WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES Charles Henry Rosenthal

APPLICANT

-v-

John Palermo

RESPONDENT

CORAM Acting Senior Commissioner P E Scott

HEARD 31 AUGUST 2009, 1 SEPTEMBER 2009, 2 SEPTEMBER 2009, 20 OCTOBER 2009, 21 OCTOBER 2009, 5 MAY 2010, 6 MAY 2010, 7 MAY 2010, 13 MAY 2010, 14 MAY 2010

DELIVERED TUESDAY 6 JULY 2010

FILE NO. U 10 OF 2009, B 101 OF 2009

CITATION NO. 2010 WAIRC 00401

CatchWords Unfair dismissal – contractual benefits – compensation – unsatisfactory work performance – Industrial Relations Act 1979 s 23A(8), s 26, s 27(1)c, s 27(1)(ha), s 27(1)(l) – order limiting times for presentation of cases – application for leave to amend defence to allege theft – considerations in application to amend – failure to call significant witness – dismissal unfair – misconduct – compensation for loss – social security benefits – loss of remuneration – Minimum Conditions of Employment Act 1993 s 7(c)

Result Applications granted

Representation 

Applicant Ms R Cosentino of counsel

Respondent Mr T Palermo as Agent

Reasons for Decision

1          The applicant claims that he was harshly, oppressively or unfairly dismissed from his employment with the respondent and he seeks compensation, and he also seeks benefits arising from his contract of employment. 

2          The Commission has heard evidence from the applicant; Chantelle Marie Rosenthal, the applicant’s wife; Victor John Matthews; David Cabassi; and Fiona Logan, who lived on the Palermo farm for a period during the applicant’s employment.

3          The respondent, John Palermo, was represented in the hearing by Mr Tony Palermo.  The respondent owns and operates a cattle farm called Palermo Farms, at two locations around Pinjarra.  For the purposes of the hearing one block in the Darling Escarpment was known as the hills block and the second, being the larger and more productive land, on the plain to the west of Pinjarra, was known as the Curtis Lane property.

4          The applicant’s family has a cattle farm located in the Darling Escarpment off the same road as the respondent’s hills block and the applicant lives on his family’s farm.  The applicant has many years’ experience working in cattle farming both in his family’s business, of which he was a partner and is now director, and on other farms.

5          In February 2006, the applicant commenced working for the respondent, under the manager Victor John Matthews, as a casual farmhand working 2-3 days per week.  This was in addition to his work for the family farm.

6          Mr Matthews had been the farm manager since 1999, but was leaving the job due to his incapacity to do much physical work.

7          The job of farm manager was advertised and the applicant applied.  He was interviewed by Mr Tony Palermo, was recommended by Mr Matthews, and was appointed to the position from 1 August 2006.

8          Due to the applicant’s lack of experience in managing other people’s farms, it was agreed that the applicant would be paid $40,000 per annum on commencement and his salary would be reviewed after six months and after a further 12 months.  The salary was increased to $52,000 after six months, but was not subsequently reviewed.  Therefore the applicant’s salary at termination was $52,000 per annum. 

9          The applicant’s employment terminated on 23 December 2008 when the respondent summarily dismissed him for misconduct.  Mr Matthews took over the running of the farm for a month until Mr David Cabassi, the new manager, could commence.

The Termination

10       The applicant says that when there was concern about his father’s health in around June 2008, he foreshadowed to Mr Tony Palermo that he may have to resign, and accordingly, Mr Palermo should not let out the house on the farm in the event that a new farm manager may need to be engaged and may need to live in the house.

11       He says that within a couple of days of advising Mr Tony Palermo of this, his father’s health situation was clarified and that he was not ill, and the applicant advised Mr Palermo of this.  At no time did he resign.

12       On 20 August 2008 the applicant wrote to Mr Tony Palermo regarding the number of cattle deaths and suggesting remedial action for the herd.  He also raised the issue of not being able to handle the requirements of the job in the time available.  He said “(a) discussion of what to do would be appreciated as the farm is suffering.” (Ex A5).

13       However, in around September 2008, the applicant heard that word had passed around the local farming community that the respondent was looking to replace him.  The applicant telephoned Mr Tony Palermo to ask him about it and he says Mr Palermo denied that he was sourcing a new farm manager. 

14       According to Mr Cabassi, he was contacted by Mr Tony Palermo in around September 2008 about taking on the farm management, saying that the applicant was leaving due to his father’s ill health.  In November 2008, he was asked if he could start work prior to 31 December 2008, and he said he could not because he needed to give notice in his existing job.

15       In late November 2008, the applicant wrote to Mr Tony Palermo (Ex A6) expressing a number of concerns, suggesting that he was not being provided with the resources necessary to properly manage the farm, and noting that the workload had increased over time.  Mr Palermo telephoned the applicant on what appears to be 19 December 2008 regarding the hay not being carted.  I accept the applicant’s evidence that he was carting hay at the time he received the call and he says he could actually see Mr Palermo across the other side of Greenlands Road when he received the phone call.

16       On 23 December 2008, the applicant says he started work earlier than usual, doing some work at the hills property.  He had started earlier because the family had some guests coming from Geraldton who would be there around mid-morning, and he wanted to return home to be there for their guests.

17       That morning, at around 7.30am while he was working, the applicant says he received a call from a Mr Mal Kentish who said he had heard that Mr David Cabassi of Alcoa Farmlands had handed in his notice and was taking over as Palermo Farm manager in January 2009.  The applicant immediately rang Mr Tony Palermo and left a message on his voice mail saying he had heard he was being replaced by David Cabassi.  About two hours later, when he had returned home, the applicant received a call from Mr Tony Palermo about what was happening, and he says that Mr Palermo told him that if he did not like it he could quit.  The applicant said he would not quit to which Mr Palermo responded that he was fired, and that he would let him know when the ute and mobile phone would be collected.

