Fair Work Act 2009
s.394—Unfair dismissal

Gregory Alan Ross
v
Bridgewood Pty Ltd
(U2020/14705)

Application for an unfair dismissal remedy

[1] This decision concerns an application made by Mr Gregory Ross (the applicant) for an unfair remedy under section 394 of the Fair Work Act 2009. The respondent is Bridgewood Pty Ltd (the respondent).

[2] The respondent objects to the application on the ground that it asserts that the applicant is not protected from unfair dismissal by virtue of section 382 of the Act, because the sum of his annual rate of earnings and other amounts is more than the high-income threshold.

[3] The history of the proceedings in this matter is somewhat complex which reflects the vigorous advocacy pursued by both parties against the other, regrettably somewhat out of proportion with the weight of the issues in dispute.

[4] Hearings were first held in March 2021 and were continued in June 2021. Following this the parties filed written closing submissions.

[5] However, in early August 2021 the respondent became aware of matters that caused it to doubt the accuracy of the applicant’s evidence and closing submissions. Consequently, the respondent then applied to the Commission to reopen the hearing in order to lead further evidence concerning the applicants then current employment status and the quantum of remuneration earned by him since the end of his employment with the respondent and his then current and likely future earnings.

[6] Consequently, the Commission convened a further hearing in October 2021 to hear from the parties regarding the application to reopen the substantive hearing. A decision was issued by the Commission on 22 October 2021 to the effect that the hearing would be reopened and various orders to produce documents and for witnesses to attend were issued.

[7] Following this a further day of hearing of the substantive application was held in December 2021 and final written submissions were provided by both parties thereafter.
[8] Following this the respondents have made an application for costs which will be considered by the Commission after this decision, dealing with the respondent’s high income threshold objection and the substantive application is issued.

[9] At the hearing of this matter the applicant Mr Ross gave evidence and in support of his application his wife, Mrs Caroline Ross, also gave evidence. For the respondent, evidence was given by Ms Tania Sydney – Smith the Chief Financial Officer and Company Secretary of the Lane Group.

[10] The respondent is one of the businesses within the Lane Group of companies. Ms Sydney Smith is also a director and secretary of the respondent. Mr Colin Lane one of the owners of Bridgewood Pty Ltd and Peel Motors Pty Ltd also gave evidence for the respondent.

Evidence and factual findings

[11] The applicant was employed as the dealer principal of Mandurah Auto Pty Ltd in December 2013.

[12] The applicant says that in 2016 Ms Sydney Smith, on behalf of the Lane Group, was assisting with a plan to sell Mandurah Auto. This involved the Lane Group refinancing Mandurah Auto and the applicant and Mrs Ross providing personal guarantees for Mandurah Auto’s debt, secured by a second mortgage against their house.

[13] He says in May 2017 it was agreed that a newly incorporated company, Peel Motors, would buy certain assets of Mandurah Auto and take over the ownership and conduct of Mandurah Auto’s business. He would be offered full-time employment by Peel Motors. He would be entitled to 15% each of the shares held in Peel Motors. The debt from Mandurah Auto would be reduced by $1.3 million and would be repaid by applying the dividends, that he and another shareholder would otherwise have been entitled to, towards Mandurah’s Auto’s remaining debt.

[14] It seems his employment then transferred to the respondent in July 2017. 1

[15] In April 2020 Ms Sydney Smith called a meeting in Mandurah of senior staff of the respondent including the applicant and Mr Colin Lane. She explained that as a result of Covid- 19 and the government restrictions the business was being put into care and maintenance. Some staff would be stood down or placed on rosters. The expectation was that the used car market would collapse in value by 30%. Finance was likely to be restricted by banks and their financiers had altered the terms affecting the business.

[16] Of the 16 sales and finance staff 14 would be stood down and only two retained.

[17] The applicant was directed to take on the additional tasks of finance manager, sales manager, salesperson and parts manager.

[18] As another of the respondent’s responses to Covid-19 in April 2020 the applicant’s employment contract was revised. The contract indicates that from 15 April 2020 the applicant’s base remuneration was to be $144,000 per annum when it previously had been $180,000 per annum. 2

[19] The respondent submits that the applicant’s base salary plus the personal benefit received by him and his wife of using two of the respondent’s cars plus the further benefit of personal mobile phone usage for the applicant and his wife exceed the value of the high income threshold, which for this application is $153,600 per annum.

[20] The following evidence concerns these matters.

[21] The applicant was advised that he was being dismissed with pay in lieu of notice, with immediate effect on 21 October 2020 in an email from Ms Sydney Smith. 3

[22] The applicant says that as the dealer principal it was accepted practice throughout his employment that he could take one of the demonstration vehicles home at the end of each day. He was provided with a credit card by the respondent to refuel the vehicles he took home.

[23] His evidence was that prior to Covid-19, in accordance with the respondent’s standard practice, he used two of the respondent’s demo cars at any given time in this way, one for him and one for his wife. This evidence is not challenged. 4

[24] He says that in July 2020 Ms Sydney Smith instructed him that both his wife and he were required to drive only Nissan Leaf’s, which are electric cars. Both cars were branded with advertising and he was expected to discuss the vehicles with potential customers for the purpose of encouraging the potential customer to buy such a vehicle from Peel Motors.

