Dec 451/99 M Print R4471
AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
s.45 appeal against decision Print R0708
issued by Senior Deputy President Watson on 13 January 1999
I. Rode
(C No. 30556 of 1999)
s.170CE application for relief in respect of termination of employment
I. Rode
and
Burwood Mitsubishi
(U No. 32313 of 1998)
VICE PRESIDENT ROSS |
|
SENIOR DEPUTY PRESIDENT POLITES |
|
COMMISSIONER FOGGO |
MELBOURNE, 11 MAY 1999 |
Appeal against decision - termination of employment.
DECISION
Background
[1] Mr Ivan Rode was employed by Burwood Mitsubishi as a "sales consultant (used/new)".1 He sold used motor vehicles. He was initially employed from 26 June 1997 until his resignation on 19 December 1997. Mr Rode resigned in order to visit his family in Sri Lanka for a period which could not be accommodated within his leave entitlements at that time.
[2] On Mr Rode's return to Australia he was re-employed by the respondent and started work on 17 January 1998.
[3] While employed by the respondent Mr Rode participated in weekly sales meetings and end of the month sales reviews. These meetings were with other employees and Mr Mills, the General Manager of Burwood Mitsubishi.
[4] During his initial period of employment (26 June to 19 December 1997), Mr Rode sold 11 or more vehicles in each full month in which he was employed.2
[5] In the period from 17 January 1998 until 15 June 1998 the applicant's sales performance deteriorated, as shown below:
1998 |
No of cars sold (excluding sales which were not completed)3 |
January |
7 |
February |
6 |
March |
7 |
April |
7 |
May |
7 |
June |
2 |
[6] Mr Rode's employment was terminated arising out of a meeting on 15 June 1998. He subsequently lodged an application for relief pursuant to s.170CE of the Workplace Relations Act 1996 (Cth) (the Act). Conciliation was unsuccessful and the applicant proceeded to arbitration before Senior Deputy President Watson.
Decision at first instance
[7] On 13 January 1999 Senior Deputy President Watson handed down his decision in respect of Mr Rode's application [Print R0708]. His Honour concluded that the termination of Mr Rode's employment was not "harsh, unjust or unreasonable" and he dismissed the application. The matter before us is an appeal from that decision.
[8] In relation to whether there was a valid reason for Mr Rode's termination his Honour's findings are set out at pp4-5 of the decision. The Senior Deputy President found, among other things, that:
· sales targets were set for employees, including Mr Rode;
· the applicant had a personal target of 10 sales per month. Mr Mills, the General Manager of Burwood Mitsubishi, required 12 to 15 sales per month, a target which was not unreasonable given the applicant's demonstrated capacity to consistently achieve sales of 11 or more vehicles per month in 1997; and
· the applicant's sales performance deteriorated significantly in 1998 and he consistently failed to meet the targets set for him.
[9] His Honour concluded that the respondent had a valid reason for terminating Mr Rode's employment. At pp4-5 of the decision his Honour said:
"19. I am satisfied that there was a valid reason for the termination related to the performance of the applicant over the course of 1998. The applicant's sales performance deteriorated significantly in 1998, being well below that of which he was capable and had achieved in 1997, and consistently failing to meet the targets set for him. .... I think termination on this basis was reasonable given the applicant's demonstrated capacity to consistently achieve sales of 11 or more vehicles per month in 1997.
20. Whilst the applicant focussed on the performance of the applicant relative to other sales persons, the marked deterioration of the applicant's performance in itself provides a valid reason for termination. Inadequate performance of others, if it exists, does not itself negate a valid reason for termination based on performance of a particular employee, where it exists. Different expectations could be validly held of different employees, reflecting factors such as experience and other duties. In any case, the sales data provided shows that whereas the applicant consistently outsold all other sales staff in each full month of 1997, this was not the case in 1998, confirming the decline in the applicant's performance levels in 1998.
21. The applicant's explanation for the poor sales levels was the limited stock held in the yard. However, this factor applied in both 1997 and 1998 and does not explain the decline in the applicant's sales levels in the second period."
[10] The Senior Deputy President also found that Mr Rode had been notified of the reasons for his dismissal and was given an opportunity to respond to those reasons.
[11] As the termination related to Mr Rode's unsatisfactory performance his Honour considered, pursuant to s.170CG(3)(d), whether Mr Rode had been warned about that unsatisfactory performance before the termination. In this regard his Honour said that he was "satisfied that the applicant was warned about ... unsatisfactory performance before the termination".
[12] The Senior Deputy President concluded that in all the circumstances the termination was not harsh, unjust or unreasonable.
Summary of submissions in support
[13] The appellant challenged the decision subject to appeal on four broad bases:
· A valid reason for termination: it was contended that the Senior Deputy President erred in concluding that there was a valid reason for Mr Rode's termination.
