WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES NICHOLAS RICHARD LYNAM

APPELLANT

 -v-

 LATAGA PTY LTD

RESPONDENT

CORAM FULL BENCH

  HIS HONOUR THE PRESIDENT P J SHARKEY

  CHIEF COMMISSIONER W S COLEMAN

  COMMISSIONER S J KENNER

DELIVERED THURSDAY, 29 MARCH 2001

FILE NO/S FBA 53 OF 2000

CITATION NO. 2001 WAIRC 02420

_______________________________________________________________________________

Decision  Appeal upheld.

Appearances

Appellant   Mr G McCorry, as agent

Respondent   Mr A J Prentice (of Counsel), by leave

_______________________________________________________________________________

Reasons for Decision

THE PRESIDENT:

INTRODUCTION

1                 These are the unanimous reasons for decision of the Full Bench.

2                 This is an appeal brought by the abovenamed appellant, Mr Nicholas Richard Lynam, against the decision of the Commission, constituted by a single Commissioner, contained in an order made on 7 December 2000 and deposited in the office of the Registrar on 7 December 2000.

3                 The decision in this matter was made on an application by Mr Lynam in which he claimed that he was harshly, oppressively and unfairly dismissed, and was denied contractual benefits to which he was entitled.  He made application pursuant to s.29(1)(b)(i) and (ii) of the Industrial Relations Act 1979 (as amended) (hereinafter referred to as “the Act”).

4                 The order, formal parts omitted, was made in the following terms:-

  “(2) ORDERS that the said respondent do hereby pay within seven days of the date of this order, as and by way of compensation, the amount of $3,510.00 to Nicholas Richard Lynam, less any taxation that may be payable to the Commissioner of Taxation.

  (3) ORDERS that the said respondent do hereby pay within seven days of the date of this order, as and by way of denied contractual benefits, the amount of $1,579.50 to Nicholas Richard Lynam, less any taxation that may be payable to the Commissioner of Taxation.”

GROUNDS OF APPEAL

5                 It is against that decision and part of it only, that Mr Lynam now appeals on the following grounds:-

 “1) The Commission erred in fact and in law in finding that the appropriate measure of compensation for the harsh, oppressive and unfair dismissal of the Appellant was four week’s remuneration, in that –

   a) The quantum of four week’s remuneration was assessed on the basis that it was more probable than not that the Appellant’s employment could and would have been fairly terminated by the giving of four week’s notice or payment in lieu, when there was no evidence adduced by the Respondent or derivable from the evidence to show that a termination with such notice would have been likely to occur or could or would have been fair if it had occurred;

   b) The dismissal of the Appellant was found to have been substantively rather than merely procedurally unfair and the measure of loss and injury was demonstrated to be greater than 4 weeks remuneration;

   c) The Commission failed to assess the loss and injury suffered by the Appellant by reason of the dismissal in the face of uncontested evidence of the Appellant’s quantifiable loss and injury;

   d) The Commission wrongly found that there was no injury to the Appellant and that the Appellant was aggrieved prior to the termination of his employment when the uncontested evidence of the Appellant was that he was injured by the dismissal.

 2) It is in the public interest and consistent with sections 26(l) and 23 of the Act for a decision of the Commission to be overturned if it is wrong in law and provides incentives for an employer to act unfairly in the manner in which an employee is dismissed.

 ORDERS SOUGHT

 1.  That the appeal be upheld.

 2. That the decision of the Commission that the Respondent pay to the Appellant compensation of four week’s wages ($3,510) be set aside and in lieu thereof, the Respondent be ordered to pay to the Appellant compensation of $17,500.”

6                 This appeal is against the quantum of compensation ordered to be paid, only, and against no other part of the order.  The was no cross appeal.

BACKGROUND

7                 At all material times, Mr Lynam was an employee of the respondent company at its record selling store, “Wesley CD Megastore” in the city of Perth in this State.  In fact, he was employed from 13 December 1999 until 27 March 2000 by the respondent who had bought the business from the previous owner who had also employed Mr Lynam since October 1995.