18       The applicant went back to do some work, and collected some of his own property from the respondent’s farm including a solar powered electric fence unit.

19       Mr Tony Palermo telephoned the applicant later that day and advised him that Mr Matthews would ring him to make arrangements for the ute and telephone to be collected.  The applicant says he asked for a reason for being dismissed and Mr Palermo refused to give one.

20       According to the applicant, it was organised that on 24 December 2008, Mr Matthews would collect the ute at around 9.00am.  This did not go according to plan as the applicant says Mr Matthews was early and the gate to the applicant’s farm was locked, causing Mr Matthews to leave.  The applicant then received a call from Mr Tony Palermo asking why he refused to hand over the ute to Mr Matthews.  The applicant telephoned Mr Matthews who returned.  The two of them met for what appears to have been a lengthy discussion about some aspects of the farm including the ordering of diesel fuel, and Mr Matthews left with the farm keys.  The applicant refused to hand over what records he had relating to the management of the farm, including the diaries.

The Course of Proceedings

21       The course of proceedings in this matter is of some significance to a number of the issues which arose.  The Notices of application for both applications were filed on 16 January 2009. 

22       On 6 February 2009 the respondent filed a Notice of answer and counter proposal which in brief terms denies, disputes and rejects the application. 

23       On 8 June 2009, the respondent provided particulars of its answer in accordance with an order of the Commission.  Those particulars say that:

1. In February 2008 the applicant gave two weeks’ notice, the reason being that his father had cancer and that he would manage the family farm;

2. Two weeks later he advised that his father’s illness was in remission and that he would stay until Christmas at the latest but if someone else could be found in the meantime, he would be prepared to leave earlier;

3. By June 2008 the condition of the farm had been let go, that the applicant had not provided all the paperwork for the previous 12 months and cattle numbers could not be reconciled;

4. Repeated requests for the presentation of management documents were made to the applicant;

5. Between June and September 2008, Mr Tony Palermo had given the applicant various warnings about unsatisfactory work performance, the way the farm looked and the way he was managing it;

6. There was non-compliance by the applicant with legislative requirements regarding branding, stock numbers and declared weed control;

7. Issues were raised between October and November 2008 regarding a lack of reconciliation of cattle numbers;

8. The applicant was often at his family farm when Mr Tony Palermo called him, and was not undertaking his duties;

9. There were failures to tend to his duties including the storage of hay;

10. On 23 December 2008 the applicant was dismissed for serious misconduct being failing and refusing to attend to his duties, legislative requirements, animal welfare and other requirements of the cattle.  There is said to have been intentional and deliberate, and substantial and significant damage resulting from the applicant’s alleged failings in his management of the farm. 

The Course of the Hearing

24       The hearing was listed for three days and commenced on Monday 31 August 2009, continuing on Tuesday 1 and Wednesday 2 September 2009.  It then reconvened on Tuesday 20 October and Wednesday 21 October 2009.  During those latter two days, a substantial amount of time was taken up by the parties being engaged in discussions with the Deputy Registrar in an unsuccessful attempt at resolution of the claims.

25       Due to the hearing taking a much longer time than originally anticipated, on 21 January 2010, I issued Orders pursuant to s 27(1)(ha) of the Industrial Relations Act 1979 (the Act) to limit the times for the presentation of the parties’ cases.

26       The hearing reconvened on Wednesday 5 May 2010, continuing on Thursday 6, Friday 7, Thursday 13 and Friday 14 May 2010. 

27       Mr Rosenthal was under cross-examination almost all of 1 September 2009, half of the morning of 2 September 2009 and all of 20 October 2009.  Chantelle Marie Rosenthal’s evidence was interposed into the applicant’s evidence.  At the respondent’s request the applicant’s cross-examination was interrupted and Mr Matthews gave some of his evidence on 2 September 2009.  The applicant continued under cross-examination on Wednesday 5, Thursday 6, and Friday 7 May 2010, and was re-examined on Friday 10 May 2010.  Ms Fiona Logan and Mr David Cabassi gave all of their evidence on Thursday 13 May 2010.  Mr Matthews continued his examination in chief and was cross-examined on Thursday 13 and Friday 14 May 2010, Mr Matthews was re-examined and the parties gave their closing submissions.

Applications to Amend Response

28       During the course of proceedings, the respondent made two applications to amend his grounds for defence, the first being to counterclaim for damages against the applicant, and the second being to claim that the grounds for dismissal included theft.

29       The Notice of answer and counter proposal filed by the respondent on 6 February 2009 and the particulars of answer filed by the respondent on 8 June 2009 make no reference to any allegations of theft by the applicant.

30       During the initial part of the hearing in August and September 2009, when the respondent sought to summons the applicant’s parents and the Rosenthal family farm records, I raised with the respondent whether there was an allegation of theft, and Mr Tony Palermo denied it. (T10).

31       I referred to this in my Reasons for Decision of 15 January 2010 [2010 WAIRC 00006].  I noted that the respondent appeared to be using the hearing in 2009 “to gather information for purposes other than responding to the claim before the Commission, a matter clarified with Mr Palermo early in proceedings.” (see [18]). 

32       Mr Palermo also confirmed early in proceedings that he was not alleging theft against the applicant.  On 1 September 2009, while cross-examining the applicant Mr Palermo said to the applicant “I’m not calling you a cattle thief and please accept that? …  I have never accused you of being a cattle thief?” (T85).

33       During the course of responding to orders I proposed to issue relating to the time to be allowed for the presentation of the parties’ cases, the respondent in a letter dated 7 December 2009, set out further detail of the defence and counter-claim and sought leave to amend the defence to have the right to set off and counter-claim for damages.  At no point in this letter was it suggested that the reason for dismissal included theft. 