· Findings not supported by the weight of the evidence: it was contended that the Senior Deputy President made findings that were not supported by the weight of the evidence.
· Denial of procedural fairness: it was submitted that the Senior Deputy President had erred in failing to find that the appellant was denied procedural fairness.
· Manner of the dismissal: it was contended that the Senior Deputy President had erred in failing to have adequate regard to the "crude and rough manner" of Mr Rode's termination.
[14] We note that during the oral argument counsel for the appellant abandoned an argument advanced in his earlier written submission to the effect that the Senior Deputy President had demonstrated bias in favour of the respondent. In our view this course was an appropriate one as it was apparent that there was no evidence to support the allegation made.
[15] We deal with each of the arguments advanced in turn.
A valid reason for termination
[16] In determining whether a termination was harsh, unjust or unreasonable s.170CG(3) requires the Commission to have regard to, among other things,:
"(a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; ..."
[17] In relation to the meaning of "valid reason" the following remarks of Northrop J in Selvachandran v Peteron Plastics Pty Ltd are relevant:
"Section 170DE(1) refers to a `valid reason, or valid reasons', but the Act does not give a meaning to those phrases or the adjective `valid'. A reference to dictionaries shows that the word `valid' has a number of different meanings depending on the context in which it is used. In The Shorter Oxford Dictionary, the relevant meaning given is: `2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.' In The Macquarie Dictionary the relevant meaning is `sound, just or wellfounded; a valid reason'.
In its context in s 170DE(1), the adjective `valid' should be given the meaning of sound, defensible or wellfounded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee's capacity or conduct or based upon the operational requirements of the employer's business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must `be applied in a practical, commonsense way to ensure that' the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd, when considering the construction and application of a s 170DC." 4
[18] While Selvachandran was decided under the former statutory scheme the above observations remain relevant in the context of s.170CG(3)(a). A valid reason is one which is sound, defensible or well founded. A reason for termination which is capricious, fanciful, spiteful or prejudiced is not a valid reason for the purpose of s.170CG(3)(a).
[19] We agree with the appellant's submission that in order to constitute a valid reason within the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.
[20] In determining a s.170CE application for relief the Commission is bound to consider, for itself, whether, on the evidence in the proceedings before it the termination was "harsh, unjust or unreasonable".5
[21] There appear to be two elements to the appellant's attack on his Honour's conclusion that there was a valid reason for Mr Rode's termination.
[22] First, it is said that his Honour had erroneously applied a subjective test in his determination of this issue. The appellant argues that an objective test should have been applied. In support of such an approach the appellant submits:
"An objective test would also achieve certainty and consistency in the workplace by achieving a universal standard, whereby car sales targets should apply equally to all employees."6
[23] As we have indicated a valid reason must be objectively defensible. But this does not give rise to the implication suggested by the appellant. Section 170CG(3)(a) does not mean that an employer is obliged to apply the same performance standards to all employees. As the Senior Deputy President noted in the decision subject to appeal: "Different expectations could be validly held of different employees, reflecting factors such as experience and other duties."7
[24] Second, it was argued that his Honour had failed to consider Mr Rode's sales performance figures in context. It was suggested that the reduction in sales in 1998, compared to 1997, may have been attributable to external or seasonal factors and restrictions beyond the applicant's control. In this context the appellant relied on the following extract from the decision of Judicial Registrar Millane in Cowell v Irlmond Pty Ltd:8
"The respondent carries the burden of justifying the allegations it makes concerning performance. In respect to the failure to achieve targets it seemed to me that it relied on the general assumption that because he was floor manager the applicant was to be held entirely responsible. This assumption ignores the role of other factors such as Russo's role as sales manager, the role of the salesmen and external market considerations affecting the sale of Mitsubishi motor vehicles. The respondent conceded that sales were down both before the applicant commenced his employment in February 1995 and after he left in February 1996. This together with the failure to have any specific discussion with the applicant about his performance left me with some doubt as to the soundness of the allegation that the applicant's performance was the reason for the poor sales."
[25] The difficulty with this submission is that there was no evidence in the proceedings below to suggest that external factors - such as seasonal fluctuations - explained the deterioration in Mr Rode's performance. If such factors did exist and the employer had not taken them into account in deciding to terminate Mr Rode's employment, then some doubt would be cast on the assertion that the applicant's poor performance was the reason for the reduction in sales in 1998 compared to the previous year.
[26] The references in the proceedings below of seasonal fluctuations are very limited and do not support the appellant's position. The following exchange took place during the course of the applicant's cross-examination:
"Mr Vadarlis: From your experience, being an experienced salesman, is January a slow or a good month for selling cars?