[25] His evidence was that as demo cars that could potentially be brought by customers one of the respondent’s requirements was that the cars he and his wife were driving were available to be returned to the dealership at short notice.

[26] He says he and his wife drove these Nissan Leaf’s from August 2020 until 22 October 2020. He says they recharged both vehicles at their home.

[27] Neither the applicant nor the respondent maintained a record of the kilometres travelled by the applicant or his wife in the respondent’s cars. 5

[28] The applicant’s evidence was that in a normal working week he and his wife would each travel less than 100 km in the cars. Between August 2020 until October 2020 they usually operated one car whilst charging the other, rarely were both cars on the road at the same time.

[29] I accept this evidence of Mr Ross which was not challenged.

[30] Mrs Ross’s evidence was that in July 2020 her husband told her he had been instructed that they were both to drive Nissan Leafs and so she drove such a car exclusively until 22 October 2020. Her evidence was that other than during the first week both cars were recharged at their home.

[31] Mrs Ross’s evidence was that in a normal working week, before Covid-19, she would drive between 90 and 100 km per week. During Covid she drove approximately 20 to 30 km per week. 6

[32] Mrs Ross was cross-examined in detail on the places she drove to, the frequency of these trips and her estimates of the distances from their home to these places. Her evidence under cross examination is consistent with her estimate of driving less than 100 kilometres per week, provided in her evidence in chief. 7

[33] Mrs Ross’ evidence is that she was employed from September 2019 by Project Solutions (WA) Pty Ltd, to provide services to the Lane Group including to the respondent. During this employment she continued using a phone that had been provided to her by Mandurah Auto. She used the phone for both work and personal purposes. Her evidence was however that the vast majority of its use was for work purposes. When she was at home the phone was connected to their home Wi-Fi which is paid for by herself and Mr Ross. She has no records of how much of the phone was used for work or personal purposes.

[34] The evidence of Ms Sydney Smith, 8 contrary to the evidence of Mrs Ross was that the applicant was provided with two mobile phones by the respondent, including one for Mrs Ross, as part of his salary package.

[35] Noting the conflict between the two witnesses on this point it seems to me far more likely that Mrs Ross, as she said in her evidence, was enjoying the benefit of personal use of a mobile phone as a result of her employment directly with Project Solutions from 2019 onwards rather than as an ancillary benefit provided to the applicant by the respondent at this time.

[36] Consequently, I find that Mrs Ross’s mobile phone in 2020 was not provided to her as part of an agreement between the applicant and the respondent.

[37] Mr Ross’s evidence in chief was that he had been provided with the use of a mobile phone by Peel Motors Pty Ltd before he was employed by the respondent and continued to use it when working for the respondent. The respondent required him to be available by phone at all times in the event of fire and emergency service issues and security alarm issues. He used the phone for both work and personal purposes however his evidence was the vast majority of it was for work. 9

[38] His evidence was that he did not have any discussions with Ms Sydney Smith or any other representative of the respondent about the value of the mobile phone or the value of being provided with the mobile phone.

[39] His evidence was that when he was at home his mobile phone was connected to the home Wi-Fi paid for by himself and his wife. He did not keep records of how much he used the mobile phone for work or personal purposes but estimated it would have been approximately 80% work and 20% personal.

[40] I note the applicant’s contract of employment with the respondent dated April 2020 includes clause 12 which concerns Company Vehicles. The contract does not include any provision regarding mobile phones.

[41] The evidence is that the costs of both of the cars and both of the mobile phones used by the applicant and his wife were borne by Peel Motors not by the applicant’s employer Bridgewood, the respondent.

[42] The evidence of Ms Sydney Smith 10 is that the cost of the mobile phones were paid by Peel Motors not the respondent. Her evidence was that the telephone charges incurred on the applicant’s mobile phone for the 12 months preceding his dismissal was $3,747.70.

Consideration

[43] The respondent objects to the application on the ground that the applicant is not a person under section 382 who is protected from unfair dismissal. This section is set out below.

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

[44] The respondent submits that the sum of the applicant’s annual rate of earnings and other amounts worked out in relation to the applicant in accordance with the regulations is not less than the high income threshold of $153,600 per annum, which is a prerequisite under section 382(b)(iii) for a person to be protected from unfair dismissal.

[45] The respondent says the applicant’s base salary plus the personal benefit received by him from he and his wife being entitled to each use a car plus the further benefit of personal mobile phone usage for the applicant and for his wife in total exceeded the value of the high income threshold.

[46] Relevantly section 382 prescribes what the necessary preconditions are for a person to be protected from unfair dismissal. One of those preconditions prescribed in 382 (b)(iii) is that,

“the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[47] The regulation mentioned is regulation 3.05 of the Fair Work Regulations 2009. The relevant parts of the regulation are 3.05(1) and 3.05(6) which are set out below.

3.05 When a person is protected from unfair dismissal—high income threshold

(1) For subparagraph 382(b)(iii) of the Act, this regulation explains how to work out amounts for the purpose of assessing whether the high income threshold applies in relation to the dismissal of a person at a particular time.

………

Benefits other than payment of money

(6) If:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and

(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332(3) of the Act; and

(c) the FWC is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and

(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and

(iii) the FWC can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.

