parties had agreed upon as important or even vital.” 21 Clearly stealing may be such an offence, but does not fit the circumstances of this matter. Mr Caldwell was it would seem entitled to be in the house in case of an emergency and Mrs Brown does not accept that Mr Caldwell was attending to an emergency. However, Mr Caldwell was entitled to be questioned and to provide an explanation for his actions before the respondent took a decision to terminate his services. He had no such opportunity to defend himself. Mrs Brown did not raise her doubts with him when she discovered Mr Caldwell in the house or shortly thereafter when, on her account, he apologised to her. If this approach had been taken, and a subsequent investigation by the respondents had left doubts in their minds so as to be destructive of the trust between employer and employee, then a termination with notice would have been more appropriate. However, given the evidence presented to me I doubt that a termination was warranted at all. Within the test laid down in Undercliffe Nursing Home –v- Federated Miscellaneous Workers’ Union of Australia, Hospital, Service and Miscellaneous, WA Branch 65 WAIG 385 Mr Caldwell was clearly not afforded a fair go all round. 22 For all of the reasons expressed I find the dismissal of Mr Caldwell to be both substantively and procedurally harsh and unfair. I have no doubts whatsoever that the employee/employer relationship has broken down given the events that transpired after the dismissal and the involvement of the Police and subsequent attempted prosecution. I find that reinstatement is impracticable. 23 Mr Caldwell gave evidence as to the employment he had sought following termination and his difficulties given the country location. I find that he has adequately sought to mitigate his loss. He did not however give an adequate description of his earnings. Subsequent to the hearing, and on the instruction of the Commission, Mr Chilvers for the applicant provided a record of earnings for Mr Caldwell for the period from dismissal to the hearing. Mr Caldwell has earned $462.00 gross and $8,087.30 net through employment with W.A. Bakery and Smoothjob Pty Ltd respectively. His ongoing weekly wage is $335.76 net. I use these figures, taken from Mr Chilvers’ letter of 18 January 2002, for comparison purposes with Mr Caldwell’s wage whilst working for the respondent. The pay rate would appear to have increased from that shown in the contract [Exhibit A1] as the only clear evidence of Mr Caldwell’s remuneration, which is agreed, is that he was paid $1,056.00 net per fortnight. No recognition is taken of the income splitting arrangement entered into between the Browns and Mr Caldwell. This represents an ongoing loss of $192.24 net per week. The time from termination to hearing was exactly 6 months and hence Mr Caldwell could have expected to earn $13,728.00 net during that time but for his dismissal. Hence his actual loss during this time was therefore approximately $5,178.70. 24 There is no evidence to suggest that his employment would have terminated but for the incident on 18 July 2001. I do not consider the evidence relating to the later discovery of various missing items of the Browns to be indicative that the employment of Mr Caldwell was bound to end. There is no indication also that Mr Caldwell will not continue to suffer the ongoing loss of $192.24 net per week given his changed employment circumstance. Even if one were to assume that after twelve months Mr Caldwell’s situation might improve then Mr Caldwell’s actual and ongoing loss would be greater than the maximum compensation of six months which he could be awarded. In these circumstances, given the finding I have made I would award Mr Caldwell six months compensation, that being $13,728.00 net. The notice claimed is subsumed within that amount. 25 The evidence concerning Mr Caldwell’s amount of annual leave claimed is incomplete to say the least. The figure claimed varies from $900.00 to $1,085.00 and in closing argument is $868.56. Nevertheless the claim was for $900.00 and the evidence which was not challenged was that Mr Caldwell was not paid leave which he was due on termination. On that basis I would 82 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 621 award the amount finally claimed, ie $868.56, as a denied contractual benefit. I take the figure to be a gross figure from which taxation would be deducted. _________ 2002 WAIRC 05096