8                 Mr Lynam gave evidence that he was, at the time of the respondent’s purchase of the business, Stores Manager and Sales Manager.  This position included the following duties:  opening and closing the store, staff supervision, general shopkeeping and retail operations.

9                 It was common ground that, when the new owner, the respondent, took over from the administrator of the business on 13 December 1999, that it agreed to pay Mr Lynam on the same terms and conditions as he had enjoyed with the previous employer.

10              On 27 March 2000, when Mr Lynam arrived for work, he was dismissed and he said that he was unfairly dismissed.  It was common ground that there was, prior to this event, an ongoing dispute about the contract of employment insofar as it related to overtime. 

11              It was the evidence of both parties that Mr Lynam was then paid his salary and overtime for the additional hours worked.

12              The respondent submitted and there was evidence from Mr Peter Wilkinson, a Director of the respondent, that Mr Lynam claimed and was wrongly paid overtime which he should not have received.  The respondent also alleged that Mr Lynam should have continued, on the transfer of the business, with his salary of $667.00 per week and no overtime.  Mr Lynam, on the other hand, said that he was to continue on $667.00 per week but that he was paid overtime, queried it, and was told that the respondent intended to pay him overtime.

13              The Commissioner found that Mr Lynam was asked to and, in fact, did work six days a week from late January 2000.  He also found that Mr Lynam had conversations with Mr Wilkinson where they agreed that Mr Lynam would be paid overtime for all hours worked in excess of 38 hours.  That overtime was found to be paid initially at the rate of time and a half and later at the single time rate (see page 4 of the appeal book (hereinafter referred to as “AB”)).

14              After the respondent purchased the business, Mr Lynam gradually lost duties to others, with Ms Sonya Kuhari commencing as Promotions Manager and subsequently as General Manager which, effectively, was a demotion of him.  He raised a pay issue on behalf of another staff member, Mr Adrian Mansfield, and this resulted in his being presented with a letter, signed by Mr Wilkinson, dated 15 March 2000 advising him that his salary was to be reduced.  He was asked to sign that letter, but refused.  He was then asked to take a week off and return his keys to the store and leave without speaking to other members of the staff, which he did.

15              Over the ensuing weekend, Mr Lynam prepared a letter in which he asserted that the week off work should not be deducted as leave.  When he delivered it to Ms Kuhari on the Monday following that weekend, he was told to leave the store and that he was not allowed to be in it.

16              The following Monday, 27 March 2000, Mr Lynam returned to the store.  There, he met Mr Wilkinson who had with him the Warehouse Manager, Mr Wayne Sheldon.  Mr Wilkinson told him that he was not to enter the store any more and that, if he attempted to, Mr Wilkinson would have the police remove him.  Mr Wilkinson gave Mr Lynam one week’s notice pursuant to the contract of employment and told him to contact Mr Wilkinson to sort out a redundancy and termination package (see pages 23-25(AB)).  As to the further details of dismissal in his evidence, see pages 28-29(AB)).  Mr Lynam did contact Mr Wilkinson and received a letter in reply dated 31 March 2000 (see page 126(AB)), which contained allegations and assertions of fact which he denied.

17              The Commissioner found that Mr Wilkinson denied that Mr Lynam had any entitlement to overtime, that Mr Lynam’s contract provided for him to work whatever hours were required for the efficient running of the store for 6 days per week.  Further, the Commissioner found that it was clear from the evidence of Mr Wilkinson that, at the time of dismissal, Mr Lynam did not want to work under a revised and reduced contract.  This was made clear to Mr Lynam that day, 27 March 2000.

18              There was also evidence in relation to denial of contractual benefits which, since it does not relate to the issues raised upon appeal, it is not necessary to consider in these reasons.

19              In the end, the Commissioner accepted Mr Lynam’s account of the events as more reliable, and found that Mr Lynam was harshly, oppressively or unfairly dismissed on that basis that, whilst his performance was not in question, he received no warning or indication that his employment was in jeopardy, that there was no evidence to suggest that any discussion occurred as to why he had been receiving a higher rate of pay, and why the unilateral change was warranted.

20              The Commissioner also found that there was no prospect whatsoever that an employment relationship could be re-established between the parties, since they both expressed strongly adverse views of the other, which the Commissioner considered were not capable of being redressed.