The cars

[48] The unchallenged evidence is that both cars made available to the applicant (one used by Mrs Ross) were a benefit the applicant received in accordance with an agreement with the respondent, notwithstanding that Peel Motors rather than the respondent actually funded both the cars for the use of the applicant.

[49] Considering the facts of this matter I am satisfied that the applicant has received a benefit in accordance with an agreement between himself and the respondent being the use of two cars one for himself and one for his wife. This benefit is not an entitlement to a payment of money nor a non-monetary benefit within the meaning of subsection 332(3).

[50] Having regard to all the circumstances here I am satisfied that the Commission should consider this benefit for the purpose of assessing whether the high income threshold applied to the applicant at the time of his dismissal and am satisfied that no money value of this benefit has been agreed by the applicant and respondent.

[51] What is not immediately clear is whether the requirement in regulation 3.05(6)(c)(iii) is satisfied. Having regard to the evidence can the Commission estimate a real or notional money value of this benefit?

[52] The Macquarie Concise Dictionary defines ‘estimate ‘as follows.

“To form an approximate judgement or opinion regarding the value, amount, size, weight etc of; calculate approximately.”

[53] Deputy President Beaumont recently considered the authorities regarding such matters in Ryan Welk v SG Mining Pty Ltd T/A SG Mining [2020] FWC 2513 as follows,

“[20] In the absence of an agreed sum, the process generally used to determine the value of the use of a company vehicle is that described in Kunbarllanjnja Community Government Council v Fewings (Fewings). The ‘Fewings approach’ is as follows:

a) determine the annual distance travelled by the vehicle in question;

b) determine the percentage of that distance that was for private use;

c) multiply the above two figures to obtain the annual distance travelled for private purposes;

d) estimate the cost per kilometre for a vehicle of the type used. This information can be obtained from the RACV, NRMA or like motoring organisations; and

e) multiply the annual distance travelled for private purpose by the estimated cost per kilometre. The result is the value of the motor vehicle component of the remuneration.

[21] The Full Bench in Fewings further observed that the party advancing the proposition that an applicant is excluded from the relevant provisions of the Act (protection from unfair dismissal) carries the burden of establishing the evidentiary basis upon which such a determination can be made.” (references omitted)”

[54] Both parties in their submissions have recognised the authority of the Fewings approach.

[55] This approach, which I accept is appropriate, is in effect a mathematical formula that works with three variables being the annual distance travelled by a vehicle, the percentage of that distance that was for private use and the estimated cost per kilometre for a vehicle of the type used.

[56] The difficulty is that in the absence of one or more of these variables having a known value, the Commission is not able to apply this approach.

[57] The evidence before the Commission here is that:

•  Neither the applicant nor the respondent recorded the kilometres travelled by the applicant or Mr’s Ross in either of the cars.

•  In a normal working week the applicant and his wife would each travel less than 100 km in the cars.

•  Between August 2020 until October 2020 they usually operated one car whilst charging the other, rarely were both cars on the road at the same time.

•  In a normal working week, before Covid 19, Mr’s Ross would drive between 90 and 100 km per week. During Covid she drove approximately 20 to 30 km per week.

•  Mr’s Ross’s evidence under cross examination is consistent with her estimate of driving less than 100 kilometres per week, provided in her evidence in chief.

[58] There is no evidence as to how many weeks in the 12 months before dismissal nor any other period were “normal working” weeks.

[59] There is no evidence as to what kilometres the applicant and Mrs Ross travelled in the cars in other than normal working weeks.

[60] There is no evidence as to how often between August 2020 and October 2020 they only used one car in a given day.

[61] There is no evidence as to how many weeks “during Covid” refers to.

[62] The difference between driving 20 km a week and 30 km per week is 50% which does not allow for any accuracy in an estimate for any week when ’20 to 30 km per week’ were driven.

[63] The available evidence simply does not allow the Commission to make an approximate calculation of the annual distance travelled by both of the cars nor to make an approximate calculation of the percentage of that distance that was private use for both of the cars.

[64] The onus is on the respondent to put on evidence in support of its jurisdictional objection.

[65] The representatives of both parties recognise the deficiency in the evidence and have respectively proposed alternative approaches for the Commission to adopt.

[66] Due to the deficiency in the evidence each of these proposals would involve the Commission making a number of guesses or assumptions rather than an approximate calculation. Any value of the benefit arrived at in this way using incomplete data is a guesstimate, it is not an estimate.

[67] Consequently, I am not satisfied, as is required by Regulation 3.05(6)(c)(iii), that the Commission in the circumstances can estimate a real or notional value of the benefit of the two cars provided to the applicant.

[68] Whatever the value of this benefit to the applicant this amount cannot be worked out in accordance with the regulations and so cannot be taken into account for the purposes of subparagraph 382(b)(iii) of the Act.

The phones

[69] The evidence is that the benefit Mrs Ross received of the personal use of a mobile phone was not a benefit the applicant received in accordance with an agreement with the respondent.

[70] Rather Mrs Ross received the personal use of a mobile phone as a benefit up to the time of the applicant’s dismissal as an employee using that phone for her work with Project Solutions. I note however this was in fact paid for by Peel Motors.

[71] Consequently, the personal use of this mobile phone by Mr’s Ross is not relevant to determining whether the Applicates annual rate of earnings and other amounts was less than the high-income threshold.

