DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Paul Conicella
v
Phillip W Hill & Associates Pty Ltd T/A Hunter Legal & Conveyancing
(U2016/8234)

Application for relief from unfair dismissal – small business employer – non-compliance with Small Business Fair Dismissal Code – valid reason for dismissal but failure to afford procedural fairness – compensation ordered

[1] In the period from about December 2015 until about June 2016 there were difficulties in the marital relationship between Mr Paul Conicella and his wife, Mrs Sue Conicella. In about June 2016, their marital relationship irretrievably broke down. The difficulties in the marital relationship between Mr and Mrs Conicella unsurprisingly spread into the small workplace of Phillip W Hill & Associates Pty Ltd T/A Hunter Legal & Conveyancing (HLC), for they were both employees, directors and shareholders of HLC.

[2] Mr Conicella was summarily dismissed as an employee by HLC on 30 June 2016. He alleges that his dismissal was harsh, unjust and unreasonable. HLC denies those allegations.

The Hearing

[3] This matter was heard by me on 24 October 2016, 25 October 2016 and 1 November 2016. Mr Conicella gave evidence on his own behalf. Ms Lee-Anne Maree McAllister-Essex (known as Ms McAllister), a director and employed solicitor of HLC, Ms Kristy Bidner, HLC Office Manager/Business Development Manager, and Ms Lee-Ann Margaret Spencer, HLC Personal Assistant, gave evidence on behalf of HLC.

[4] The parties consented to witness statements made by Ms Nadine Borrett, former HLC Conveyancing Assistant, Ms Jessica Kinsley, HLC Conveyancing Assistant, and Ms Jessica Stephens, HLC Conveyancing Assistant, on behalf of HLC, and a witness statement made by Ms Danielle Deacon, former HLC Customer Relations and Area Manager, on behalf of Mr Conicella, being admitted into evidence on the basis that the makers of those statements were not available to give evidence on account of their significant reluctance to be involved in the proceedings and subject to submissions being made as to the weight that should be given to their witness statements.

Initial matters to be considered

[5] I am required by s.396 of the Fair Work Act 2009 (Cth) (the Act) to decide four matters before I consider the merits of Mr Conicella’s application. There is no dispute between the parties and I am satisfied on the evidence that:

(a) Mr Conicella’s application was made within the period required by s.394(2) of the Act;

(b) Mr Conicella was a person protected from unfair dismissal; and

(c) HLC was a “small business employer” as defined in s.23 of the Act at the relevant time. I will consider below whether Mr Conicella’s dismissal was consistent with the Small Business Fair Dismissal Code (the Code); and

(d) Mr Conicella’s dismissal was not a case of genuine redundancy.

Small Business Fair Dismissal Code

[6] Section 388 of the Act provides:

“388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[7] The Code declared by the Minister pursuant to section 388(1) of the Act is in the following terms:

“Summary dismissal

“It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[8] In Pinawin v Domingo 1, the Full Bench considered whether, in the context of a summary dismissal under the Code, the Commission had to be satisfied that the serious misconduct which was the basis for the dismissal actually occurred:

“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. The circumstances include the experience and resources of the small business employer concerned.
…

[38] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. We are concerned in this case that no discussions took place about the implications of Mr Domingo’s conduct for his future employment. However this is a very unusual case. The employer was very small. The owners knew Mr Domingo well …”

[9] Another Full Bench of the Commission recently examined the summary dismissal part of the Code in detail in Ryman v Thrash Pty Ltd 2 and concluded as follows:

“[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates the following way:

(1) If a small business employer has dismissed an employee without notice – that is, with immediate effect – on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.

(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectivity speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.”