34       On 5 May 2010, the respondent filed an application for leave to amend the defence with ‘a right to have the ability to set - off and counterclaim for damages’. 

35       At approximately 2.30pm on 5 May 2010, while continuing to cross-examine the applicant, the respondent commenced asking questions which clearly raised an issue of theft and then made an oral application to amend his grounds of dismissal to include theft. 

36       At that time, the respondent indicated that until that day the issue of theft had not arisen (T 466).  However, he said that “(a)fter taking a statement of evidence from Mr Matthews, it is now a question of theft and that’s why we are putting that question.” (T 465).

37       I asked him about what had changed and he said:

“Mr T Palermo: Commissioner, if you look back through the records, I think you'll find that the … that I said there was no allegation of theft based on the information that we had to hand and we were trying to reconcile numbers, which we have spent many hours trying to do, and the reason why we couldn't reconcile numbers is because we didn't have the records and … and the diary records. The reason why these things are relevant … and I'm also getting sick and tired of being asked by whoever about the relevancy, and you're quite entitled to ask, or whoever is quite entitled to ask. This refers to farming records and the welfare and the … and the other matters regarding the cattle. That's an all encompassing clause that relates to cattle; cattle numbers, and I think I explained that to … to everybody last time. I don't know how else I can explain it other than to get an interpreter in here to actually explain it in a different way. This goes to the heart of the dismissal, one of the items that goes to the heart of the dismissal.

Scott ASC: Until today there was not an issue of theft. That is what you have told me before.

Mr T Palermo: That's correct.” (T 465 + 466)

38       There is no evidence of when a statement of evidence was taken from Mr Matthews.

39       I considered the matter overnight and then refused to allow the amendment to the respondent’s grounds at that point in the proceedings.  The following are my reasons for doing so.

40       In Aaron Dale Tasker v Sinogal Pty Ltd trading as Rockingham Auto Electrics & Mechanical Services [2002] WAIRC 05513 (2002) 82 WAIG 957 at 963, the Full Bench of the Commission noted that:

“It is the law, too, that an employer can justify a dismissal by reference to facts not known at the time of his dismissal but discovered subsequently, so long as these facts concern circumstances in existence when the decision is made.  Whether the decision can be so justified will depend on all of the circumstances (see RRIA v CMETSWU (1995) WAIG 813 and see Byrne and Frew v Australian Airlines Ltd [1995] 185 CLR 410 at 430 per Brennan CJ, Dawson and Toohey JJ, and at page 467 per McHugh and Gummow JJ).” 

41       The question arises as to whether it was appropriate at that stage of proceedings to allow the respondent to amend his position. 

42       In Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, the High Court dealt with the issue of applications to amend and raise new claims.  Although it dealt with the circumstances of a court where rules regarding pleadings and amendments apply, the joint judgment of the majority sets out issues to be considered by a court deciding whether to allow an amendment.  The decision to allow amendment is a matter of discretion.  The issues for consideration in exercising that discretion include:

1. The court has a duty to allow an amendment for the purpose of deciding the real issues in, and avoiding multiplicity of, proceedings;

2. The nature and importance of the amendment to the party applying;

3. The extent of delay and costs associated with the amendment;

4. Where the inconvenience or cost to the other party of the amendment being granted can be overcome by an arrangement for costs, then amendment ought to be granted;

5. The prejudice to the other party;

6. The point the litigation has reached relative to a trial when the application to amend is made;

7. Non-compensable inconvenience and stress on parties, whether individuals, business corporations or commercial persons;

8. The party applying to amend should explain the delay in applying to amend, including that the application is brought in good faith, and the circumstances giving rise to the amendment;

9. The Rules are to be applied to the objective of the court arriving at a just resolution;

10. Case management principles are a tool, not an end in themselves; and

11. “The conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruption in the court’s lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard”, per Toohey J in Sali v SPC Ltd (1993) 67 ALJR 841 at 849.

43       In deciding whether to allow the respondent to amend its defence at this stage I note that the Commission is not a court of pleadings and it is obliged to deal with matters before it according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms (s 26 of the Act).  It may allow the amendment of any proceedings on such terms as it sees fit (s 27(1)(l) of the Act). 

44       The point at which the respondent sought to amend his grounds for the dismissal was:

1. 17 months after the dismissal;

2. 16 months after the Notice of application was filed;

3. Many months after the respondent had filed both a Notice of answer and counter proposal, particulars of his defence on 8 June 2009 and reiterated a number of those on 7 December 2009;

4. When the hearing of the matter had been proceeding for more than five and a half days, with a break in the middle of some six months;

5. The applicant had been under cross-examination for more than two full days in total;

6. The respondent had both foreshadowed and made an application to amend his Notice of answer and counter proposal and defence for the purpose of seeking a claim for damages against the applicant;

7. Chantelle Marie Rosenthal had concluded her evidence and Victor John Matthews was approximately halfway through his evidence in chief.

45       Other circumstances requiring consideration include that:

1. The applicant was represented by a legal practitioner and incurring costs;

2. The Commission has no power to award costs for the services of a legal practitioner (see s 27(1)(c) of the Act);

3. Putting an allegation of theft to the applicant for the first time at this point would have prolonged the cross-examination and required further re-examination.  As noted in detail later, the person cross-examining him was Mr Tony Palermo, the person who had dismissed him and the cross-examination was difficult partly for that reason.  The applicant expressed frustration and at times was clearly distressed during cross-examination, particularly where the cross-examination had become difficult and he believed the questions to be unfair.  Any delay would have caused further distress and inconvenience to the applicant.

4. There was no explanation as to why there was a delay in applying to amend including the circumstances giving rise to the amendment.  There was no suggestion that new information or evidence had come to hand, except that there was said to be a statement of evidence from Mr Matthews.  There is no information as to when this was taken.  It is important to note that Mr Matthews had commenced but did not finish his examination in chief on 2 September 2009, however, he was not called again until the conclusion of the applicant’s cross-examination in May 2010. 