Mr Rode: It can be - with the car market today you can never pinpoint any month to be a good month or a bad month, it all depends on what stock you got, how many people you have walking into the yard and how much opportunity you have to sell. It doesn't mean, you know that you can pinpoint February as a bad month, or August as a good month. It is what you can do with the limited resources you have."9
[27] Further during the course of Mr Pepers' cross-examination the following exchange took place:
"Mr McDonald: The October-November period is better month to sell motor vehicles than perhaps the May-June period, isn't it?
Mr Pepers: Not necessarily."10
[28] Moreover counsel for the applicant failed to lead any evidence in relation to seasonal or other factors which may have contributed to the deterioration in Mr Rode's sales performance.
[29] Nor did the appellant cross-examine the respondent's witnesses in relation to such factors - other than in the extract from Mr Pepers' evidence set out above.
[30] The appellant submitted that "the Commission must look to external and objective factors in accounting for an employee's poor performance". Certainly if such factors were demonstrated they would be relevant and the Commission would be obliged to take them into account. But in this case there was no evidence to suggest the existence of such factors. Hence we fail to see how it can be said that the Senior Deputy President fell into error in failing to properly consider Mr Rode's sales performance figures in context.
[31] The appellant suggested that the respondent was obliged to bring forward evidence that it had considered seasonal and other relevant factors before deciding to terminate Mr Rode's performance. The decision in Cowell v Irlmond Pty Ltd was relied on in support of this proposition.
[32] We do not agree with the appellant's submissions on this point. The decision in Cowell is clearly distinguishable from the matter before us. It was determined under the previous legislative provisions and the factual circumstances were quite different. Section 170EDA(1) of the former Industrial Relations Act 1988 provided that where an application alleges that a termination was not for a valid reason, the employer bore the onus of proving that there was a valid reason. There is no equivalent provision in the current Act.
[33] In this case the respondent led evidence as to the reasons for the termination of the applicant's employment. In our view the respondent was not obliged to do any more than that.
[34] As the Senior Deputy President observed in his decision counsel for Mr Rode focussed on the applicant's performance relative to other salespersons. The essence of the applicant's argument was that his performance was better than some of the others so it was unfair to single him out for termination.
[35] His Honour dismissed this argument in the following terms:
"Inadequate performance of others, if it exists, does not itself negate a valid reason for termination based on performance of a particular employee, where it exists. Different expectations could be validly held of different employees, reflecting factors such as experience and other duties."11
[36] While we agree with his Honour's general observation we also note that the applicant's analysis of the sales figures is seriously flawed. The analysis focussed on used car sales only. It is apparent from the evidence that a number of the salespersons - other than Mr Rode - also sold new cars. Indeed there is evidence to support a finding that all salespersons were given the opportunity to sell both used and new cars.12
[37] The sales performance comparison should have included both used and new car sales. The data relied on by the applicant is subject to a number of other limitations:13
· Mr John Sermon was a new car salesperson;14
· Mr Paul Gray was the used car sales manager. He was not solely employed to sell vehicles directly, he had a range of other duties. In the first half of 1998 he carried out managerial functions in another Department, in addition to his other duties.15
· If a salesperson is absent on leave for part of a given month that will influence his or her monthly sales performance.16
[38] Counsel for the appellant also submitted that his Honour had failed to take adequate account of Mr Rode's performance as averaged across the whole of his employment. In our view the Senior Deputy President did not fall into error in this regard. He was entitled to focus on the deterioration in Mr Rode's sales performance in the first half of 1998 compared to the second half of 1997.
[39] We also note that the appellant contended that the Senior Deputy President had erroneously relied on and/or misinterpreted the decision of Ryan JR in Hearps v Jacob Toyota17 in considering whether there was a valid reason for Mr Rode's termination.
[40] There is no substance in this point. The decision subject to appeal does not disclose any reliance on the decision referred to and in the circumstances it is unnecessary for us to express a view on the relevance of that decision in the current statutory context.
[41] In our view the Senior Deputy President did not fall into error in his application of s.170CG(3)(a) and his conclusion that there was a valid reason for Mr Rode's termination was reasonably open.
Findings not supported by the weight of the evidence
[42] The appellant challenged two of the Senior Deputy President's findings on the basis that they were "against the evidence and the weight of the evidence".
[43] Before turning to the arguments advanced by the appellant we wish to briefly state our view regarding the role of an Appeal Bench in relation to findings of fact made by a member at first instance.
[44] As noted in Pham v Taubmans Pty Ltd,18 an Appeal Bench would be very reluctant to reverse a finding of fact made by a member at first instance and would only do so if satisfied that any advantage enjoyed by the member below as a result of hearing the relevant evidence was not sufficient to justify the findings made. As his Honour Mr Justice McHugh said in Abalos v Australian Postal Commission:19
" . . . where a trial judge made a finding of fact contrary to the evidence of a witness but has made no reference to that evidence, an appellate court cannot act on that evidence to reverse the finding unless it is satisfied `that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion."