Compliance with the Code

[10] I am satisfied that HLC complied with the following aspects of the Code in relation to Mr Conicella’s dismissal:

(a) On 30 June 2016, HLC dismissed Mr Conicella without notice – that is, with immediate effect – on the ground that Mr Conicella had committed serious misconduct;

(b) HLC genuinely believed that Mr Conicella had engaged in conduct sufficiently serious to justify immediate dismissal. In this regard, I accept Ms McAllister’s evidence to the effect that she genuinely believed that Mr Conicella had engaged in conduct sufficiently serious to justify immediate dismissal. Her evidence in relation to her genuine belief is consistent with the terms of the letter of termination sent to Mr Conicella on 30 June 2016 and is supported by both her evidence concerning her conversation with Mr Conicella on 22 June 2016 and the complaints communicated to her by staff members about Mr Conicella on about 22 June 2016. Ms McAllister was the principal decision maker in relation to the decision to dismiss Mr Conicella. Mrs Conicella agreed with Ms McAllister’s decision to dismiss Mr Conicella. It is clear that each of Ms McAllister and Mrs Conicella, in their capacity as directors and senior managers of HLC, had actual or apparent authority to make a decision to dismiss Mr Conicella. By reason of section 793(2) of the Act, it follows that the state of mind of Ms McAllister and Mrs Conicella in deciding to dismiss Mr Conicella can be attributed to HLC; 3

(c) The conduct in which HLC believed Mr Conicella had engaged and on which it acted to dismiss him meets the definition of “serious misconduct” within the meaning of reg 1.07, in particular:

(i) Mr Conicella’s alleged conduct in threatening Ms McAllister on 22 June 2016 to “go legal” and “bring you all down”, and allegedly making similar threats to Ms Bidner on 21 June 2016, caused serious and imminent risk to the reputation, viability and profitability of HLC’s business; and

(ii) Mr Conicella’s alleged conduct in acting in an intimidating and threatening way toward a number of HLC employees (Ms Bidner, Ms Kinsley, Ms Stephens, and Ms Spencer) on about 21 June 2016 caused serious and imminent risk to the health or safety of those employees.

[11] However, I find that HLC did not comply with the Code because HLC did not carry out a reasonable investigation into the matter, with the result that HLC’s belief was not based on reasonable grounds. I make that finding on the basis that, at no time prior to his dismissal, did HLC put to Mr Conicella the allegations it relied on to terminate his employment, as set out in the letter dated 30 June 2016 from HLC’s lawyers, Fletcher Pidcock, to Mr Conicella. As a result, Mr Conicella did not have a chance to respond to those matters before the decision was made to summarily dismiss him.

[12] Copies of typed complaints made by employees of HLC about Mr Conicella were sent to him by Mrs Conicella by email on 23 June 2016. Mrs Conicella’s covering email to Mr Conicella was in the following terms:

“Please see attached as requested. Leanne is still with clients so I have not seen her for any investigation notes.”

[13] The investigation notes to which Mrs Conicella referred in her email of 23 June 2016 were notes taken by Ms McAllister in relation to her interviews with staff members on 22 June 2016. Those notes contain additional information and allegations to that set out in the written complaints provided by staff to Ms McAllister on 22 June 2016. At no time were those notes, or the allegations set out in them, provided to Mr Conicella prior to the termination of his employment on 30 June 2016.

[14] Further, the alleged conduct relied on to dismiss Mr Conicella, as set out in the letter of termination dated 30 June 2016, extends to events that allegedly occurred in the period from December 2015 up until 22 June 2016. Mr Conicella was not given any chance to respond to the whole range of allegations prior to his dismissal.

[15] Ms McAllister gave hearsay evidence that Mr Conicella, after having received copies of the complaints made by staff against him, said to Mrs Conicella words to the effect that he could “talk to employees as I like”. On the balance of probabilities I do not accept that evidence, for the following reasons:

(a) Mr Conicella denied making such a statement to Mrs Conicella;

(b) The evidence is plainly hearsay;

(c) Mrs Conicella was not called by HLC to give evidence, nor was any attempt made to tender any witness statement or affidavit made by her. In this regard, HLC relies on a medical certificate dated 21 October 2016 in which Dr Nicholas Moncrieff states that Mrs Conicella “has undergone a medical procedure will be unfit for work duties from 24 October 2016 to 30 October 2016 inclusive”. On the basis of this medical evidence HLC contends that the decision not to call Mrs Conicella as a witness was not “unexplained”; and

(d) Directions for the filing and service of witness statements were initially made on 9 August 2016 and then amended on 2 September 2016. The hearing dates of 24 to 26 October 2016 were set on 9 August 2016. At no time was any application made by HLC to adjourn the hearing or to hear Mrs Conicella’s evidence at some other time. No evidence was adduced as to the nature of Mrs Conicella’s “medical procedure” or when she became aware she would undergo such a procedure. In those circumstances, I draw a Jones v Dunkel inference that Mrs Conicella’s evidence in relation to any conversation she may have had with Mr Conicella concerning the staff complaints sent to Mr Conicella would not have assisted HLC.