21              The Commissioner made a finding that Mr Lynam had been unfairly dismissed from his employment and then went on the make findings as to compensation, which we will deal with hereinafter.

22              Mr Lynam gave evidence that he had suffered stress following the dismissal.  He was out of work for eight weeks (and living on savings) during which time he attempted to find other employment, eventually obtaining employment as the Assistant Manager of a bookshop at a lesser wage (see page 32(AB)).  That evidence was not challenged or, in any way, eroded.

FINDINGS - COMPENSATION

23              In relation to the question of compensation, the Commissioner found as follows:-

1. Mr Lynam’s evidence, which was unchallenged and supported by exhibit NL5, was that he had actively sought employment since his dismissal.

2. Mr Lynam found work some 7 weeks and 2 days after dismissal and has been earning less than his former position.

3. Mr Lynam calculated his lost income on the basis of an income of $667.00 per week on the basis that the employer could have given him reasonable notice of a change to work five days per week.

4. The Commissioner calculated Mr Lynam’s loss as $4,932.00 for the period up until he gained employment and $6,409.00 for an ongoing loss over a twelve month period.

5. The Commissioner also found that, at the time of dismissal, Mr Lynam did not want to work under a revised and reduced contract put forward by the respondent, even though this had been his contract on the initial engagement on 13 December 1999.

6. Mr Wilkinson handed Mr Lynam a letter on 20 March 2000 (exhibit NL2) which sought to reduce his weekly rate of pay.  In those circumstances, the Commissioner found that Mr Wilkinson should have provided Mr Lynam with reasonable notice of change.  However, the Commissioner was convinced and found that the employment relationship was bound to terminate.

7. The Commissioner also found that, in all of the circumstances of the dismissal, and given Mr Lynam’s age, and that he had previously been a manager in the store and had worked there for over four years (although only for a short period for the respondent), he should have been granted four weeks’ notice of the change.  This was a total of $3,510.00 by way of compensation.

8. The Commissioner held that he would not award Mr Lynam any money for injury.  This was because Mr Lynam’s evidence was that he was aggrieved prior to the date of termination and the Commissioner considered that this was due largely to him no longer managing the store.

ISSUES AND CONCLUSIONS

24              That part of the decision appealed against, namely the finding as to quantum of compensation and, indeed, the decision as a whole, was a discretionary decision, as it is defined in Norbis v Norbis (1986) 161 CLR 513.  Since the decision was a discretionary decision, the Full Bench may not interfere with it unless the appellant establishes that, by application of the principles in House v The King [1936] 55 CLR 499 and Gromark Packaging v FMWU 73 WAIG 220 (IAC), there was a miscarriage of the exercise of discretion.

25              The law relating to findings of loss and injury and the assessment of compensation is well and clearly settled in this Commission (see Manning v Huntingdale Veterinary Clinic 78 WAIG 1107 (FB); Bogunovich v Bayside Western Australia Pty Ltd 79 WAIG 8 (FB); Capewell v Cadbury Schweppes Australia Ltd 78 WAIG 299 (FB); and Gilmore and Another v Cecil Bros and Others 78 WAIG 1099 (IAC)).

THE GROUNDS OF APPEAL

Loss

26              There was a complaint in Ground 1 that:-

27              The Commissioner’s findings were inconsistent and in error because, having found that Mr Lynam’s evidence was to be preferred to that of Mr Wilkinson, the Commissioner then made findings which relied on Mr Wilkinson’s account of events being accepted.  From those findings, the Commissioner then made findings about the likely future employment of Mr Lynam with the respondent, which was not open on the evidence, so the submission for Mr Lynam went.

28              It was submitted that the Commissioner purported to accept the respondent’s account of the events of 27 March 2000, when he had earlier said that he accepted the evidence of Mr Lynam; then he accepted Mr Wilkinson’s account of the events of that day, namely that, on that date, there was a discussion of what terms of employment would apply to overtime when Mr Lynam returned to work and, therefore, when no agreement could be reached on that point, Mr Lynam was lawfully dismissed.