[45] Further, in Devries v Australian National Railways Commission20 their Honours Brennan, Gaudron and McHugh JJ observed:
"More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact (see Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842, 62 ALR 53; Jones v Hyde (1989) 63 ALJR 349, 85 ALR 23; Abalos v Australian Postal Commission (1990) 171 CLR 167). If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge `has failed to use or has palpably misused his advantage' (SS Hontestroom v SS Sagaporack [1927] AC 37 at 47) or has acted on evidence which was `inconsistent with facts incontrovertibly established by the evidence' or which was `glaringly improbable' (Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844, 62 ALR at 57)."
[46] If a finding made by a member at first instance depends to any substantial degree on the credibility of a witness, that finding must stand, unless it can be shown that the member at first instance:
· acted on evidence inconsistent with facts incontrovertibly established by the evidence;
· acted on "glaringly improbable" evidence; or
· failed to use or palpably misused the advantage the member at first instance enjoyed in hearing the witnesses give evidence.21
[47] Where a member at first instance resolves a conflict of evidence between witnesses the subtle influence of demeanour on the member's determination cannot be overlooked. Further, it does not necessarily follow that because a member at first instance makes no express reference to demeanour and credibility that such factors played no part in any findings of fact made.22
[48] The role of an appellate Court in reviewing a trial judge's findings of fact was recently considered by the High Court in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq).23
[49] In that case the appellant (the SRA) brought proceedings against nine defendants in the Commercial Division of the Supreme Court of NSW. The SRA claimed that two of those defendants, being contractors to it, had submitted invoices based on dockets that had been certified fraudulently by those defendants, their managers and employees, and that other defendants, engaged by the SRA to certify the accuracy of the documents, had been similarly fraudulent.
[50] The SRA, having failed before the primary judge and on appeal to the Court of Appeal, further appealed to the High Court. It submitted that the primary judge had overlooked a body of documentary evidence supporting SRA's case; had made inappropriate findings about the want of credibility of a material witness, Mrs Page; and had failed to identify the relevant issue for trial.
[51] Mrs Page, as a site secretary, gave evidence of having been instructed to write up false entries in books and dockets. The trial judge said of Mrs Page:
"Whilst the material included in her affidavits gives the appearance of being quite unequivocal, this appearance did not survive her cross-examination. I do not accept significant parts of her evidence. It was internally inconsistent in a number of respects. She was argumentative at times, evasive at others. She did not present well in the witness box."
[52] The High Court held that the findings of the primary judge as to Mrs Page were surprising and suggested that the "significance" attached by him to Mrs Page's appearance and demeanour was misplaced, especially in a context where that judge had failed to give sufficient attention to all the evidence of the case.24
[53] The joint judgment of their Honours Gaudron, Gummow and Hayne JJ referred to in the extract from Devries which we have set out above, with apparent approval (at 807) and concluded in the following terms:
"It is true that the trial judge, in determining whether to accept the evidence of Mrs Page, was heavily swayed by his impression of her whilst giving oral evidence. However, this circumstance does not preclude a court of appeal from concluding that, in light of other evidence, a primary judge had too fragile a base to support a finding that a witness was unreliable (Apand Pty Ltd v Kettle Chip Co Pty Ltd (1994) 52 FCR 474 at 496-497. See also Voulis v Kozary (1975) 50 ALJR 59; Chambers v Jobling (1986) 7 NSWLR 1). The documentary evidence in this case, comprising unchallenged affidavit material of Mrs Meek and Ms Packham, the wage records and related documents of Earthline and Nuline, the list of plant (at least in relation to machine No 59) and the analysis of Coopers & Lybrand (in respect of the duplicity claims), provides significant support to the allegations made by Mrs Page.
As Kirby J and Callinan J point out in their reasons for judgment, these were matters to which weight was not given either by the trial judge or the Court of Appeal. The substance of the matter is that there has not yet been a determination of the SRA's case upon a consideration of the real strength of the body of evidence it presented. There must be a new trial at which this consideration will be undertaken."
[54] It seems to us that the approach of the majority of the Court in the State Rail Authority case represents an application of the traditional approach of appellate bodies to findings of fact at first instance. It does not, in our view, represent a change in the law as stated in Devries and Abalos. The position prior to the State Rail Authority case was that appellate courts were prepared to overturn findings of fact in certain circumstances including where the trial judge acted on evidence which was inconsistent with facts incontrovertibly established by the evidence. That is still the position.
[55] We have applied the general observations set out above to the determination of the matter before us.
[56] The first challenge was in relation to the finding that sales targets were set throughout the applicant's employment. The appellant contended that there was no documentary evidence of sales targets being set and the sales meetings were motivational talks to encourage employees to increase sales.