[16] Even if, contrary to my finding set out in the previous paragraph, I had found that Mr Conicella responded to the staff complaints by saying to Mrs Conicella words to the effect that he could “talk to employees as I like”, that would not have altered my conclusion that HLC did not carry out a reasonable investigation. Responding in such a way to the receipt of some written staff complaints is not the same as being given a fair and reasonable opportunity to respond to the whole range of allegations on which an employer intends to rely to summarily dismiss an employee.

[17] HLC submits that in order to hold a belief on reasonable grounds it is not always necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. I agree with that statement of principle. Normally, but not always, will it be necessary to have such a discussion as part of a reasonable investigation. 4

[18] In the circumstances of this case, however, I am satisfied that a reasonable investigation did require the communication to Mr Conicella of the allegations made against him and the opportunity for him to respond to those allegations. The relevant circumstances included the fact that:

• Mr Conicella was suspended on pay while “a review of the situation is conducted”. 5 There was therefore very little risk during the period of the investigation of Mr Conicella disrupting the workplace or acting in an inappropriate way towards the staff who had made complaints against him;



• Both HLC and Mr Conicella were represented by lawyers during the investigation period. In fact, on 24 June 2016 Mr Conicella informed Ms McAllister by email that all future contact with him should go through his solicitor. To that end, Mr Conicella provided the contact details of his solicitor to Ms McAllister. The fact that both sides were legally represented enhanced the prospect of meaningful responses being provided by Mr Conicella to allegations of the kind set out in the letter of termination dated 30 June 2016, together with further communication in relation to the allegations and his responses thereto;



• In these proceedings Mr Conicella has contested, and provided further information and explanations in relation to, many of the allegations set out in the letter of termination dated 30 June 2016. It follows that, had he been given the chance to do so, it is likely that he would have provided such information and explanations to HLC as part of its investigation. The exchange of such information and explanations may have resulted in a different outcome. That is particularly so in circumstances where Mr Conicella had not explained to HLC what legal action he was considering taking against HLC or any of its officers or employees and Mr Conicella’s concerns about the potential misuse of HLC monies by Mrs Conicella and/or Ms Bidner could have been the subject of discussion, explanation and the exchange and consideration of relevant documents and views; and



• Mr Conicella’s summary dismissal had serious consequences for him, including his automatic removal (pursuant to the Constitution of HLC) as a director of HLC, a company in which he retains a shareholding, and immediate loss of income for Mr Conicella.

[19] The fact that Ms McAllister obtained statements from relevant staff members, conducted interviews with those staff members, and sought legal advice before making a decision to terminate Mr Conicella’s employment lends weight to HLC’s argument that it conducted a reasonable investigation. However, for the reasons set out above, those aspects of the investigation do not, in my view, overcome the failure to put the allegations to Mr Conicella and give him a chance to respond to them.

[20] Mr Conicella submits that Ms McAllister was not impartial and should not have conducted the investigation. He submits that a third-party investigator should have been engaged by HLC to conduct investigation. When this matter was put to Ms McAllister in cross examination her response was that HLC could not afford to engage a third party to conduct investigation. I accept her evidence in that regard. It is not unusual for a small business to be in such a situation. In considering whether a reasonable investigation has been undertaken, it is necessary to have regard to the “experience and resources of the small business employer”. 6 By considering the size of HLC’s business, its lack of resources and Ms McAllister’s limited knowledge of, or experience in, employment law, I have had regard to such matters in this case.

[21] HLC, quite properly in my view, conceded in its final submissions that Ms McAllister was not impartial. She had an interest in removing Mr Conicella from the business in which she had a financial interest as a shareholder and employee, so that the employees of the business could focus on the needs of the business and their clients. However, Ms McAllister was the best placed person within the business to conduct the investigation. In light of the acrimonious relationship between Mr and Mrs Conicella, both of whom were directors of HLC, it would have clearly been inappropriate for either of them to conduct the investigation. In addition, the fourth director of HLC, Mr Philip Hill, was overseas at the relevant time. Although Ms McAllister was not impartial, I am satisfied that this is not a case in which she, as the principal decision-maker, was so impartial that she could never have conducted a fair or reasonable investigation.