[72] Notwithstanding the evidence that the mobile phone the applicant enjoyed the personal use of was not provided by the respondent, 11 I do accept that he did receive this benefit of personal use in accordance with an agreement between himself and the respondent.

[73] The evidence is that the charges for the mobile phone used by the applicant, according to the evidence of Ms Sydney Smith was $3,747.70.

[74] The respondent has given no evidence as to what proportion of use of the mobile phone by the applicant was personal. Mr Ross kept no records of this but estimated his personal use to be 20%. The accuracy of this estimate was not challenged.

[75] On the evidence before the Commission the amount of the benefit derived by Mr Ross from the personal use of the mobile phone provided by the respondent was $3747.70 x 20% = $749.54.

[76] Consequently, applying regulation 3.05 I find that monetary value of the benefit of personal use of the mobile phone to Mr Ross was $749.54.

[77] Then applying section 382 (b)(iii) the sum of the applicant’s annual rate of earnings ($144,000) and the amount worked out in accordance with the regulations ($749.54) equals $144,749.54.

[78] The figure of $144,749.54 is less than the high-income threshold that applied to this application which was $153,600.

[79] Consequently, the applicant under the terms of section 382 is a person protected from unfair dismissal.

[80] Accordingly, the Commission dismisses the respondent’s jurisdictional objection.

Evidence and factual findings concerning the merit of the application

[81] The applicant’s evidence was that after the adjustments made to the business by Ms Sydney Smith in April 2020, in May 2020 the market for cars rebounded substantially and was close to what it had been before Covid 19.

[82] Despite the increased business activity he says he continued to do the work of five staff members including acting as the dealer principal. He says he was working seven days a week, 12 to 14 hours daily as well as work from home after hours. His evidence was it was impossible to keep on top of the workload.

[83] His evidence was that in mid June 2020 Ms Sydney Smith came into his office and told him that the workload she had placed on him was unfair and unreasonable and she admired what he did each day recognising he gave 110% to the job.

[84] She told him that the Nissan, Suzuki and Kia dealerships would reopen in July. She said she had hired a General Sales Manager to operate Hyundai and Kia at the 119 Pinjarra Road site who would arrive on 13 July 2020. She also said that from then onwards the applicant was to focus on Nissan at the 53 Pinjarra Road site.

[85] On 6 July 2020 Ms Sydney Smith sent an email to the Lane Group staff 12 that explains amongst other things that the 53 Pinjarra Road site from Monday 20 July will house Nissan and Suzuki and that the applicant will head up the site and will continue to assemble his team.

[86] Consequently, from 13 July 2020 he began working at the Nissan dealership.

[87] Her email refers to then operating three new car hubs, each with a dedicated manager on board. The applicant is one of those as above with another heading up Ford and Mitsubishi and a third manager heading up Hyundai, Kia and CJD.

[88] The applicant says that around this time he heard rumours that the new Hyundai and Kia General Sales Manager was to be his replacement. He challenged Ms Sydney Smith about the rumours and says her response was that he would be her only Peel Motors dealer principal.

[89] He says he had been contacted by other vehicle manufacturers who told him they were unhappy with the way their dealerships were restricted from full operations during Covid 19 and that Ms Sydney Smith had been blaming him for the shortcomings including the lack of willingness to acquire new vehicles despite the resurgence of the market, the closing of sites, the standing down of key staff and customer dissatisfaction as a result of delays in being able to book services or collect the vehicle.

[90] He felt that Ms Sydney Smith was making arrangements about the day-to-day operation of Peel Motors and excluding him from involvement in the business as a whole. He had a long conversation with her over the phone around mid-July about what he had been hearing which developed into a fairly heated argument. He said she was cutting him off from the business and this was never the agreement, that he was supposed to be a co-owner of the Peel Motors business.

[91] His evidence was he then spoke to Mr Colin Lane who offered him an arrangement whereby if the applicant returned to Nissan and focused on vehicle sales Mr Lane would instruct Ms Sydney Smith to back off.

[92] He says Ms Sydney Smith created a new organisational chart removing him from much of the dealership operations at Nissan and he was only responsible for one staff member. All his usual reporting lines were redirected to Ms Sydney Smith, who he says changed her position to Chief Operating Officer

[93] His evidence was that around 5 August 2020, three weeks after his phone conversation with her and his approach to Mr Lane, Ms Sydney Smith told him to take an extended period of annual leave to “recharge your batteries.” He asked her for how long and she advised that he had 13 weeks accumulated leave but she wouldn’t give him an exact time to return. He says she asked him for his company credit card and said he must return his building security keys along with his laptop. She told him she would call him in approximately four weeks to discuss his return.

[94] As a result of this discussion he stopped working on 16 August 2020. He says he did not really understand why she had told him to take extended leave. She never said anything to suggest it was because of any shortcomings with respect to his work.

[95] He says over the following week he was removed from internal phone lists and his access severed from the company computer server. He did not hear from Ms Sydney Smith again until October 2020.

[96] On 7 October 2020 the applicant received a text message from Ms Sydney Smith asking him to attend a meeting with her and Mr Lane on 14 October 2020. At the meeting he was met by Ms Sydney Smith and Mr Lane.

[97] The applicant said he was eager to return to work. Ms Sydney Smith said she was surprised to give his resistance in July, presumably a reference to the arguments he had had with her then. She said she had hoped he would use the leave period to find a new position elsewhere and resign.

