1
Fair Work Act 2009
s.604 - Appeal of decisions
David Armstrong
v
Taxation Management Services Pty Ltd ATF TMS
(C2015/5234)
VICE PRESIDENT WATSON
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER ROE
PERTH, 2 DECEMBER 2015
Appeal against decision [2015] FWC 4879 of Commissioner Riordan at Sydney on 6 August
2015 in matter number U2014/1566 – Termination of employment – Small Business Fair
Dismissal Code – Further evidence - Fair Work Act 2009 – ss. 394, 400 and 604.
Introduction
[1] This decision concerns an appeal against a decision of Commissioner Riordan handed
down on 6 August 2015. The decision of the Commissioner arose from an unfair dismissal
application made by David Armstrong on 2 May 2014 under s.394 of the Fair Work Act 2009
(the Act) in relation to the termination of his employment by Taxation Management Services
Pty Ltd ATF TMS (TMS).
[2] Mr Armstrong’s application for permission to appeal was heard by the Full Bench on
30 September 2015. Permission was granted in a decision issued on 6 October 2015.1 At the
hearing of the application for permission to appeal, Mr Armstrong submitted that the owner
and principal of TMS, John Hoff, deliberately fabricated evidence in order to establish
grounds by which to summarily dismiss him from his employment with the company, and that
he now had new evidence which could prove that no break-in occurred at the TMS office.
Permission to appeal was granted by the Full Bench for the reason that such evidence, which
would have been highly relevant to findings of fact necessary to determine the unfair
dismissal matter, was not put to the Commissioner because it was not then known or available
to Mr Armstrong.
[3] Directions were subsequently issued providing the parties with the opportunity to file
additional evidence of the nature foreshadowed by Mr Armstrong prior to the hearing of the
substantive appeal.
[4] At the hearing of the appeal on 19 November 2015, Mr D. Armstrong appeared on his
own behalf and Mr A. Cameron of counsel appeared on behalf of TMS.
[2015] FWCFB 8094
DECISION
E AUSTRALIA FairWork Commission
[2015] FWCFB 8094
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[5] Before dealing with the further evidence it is important to restate the relevant
questions that arose in Mr Armstrong’s unfair dismissal matter.
The decision under appeal
[6] The Commissioner found that the dismissal of Mr Armstrong by TMS was not unfair
because it was consistent with the summary dismissal provision of the Small Business Fair
Dismissal Code. In doing so he relied on various aspects of the evidence before him including
the letter of termination which was in the following terms:
“11 April 2014
Mr D J Armstrong
Dear David
Re: Letter of termination
I refer to previous correspondence, particularly my email to you this morning. In my
email this morning I identified that you had:
(a) Failed to return company property, including complete client files which
had been specifically requested from you in my letter to you of 8 April 2014;
(b) Failed to attend at a meeting scheduled to discuss the return of such
property and files.
As a consequence of the above I set out that you had breached your obligations to:
(a) Serve the company faithfully and diligently;
(b) Act in the company's best interests; and
(c) Refrain from acting or giving the appearance of acting contrary to the
company's interest.
I again requested that you return all company property and all client files (complete)
to me at the office before noon today.
I note that you did not attend at the office at noon today and have sent an email to me
at 1.40 pm today in which you state that you have complied with my request for the
return of complete client files and all company property.
As I am in possession of particular files identified in my letter that you have returned,
it is obvious to me that there are documents missing from those files. I can only
assume that you have retained those documents and do not intend to return them to
the company. You are acutely aware that the documents are necessary for the
company to continue with its work for these clients.
In relation to your failure to attend the scheduled meeting you assert that your child
was sick and that you had to look after the child. You do not say why this prevented
you from contacting me prior to the scheduled time to advise me of your predicament
and to request a deferment of that meeting. Your further reasons for failing to attend
[2015] FWCFB 8094
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at this meeting are ambiguous or factually incorrect. I conclude that your failure to
attend was deliberate and wilful.
You have not provided any meaningful comments in relation to the breaches of your
obligations set out in my email to you this morning.
As further noted in my email, a failure by you to return company property comprising
the complete client files by noon today would result in a termination of your
employment without further notice.
There is nothing in your email to me today that provides any or any legitimate reason
as to why you have not complied with this requirement. If you are aware of the
location of the client files or documents relating to those files you have had the
opportunity to advise me. You have not done so.
The retention of company property, including client files and or documents from those
files is clearly a serious and wilful breach of your contractual obligations.