I note in passing that if Mr Matthews gave a statement of evidence, it ought to have been before he commenced examination in chief, not after it.  During Mr Matthews’ later evidence, in May 2010, he said that in the period since he last gave evidence Mr Tony Palermo had asked him to attempt to reconcile the cattle numbers and he had been unable to do so.  I do not believe Mr Matthews’ evidence has been tainted by this, however, it is quite improper for this to have occurred while he was in the middle of his evidence. 

Further, by 5 May 2010, Mr Matthews’ evidence of trying to reconcile cattle numbers was not new evidence such as to justify the amendment.  I note that when he did go on to conclude his evidence, Mr Matthews was asked “Is it possible that cattle may have disappeared?” … Mr Matthews said “I found no evidence of that at all, Tony, with the numbers you gave me.” (T 658).

5. To grant the application would have resulted in further delays for both the parties and the Commission, and might have affected the listing of other matters and as a consequence, prejudice the interests of other litigants before the Commission.

6. Whilst there was an insinuation in the questions relating to the numbers of cattle being unable to be reconciled according to the respondent, and suggestions being made about cattle being taken to the applicant’s family farm, when challenged as to whether or not there was an allegation of theft, the respondent had earlier denied this on a number of occasions. 

7. The respondent had sought to summons the applicant’s father and mother to deal with questions regarding the applicant’s employment and the family farm which at the time appeared to suggest that there may have been an allegation of theft.  However when this was denied by the respondent, I ruled that it was inappropriate to summons the applicant’s parents and I discharged the summonses against them.

8. In considering the importance of the amendment to the party applying, I note that the respondent has commented a number of times from the earliest stages of the hearing to the effect that he was using the hearing to investigate what happened to missing cattle.  With the benefit of hindsight, it is now clear that Mr Tony Palermo was not being candid when he denied that theft was an issue.  His questions about cattle numbers were always directed to that issue.  That should then have been an important issue from the outset, not one to be made explicit after such a lengthy delay.  In any event, the purpose of the hearing is to enable the Commission to determine the claim.  It is not for the purpose of enabling an employer to investigate a matter which, if it had been in his mind prior to the termination, ought to have been investigated then.  If it was so important, it should not have been left until the point I noted in para [35].

46       In all of the circumstances I decided against the respondent’s application to amend his grounds to allege theft.  However, even though I refused the respondent’s application to raise the issue at that point, Mr Tony Palermo continued to ask questions of the applicant which alluded to theft, and made closing submissions in a similar vein.

47       As to the other amendment sought by the respondent, to have a right to set off and counter-claim for damages, the Commission has no power to award damages to an employer.

The Evidence

48       It is not my intention to set out all of the evidence in this matter.  As to the credibility of the witnesses, I have no hesitation in accepting the evidence of Mr Matthews or Mr Cabassi.  They were both straightforward and reliable, and unwavering in their evidence.  Both gave the impression of being truthful, and of being competent farm managers who know what constitutes good farming practice. 

49       I accept as truthful the evidence of Chantelle Rosenthal. 

50       The applicant’s cross-examination was difficult and problematic.  On occasions he was argumentative and refused to answer questions.  I am in no doubt that part of this was brought about by the fact that it was Mr Tony Palermo, the person to whom he had previously reported, who dismissed him and who he sees as having done him wrong, who cross-examined him.  Mr Palermo was not skilled or experienced in cross-examination and the way in which he put some questions to the applicant was unclear, unhelpful and often repetitive.  I also take into account that on occasion the applicant was difficult and provocative towards Mr Tony Palermo.  The two of them took the questioning and answering very personally and were combative.  I take this into account in assessing the credibility of the applicant’s evidence. 

51       Generally, where the applicant’s evidence conflicts with that of Mr Matthews and Mr Cabassi, unless the applicant’s evidence is corroborated by other evidence, I have no hesitation in accepting the evidence of Mr Matthews and Mr Cabassi.

The Failure to Call Tony Palermo

52       As noted at the outset, the respondent, John Palermo, was represented during the hearing by Mr Tony Palermo.  The evidence indicates that the person to whom the manager reported, during Mr Matthews’ time as manager and for the applicant and subsequently Mr Cabassi, was Mr Tony Palermo who conducts other business from Perth.  The farm manager had day-to-day control of the farm and autonomy to make decisions about its operation.  The manager would inform Mr Tony Palermo of issues and occasionally it was necessary to seek his approval in respect of matters going beyond day-to-day operations, often matters which required significant expenditure.

53       Mr Tony Palermo was the person with whom the applicant had most contact and who terminated his employment in a telephone conversation on 23 December 2008. 

54       The difficulty for the respondent in the Commission examining the evidence is that Mr Tony Palermo did not give evidence.  He had indicated an intention to do so when the Commission issued orders on 5 November 2009 for the parties to file and serve a list of the names of their witnesses and the estimate of the time necessary for examination in chief of each of those witnesses.  The respondent’s response indicated that Mr Tony Palermo would be a witness for the respondent and his evidence was to take between one and eight days. 

55       As the hearing in May 2010 proceeded, Mr Tony Palermo sought an extension to the time allowed to cross-examine the applicant, and I expressed concerns regarding meeting the timeframes set out in the Order of 21 January 2010, [2010] WAIRC 00023.  Mr Tony Palermo indicated that he had revised his case, would not be calling a number of witnesses, and indicated that he may not give evidence.  I explained to him on two occasions on 6 May (T 508) and 14 May 2010 (T 689), when it was suggested that he may not give evidence, that in assessing the evidence, the Commission could give little weight to statements made from the bar table as against evidence given under oath by a witness subject to cross-examination. 