[57] The Senior Deputy President dealt with the issue of "sales targets" at paragraphs 19 and 24 of his decision, in the following terms:
"I am satisfied that targets were set. The applicant had a personal target of 10 sales per month. Mr Mills required 12-15 sales per month, a target which was not unreasonable having regard to the applicant's sales performance in 1997 ...
Whilst the applicant gave evidence that he was not subject to any targets, he did concede that individual sales targets and sales outcomes were put on the whiteboard and discussed at the weekly sales meetings, and that Mr Mills regularly imposed upon him a target of 12-15 sales."
[58] At paragraph 24 of his witness statement Mr Rode said:
"I did not have any sales targets or budgets throughout the period of my employment with Burwood Mitsubishi."
[59] In the course of his cross examination Mr Rode agreed with the proposition that weekly sales meetings were held every Monday morning and during these meetings Mr Mills would write each person's sales figures for the previous week on a whiteboard.25 Mr Rode also accepted that Mr Mills would go through each person's sales and say, for example, "look, Paul, you only sold five cars, you should have sold six".26
[60] In relation to the sales targets or budgets issue the following exchange during Mr Rode's cross-examination is relevant:
"Mr Vadarlis: Mr Mills is going to get up and give evidence and say that you set your own budgets and that your own budget was 12 cars per month.
Mr Rode: Mr Mills would ask how many cars do we think we can sell for the month. It was not that I set a budget of 12. If I said 12 he would say: you are quite better than that you could do 12.
Mr Vadarlis: Now, are you telling this Court that you did estimate how many cars you would sell in the following month?
Mr Rode: With the side of the yard and with the number of salesmen there, your Honour, I used to keep it to 10 but Mr Mills would always say: I want you to do much better than that. You can definitely do 12 to 15. So he used to up me another two.
Mr Vadarlis: So your budget was 12 then?
Mr Rode: 10.
Mr Vadarlis: 10. Mr Rode, maybe I haven't been in the same room as you but didn't you say earlier there was never a budget?
Mr Rode: No, a budget that I set for myself. It was an individual budget that I wanted to achieve for me."27
[61] The evidence of Messrs Mills, Gray and Pepers supports the finding made by the Senior Deputy President. For example, paragraph 24 of Mr Rode's statement was put to Mr Gray for comment and he said:
"Mr Gray: Well, that's incorrect. Everybody is always given a target which is achievable and if you do not achieve your targets well you're informed of your progress and given every help to let them achieve it. But at the end of the day it's up to the individual to perform.
Mr Vadarlis: Particularly applying that to Mr Rode, did he have a sales target.
Mr Gray: Always."28
[62] Similar statements were made by Mr Pepers in his oral evidence29 and in Mr Mills' witness statement.30
[63] Further, contrary to the appellant's written submission there was documentary evidence relating to sales targets in the proceedings below31. In his evidence Mr Pepers said that a document setting out sales targets was distributed to all salespersons every month.32 This was confirmed by Mr Mills in his evidence.33 The sales target document for April 1998 was tendered in the proceedings below as Exhibit 12.
[64] The Senior Deputy President's finding that sales targets were set throughout the applicant's employment was reasonably open.
[65] The second challenge was in relation to his Honour's conclusion that the applicant "was warned". Counsel for the appellant contends that Mr Rode was not given a formal written or verbal warning about his performance, nor was he advised that his employment was at risk.
[66] Section 170CG(3)(d) provides that where a termination is related to unsatisfactory performance the Commission must have regard to whether the employee has been warned about that unsatisfactory performance before the termination. The Senior Deputy President dealt with this issue in the following terms:
"24. The termination did relate to unsatisfactory performance by the applicant. I am satisfied that the applicant was warned about that unsatisfactory performance before the termination. This occurred by way of the weekly sales meetings and monthly sales reviews at which individual sales outcomes, targets and performance were written on a whiteboard and/or discussed. Whilst the applicant gave evidence that he was not subject to any targets, he did concede that individual sales targets and sales outcomes were put on the whiteboard and discussed at the weekly sales meetings, and that Mr Mills regularly imposed upon him a target of 12-15 sales (Transcript p16). Whilst the applicant did not regard that as a budget or target, it clearly was and put the applicant on notice as to what was expected of him. Whilst I accept, on the evidence, that the applicant was not advised in specific terms that his employment was at risk, I find that he was appraised in general terms that his inadequate sales performance would result in action by his employer. Given the applicant's experience in the industry and the clarity of performance expectations of him by way of sales targets, I think it reasonable to conclude that he would have been aware of the consequences for his continuing employment of a continued failure to meet sales targets. Whilst the discussions about inadequate sales performance did not contain explicit threats to continuing employment, and no written warnings or verbal warnings in a one-on-one situation were issued, I am satisfied that the applicant was told of the inadequacies in his performance, the expectations of him and generally appraised of the consequences of continuing inadequate performance in a manner which was reasonable in the particular circumstances of the employment."