[98] The applicant says she said there is no position with the respondent for him because she had no confidence in him. She gave him the choice of a voluntary resignation or dismissal for misconduct.

[99] He asked what the alleged misconduct was and she replied to the effect that she did not want to go there “..but nothing malicious. “

[100] He says he asked about the guarantee regarding the debt of Mandurah Auto to Zephyr particularly the mortgage that Zephyr held over his family home as a result of that guarantee. Ms Sydney Smith said to him that they would not be enforcing this and would be arranging to remove the mortgage from his home.

[101] On 20 October 2020 the applicant sent an email 13 addressed to Ms Sydney Smith from himself and his wife. I note it is quite unclear what this email is about other than retracing historical events from the applicant’s perspective.

[102] The following day, 21 October 2020 Ms Sydney Smith emailed the applicant in reply. 14 Her email refers to having had numerous conversations regarding his performance and conduct then advises that his employment is terminated effective immediately.

[103] The email states they will pay the applicant 5 weeks in lieu of notice plus any accrued leave entitlements up until the termination date.

[104] The same day Ms Sydney Smith emailed Mrs Ross dismissing her from her employment with Project Solutions.

[105] On 4 November 2020 the applicant sent an email to Ms Sydney Smith asking her if she still intended not to enforce the loan and to remove the mortgage from their home. She replied on 7 November 2020 to the effect that given the circumstances and the information she currently had it remains their intent to remove the mortgage over the home and release the applicant and Mrs Ross from the joint and several debt obligations they have in relation to the 2016 payout of their St George obligations.

[106] On 11 November 2020 this application was filed with the Commission. On 16 November 2020 the applicant received by email a 4 ½ page letter from Ms Sydney Smith. This letter details Ms Smith’s reasons for terminating the applicant’s employment. After some general observations the letter details many allegations or complaints about the applicant actions and/or performance.

[107] The applicant has given responsive evidence to these allegations or complaints individually in his reply statement. 15 The applicant was cross-examined on these allegations at length.

[108] The applicant contests each and every one of the allegations. To the extent the evidence demonstrates, which it does, that the business he was responsible for was performing poorly financially, he has provided many explanations for this but does not accept the poor performance was his responsibility.

[109] The applicant’s evidence is that he was responsible for the supervision and day-to-day running of the Peel Motors dealerships sites and liaising with the various vehicle manufacturers. He was the most senior person on the sites and was responsible for ordering stock and recruiting staff.

[110] His evidence was that he was responsible for achieving monthly and annual budgets, complying with the processes and policies of the respondent, and ensuring staff complied with those policies and procedures. 16

[111] The applicant openly acknowledges that Peel Motors whilst he was dealer principal was not profitable and had not been profitable for approximately two years. He accepts it was his role to run the dealership at a profit but that he had been unable to do this. 17

[112] The applicant agrees that for the last two years of trading up to 30 June 2020 the business had lost $1,490,584. 18

[113] His evidence was that in the first of these trading years the loss was approximately $1 million but for the second trading year this loss had been reduced to only $600,000. 19

[114] His evidence was that during this period there were frequent conversations with Ms Sydney Smith about the business and its profitability and with Mr Ward the respondent’s financial controller. These discussions the applicant says were probably twice a week. The applicant agreed that Ms Sydney Smith and the respondent as a whole gave him a lot of support over that period. 20

[115] The applicant explained that during the first of these trading years when $1 million was lost there was a fair amount of upheaval. There was a second operator marched off the premises so he ended up taking on two roles. He says they lost a finance manager and he ended up taking on that role. His evidence was the part of the arrangement with the respondent for the purchase of the business was that Lane Group would redevelop the Nissan site, which was subsequently demolished. While a new showroom was built they were operating out of a warehouse for 10 months.  21

[116] Ms Sydney Smith and Mr Lane both gave evidence about most of the allegations and similarly were cross-examined at length. Whilst they concede, albeit reluctantly, that there were forces beyond the applicant’s control at times that were negatively impacting on the performance of the business they were unshaken in their opinion that the applicant was largely responsible for the business not improving as they believed it should have.

[117] The performance of the Nissan dealership under the applicant’s leadership was raised with Ms Sydney Smith by Nissan in a letter dated 12 August 2020. 22 The letter refers to a response from Peel Motors to a request made on 28 July 2020 for a performance improvement plan and the supply of an adequate organisational structure with resourcing and accountabilities to support the performance improvement plan.

[118] The letter rejects a response they had received from the dealership to the effect that much of the dealership’s problems in the preceding five months had been outside of their control and argues that performance was below acceptable levels since October 2018, well before the impact of Covid 19.

[119] On this point the applicant agrees that as the dealer principal responsible for Nissan he received monthly reports from them. He agrees consequently he was fully aware of how he was tracking in terms of not meeting their targets. 23

[120] Nissan’s letter complains that the response submitted by the dealership was only providing a detailed commentary of the dealership and the group’s position, not a suitable resolution addressing Nissan’s concerns.

[121] The letter expands on the concerns of the manufacturer and sets out specific areas that need to be improved. However, the letter concludes by saying that Nissan is not satisfied the dealership can return to sustainable performance levels against all metrics without clear articulation of measurable accountability and commitments, and they expect a plan to be submitted addressing all of this.