56       Although the respondent submitted particulars of his case in writing and made submissions, the respondent’s case relies heavily upon conversations between Mr Tony Palermo and the applicant including the applicant’s alleged resignation, and instructions and warnings said to have been given to him.  The only persons who could give evidence on those matters were the applicant and Mr Tony Palermo.  Without Mr Tony Palermo’s evidence, the only evidence before me on those matters is that of the applicant and some documents prepared by him and by Mr Palermo.  For example, there is no evidence of why the respondent decided to terminate the applicant’s employment, when that decision was made and what process the respondent says was applied to the dismissal. 

57       The rule in Jones v Dunkel ((1959) 101 CLR 298) is that an unexplained failure by a party to call a particular witness may, in appropriate circumstances, lead to an inference that the uncalled witness would not have assisted the party.  JD Heydon, in Cross on Evidence explains that a range of circumstances exist where the inference ought not to be drawn, and where there is a reasonable explanation for the failure such as illness of the witness, or hostility of the witness, and says that “a belief by the defendant that the plaintiff’s evidence is insufficient is not a satisfactory explanation.” [1215].

58       Heydon notes that:

 “[t]he significance of the inference depends on the closeness of the relationship of the absent witness with the party who did not call the witness …  Considerable significance may attach if the absent witness is either a party or a senior executive of a corporate party closely engaged in the transactions in question and present in court during the hearing.” [1215].

59       Mr Tony Palermo explained his reasons for not giving evidence in closing submissions.  He said:

“Whether I decided to give evidence or not, that’s up to me … but for the benefit of the Commission, one of the reasons why … one of the important reasons why that was the case is because the respondent and I formed the view that nothing that was provided or … or demonstrated by the applicant could in any way be deemed to be harsh, offensive and unfair and to add to the pain, it was considered not necessary.” (T 725).

60       I take that explanation to mean that the respondent was of the opinion that the applicant had not discharged the onus of proof.  According to Heydon, this is not a satisfactory explanation for the failure to call the witness who could provide evidence of key matters which fall to the respondent to prove.

61       In all of the circumstances, there is no reasonable explanation for Mr Tony Palermo not giving evidence, and I draw the inference that his evidence would not have assisted the respondent.

Findings and Conclusion

62       I have considered all of the evidence in this matter.  I draw the following conclusions:

1. The applicant was a competent farm manager.  During cross-examination of the applicant Mr Tony Palermo said to him that he acknowledged that the applicant is a competent farm manager (T 179).  He was experienced in working on a farm and in being involved in the management of his family’s farm.  I accept Mr Matthews’ evidence that he was capable of managing the farm if he wanted to.  However, he was not experienced in running someone else’s farm, where a higher degree of sophistication in the management and reporting might apply compared with that of a family operated farm.

2. When the applicant took over management from Mr Matthews, Mr Matthews showed the applicant what was his usual practice in terms of keeping records and making reports to Mr Tony Palermo.  He did this by more than pointing to a filing cabinet where the records were kept, but by actually showing him the records.

4. There is no evidence that the applicant was told that his failure to provide monthly reports to Mr Tony Palermo was unsatisfactory, or that the reports he provided were inadequate.  There is no evidence that he was counselled or warned about this issue. 

3. The applicant’s excuse for not providing more regular and detailed reports to Mr Palermo was that he was not provided with the means to do it.  This is disingenuous.  Nothing prevented him providing a handwritten report had one been required.  In any event, he did provide annual reports, brief though they were.

5. Managing the farm was not a job involving clocking on and off, or of a set number of hours.  There is no evidence of the applicant’s contract of employment setting particular hours per day or per week, or of particular start and finish times.  Mr Matthews worked approximately 40 to 70 hours per week depending on the needs and the season.  The applicant worked at least 40 hours per week, sometimes more, and did so as required for dealing with animal welfare and safety.  The diaries are not an exhaustive record of all work done and how long he worked each day. (T 96).

6. There is no evidence of any instruction or agreement that the applicant was precluded from spending some time working on his family’s farm. 

7. I am not satisfied that the applicant refused to attend for duty on 23 December 2008.  His return to his home mid-morning to attend a social gathering is not unusual in such an environment.  There are no time-clocks in farm management.

8. I find nothing improper in him having taken that time.

9. The applicant was able to engage assistance when required.  He asserted that he was only able to offer the award rate, and that in the then prevailing labour market, he could not obtain labour, other than through friends.  I do not accept that he was instructed by Mr Palermo to offer no more than the award rate.  I conclude that he made an assumption and did not act to clarify the situation or to attempt to persuade Mr Palermo to allow a higher rate of pay to be offered.  I believe that it was only while he was giving evidence that the applicant realised he had made an incorrect assumption regarding this limitation.  Mr Matthews’ and Mr Cabassi’s evidence demonstrates that when they believed that something was necessary for the good of the management of the farm, they would advise Mr Tony Palermo and were generally able to obtain what was necessary.  This included bringing in contractors to undertake planned fence replacement, and to pay higher rates than the award when appropriate.

10. I do not accept that Mr Tony Palermo instructed the applicant that the cattle and the farm should be kept going as long as they could on the bare essentials.  The applicant suggested that Mr Tony Palermo indicated that cattle should be kept until they were very old and unproductive and that fences ought not to be replaced – that it was minimal care and maintenance only.  This is contrary to the way in which both Mr Matthews and Mr Cabassi, his predecessor and successor, managed the farm.  It is clear that they took and take pride in the farm and the cattle they produced. 

11. I accept Mr Matthews’ report (Ex R19) as to the state of the property within days of the applicant’s dismissal.  His purpose was not to provide a report which was a critique of the applicant’s management, but to review the farm and set out what needed to be done for the future.  However, it demonstrates that the farm was not at that point in a desirable condition.  Mr Matthews’ reaction to the state of affairs which he discovered was one of disappointment.