29              This in turn, so the submission went, led to an erroneous finding as to the loss or injury suffered.  It was submitted that, having erroneously accepted the respondent’s account of events on the date of termination, the Commissioner found that, in such circumstances, it would have been fair to terminate Mr Lynam’s employment by the giving of four weeks’ notice of the change in his employment conditions.

30              It was also submitted that the Commissioner erred in so finding and, further, erred in failing to find what was the loss and injury suffered by Mr Lynam by reason of the dismissal.

31              The first ground of the appeal was based on an allegation, supported by submissions, that the Commissioner’s findings were inconsistent and in error.  The basis of that submission was that, having found that Mr Lynam’s evidence was to be preferred to that of Mr Wilkinson, the Commissioner then made findings which relied on Mr Wilkinson’s account of events being accepted.  Put shortly, his finding that four weeks’ notice and, therefore, an amount equal to four weeks’ salary as a compensation for the failure to give notice, was made in error.

32              There was, it was submitted, no evidence adduced by the respondent derivable from the evidence to support a finding that Mr Lynam’s employment was bound to terminate.  As the Commissioner found, having accepted Mr Lynam’s evidence, Mr Lynam was presented with a proposal to vary the contract.  He was put off for a week without pay and, when he would not agree to the variation of his contract, he was dismissed on one week’s notice.

33              In our opinion, once the Commissioner accepted Mr Lynam’s evidence, which he did and which a fair reading of the transcript reveals it was open to him to do (not the least because it was unchallenged in cross-examination), the Commissioner was bound to accept Mr Lynam’s version of the events of the day of dismissal and, indeed, did so.  No reason was offered for the Commissioner purporting to accept Mr Wilkinson’s version of what occurred on 27 March 2000 and there is no reason discernible on a reading of the evidence.

34              The Commissioner found that Mr Wilkinson’s evidence of the events of 27 March 2000  “aligned with that of the applicant” (see paragraph 13, page 5(AB)) but, in fact, the evidence of Mr Lynam was quite detailed as to the events of the day and his exclusion from the premises and went beyond and was in conflict with some of Mr Wilkinson’s evidence.  Mr Sheldon was not called to give evidence.

35              It was submitted that the Commissioner, having erroneously accepted the respondent’s account of events on the date of termination, then went on to find that, in such circumstances, it would have been fair to terminate Mr Lynam’s employment by giving four week’s notice of change in his employment conditions.

36              As against that, it was submitted for the respondent that it was based on the undisputed evidence of the parties that Mr Lynam did not wish to work for reduced pay under the new contract presented to him.  It was therefore submitted that the employment relationship was correctly found as being bound to terminate and that there was ample evidence to find that four weeks’ notice would have been fair, taking into account the circumstances of the dismissal, Mr Lynam’s age, his position in the store and the length of his employment.

37              Of course, Mr Lynam, through his agent’s submissions, accepted four weeks’ notice as reasonable notice.  What is submitted was that there was an ongoing loss of wages for twelve months which impliedly derives from and was caused by the dismissal.  That is an amount calculated on the difference between what Mr Lynam lost in his employment and what he earned when he obtained new employment seven weeks after his dismissal as Assistant Manager of a bookstore.

38              The reason for the dismissal was plainly the refusal of Mr Lynam to accept a new contract of employment.  It was open to so find, on the evidence of both Mr Lynam and Mr Wilkinson, that the reason for the dismissal was the refusal of Mr Lynam to accept a new contract in lieu of his existing contract with reduced pay.

39              It was open to find and it should have been found that the events of 27 March 2000 occurred as Mr Lynam described them in evidence.  In any event, they fit more consistently a line of conduct which the evidence clearly reveals as follows.

40              Mr Lynam was paid overtime, which he was entitled to be paid, and the Commissioner did not accept the disavowal of the payment by Mr Wilkinson. 

41              Mr Lynam’s previously accepted contract of service as Store and Sales Manager was unilaterally varied by the unconsented to transfer of duties to Ms Kuhari.  That evidence was not denied.  It was Mr Mansfield’s evidence, too.  Then, Mr Lynam was unilaterally required to agree to a variation of this contract of service which reduced his wages.  When he did not agree to the variation, he was sent home for a week and not allowed back, even when he attempted to respond by letter.