[67] In his evidence the applicant states that he "did not receive any personal warnings or counselling sessions"34 and that apart from the day on which his employment was terminated he "was not aware that [his] sales performance was deficient".35 Mr Rode could not remember any discussion with Mr Mills regarding his sales performance in February and March.36 However during cross-examination he acknowledged that in the car sales industry a salesperson was measured by their performance37 and that sales managers, such as Mr Mills, were obsessed with sales figures.38
[68] The evidence of other witnesses supports the Senior Deputy President's findings on this issue. Mr Gray gave evidence in relation to the practice in the industry and at Burwood Mitsubishi in the following terms:
"Mr Gray: ... if people are below their target they are well and truly informed by Mr Mills.
Mr Vadarlis: What are they told?
Mr Gray: Simple rule, if you do not achieve your target you will run the risk of being terminated. We all know that, it's common knowledge in the motor industry, it is performance-based."39
[69] The following exchange took place during Mr Pepers' cross-examination and re-examination:
"Mr McDonald: You never heard Mr Rode ever threatened with dismissal, did you.
Mr Pepers: Sorry?
Mr McDonald: You never heard him threatened with dismissal prior to the meeting which he was actually dismissed?
Mr Pepers: Through the - I'm not sure what you're getting at.
Mr McDonald: Well, threatened with dismissal. You were never present at a meeting before the 15 June meeting in which Rode was told if you don't sell a certain number of vehicles, you'll be sacked?
Mr Pepers: Not in so many words.
Mr McDonald: All right no further questions sir ...
Mr Vadarlis: How many words?
Mr Pepers: Well, its more the phrase of something to the effect if targets are not met, that drastic measures would be taken.
Mr Vadarlis: Does that have a particular meaning at Burwood Mitsubishi.
Mr Pepers: Most certainly as it does with any dealership.
Mr Vadarlis: What does that mean?
Mr Pepers: Well, that if you can't perform or can't achieve your targets on a regular basis, that you would ultimately be dismissed."40
[70] In his witness statement Mr Mills made the following reference to counselling sessions with Mr Mills:
"I often discussed his sales performance with him through from early 1998 and he was told on a number of occasions by me (in the presence of usually the used car sales manager Paul Gray) and at the sales meetings, that his performance was unsatisfactory and that if he didn't improve his employment was at risk and he would be dismissed."41
[71] Mr Mills' oral evidence was consistent with the above statement.42 It was also generally supported by Mr Gray's evidence. In particular Mr Gray said:
"... his sales figures for months had been declining and declining and Mr Mills had informed Ivan on several occasions or more that `You're not achieving what ever yourself have set to achieve, let alone what the dealership expects. It just can't continue.' "43
[72] There is a conflict between Mr Rode's evidence and that of the respondent witnesses.
[73] It is clear that in the event of an inconsistency between a witness's evidence and a member's findings of fact, then the member must be taken to have rejected that evidence.44 In this case it is apparent that the Senior Deputy President rejected Mr Rode's evidence.
[74] In our view the conclusion reached by his Honour in relation to this issue was reasonably open to him.
Denial of procedural fairness
[75] Counsel for the appellant contended that his client had been denied procedural fairness.
[76] Section 170CG requires the Commission to have regard to a number of factors in determining whether a termination was harsh, unjust or unreasonable. Some of these matters relate to whether the termination was procedurally fair, namely:
- whether the employee was notified of the reasons for his or her termination [s.170CG(3)(b)];
- whether the employee was given an opportunity to respond to any reason related to his or her capacity or conduct [s.170CG(3)(c)]; and
- if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination [s.170CG(3)(d)].
[77] We have already dealt with the question of whether Mr Rode was warned about his unsatisfactory performance before his termination.
[78] In relation to ss.170CG(3)(b) and (c) the appellant contended that the Senior Deputy President had not given adequate or sufficient regard to the failure of the respondent to accord procedural fairness.
[79] The resolution of this issue depends on the view one takes as to what was said at the meeting on 15 June 1998. There are two competing versions.
[80] In his statement Mr Rode said that before he was given an opportunity to respond to any issues about his performance he was told by Mr Mills that "we had to part company".45 We also note that in his oral evidence Mr Rode confirmed that during the course of the meeting Mr Mills said "look, Ivan, is there any way we can get you to sell more cars?".46
[81] Mr Mills' version of events is set out at paragraphs 21 to 24 of his statement in the following terms:
"21. By the 15th June 1998, I was most concerned about the Applicant's sales performance. On that day, I had a meeting with the applicant, in the presence of Paul Gray, the used car sales manager. By that stage, the applicant had sold only 2 cars for June. I told the applicant that his sales essentially were unsatisfactory and that we couldn't tolerate his sales performance.