[122] I note the applicant’s evidence is that after a discussion with Ms Sydney Smith he stopped working on 16 August 2020 and was on a period of extended leave.

[123] Further correspondence from Nissan dated 19 August 2020 addressed to Mr Lane and Ms Sydney Smith sets out a series of actions to be taken by either Nissan or the dealership, one of which is the dealership advising Nissan on the removal of the dealer principal, by 20 August 2020 and by the same date being advised on the proposed dealer principal’s replacement.

[124] The letter goes on to include agreed actions where the whole of the business will be reviewed by an external consultant with output including a sales recovery plan and a resourcing plan.

[125] Having considered all of the evidence I am satisfied that in 2020 the Nissan dealership was performing poorly and had been for some years. This finding does take into account the fact that in 2018 the showroom was closed and that the business operated out of a warehouse until the new showroom was built, and also that there were major difficulties caused by Covid 19 which negatively impacted the dealership. However of course this affected all car dealerships and not just the one under the applicant’s leadership.

[126] The applicant in his evidence however rejects Nissan’s critique of the dealership’s performance under his leadership. He disputes the validity of their metrics and views their criticisms as unreasonable. 24

[127] Some of the respondent’s other specific complaints that the witnesses gave evidence about are dealt with below.

[128] Firstly, the pre-reporting of vehicles. This refers to the applicant reporting to a manufacturer that a vehicle has been sold in a month when that has not yet occurred. Manufacturers would pay a dealer additional bonuses for achieving particular levels of sales in a month. The evidence is this practice of pre-reporting vehicles as sold was understood by manufacturers to occur from time to time. When this was viewed as necessary to achieve a monthly sales target the evidence of Ms Sydney Smith, which I accept, is this would be agreed-upon collaboratively between the applicant, herself and the financial controller. 25

[129] The evidence is that having pre-reported a vehicle in one month it was then critical for the longer term that that vehicle be sold as soon as possible thereafter. 26

[130] The applicant explained that if this does not occur the dealership winds up with too much stock. If the manufacturer then changes direction and has a different bonus program which doesn’t apply to those cars, the dealership can get caught with the stock. 27

[131] The applicant’s evidence was that pre--reporting also gives the impression to the manufacturer, in this case Nissan, that the dealership was regularly achieving the manufacturer’s monthly sales target and so probably has capacity for a higher level of sales. Consequently, the manufacturer then keeps increasing the monthly sales targets for the dealership. 28

[132] I accept the evidence is that the applicant was at times pre-reporting more vehicles in a month than he had made Ms Sydney Smith aware of. 29 This had negative consequences in terms of customer warranties and what are referred to as wholesale curtailments, both of which were damaging for the business.30

[133] The problem of curtailments was raised with the respondent by Macquarie Bank and this was then raised by Ms Sydney Smith with the applicant. The applicant recognises this and agrees he had his opportunity to put his views on this to her at that time. 31

[134] The respondent’s evidence as to the financial cost to the dealership of the problematic curtailments I accept was inconsistent as the applicant’s representative submits. However, the applicant in cross examination appears to accept that an amount in the region of $ 200,000 was the cost to the business.

[135] What is clear from his evidence is that notwithstanding the negative financial implications of his approach to pre-reporting vehicles over an extended period, the applicant does not accept any wrongdoing nor any error in judgement regarding his approach. 32

[136] Secondly, there were a number of problematic instances of customers being loaned cars.

[137] One involved a woman who was lying about her personal circumstances pretending she was interested in purchasing four vehicles. She signed contracts but did not pay any deposits and was loaned a car. The driver was unlicensed. Ultimately the vehicle could not be retrieved from this person for six weeks and was found to have been involved in an accident. The respondent’s evidence is that if the policy on loan cars had been followed this incident would have been prevented.

[138] Another involved a customer who had bought a used car for approximately $16,000. The customer later disputed the fitness of the vehicle and was provided with a new loan vehicle whilst their vehicle was repaired. The customer left the new vehicle in her driveway with the keys in it. The vehicle was stolen and torched. Because the keys were left in the car the insurance company would not pay out the claim. The respondent’s view is there was no basis in the first instance to ever have provided this customer with a loan vehicle. 33

[139] Both instances involved a financial loss for the business.

[140] The applicant denied any wrongdoing or poor judgement in either of these cases.

[141] Next, an old Nissan Patrol had been sitting in the dealership’s yard for two years having been brought into the service department for a repair estimated to cost $5000. The applicant says the service department staff had tried to contact the customer but was unable to and the customer had never returned. Mr Lane became aware of the situation and through his enquiries and efforts established that monies had been paid a long time ago from the Public Trustee which hadn’t been matched to the invoice. Mr Lane was able to trace the ownership and ultimately arranged for the vehicle to be sent to the owner and so removed from the dealerships yard.

[142] In 2019 the applicant sold a Jeep Trackhawk to the managing director of a customer called Smart Fleet (Fleet West) for $138,000 on the basis that it would be sold back to the dealership within nine months or 15,000 km which ever came first for $136,000. By the time the vehicle was returned to the dealership to be purchased back, in early 2020, it was no longer a good deal to buy the vehicle back at $ 136,000 and Ms Sydney Smith did not want to do this. 34

[143] Ms Sydney Smith’s evidence was that the purchaser had previously only purchased low value vehicles in the past between $20,000 and $30,000 and to agree to sell a vehicle worth $138,000 and not discuss the guaranteed buyback with her or the fleet controller was wrong. Her evidence was that she agreed to the deal only after Mr Ross pleaded with her, explaining to her the importance of him maintaining face with the managing director of Fleet West.