42              It is far more credible that, when he attempted to return without agreeing to the terms sought to be imposed on him, he was excluded from the premises as he had been before and dismissed, as his version related.  That is what the Commissioner should have found occurred.

43              The question, on the evidence, was whether it was more probable than not that Mr Lynam would have and/or could have been dismissed fairly in any event and, if so, when.  The Commissioner was required to assess the degree of probability that that event would occur and make a finding as to loss to reflect the degree of probability, assessing damages accordingly (see Bogunovich v Bayside Western Australia Pty Ltd (FB)(op cit) at page 9 where Malec v J C Hutton Pty Ltd 92 ALR 545 (HC) is cited).

44              In this case, it would be open to find that irrespective of the notice given, a dismissal as a sanction against Mr Lynam for failing to agree to the termination of the contract of employment and its replacement by a contract on less favourable terms, would not be fair at any time.

45              It was open to find and the Commissioner should have found that a fair dismissal with four weeks’ notice for good reason would not have occurred within twelve months or, if it might, then the respondent had not discharged its evidentiary burden to so establish it.  There was no evidence that a dismissal was contemplated or would have occurred but for the fact that the respondent wished to force a variation in contract on Mr Lynam against his will.  There was no evidence either that Mr Lynam did not wish to continue in his employment.

46              It is, however, not more probable than not that, but for that event, the employment would and could have continued for at least twelve months.  It will be clear that the Commissioner, for those reasons, erred and should have made a finding of loss based on the difference between wages earned and wages lost subsequent to the dismissal in the sum of $6,409.00, a figure which is not in dispute.

47              We would add that no claim was made when it might have been made for loss of security of employment or, put by way of synonym, loss of an asset.

48              The dismissal was found and found correctly to have been substantially unfair.  Grounds of Appeal 1(a), (b) and (c), insofar as they apply, as to loss have been made out.

Injury

49              We now turn to Ground 1(d), which deals with the question of injury.

50              The Commissioner found that he would not award Mr Lynam any monies for injury and expressed his reason for so finding as follows:-

  “His evidence is that he was aggrieved prior to the date of termination and I consider that this was due largely to him no longer managing the store.”

 (See paragraph 31, page 7(AB).)

51              He was, of course, so aggrieved, but there was ample evidence that he was aggrieved after the dismissal, which the Commissioner accepted, because he expressly said that he accepted Mr Lynam’s evidence.

52              The manner of the dismissal is best described in Mr Lynam’s evidence at pages 28-29(AB).  We quote a portion of his evidence at page 29(AB)):-

  “I was told that I was no longer able to be in the store, that if I went in the store the police would be called and I would be thrown out.  I was given one week’s notice, and told to contact Peter with what I believed to be owing and sort out a redundancy or a termination package, and his words were, “Whatever you want to call it”.”

53              The locking of him out of the premises and the threat to call the police to throw him out, on their own or coupled with the earlier events, were unnecessary, humiliating and hurtful.

54              That, of course, followed on his being sent home a few days earlier on 17 March 2000 after he refused to agree to a reduction of his wages (his duties having already been unilaterally eroded), with a direction not to talk to other staff members, with his being excluded from the premises during the week when he delivered a letter about the matter, and the non-payment to him of wages during the week.  This conduct was directed clearly to him because he would not agree to enter a new contract on less favourable terms than that which he had.  We would also add that he had, previous to that, been effectively demoted from Store and Sales Manager to Sales Manager, it was open to find.

55              There was a course of conduct which, it was open to find, was directed to pressuring Mr Lynam and, at very least, to be contrary to the implied obligation of the employer not to conduct itself without reasonable cause in a manner likely to damage or destroy the relationship of confidence and trust.  That plainly occurred here, but is more a matter, in the circumstances of this case, directed to unfairness than the question of injury (see Burazin v Blacktown City Guardian Pty Ltd 142 ALR 144 at 151-152 (FCFC), and the approval by the Full Court of the dicta of Lee J in Aitken v CMETSWU  (1995) 63 IR 1 at 9).

