WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2016 WAIRC 00237

DELIVERED : Thursday 21 April 2016

FILE NOS. : U 146 OF 2015 AND U 147 OF 2015

Applicants

AND

Mr William Paul Brooks T/AS Bayview Motel Esperance, WA

Respondent

Catchwords :  Termination of employment - Harsh, oppressive and unfair dismissal - Lack of fairness - Applicant harshly, oppressively and unfairly dismissed - Termination on basis not contemplated by Applicants -  Application granted - Compensation ordered - Compensation below full amount sought 

Legislation                  : Industrial Relations Act 1979 (WA) sections 23A(6), 23A(7)(c), 23A(8), 26(1)(a), 26(1)(c), 27(1)(c), 32(7) 

Result : Application granted

Representation:

Counsel:

Applicant :  Mr J Nicholas

Respondent : Mr J A Davies

Solicitors:

Applicant : Nicholas Legal

Respondent : Lawton Gillon Lawyers

CASE ALSO CItED:

Amalgamated Metal Workers and Shipwrights Union of Western Australia v Australian Shipbuilding Industries (WA) Pty Ltd (1987) 67 WAIG 733

Bi-Lo Pty Ltd v Hooper (1992) 53 IR 224

Bogunovich v Bayside Western Australia Pty Ltd (1999) 79 WAIG 8

Browne v Dunn (1893) 6 R 67

Bunnett v Henderson’s Federal Spring Works (1989) 31 AILR 356

Capewell v Cadbury Schweppes Australia Ltd (1997) 78 WAIG 299

Gilmore v Cecil Bros, FDR Pty Ltd & Cecil Bros Pty Ltd (1996) 76 WAIG 4434

Re Loty & Holloway v Australian Workers’ Union [1971] AR (NSW) 95

Miles v The Federated Miscellaneous Workers Union of Australia, Hospital, Service & Miscellaneous WA Branch (1985) 65 WAIG 385

Shire of Esperance v Mourtiz (1991) 71 WAIG 891

Termination, Change and Redundancy General Order (2005) 85 WAIG 1667

Reasons for Decision

Background

1         From 29 March 2013 Mr and Mrs Scicluna managed the Bayview Motel in Esperance as a husband and wife team for the motel’s owner Mr Brooks.

2         On 2 July 2015 Mr and Mrs Scicluna were given, in writing, one month’s notice of the termination of that employment by Mr Brooks.  In accordance with the written notice their employment ended on 2 August 2015.

3         There is no dispute in these proceedings that it was lawful for Mr Brooks to have brought the employment of Mr and Mrs Scicluna to an end in this way.  The question before me is whether the termination was fair.

4         The following background facts were not in serious dispute in the proceedings before me.

5         Some time prior to 2 July 2015 Mr Brooks had decided to sell or lease out the motel and had communicated this decision to Mr and Mrs Scicluna. 

6         Mr and Mrs Scicluna understood and accepted that in the event of the sale or leasing out of the motel their employment would end upon the giving of one month’s notice.

7         As at 2 July 2015 such attempts as Mr Brooks had made to sell or lease out the motel had been unsuccessful.  However, he had, as at that date, come to an arrangement with Mrs Jeanette Dall, who worked at the motel as a receptionist and relief manager, whereby she would manage the motel with a view to possibly taking over the lease at some indeterminate future time.

8         Mr and Mrs Scicluna were not told the details of that arrangement at the time they were given notice of the termination of their employment.  In exhibit 10, an email from Mr Brooks to Mr Scicluna dated 2 July 2015, Mr Brooks informed Mr Scicluna that “Jeanette Dall will be taking over the motel” and gave Mr and Mrs Scicluna one month’s notice of the termination of their employment.

9         Mr Scicluna responded by email that same day, also part of exhibit 10, that there were “no problems” with Mr Brook’s decision and that he and his wife “were expecting it.”

10      By email dated 7 July 2015, part of exhibit 11 in these proceedings, Mr Jason Brooks, Mr Brooks’ son who Mr Brooks gave evidence was more closely involved in the day to day running of the motel than him, wrote to Mr Scicluna that Mrs Dall “will be managing the motel as a general manager and not leasing it for now.”

11      This information caused a change in the attitude of Mr and Mrs Scicluna to the termination of their employment, as revealed by Mr Scicluna’s email to Jason Brooks on 7 July 2015, also part of exhibit 11.  In that email Mr Scicluna wrote that he was “surprised...that Jeanette will now be managing the property and not leasing it”, that there was an “agreement” that Mr and Mrs Scicluna would remain in their employment until the motel was leased out and that if the motel had not been leased the ending of the employment of Mr and Mrs Scicluna was an “unfair dismissal.”