22. We also discussed his performance. I told the applicant that I believed he was capable of selling more cars but that he wasn't applying himself fully.
23. The applicant said that he wanted a bigger yard but could not offer any other explanation or way to improve his performance. I told him that was not a good reason because the yard had not changed and his sales were getting lower in numbers.
24. He was told to in effect by me that if he couldn't improve his performance than his employment would be terminated. In essence he said that he couldn't offer any other explanation other than what he said earlier and therefore his employment was terminated. He was given one week's notice."47
[82] Mr Mills was not cross-examined on the issue of whether or not he notified Mr Rode of the reason for his termination and gave him an opportunity to respond.48
[83] The evidence of Mr Gray supported that of Mr Mills.49
[84] The Senior Deputy President reached the following conclusions in respect of these matters:
"22. I am satisfied that the applicant was advised of the reason for his termination - his inadequate sales performance in 1998 ...
23. I am satisfied that the applicant had an opportunity to respond in the meeting of 15 June 1998. The applicant did raise the issue of stock limitations, a matter which would not have required the respondent to alter its view of the deficiencies in the applicant's performance."
[85] In our view the conclusions reached by His Honour in relation to paragraphs 170CG(3)(b) and (c) were reasonably open.
Manner of the dismissal
[86] The appellant contended that the Senior Deputy President had failed to have adequate regard to the "crude and rough manner" in which the applicant was dismissed.
[87] The manner in which an employee is terminated may be a factor which is relevant, pursuant to s.170CG(3)(e), in deciding whether a termination was "harsh, unjust or unreasonable".
[88] It is apparent from the evidence in this case that Mr Mills used inappropriate language in terminating Mr Rode's employment. Mr Mills said, among other things, that Mr Rode was capable of selling more than seven cars a month and "even if I get a fucking stick and hit you, I can't get you to do any more than that".50
[89] The Senior Deputy President had regard to the manner of Mr Rode's termination. He noted that the approach of Mr Mills was "robust and adorned by unnecessary language"51 but concluded in the following terms:
"Whilst the respondent could have handled the circumstances with greater precision and sensitivity, I am not satisfied, in all the circumstances, that the termination was harsh, unjust or unreasonable."
[90] In our view the approach taken by his Honour in relation to the manner in which Mr Rode was dismissed was reasonably open and does not disclose a reviewable error.
Conclusion
[91] Section 170JF deals with appeals from orders arising from the determination of whether a termination was harsh, unjust or unreasonable. It states:
"(1) An appeal to a Full Bench under section 45 may be instituted by any person who is entitled under section 170JD to apply for the variation or revocation of an order under this Part.
(2) For the avoidance of doubt, an appeal to a Full Bench under section 45 in relation to an order made by the Commission under Subdivision B of Division 3 may be made only on the grounds that the Commission was in error in deciding to make the order."
[92] Section 45(2) provides that a Full Bench shall grant leave to appeal if "in its opinion, the matter is of such importance that, in the public interest, leave should be granted". Having regard to the terms of s.170JF(2) we think that leave to appeal should generally not be granted unless the appellant satisfies the Commission that there is an arguable case that the member at first instance had either made a legal error or had acted upon a wrong principle, given weight to irrelevant matters, failed to give sufficient weight to relevant matters or made a mistake as to the facts or that the decision was plainly unreasonable or unjust. In the absence of an arguable case of either legal error or that the discretion was miscarried the Commission would not grant leave merely to substitute its decision for the decision under appeal.
[93] Leave to appeal is not a mere formality and a substantive submission is required if leave is to be granted.
[94] The requirement for an arguable case of either legal error or that the discretion has been miscarried means that the appellant must demonstrate that their case has a reasonable prospect of success. This requirement is rigorously applied in order to ensure that the standing and purpose of Commission proceedings at first instance are not diminished by automatic or unwarranted access to an Appeal Bench.
[95] We are satisfied that the conclusion reached by the Senior Deputy President in the decision subject to appeal was reasonably open on the material before him.
[96] The appellant failed to establish an arguable case of either legal error or that the discretion was miscarried. The matter is not of such importance that, in the public interest, leave to appeal should be granted. Nor are there any other considerations which would lead us to grant leave in the circumstances of this case.
[97] We have decided to refuse leave to appeal and we dismiss the appeal.
BY THE COMMISSION:
VICE PRESIDENT
Appearances:
A. McDonald of Counsel for I. Rode.
E. Vadarlis for Burwood Mitsubishi.
Hearing details:
1999.
Melbourne:
April 27.