56              As was said by the Full Court of the IRCA in Burazin v Blacktown City Guardian Pty Ltd (op cit), there is an element of distress in every dismissal and restraint is required.  There must be evidence that the dismissed employee has sustained damage of the kind claimed.

57              There was ample evidence of the stress occasioned to Mr Lynam (see page 33(AB)).  Mr Lynam has been under stress and has been grinding his teeth at night.  He has never been dismissed before.  He feels very hard done by.  He was upset at being dealt with in an underhanded way, but he was not losing control (see page 34(AB)).

58              This was a callous, oppressive and humiliating course of conduct culminating in a dismissal and injurious to Mr Lynam.  (Matters such as this are discussed in Bogunovich v Bayside Western Australia Pty Ltd (FB)(op cit) at pages 10-11.  See also Burazin v Blacktown City Guardian Pty Ltd (op cit) and Whelan v Waitaki Meats Ltd [1991] 2 NZLR 74.)

59              An injury is constituted, inter alia, by humiliation, injury to feelings, the result of callous treatment, loss of reputation, nervous shock. 

60              S.23 of the Act has the characteristics of a statutory fact.  It was open to find, as in Burazin v Blacktown City Guardian Pty Ltd (op cit), that Mr Lynam was shocked, stressed and, indeed, by the nature of the treatment meted out to him, he was humiliated and suffered injury.

61              In our opinion, a fair award for injury would be $4,500.00, but Mr McCorry told us that his client would be content with less,  namely $3,500.00.

62              For the Full Bench, the question of whether awards of compensation for injury such as this remains an open question.

63              For those reasons, we would find that the exercise of the discretion at first instance miscarried.  We would agree to substitute the exercise of discretion of the Full Bench for that exercised at first instance.  We would make the findings which we have said above should have been made at first instance to support that exercise of discretion.

64              As the respondent recognizes in its submissions, the law is well settled in the Commission in the cases to which we have referred.  What the Commissioner was required to do was to make a finding as to whether there was loss or injury as established by Mr Lynam on the balance of probabilities.  That was clearly so established as was the extent of the loss and injury.  The manner of assessing compensation is as prescribed in those cases.  The loss and injury established are indubitably causally linked to the dismissal in this case.

Ground 2

65              Ground 2 is not a ground of appeal but a submission and not a relevant one.

CONCLUSIONS

66              It was open to find as follows, on the evidence, that:-

 (a) Between the date of the dismissal and the obtaining of other employment, seven weeks elapsed during which Mr Lynam was without income.  Had he remained in employment, he would have earned $667.00 per week.  That element of the loss, therefore, can be found to be $4,669.00.

 (b) The next item is the ongoing loss of wages, being the difference between what Mr Lynam received in his new employment compared with the wages which he received in his old employment for a period of at least one year.  That amount is $6,409.00.

 (c) There was also the loss of pay in lieu of reasonable notice, which was conceded to be four weeks.  That amount is $2,668.00.

 (d) For injury, the amount is $3,500.00.

67              There is no evidence of any event which might affect, adversely or otherwise, the loss.  There is nothing in the evidence which might lead to a conclusion that the vicissitudes and contingencies of life would affect, adversely or otherwise, the finding as to loss, insofar as the vicissitudes and contingencies of life are applicable.

68              Any allowance for the fact that the compensation is paid in a lump sum is properly offset in this case by the period of time in which the losses and injury have gone uncompensated.  To that, one must add a figure for “grossing up” and we accept the appellant’s calculation in that respect, although the question of reduction of compensation for a lump sum payment and the use of “grossing up” are questions which remain open as far as we are concerned.

69              We would uphold the appeal and vary the order made at first instance to order compensation to be paid as follows:-

 Loss to date of hearing and future loss

 (a) From dismissal until the obtaining of a new job

  – 7 weeks @ $667.00 per week  $ 4,669.00

 (b) Ongoing loss of wages being the difference in wages

  earned in new employment and the wage paid by the

  respondent for twelve months $ 6,409.00

 (c) Loss of reasonable notice – four weeks $ 2,668.00

 (d) Compensation for injury $ 3,500.00

 Total    $17,246.00

70              We would order accordingly.