12      Mrs Dall commenced managing the motel in August 2015.  For various reasons she has not become the lessee of the business and remains as its manager.  Neither Mr Brooks nor Mrs Dall has given up hope that a lease will, one day, be signed.

The positions of the parties

13      Mr and Mrs Scicluna maintained in these proceedings that it was unfair for Mr Brooks to terminate their employment because, as the motel had not been leased out or sold at that time, there was no valid reason for the termination.  It was submitted that in the circumstances present at the time of the termination of the employment of Mr and Mrs Scicluna the termination was simply “convenient” for Mr Brooks rather than necessary.  It was submitted that a decision to terminate for the mere convenience of the employer and others is an abuse of the lawful right to terminate.

14      Mr and Mrs Scicluna also argued that it was unfair for Mr Brooks to lead them to believe their employment was ending because the motel had been leased out when in fact that was not the case.    

15      Mr Brooks’ position was the termination was not motivated by mere convenience but was part of a strategy to “move on” the business and that the intention to “move on” the business was known to Mr and Mrs Scicluna.  Mr Brooks’ submitted that if his circumstances are fully considered, primarily that he wishes to retire, that he was having difficulty in leasing out the motel, that Mrs Dall was his “best prospect” and that it was legitimate to do what he could to pursue that prospect, the matter takes on a different light.  Mr Brooks’ submits that when all the circumstances are considered his reason for bringing the employment of Mr and Mrs Scicluna to an end was a valid one and the decision a fair one.

16      Even if the exact reason for the termination of the employment of Mr and Mrs Scicluna was different from that conveyed to and understood by Mr and Mrs Scicluna, Mr Brooks’ says that, if it was accepted by Mr and Mrs Scicluna that their employment would end on the giving of one month’s notice in the event the motel was leased out, there is nothing unfair about their employment ending if that event was directly related to a genuine attempt to lease out the motel.

Consideration

17      In terms of the overall fairness of the matter it is important, on the cases as run before me, to determine what was understood between the parties and why it was understood as at July 2015.

18      It is clear that as at 2 July 2015 Mr and Mrs Scicluna had known for some time that Mr Brooks intended to cease operating the motel himself and to, instead, sell it or lease it out. 

19      Both Mr and Mrs Scicluna gave evidence that it was their understanding that their employment would come to an end on the giving of one month’s notice if Mr Brooks found a buyer or lessee for the motel. 

20      They gave evidence that they had come to this understanding as a result of communications with Mr Brooks including several emails that were admitted into evidence in the proceedings.

21      Mr Brooks gave evidence that he considered that he was free to bring the employment of Mr and Mrs Scicluna to an end on the giving of one month’s notice whenever he chose to do so and that the understanding of Mr and Mrs Scicluna as to the circumstances in which that might occur was not a common understanding.

22      That is, Mr Brooks did not accept that the understanding related only to a sale or leasing out of the motel and that this was an unwarranted and narrow construction put upon communications by Mr and Mrs Scicluna.  Mr Brooks was of the view that, in the circumstances, it should not have come as a surprise to Mr and Mrs Scicluna that their employment was being brought to an end at the time it was on the giving of one month’s notice and that, given they were expecting it, it cannot be unfair that this occurred.

23      I find the understanding of Mr and Mrs Scicluna was genuinely held and that it was an understanding that, if not common, was encouraged by Mr Brooks or at least not countermanded by Mr Brooks in circumstances where he knew it to be genuinely held by Mr and Mrs Scicluna.

24      The evidence of Mr and Mrs Scicluna in this regard was plainly stated by them in their evidence in chief and not undermined by cross-examination and I accept it.  Also the contents of exhibits 5, 6, 7, 8 and 9, being emails between Mr Scicluna and Mr Brooks, clearly imply that the understanding of Mr Scicluna was that the employment of Mr and Mrs Scicluna would end only if the motel was leased out or sold and that Mr Brooks knew this was Mr Scicluna’s understanding. 

25      I also rely upon exhibits 10 and 11 which reveal that Mr Scicluna was accepting of a termination on the basis that the motel had been leased when he thought this was the case but objected to a termination upon a different basis when he learned about it.  Mr Scicluna’s emails only make sense if there was a common understanding, or an understanding on Mr Scicluna’s part about which Mr Brooks knew; that being the employment of Mr and Mrs Scicluna would only end if the motel was leased out or sold.

26      I also relevantly find that Mrs Dall was not “taking over” the motel in the sense that the context of previous communications between Mr Brooks and Mr and Mrs Scicluna which were admitted into evidence would have suggested.  Given the contents of exhibits 5, 6, 7, 8 and 9 the term “taking over” would have connoted “leasing” the motel to Mr and Mrs Scicluna and Mr Brooks knew or ought to have known this.