As indicated in my earlier email I herein notify you that your employment with the
Company is terminated, effective immediately. I shall arrange for the payment of your
salary, to the end of today, as well as any other accrued entitlement, to be paid to you
on the usual pay day.
I remind you of your restraint obligations as set out in clause 14 of your contract. As it
is evident to me that you have retained documents from particular client files I will be
advising those clients of your post termination obligations and will seek to enforce
those obligations against you if necessary.
Yours faithfully
John Hoff”
[7] The Commissioner made the following findings of fact arising from all of the
evidence:
“[10] The office of TMS was broken into by an unknown person on the evening of 9
April 2014. Mr Hoff is of the strong opinion that Mr Armstrong committed the offence
based on the actions of the thief.
[11] Mr Hoff advised the FWC and the Police that the following items had been stolen
from the office:
● Mr Armstrong’s diary;
● Documents from Mr Armstrong’s desktop;
● Documents from Mr Hoff’s office pertaining to Mr Armstrong’s
employment.
[12] I note that nothing of any value, such as computers, laptops or petty cash was
stolen during this break and enter. I have taken this into account.
[2015] FWCFB 8094
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[13] Mr Hoff also advised that he had engaged IT consultants to search TMS’s
computer system to ascertain whether any material had been stolen or the system
compromised. The IT consultants advised Mr Hoff that somebody had logged into
TMS’s computer system and downloaded information onto a USB. The log in details
that were used were that of Mr Armstrong. Mr Armstrong claims that he left his log in
details on a post it note with Mr Hoff when he left. Mr Hoff denies the existence of
any post-it note. There is some debate as to whether the log in details that were
provided by Mr Armstrong at the hearing, which he claims was the information that he
provided to TMS when he left on 3 April 2014, would actually provide access. The
code is two characters short to work the system. I have taken this into account.
[14] A significant client of TMS is a friend of Mr Armstrong and was also a witness in
these proceedings, Mr Dean Taylor. Mr Taylor operates a business and is a resident of
Geraldton, a town 418 km north of Perth.
[15] Mr Armstrong would occasionally meet Mr Taylor on the weekend to deal with
his tax and business issues when Mr Taylor was visiting Perth. It was therefore
appropriate for Mr Armstrong to have possession of Mr Taylor’s files at his home,
perhaps not on a permanent basis but certainly on a regular basis.
[16] When Mr Hoff requested and then demanded that the files of Mr Taylor be
returned to the office of TMS, following Mr Armstrong being stood down, the files
were returned in a loose fashion with the pages not contained in a file. Mr Hoff claims
that a number of files and important pages pertaining to Mr Taylor were not returned.
[17] One of the files not returned was the billing file. This meant that Mr Hoff could
only charge Mr Taylor an estimate of what work he thought had been undertaken by
Mr Armstrong. Mr Taylor, after receiving the estimated account, had a discussion with
the recently dismissed Mr Armstrong. At this meeting, either Mr Armstrong or Mr
Taylor suggested that Mr Taylor should ask TMS for an itemised account. An itemised
account could not be provided by TMS because the billing sheet/billing file was no
longer in existence, a fact that would have been well known to Mr Armstrong at this
point in time if he had removed or destroyed this information from the TMS file. I
have taken this into account.”
[8] Mr Armstrong, who had earlier been given notice of termination of his employment,
was summarily dismissed on 11 April 2014. As TMS is a small business, the task of the
Commissioner was to consider whether, on the evidence before him, the termination was
consistent with the Summary Dismissal provision of the Small Business Fair Dismissal Code.
This provision states:
“Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the
employer believes on reasonable grounds that the employee’s conduct is sufficiently
serious to justify immediate dismissal. Serious misconduct includes theft, fraud,
violence and serious breaches of occupational health and safety procedures. For a
dismissal to be deemed fair it is sufficient, though not essential, that an allegation of
theft, fraud or violence be reported to the police. Of course, the employer must have
reasonable grounds for making the report.”
[2015] FWCFB 8094
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[9] The Commissioner concluded:
“[28] After taking into account all of the submissions and volumes of evidence
submitted by the parties at the reasoning of the Full Bench in Pinawin v Domingo, I
find that Mr Hoff did have reasonable grounds for reaching the conclusion to
summarily dismiss Mr Armstrong in accordance with the Small Business Fair
Dismissal Code. It is peculiar in the extreme that a thief would break into an office,
steal only items that were linked to a recently dismissed and suspended employee, log
on to a computer using the login details and password of the recently dismissed
employee and steal unspecified information from the computer system, then leave
without taking any good or chattel of any monetary value.”