Decision Summary
Termination of employment - unfair dismissal -- appeal - full bench - claimed Commission at first instance erred in finding valid reason for termination - erred in failing to find denial of procedural fairness - claimed findings were not supported by the weight of evidence - valid reason - Bench found the a valid reason for termination must be objectively defensible - s170CG(3) does not mean that an employer is obliged to apply the same performance standards to all employees - different expectations could be validly held for different employees, reflecting factors such as experience and other duties - exercise of discretion - held Bench appeal bench should be very reluctant to reverse finding of facts per Pham v Taubmans Pty Ltd (Print 232) - should only do so if satisfied that an advantage enjoyed by the Commission at first instance as a result of hearing the evidence was not sufficient to justify the findings made per Ablos v Australian Postal Commission (1990) 171 CLR 167 - findings which depend to a substantial degree on the credibility of a witness must stand unless "glaringly improbable" or inconsistent with facts incontrovertibly established per Devries v Australian National Railways Commission (1993) 177 CLR 472 - general observation in State Rail Authority of New South Wales v Earthline Pty Ltd (In Liq.) applied - held conclusions reached by Commission were reasonably open - applicant failed to establish arguable case - leave to appeal refused - application dismissed. | ||||
Appeal by I Rode against a decision of Watson SDP (Print R0708) issued 13 January 1999 re Burwood Mitsubishi. | ||||
C No 30556 of 1999 |
Print R4471 | |||
Ross VP Polites SDP Foggo C |
Melbourne |
11 May 1999. | ||
Printed by authority of the Commonwealth Government Printer
<Price code F>
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3 See Exhibit 2 and Transcript of 16 December 1998 p24 at lines 29-30; p26 at lines 30-31; p72 at lines 19-26 and p74 at lines 11-29.
5 McLauchlan v Australia Meat Holdings Pty Ltd, Print Q1625, 5 June 1998.
6 See appellant's written submission at page 2.
9 Transcript 16 December 1998, p25 at lines 2-8.
10 Transcript 16 December 1998, p104 at lines 19-20. Also see p130 at lines 3-22.
12 See Mr Mills' evidence, Transcript 16 December 1998, p87 at lines 15-16.
13 Also see generally Transcript 16 December 1998, p86 at lines 8-11.
14 Transcript 16 December 1998, p68 at line 8.
15 Transcript 16 December 1998, p70 at lines 26-28; p77 at lines 23-24 and p84 at lines 5-33.
16 Transcript 16 December 1998, p64 at lines 20-24.
18 Print P2322, 28 July 1997 per Ross VP, Drake DP and Cargill C; see further Department of Social Security and Dean Uink, Print P7680, 24 December 1997 per Ross VP, Drake DP and Palmer C at 16-17.
21 See Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479; Elitegold Pty Limited v CM Holdings Pty Ltd and Anor [1995] ATPR 40,753 at 47,759.
22 Martin v Option Investments (Aust.) Pty Ltd [No. 2} [1982] VR 464 at 468; Ablos v Australian Postal Commission (1988) 171 CLR 167 at 179.
24 Ibid at 321 per Gaudron, Gummow and McHugh JJ.
25 Transcript 16 December 1998, p13 lines 27-28.
26 Transcript 16 December 1998, p14 at lines 3-4.
27 Transcript 16 December 1998, p16 at lines 16-29.
28 Transcript 16 December 1998, p92 at lines 5-10. Also see p95 at lines 3-10.
29 Transcript 16 December 1998, p98 at lines 19-28.
30 See Exhibit 5 at paragraphs 10 to 15.
31 This was conceded by counsel for the appellant in his oral submissions, properly in our view. Mr McDonald maintained - as he did in the proceedings below - that Mr Rode never received such a document.
32 Transcript of 16 December 1998, p103 at lines 1-16.
33 Transcript of 16 December 1998, p114 at lines 8-14.
36 Transcript of 16 December 1998, p25 at lines 23-24 and p27 at lines 13-14.
37 Transcript of 16 December 1998, p45 at lines 30-33.
38 Transcript of 16 December 1998, p30 at lines 1-7.
39 Transcript of 16 December 1998, p93 at lines 17-21. Also see p103 at lines 17-20.
40 Transcript of 16 December 1998, p105 at lines 11-28.
42 Transcript of 16 December 1998, p54 at lines 18-41 and p55 at lines 1-8.
43 Transcript of 16 December 1998, p93 at lines 5-7.
44 Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178-179.
46 Transcript of 16 December 1998, p42 at lines 9-10.
48 The extent of Mr Mills' cross-examination in relation to the meeting on 15 June is limited to p71 of the transcript at lines 14-28.
50 Exhibit 1 at para 15 and Transcript of 16 December 1998, p71 at lines 14-28 per Mr Mills.