27      I consider that it was unfair in all of the circumstances for Mr Brooks to have treated Mr and Mrs Scicluna in the way that he did.  A clear understanding relating to the ending of the employment of Mr and Mrs Scicluna had arisen between the parties by 2 July 2015.  It was unfair to terminate their employment in different circumstances while, by the email stating that Mrs Dall would be “taking over” the motel, suggesting to Mr and Mrs Scicluna that the ending of their employment was for a reason within the contemplation that Mr and Mrs Scicluna had and which Mr Brooks knew or ought to have known they had.

28      Mr and Mrs Scicluna had been managing the motel as at July 2015 for over two years.  No issues with their conduct or performance had been raised with them during this time.  In the face of Mr Brooks’ stated intention to cease operating the motel they had been realistic and reasonable, telling Mr Brooks they realised if this occurred it would mean the end of their employment upon the giving of one month’s notice.  That reasonable attitude is revealed by exhibit 10, Mr Scicluna’s initial response to the written notice of termination.

29      In light of the above, Mr and Mrs Scicluna were not given a fair go.  Mr Brooks should have been candid with them about the strategy involving Mrs Dall and listened to what they had to say about it in relation to their employment.  Given Mr and Mrs Scicluna’s attitude until this time some mutually acceptable arrangement may have been arrived at.  If not, at that point in time, Mr Brooks could have considered further options.

30      I do not mean to say, of course, that fairness meant that Mr Brooks could not have terminated the employment of Mr and Mrs Scicluna until the motel was leased or sold or that termination of their employment could only fairly have been achieved by agreement.  However, I do find that it was unfair for Mr Brooks to bring the employment of Mr and Mrs Scicluna to an end on the giving of one month’s notice in the circumstances in which he did.

31      Even though Mr and Mrs Scicluna accepted that their employment might come to an end on the giving of one month’s notice at the relevant time, their attitude to that occurring, and the fairness of it occurring, was clearly related to a certain set of circumstances being in existence (ie the lease or sale of the motel) and it was unfair to give Mr and Mrs Scicluna only one month’s notice where those circumstances did not exist.  This was especially so when the language used in exhibit 10 would have clearly suggested to Mr and Mrs Scicluna that the reason for the termination was one they had contemplated when that was not the case, something that was within, or ought to have been within, Mr Brooks’ knowledge.

Remedy

32      Mr and Mrs Scicluna do not seek reinstatement or re-employment.  That is, in itself, a powerful but not determinative factor in not making such orders.  In this case such orders would be impracticable not only for this reason but also because Mr and Mrs Scicluna have resumed their lives in New Zealand, the business concerned is a small one, and such orders would disturb Mr Brooks’ continuing plans to lease the motel to Mrs Dall.

33      By way of monetary compensation Mr and Mrs Scicluna each seek an amount up to the maximum allowed by section 23A(8) Industrial Relations Act 1979.  That figure is reached, their counsel says, because income and benefits lost, both past and future, and an amount for injury would take the loss of both Mr and Mrs Scicluna beyond the cap of six months’ remuneration set by that subsection with there being no factors present warranting a reduction.

34      Counsel for Mr and Mrs Scicluna handed up as part of his closing submissions a table for each itemising their respective losses.

35      Those tables were not, admittedly, wholly accurate.  In each the figure in the “Ongoing Losses” section should have been 71 weeks (rather than 69 weeks for Mr Scicluna and 75 weeks for Mrs Scicluna) on the basis that a total of 104 weeks’ of lost income and benefits was intended.  Also the table for Mr Scicluna did not include income received from government pension schemes about which he gave evidence.

36      Nonetheless, against the background of the evidence in these proceedings about income and benefits received by Mr and Mrs Scicluna, both during and after their employment at the motel, it is clear that, if there were no other factor affecting the amount of compensation to be awarded, the loss of each would exceed six months’ remuneration.  Accordingly, I accept that the cap for both is an amount of $27,500 (accepting as I do that their annual salary was $55,000 each as at the date of their termination) and that, absent other factors, the cap would be reached.

37      However, in awarding compensation under section 23A Industrial Relations Act 1979 I must have regard to section 26 Industrial Relations Act 1979 and act according to equity, good conscience and the substantial merits of the case (section 26(1)(a)) and with regard for the interests of all persons immediately concerned whether directly affected or not (section 26(1)(c)).

38      Section 23A(7)(c) also requires me, in deciding the amount of compensation, to have regard to any other matter I consider relevant.