[144] The applicant’s evidence was that he accepted the deal turned out not to be beneficial for the business in isolation, but it was a calculated risk at the time and focused on maintaining an ongoing relationship from a fleet purchaser.

[145] I accept that each of these problematic events involved poor judgement by the applicant. The evidence is that there were no formal warnings or counselling by the respondent which focused on the fact that the applicant’s job was at risk and what he needed to do to keep his job.

[146] The applicant was dismissed with 5 weeks’ pay in lieu of notice.

[147] The applicant’s evidence is that he remained unemployed until 30 November 2020 when he was employed by Bunbury Nissan as a sales manager on a short-term contract until 31 March 2021. His salary in this job is $100,000 per annum gross being approximately $1923 per week.

[148] Subsequently it has become clear that this evidence given by the applicant about his employment post his dismissal was not correct. 35,36

[149] Following the reopening of the hearing on 3 December 2021 the Commission heard further evidence from the applicant.

[150] The applicant’s evidence at this further hearing was that on 12 November 2020 a “handshake agreement” was entered into by the applicant for him to acquire a one third share, for $400,000, of the Southwest Vehicle Group which includes Bunbury Nissan, Renault and Great Wall and Narrogin Ford Mitsubishi and Nissan.

[151] His evidence was that on 20 November 2020 he signed a contract of employment with Southwest Vehicle Group. The applicant’s commencement date of this employment with them was 16 November 2020 and he was paid from this date onwards the salary he had previously referred to in his evidence of $100,000 per annum gross.

[152] The balance of his evidence given on 3 December 2021 concerned his purchase on 31 March 2021, through a trust established in February 2021, of 1/3 of the Southwest Vehicle Group and subsequent business dealings associated with this entity and the disbursement of future profits from this business.

[153] The respondent submits that the relevance of this further evidence is that from 30 March 2021 the applicant accrued, on an ongoing basis, remuneration and benefits referable to his employment that significantly exceeded what he would have received if his employment with the respondent had not ended on 21 October 2020.

The legislation

[154] Section 387 of the Act prescribes the matters the Commission must have regard for when considering whether a dismissal is harsh, unjust or unreasonable. This is set out below.

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

Consideration

Valid reason

[155] The assessment that the applicant’s performance was unsatisfactory was not limited just to Mrs Sydney Smith and Mr Lane. The evidence is that Nissan, one of the manufacturers that the applicant dealt with, clearly viewed the historical performance of the dealership as unsatisfactory and that there was little likelihood of improvement under his leadership as the dealer principal.

[156] The Commission does not stand in the shoes of the employer and determine what the Commission would do if it had been in the employer’s position. 37 The question that the Commission must address is whether there was a valid reason for dismissal.

[157] It is not for the Commission to decide what is an appropriate level of performance for an employee. That is a matter for the respondent. In this case Nissan clearly viewed the dealership as having been underperforming for some time. The applicant was fully aware of this and aware of the large yearly losses to the business. The standard of performance expected by the respondent of the applicant in this case was not unreasonable on the evidence before the Commission.

[158] Considering all of the evidence, I do accept that there were multiple reasons for the respondent to have been dissatisfied with the applicant’s performance and that his unsatisfactory performance, as well as a number of individual poor decisions that were costly for the business, were valid reasons for his dismissal related to his capacity and to his conduct.

Was the applicant both notified of the reason and given an opportunity to respond?

[159] For reasons perhaps consistent with an approach of only ever providing salespersons with positive feedback and encouragement, 38 the respondent never made it clear to the applicant that if his performance did not improve he would be dismissed.39 Consequently, at the time he had no opportunity to respond before he was dismissed.

Support person

[160] There was no refusal to allow the applicant to have a support person present. Indeed, there were no discussions relating to the dismissal where a support person may have been involved.

Warnings about unsatisfactory performance

[161] It may have been the case that formal warnings about his employment being at risk may have jolted the applicant out of his apparent complacency. This did not occur, and the respondent failed to provide him with this reality check.

Size of the business and human resource expertise

[162] The respondent is a medium-sized enterprise which does not have dedicated human resource management specialists or expertise. The absence of procedural fairness in effecting the applicant’s dismissal in the circumstances here however is in no way excused for these reasons.

[163] The respondent is a sophisticated employer and I have no doubt simply chose the course of action in effecting the applicant’s dismissal that best suited its business interests. The issue of procedural fairness was simply not considered by the Respondent.

Other relevant matters

[164] Whilst the applicant had been employed with the respondent for a little over three years he is a very experienced person in his industry and was the most senior person on site at the dealership.

[165] It is relevant that as the dealer principle the applicant was, on his own evidence, fully aware of the poor performance of the business under his management. Consequently, considered objectively, with this knowledge it should not have been a surprise to him that the respondent was dissatisfied with the performance of the business and dissatisfied with his performance as dealer principal.

[166] However, the applicant in his evidence showed little concern about the poor performance of the dealership and accepted responsibility for this only in theory, rejecting any suggestion that his actions and decisions had contributed to this.