Further evidence
[10] At the hearing of the appeal Mr Armstrong gave evidence of a series of
correspondence and other documents which he said he sent and received from TMS regarding
its former client (who had become his client), Mr Taylor. In particular he produced a report
dated 13 August 2015 under his new business name, Aegis Accounting provided to Mr Taylor
containing a review of accounting fees charged by TMS during the time it acted for him.
Attached to that report was a copy of a letter from Aegis Accounting to TMS dated 12 August
2015 requesting the most updated version of the tax return prepared for Mr Taylor’s business
and a copy of a letter on TMS letterhead, also dated 12 August 2015, in reply to that letter.
The reply letter was apparently forwarded to Aegis Accounting from Mr Hoff’s email
account. The reply stated that it attached scans of all of the documents held by TMS in
relation to the relevant file.
[11] Mr Armstrong gave evidence that upon receiving the reply to the Aegis Accounting
letter he discovered that one of the attachments was a billing sheet containing hand written
records of time spent and fees charged to Mr Taylor’s business which was alleged to be one of
the key missing documents at the time of his summary dismissal in April 2014. The time
entries included five entries for Mr Armstrong’s time apparently written by Mr Armstrong
and one entry for Mr Hoff’s time apparently written by Mr Hoff. The Aegis Accounting
report to Mr Taylor makes allegations of overcharging by TMS as a result of this data.
[12] Other evidence was produced by Mr Armstrong regarding the locks on the TMS office
door and the reports to police about the break-in.
[13] Mr Armstrong submitted that the discovery of this data proved that the theft of the
timesheet did not in fact occur and the break-in was a fabrication by Mr Hoff to create a
reason for summary dismissal. Therefore, he submitted, Mr Hoff did not have a reasonable
belief that Mr Armstrong’s conduct was sufficiently serious to justify immediate dismissal.
He submitted that on the basis of the further evidence the Full Bench should find that the
conclusion of the Commissioner was wrong and should be overturned.
[14] Mr Hoff gave evidence that TMS did not receive the letter from Aegis Accounting of
12 August and did not send the reply to the letter of 12 August. He said that the TMS
letterhead on the 12 August letter was superseded letterhead that had not been used since July
2015 and that the billing sheet attachment did not conform to the stationary used by TMS for
billing records. He gave evidence that he had never seen the billing sheet and the record of his
[2015] FWCFB 8094
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time entry had not been written by him. Mr Hoff gave evidence that the procedure for
responding to requests of the nature of the Aegis Accounting letter is to refer the requesting
firm to the client because it has the original of all records and forwarding the contents of files
to a third party would be a breach of privacy.
[15] TMS also led evidence from Mr Guy Bridge, an IT expert. He said that at the request
of TMS he conducted a search of the TMS computer system and back up logs stored on an
external hard drive. He said that he did not locate any email from Mr Hoff to Aegis
Accounting during the relevant period. Mr Bridge was cross-examined by Mr Armstrong and
questioned by members of the Bench. He gave evidence that any changes to the data log
would be likely to be detectable and that any email sent by Mr Hoff from his private computer
away from the office would still show up in the records of the TMS server. He said that it was
possible for an email to be created using someone else’s email address and direct it to a third
party. If that were to occur, the recipient email could be traced to determine the IP address of
the originator of the email. At the hearing we asked Mr Armstrong if he could provide Mr
Bridge with access to the email he received so that this trace could be conducted. Mr
Armstrong initially said that his iPad could not access his email account. We offered the
computer system of the Commission. Mr Armstrong contended that this could not be done as
he did not know the password of his email account.
[16] Evidence was also given by Mr Hoff at the hearing of the original matter that a person
pushed a tool or device through the space between the door and the doorframe and depressed
the interior handle, thus opening the door and gaining access to the TMS office. Mr
Armstrong contends that the break-in relied upon by Mr Hoff in summarily dismissing Mr
Armstrong could not have occurred because a properly installed locking mechanism could not
have been forced open in the manner described by Mr Hoff. He refers to assurances allegedly
provided to him by the makers of lock and the building developer in relation to this.