39      I consider that it is allowable and appropriate in light of section 23A(7)(c) and section 26(1) to consider whether the employment of Mr and Mrs Scicluna might have been fairly brought to an end by Mr Brooks in circumstances that would have seen him paying to Mr and Mrs Scicluna an amount less than six months’ remuneration.

40      I return here, in a different context, to the matter of what Mr Brooks could have fairly done in the situation in which he found himself as at July 2015.

41      In my view, taking into account the interests of not only Mr and Mrs Scicluna but also those of Mr Brooks, and to a lesser extent those of Mrs Dall, and giving proper attention to overall equity and the substantial merits of this case, it would have been fair for Mr Brooks, in the circumstances that presented themselves as at 2 July 2015, to have brought Mr and Mrs Scicluna’s employment at the motel to an end by giving them three months’ notice if, after discussion with them, no different arrangement had been arrived at.

42      If Mr Brooks had told Mr and Mrs Scicluna that, due to the difficulties he was having in finding a lessee for the motel, he was adopting a new strategy of having Mrs Dall manage the motel for a period to see whether she wanted to lease it and, if so, to arrange finance then he could have fairly told them that at the end of a period of three months (if the motel had not been sold or leased in the meantime) that strategy would take effect.  If Mr and Mrs Scicluna had not agreed to that Mr Brooks could have given them three months’ notice.

43      Mr and Mrs Scicluna were, as at July 2015, well aware that Mr Brooks was looking to lease the motel and that that process would affect their employment at some time.  In all of the circumstances, the primary one being the difficulty in leasing a motel in a regional centre, Mr and Mrs Scicluna could not have complained that Mr Brook’s new strategy was unfair, so long as they had good notice of it coming into effect.   Three months would have given them a fair opportunity to plan the next stage of their lives while remaining in gainful employment.  I do not think that a longer period would have been fairly required.  On the other hand, given the difficulty that would have been involved in finding alternative work in Esperance or of a similar nature elsewhere a shorter period would not have been fair.

44      There would have been no unfairness to Mr Brooks in having to give three months’ notice.  It is clear that Mrs Dall was in no position to lease the motel as at 2 July 2015, a matter that Mr Brooks could have easily discovered.  It was not as if Mr Brooks was at risk of losing a potential lessee if Mrs Dall had to wait three months to commence managing the motel.  On the other hand, even though Mrs Dall was not ready to lease the motel, it was a reasonable strategy to have her commence managing the motel after three months as part of a strategy to lease the motel.  Mr Brooks could have continued to try and sell or lease the motel in the meantime and if successful, the original understanding with Mr and Mrs Scicluna, that their employment would end on the giving of one month’s notice, would come into play.

45      Clearly, to the extent relevant, there was no detriment to Mrs Dall if she had to wait.

46      Mr and Mrs Scicluna were paid one month’s notice.  I consider that they should be paid, by way of compensation, a sum equating to eight weeks’ salary, being an amount of $8461.54 each.

47      I consider that they should also each receive an amount by way of compensation for injury suffered as is allowed by section 23A(6) Industrial Relations Act 1979.  That compensation attaches solely to the effect on Mr and Mrs Scicluna of learning the basis they had been led to assume was that upon which their employment was ending was not the real one and that Mrs Dall was not “taking over” the motel in the way the history and exhibit 10 suggested.  There is no award relating to the stress of having to leave Esperance or having to try and find other employment as Mr and Mrs Scicluna had been expecting their employment to end on one month’s notice, although for different reasons, when they were given notice.

48      As the circumstances of their dismissal seems to have had a bigger emotional impact on Mrs Scicluna than Mr Scicluna, based on my observations of them when giving evidence, I award Mrs Scicluna $3000 and Mr Scicluna $1500.

49      I will order that Mr Brooks pay to Mr Scicluna an amount of $9961.54 and to Mrs Scicluna an amount of $11,461.54.

50      I consider that awards in such amounts come within the intention of section 32(7) Industrial Relations Act 1979.

51      I will not draw up a minute of my proposed orders at this time as counsel for Mr and Mrs Scicluna has foreshadowed that an application under section 27(1)(c) Industrial Relations Act 1979 may be made on their behalf.

52      I invite counsel for Mr and Mrs Scicluna to indicate to my Associate within 24 hours of receiving these reasons for decision whether such an application is to be made on behalf of Mr and Mrs Scicluna or either of them.  If so, counsel is to file and serve written submissions in support of the application or applications within seven days of giving notice of the application or applications.  Counsel for the respondent will then have seven days to file and serve submissions in response.  I will make my decision on any application under section 27(1)(c) on the papers, providing written reasons, and draw up a minute at that time including all proposed orders.