12. The size of the property to be managed increased over time, however that should not have been an impediment to proper management if adequate labour and resources were available.  The applicant approached Mr Tony Palermo in a professional manner, seeking such resources.  He did so twice in the last four months of his employment, firstly in his letter of 20 August 2008 (Ex A5) when he sought a discussion with Mr Tony Palermo and then in late November 2008 (Ex A6) when he wrote to Mr Tony Palermo again raising the issue of available resources to do the job.  However, it appears that by August, Mr Tony Palermo had decided to replace the applicant.

13. There is no evidence that the applicant was aware that Fiona Logan was available and expected to assist him should he require it.  She gave no evidence of his being aware of this arrangement.

14. Mr Matthews noted in his evidence that the cattle were in reasonable condition when he took over the property in the interim after the termination and before Mr Cabassi could commence.  However, he was critical of the way they were managed in terms of the timing of the marking of calves, of cattle being able to run between paddocks and of bulls being with the cows for a longer period thus extending the calving season.  I accept this was not best practice.  However, I do not conclude that there was deliberate or intentional mismanagement.  Nor was there incompetence to the degree necessary to conclude that there was misconduct or breach of contract.  The applicant’s methods were those of a person used to running the family farm under the guidance of his father, not of someone experienced as a manger of a farm where higher standards of performance and reporting would be expected.

15. All that can be found is that the applicant spent less time than Mr Matthews in his work.  His methods were less controlled and his approach not as focussed.  If this was unsatisfactory to the respondent, it ought to have been brought to his attention, and remedy required.  As noted, there is no evidence of any counselling or warning.

16. The farm was not in a condition which Mr Palermo found satisfactory, but there is no basis for concluding that there was deliberate or intentional mismanagement, nor was there incompetence to the degree warranting dismissal for misconduct, being a breach of an essential condition, going to the heart of the contract.

17. A considerable amount of time was spent during the hearing on reconciling the supplies of diesel fuel on the property at the time of dismissal.  It is clear that there is some conflict between the applicant’s and Mr Matthews’ evidence, however, given that there was hay carting and other work going on between the time of the last fuel delivery under the applicant’s management and when Mr Matthews checked the supplies, I am unable to conclude that anything improper occurred regarding fuel usage by the applicant.

18. Mr Matthews clearly stated in cross-examination that he found no evidence of cattle disappearing, rather that he was unable to reconcile the cattle figures between his handing over to the applicant and taking the property back two and a half years later.

19. The only reliable evidence about the numbers of hay bales not carted by the time the applicant was dismissed is only that of the applicant.  Mr Matthews’ evidence is from information he received from his son a considerable time after the event and is hearsay.  I accept that the hay carting was approximately one third complete at the time of the dismissal, and that this was not as much as Mr Matthews considered to be timely.

20. A bundle of photographs was put into evidence including one of a super spreader. (Ex R 30).  Mr Matthews was asked if he would leave it in that condition and he said he hoped he would not. (T648-9).  However, this photograph has little probative value as there was no evidence as to where, when and by whom the photograph was taken or who the spreader belongs to.  There is nothing to support a conclusion that this was the state in which the applicant left the respondent’s super spreader.  Although Mr Palermo asked the applicant about cleaning the super spreader, he did not put the photograph to him.  If the photograph was of the respondent’s super spreader, it ought to have been put to the applicant for his response and was not (rule in Browne v Dunn).  Having said this, I note Mr Matthews’ report comments generally that “(t)ractors & machinery including the ute were very dirty and unkempt …” (Ex R19).

21. There was a lot of time and examination of witnesses spent on the question of identification of cattle via markings and tags.  In the end, it demonstrated nothing of value to the determination of the matter.

22. A lot of time was spent in going through the records the applicant made in the diary.  Neither the applicant nor Mr Matthews was able to give any real assistance in using those records to determine how much time the applicant spent in working each day and week.  There was no suggestion that the record in the diaries was exhaustive of every job that was done each day, nor of how long any one task would take.  It was very clear that the time necessary for checking cattle could be short, or very long depending on whether the checking revealed the need to take action and what that action might be.  This evidence was of little assistance and of no real probative value.  As noted earlier, the applicant’s and Mr Matthews’ evidence indicates that Mr Matthews worked longer hours than the applicant.

23. The fact that the respondent engaged and paid a cartage contractor to carry cattle on many occasions does not negate the applicant’s evidence that he also carted the respondent’s cattle.

24. There was no evidence of a refusal or failure to attend to duties.

25. Much was made of the discrepancy in stock numbers reported by the applicant in exhibit A4.  However, Mr Matthews’ evidence indicated that he too had made an error in his cattle figures report in June 2006. (Ex R10).  I see nothing sinister or incompetent in either the applicant’s or Mr Matthews’ errors.

63       I conclude that the applicant’s management of the farm was not to the standard previously set by Mr Matthews and Mr Tony Palermo was not happy with the applicant’s performance.  However, rather than deal with the issue, he grasped the applicant’s advice that he may have to relinquish the job on account of a possible issue with his father’s health.  Even though the applicant soon advised that this was not an issue, Mr Palermo continued down the path of finding a replacement.

64       During the period when he was looking for a replacement, Mr Tony Palermo denied this was the case when challenged about it by the applicant.  His intention to dismiss the applicant was clearly demonstrated by the fact that Mr Palermo had already arranged for Mr Cabassi to take over.  The inference is that Mr Palermo intended to engineer a summary dismissal but was pre-empted when the applicant heard of Mr Cabassi’s resignation from Alcoa Farmlands with the purpose of taking over his role at the end of January 2009, one month later.

65      The applicant was justifiably concerned.  He rang Mr Palermo to verify the rumour he had heard.  He left a message.  Mr Palermo returned the call while the applicant was at home with his guests.  To then rely on his being at home as part of the justification for dismissing the applicant was unfair.