[17] TMS submits that it had been informed by a locksmith after the break-in that such a
method of entry was possible and a plate was installed to prevent it occurring in the future. It
contends that it does not know whether Mr Armstrong’s claims in relation to the lock are true
or not. However, TMS further submits that Mr Hoff is not an expert in the function of the lock
mechanism and that Mr Armstrong’s allegation does not give rise to any conclusions as to the
fact of the break-in or the reliability of Mr Hoff’s evidence.
[18] We have assessed the evidence of Mr Armstrong and Mr Hoff. We have also observed
them giving evidence and being cross-examined in the matter before us. In relation to the new
evidence of an email communication between Aegis Accounting and TMS, the evidence is
directly contradictory. Mr Armstrong says that he caused the email to be sent to Mr Hoff from
Aegis Accounting (under the name of a person not involved in the business) and received the
response from Mr Hoff of TMS. Mr Hoff states that he did not receive an email from Aegis
Accounting and did not send a reply. This evidence cannot be reconciled. Either Mr
Armstrong gave false evidence about sending and receiving information from TMS or Mr
Hoff gave false evidence about receiving the email and forwarding the information.
[19] We found Mr Armstrong initially self-assured but inconsistent in his evidence. As his
evidence developed he remained forthright but showed signs of evasiveness, nervousness and
irritation at the questions asked of him and testing of his evidence. We did not find Mr
Armstrong to be a reliable witness. Mr Hoff’s evidence was clear and consistent. We
[2015] FWCFB 8094
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considered him to be reliable and consistent in his evidence. His evidence was reasoned and
plausible.
[20] We accept the evidence of Mr Hoff and Mr Bridge that no email was sent from the
TMS server to Aegis Accounting on 12 August 2015. That raises the question of the origin of
the email. There are a number of possible explanations. It may be that email records have
been altered to remove all records of its existence, the email was sought to be disguised by Mr
Hoff to allow him to later deny its existence, or it had been fabricated by someone other than
Mr Hoff in an effort to apportion responsibility on Mr Hoff. Our efforts on the day of the
hearing to obtain further information on this question through the evidence of Mr Bridge were
thwarted by Mr Armstrong’s lack of cooperation. We found Mr Armstrong to be evasive and
lacking in credibility in relation to these enquiries.
[21] We accept the evidence of Mr Bridge that any alteration in the log would show up in
the data he considered. We consider it highly unlikely that the log was changed. In our view,
the email was either disguised or fabricated.
[22] It is conceivable that someone may wish to deny possession of a document that they
had previously alleged had been stolen and no longer in their possession. However it is
inherently unlikely that a person would forward the document unnecessarily to a third party,
and highly unlikely that they would disguise the sending of an email of an apparently routine
nature by sending a phony email from a different IP address on the same day as receiving the
request for client information. There is no basis for accepting the possibility that Mr Hoff
disguised the email himself by sending it from another email account.
[23] In all of the circumstances we are drawn to the conclusion that the 12 August 2015
email allegedly from Mr Hoff to Aegis Accounting was fabricated by or on behalf of Mr
Armstrong in order to create a foundation for an allegation that Mr Hoff had lied to the
Commission about the break-in and the stolen information. We conclude that Mr Armstrong
also gave false evidence about this matter. It should be observed that it is a serious offence to
fabricate evidence and it is also a serious offence to give false or misleading evidence.
Conclusions
[24] For the purposes of the matter before us it is not necessary that we consider the other
evidence adduced by the parties. We find that the additional evidence on email
communications and other matters adduced in the appeal proceedings does not alter the
validity of Commissioner Riordan’s finding that Mr Hoff believed on reasonable grounds that
Mr Armstrong’s conduct was sufficiently serious to justify immediate dismissal. The
dismissal was therefore consistent with the Small Business Fair Dismissal Code. Accordingly
we dismiss the appeal against the Commissioner’s decision. In the light of the serious matters
we have encountered in this matter we propose to forward a copy of this file to the Director of
Public Prosecutions.
[2015] FWCFB 8094
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VICE PRESIDENT
Appearances:
Mr D. Armstrong on his own behalf.
Mr A. Cameron, of counsel, on behalf of TMS.
Hearing details:
2015.
Perth.
19 November.
Final written submissions:
Mr D. Armstrong on 23 October 2015.
TMS on 5 November 2015.
Printed by authority of the Commonwealth Government Printer
Price code C, PR574311
1 [2015] FWCFB 6789.
THE OF THE FAIR WORK C. SEN THE NOISS