Conclusion

[167] My impression is that the expectations of Bridgewood were that Mr Ross would perform at a standard beyond what Mr Ross was either willing to or capable of achieving. Perhaps his performance had been viewed as acceptable under the previous ownership of the business but that certainly was not the case under the respondent’s ownership.

[168] The respondent should have formally put its complaints to the applicant and explained that because of these issues it was considering dismissing him from his employment. He should then have had time to show real improvement. He should then have been given a proper opportunity to respond to the respondent’s concerns and his response genuinely considered by the respondent before it made a final decision whether or not to dismiss him.

[169] None of this occurred and so I find that the dismissal was harsh and unjust.

[170] Noting that there were indeed valid reasons for Mr Ross’ dismissal, it is only because his dismissal was procedurally deficient was his dismissal unfair.

Remedy

[171] Mr Ross has moved on and obtained new employment and business interests and I am satisfied that reinstatement in this case is inappropriate. I do however consider in all the circumstances that an order for the payment of some compensation is appropriate.

[172] The applicant was dismissed on 21 October 2020 and paid 5 weeks in lieu of notice.

[173] He obtained other employment from 16 November 2020.

[174] There is no suggestion that an order of compensation would negatively affect the respondent’s enterprise.

[175] The applicant was employed for a little over three years with the respondent.

[176] If the applicant had not been dismissed when he was, the respondent could then have raised its concerns about his unsatisfactory performance with him and advised him that without immediate improvement his employment would end. Given the nature of the business and the applicant’s role, a period of 12 weeks would in my view be required to assess whether he had heeded the respondent’s concerns and for him to demonstrate improvement. This would have allowed the end of month figures for October, November and December 2020 to then be taken into account.

[177] My conclusion however is that the applicant most likely would not have been able to demonstrate real business improvement to satisfy the respondent that his role as the dealer principal should not end and so he would then have been dismissed at the end of that 12-week period.

[178] Consequently, my decision is that the anticipated period of employment had the applicant not been dismissed as he was is a further 12 weeks, ending on 13 January 2021.

[179] The amount of remuneration the applicant would have received for this anticipated period is 12 weeks’ pay at the rate of $2,769 per week = $33,228.

[180] Self-evidently the applicant made appropriate efforts to mitigate his loss and did so by gaining employment shortly after his dismissal.

[181] The remuneration earned by the applicant from the dismissal date to the anticipated end of the employment on 13 January 2021 is a total of $29,999 made up of the following,

•  5 weeks pay in lieu of notice at $ 2,769 per week = $13,846, plus

•  Remuneration from his new job commencing 16 November 2020 up until 13 January 2022 which amounted to 8.4 week’s pay at $ 1,923 per week = $ 16,153.

[182] In summary, the amount of remuneration the applicant would have received had he not been dismissed when he was is $33,228. From this is to be a subtracted the remuneration earned by the applicant up to the anticipated end of his employment which was $29,999. This leaves an amount of $3,229 compensation to be ordered.

[183] I have considered the extent to which the applicant’s misconduct contributed to the respondent’s decision to dismiss him however do not consider the circumstances of this matter here warrant a consequential reduction in the amount of compensation to be ordered.

[184] An order of compensation for the amount of $3,229 from which tax will be deducted will be issued in conjunction with this decision to be paid within 21 days of the date of the order.

Printed by authority of the Commonwealth Government Printer

<PR743254>

 1   Exhibit A6 at [9].

 2   Attachment GAR – 1 to Exhibit A 5.

 3   Exhibit A6 attachment GAR – 7

 4   Exhibit A 5 at [4] to [7].

 5   PN 92 – 95, Exhibit A 5 paragraph 10

 6   Exhibit A4 paragraph 19 and 20

 7   PN 715 to 805; See attached table to the applicant’s closing submissions filed 22 July 2021, PN 880 to 890.

 8   Exhibit R 2 paragraph 1.

 9   Exhibit A6 paragraph 1 to 4.

 10   Exhibit R 2.

 11   Exhibit A6 paragraph 1 to 4.

 12   Attachment GAR 2 to Exhibit A 6

 13   Attachment GAR 6 to exhibit A 6.

 14   Attachment GAR 6 to exhibit A 7.

 15   Exhibit 6 paragraph 42 to 134.

 16   PN 929 – 938.

 17   PN 939 – 942.

 18   PN 948.

 19   PN 950 – 952.

 20   PN 943 – 947, 953.

 21   PN 955.

 22   Attachment 5 to the statement of Ms Sydney Smith.

 23   PN 1289 and 1290.

 24   PN 1320 - PN 1328.

 25   PN 956 – 958, 961 – 965.

 26   PN 982 – 987.

 27   PN 960.

 28   1350 – 1352..

 29   Paragraph 43 and 44 and Attachment TS 8 to the statement of Ms Sydney Smith.

 30   PN 966 – 981, statement of Mr Lane paragraph 7 and 8.

 31   PN 1251 – 1258.

 32   PN 1123 - PN 1155.

 33   Exhibit R3 para 57.

 34   Ex A6 paras 101 – 103.

 35   PN 200 – 285.

 36   Applicant’s submissions following the reopening of case filed 4 February 2022 paras 13 to 15.

 37   Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681at 685.

 38   PN 1341 and 1342.

 39   PN 1331, 1333.