66       The respondent also suggests that the applicant resigned when he advised Mr Palermo that his father may be ill and he might have to resign.

67       The applicant did not resign.  His letters of 20 August and late November 2008 (Exhibits A5 and A6 respectively) give no indication of resignation, nor do they reflect that he was under a warning that his job was in jeopardy.  There is no evidence of any warnings, formal or otherwise.  This is in sharp contrast with the nine letters sent to the applicant in the week following the dismissal.  (see exhibits A10 to A18 inclusive).  It seems strange that if warnings were given that the respondent would not have put them in writing and tendered them in evidence, given Mr Tony Palermo’s letters to the applicant after the termination. 

68       While I find that the farm was not being managed to the standard previously set by Mr Matthews and expected by Mr Palermo, the applicant’s conduct and performance did not amount to a demonstration of an intention to not be bound by an essential term of the contract.  That is what is required to be demonstrated in the case of a dismissal purporting to be for misconduct.

69       The onus lies on an applicant to prove that a dismissal has been unfair; however, there is an evidentiary onus on the employer to show that misconduct has occurred.  Newmont Australia Ltd v The Australian Workers’ Union, Western Australian Branch, Industrial Union of Workers (1988) 68 WAIG 677 at 679.

70       The decision of the Full Bench in Western Mining Corporation Limited v The Australian Workers’ Union, West Australian Branch, Industrial Union of Workers (1997) 77 WAIG 1079 at 1084 deals with the requirements for procedural fairness in dismissal.  The Full Bench said:

“Failure to accord procedural fairness is one factor to take into account in deciding whether there has been an unfair dismissal (see Shire of Esperance v Mourtiz 71 WAIG 891 (IAC) per Kennedy J at page 895 where he said –

 “In my opinion, any breach of the rules of natural justice was a relevant circumstance in the determination of the critical question as to whether the dismissal was harsh or unjust.  Whether an employer, in bringing about a dismissal, adopted procedures which were fair to the employee is an element in determining whether the dismissal was harsh or unjust – see The Law of Employment, Macken, McCarry & Sappideen, 3rd ed, 277-278, and the authorities there cited.  In some cases, this can be a most important circumstance.  But in a case such as the present, no question of the invalidity of a decision, as such, falls for determination.  The case does not turn simply upon the respective legal rights of the parties.”

Whether the dismissal is harsh or unfair will depend on all of the circumstances, including substantial and procedural unfairness.”

71       The Full Bench in that matter referred to the decision of the Industrial Commission of South Australia in Full Commission in Bi-Lo Pty Ltd v Hooper [1992] 53 IR 224 at 229-230.  The Commission said at page 229 –

“Where the dismissal is based upon the alleged misconduct of the employee, the employer will satisfy the evidentiary onus which is cast upon it if it demonstrates that insofar as was within its power, before dismissing the employee, it conducted as full and extensive investigation into all of the relevant matters surrounding the alleged misconduct as was reasonable in the circumstances; it gave the employee every reasonable opportunity and sufficient time to answer all allegations and respond thereto; and that having done those things the employer honestly and genuinely believed and had reasonable grounds for believing on the information available at that time that the employee was guilty of the misconduct alleged; and that, taking into account any mitigating circumstances either associated with the misconduct or the employee’s work record, such misconduct justified dismissal.  A failure to satisfactorily establish any of those matters will probably render the dismissal harsh, unjust or unreasonable.”

72       In Byrne v Australian Airlines Ltd and Frew v Australian Airlines Ltd 120 ALR 274 the Federal Court of Australia – General Division dealt with the question of substantial and procedural fairness in the following terms:

… the respondents owed to the appellants an obligation to act with both substantial and procedural fairness.  In the circumstances of this case, that obligation translated into a number of specific steps which the respondent was obliged to take.  First, it was obliged to conduct a reasonable investigation, to ascertain what view it should take of any circumstance which it might take into account in deciding to dismiss the appellants.  Second, it was required to formulate what it alleged the appellants had done or failed to do.  Third, it was obliged to put the allegations of commission and omission to the appellants, and to give them a fair opportunity to be heard as to those allegations.  Finally, it was obliged to give to the appellants a fair opportunity to be heard on whether they should be dismissed, if they were to be regarded as guilty.  The respondent was obliged to take into account matters not directly connected with the alleged offence which might mitigate the penalty.” 

73       In this case I find that the respondent has not discharged the evidentiary onus which falls to him to prove that he met the requirements for a summary dismissal for misconduct.  Firstly while I find the applicant’s performance as farm manager was not satisfactory to the respondent, there is no evidence that the applicant’s performance constituted a breach of an essential term of his contract of employment (North v Television Corp Ltd (1976) 11 ALR 599 at 609; Blyth Chemicals v Bushell (1933) 49 CLR 66 at 81-82).  Nor is there evidence of the respondent indicating to him that he fell short of the required standard in such a way that would justify termination on notice, let alone a summary dismissal.

74       There is no evidence that the respondent undertook any form of investigation into the circumstances which he took into account when the decision to dismiss was made.  There is no evidence that before deciding to dismiss the applicant, the respondent gave the applicant every, or in this case, any, reasonable opportunity or sufficient time to answer the allegations he has subsequently made against him.  There was no opportunity to respond to those allegations before the dismissal took place.  There is no evidence that any mitigating circumstances were considered.  In the circumstances, it was hardly surprising that the applicant was not co-operative in handing over to Mr Matthews or in responding to Mr Palermo’s emails.

75       In all of those circumstances, I find that the dismissal was harsh and unfair.  The respondent has added insult to injury by inferences and subsequently allegations of theft which he sought to investigate, not prior to the dismissal, but during the hearing.  Allegations of cattle theft are perhaps the most serious one could make against a cattle farmer.  To raise such allegations without any evidence was clearly and rightly viewed by the applicant as a grievous injury.

Remedy

76       Having observed the parties during the course of the hearing there is no doubt in my mind that reinstatement would be entirely impracticable.  Therefore consideration of compensation arises.

Mitigation of Loss

77       I have considered the applicant’s evidence about his attempts to mitigate his loss and taken account of the respondent’s objections, that the applicant’s desire to have work within an area such that he can remain at home with his family and that he performs work on the family farm mean that the applicant has not properly mitigated his loss.

78       The applicant has given evidence that after the termination of his employment he approached Alcoa Farmlands seeking work.  As a consequence he was contacted by FlexiStaff which employed him on a casual basis at Alcoa Farmlands undertaking farm work from 27 January 2009.  He was still employed on that basis at the conclusion of the hearing.  His rate of pay has been $20.00 per hour and his hours of work have varied according to the casual nature of his employment. 

79       The applicant’s pay advice slips from FlexiStaff (Exhibit A22) cover the period from 27 January 2009 until 15 August 2009 and demonstrate that there have been some limited periods where he has not worked or received payment and others where he has worked between 20.5 hours and 48 hours per week.  His wages during that period have been $17,710 gross.  The applicant gave this evidence on 31 August 2009 and was not asked to provide any further evidence of wages he has received since then.  However an average of his income over the entire period until the conclusion of the hearing can be derived from the evidence which has been provided. 

80       As to his efforts to mitigate his loss, the applicant has applied for work in a range of capacities, including farm work, supervising a feed lot, refinery and mine site work.  He says that he is prepared to undertake any sort of work including operating equipment and yard cleaning.  He has applied to Alcoa at its farmlands, refinery and mine; to Charles Hull Contracting, True Blue Hire, Boddington Gold Mine, Worsley Alumina, Chandler McLeod Ready Workforce, Mitre 10 in Pinjarra, John Tuckey and Emmanuels. 

81       In cross-examination the applicant said that he was not prepared to look for work in Bunbury because he wishes to stay relatively close to his home and to the family farm.  He does not consider travelling one hour each way to Bunbury for work is reasonable saying that anything more than 50 kilometres away results in a heavy cost of fuel to be taken from his wages. 

82       An applicant seeking to mitigate his loss is not required to take unreasonable steps to find alternative employment.  In this case there was good reason for the applicant to remain at home and not incur the additional costs or inconvenience of travelling beyond that which he currently does from his home to Alcoa Farmlands in Wagerup which, of itself, is not a short distance. 

83       In all of the circumstances, I am satisfied that he has attempted to mitigate his loss and there has been no evidence to the contrary.  In the circumstances the applicant is entitled to compensation for the loss he has suffered as a result of the unfair dismissal. 

What is the applicant’s loss as a result of the dismissal?

84       The applicant’s remuneration at the time of dismissal was a salary of $52,000 per annum plus superannuation of $1,181.25 per quarter which equals $4,725 per annum (Exhibit A21).  Therefore the total remuneration was $56,725 per annum giving a weekly rate of $1,087.50. 

85       The period over which the applicant suffered the loss was from 23 December 2008 to the last day of hearing, being 14 May 2010 which is 72.3 weeks.  72.3 weeks at $1,087.50 per week equals $78,626.25. 

86       The applicant was employed by Flexi Staff from 27 January 2009 to 15 August 2009, being 28 weeks and 4 days.  He received wages of $17,710 plus superannuation of $1,510.65 totalling $19,220.65.  This brings an average remuneration over that 28 and a half week period of $676.78 per week.

87       There is no evidence that this situation, on average, changed after 15 August 2009.  Therefore the applicant’s weekly loss has been $1,087.50 less $676.78 being $410.72.

88       The period since termination has been 72.3 weeks, however the period of employment commenced approximately five weeks after the dismissal.  Therefore the loss is:

1. Five weeks at $1,087.50     $  5,437.50

2. 67.3 weeks at $410.72    $27,641.45

 Total  $33,078.95

89       Therefore I find that the applicant’s loss arising from the unfair dismissal is $33,078.95.

90       The amount of compensation to be awarded is not to exceed six months’ remuneration (Industrial Relations Act 1979, s 23A(8)).  Six months’ remuneration would be $56,725  2 which equals $28,362.50.

91       Amounts received by the applicant by way of social security benefits are not to be deducted from that calculation of loss of remuneration caused by the dismissal.  (Swan Yacht Club (Inc) v Leanne Bramwell (FB) (1998) 78 WAIG 579 at 585.)

92       Accordingly I intend to order that the respondent pay to the applicant the amount of $28,362.50 by way of compensation for loss arising from the unfair dismissal.

Contractual Entitlements

93       The applicant seeks payment of unpaid wages for the period from 1 December 2008 until 23 December 2008 being date of termination.  The evidence demonstrates that the applicant worked but was not paid for this period.  This is 23 days or 3.25 weeks’ pay at $1,087.50 per week, being $3,534.37.  He ought to be paid this amount.

94       As to the accrued annual leave, there is no evidence as to any contractual entitlement to four weeks’ annual leave.  Therefore the entitlement would arise from the Minimum Conditions of Employment Act 1993 and be implied into the contract according to that act.  However, the enforcement of minimum conditions of employment implied into a contract of employment is for the Industrial Magistrate under s 83 of the Industrial Relations Act 1979 (Minimum Conditions of Employment Act 1993 s 7(c)). 

95       The claim in respect of the loss of superannuation benefits has been dealt with on the basis that superannuation formed part of the remuneration for the purposes of the calculation of loss as a result of the unfair dismissal (Capewell v Cadbury Schweppes Australia Ltd (1998) 78 WAIG 299).

96       Accordingly, an order will issue for the payment to the applicant of compensation for the loss caused by the unfair dismissal, and for unpaid wages for December 2008.