A harsh, unjust and/or unreasonable dismissal?

[22] In light of my conclusion that Mr Conicella’s dismissal was not consistent with the Code, I must now turn to consider whether Mr Conicella’s dismissal was harsh, unjust or unreasonable, taking into account the criteria set out in s.387 of the Act.

[23] The ambit of the conduct which may fall within the phrase “harsh, unjust or unreasonable” was explained in Byrne v Australian Airlines Ltd 7 by McHugh and Gummow JJ as follows:

“… It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of misconduct which the employee acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

Valid reason (s.387(a))

[24] The employer must have a valid reason for the dismissal of the employee, although it need not be the reason given to the employee at the time of the dismissal. 8 The reason for the dismissal should be “sound, defensible and well founded”9 and should not be “capricious, fanciful, spiteful or prejudiced.”10

[25] The Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer. 11 The question the Commission must address is whether there was a valid reason for the dismissal related to the employee’s capacity or conduct (including its effect on the safety and welfare of other employees).¹²

[26] In cases relating to alleged conduct, the Commission must make a finding, on the evidence provided, whether, on the balance of probabilities, the conduct occurred.¹³ It is not enough for an employer to establish that it had a reasonable belief that the termination was for a valid reason. 14

[27] The letter of termination dated 30 June 2016 includes an assertion that Mr Conicella’s conduct since at least December 2015 “has been both intimidating and threatening and amounts to workplace bullying”. The conduct to which HLC referred in the letter of termination was particularised in the letter as follows:

“…(c) your conduct, since at least December 2015, has been the subject of a number of complaints, including in relation to incidents occurring:

(i) on 7 December 2015 – when you arrived at the Business premises in a very agitated and irrational state. You were yelling at staff – who, for their own safety, were asked to (and did) leave the premises. By all accounts, your demeanour was very menacing and threatening and you were yelling wildly. In a confrontation, a director was forced to place herself between yourself and another director, saying to you words to the effect of: ‘Don’t you dare touch her!’ You were directed to leave the office and take time off, with pay, to sort yourself out and deal with your ‘anger management’ issues;

(ii) on about 10 December 2015 and whilst on leave – when you telephoned and verbally abused a member of staff out of office hours. That conduct caused the staff member to feel extremely intimidated, anxious, upset and concerned. That staff member subsequently sought counselling on account of your conduct;

(iii) in about February/March/April 2016 – when you would become extremely agitated and yell in directors’ meetings – on account of being brought to task and questioned about your job performance. That conduct also culminated in your refusal to take part in any decision–making in directors’ meetings;

(iv) on 6 April 2016 – when you verbally abused a staff member at the front of the Business premises, during business hours and in front of a client. That conduct was the subject of written complaints by both the staff member and the client;

(v) in April/May 2016, you refused to provide the Company’s directors with information reasonably requested by them in relation to the performance/discharge of your duties;

(vi) on 21 June 2016, you again attended the business premises – where you were yelling, appeared agitated and domineering and otherwise behaved in an intimidating and threatening manner. Your conduct brought at least one staff member to tears. In addition, at that time you unnecessarily incited fear mongering by ‘warning’ various staff members with words to the effect of: ‘you’d better be careful of what you say to people, because it comes back to me’ and ‘you shouldn’t trust the people you think you can trust’;

(vii) again, on 21 June 2016 when, whilst at the business premises, you were agitated, yelling at staff, appearing irrational, intimidating and otherwise conducting yourself in a manner that caused staff to be fearful you. In addition, at that time, you:

(A) raised serious allegations of impropriety against the office manager and another director – accusing them of, amongst other things, the ‘embezzlement’ of the Company’s funds;

(B) made repeated threats, including:

(AA) ‘to take you all down’;

(BB) ‘to take down the Business’;

(CC) ‘I’m going legal and you’re all going down’; and

(DD) ‘I’m going to ruin this business’.

(viii) your conduct at the Business premises escalated over the morning of 21 June 2016, causing staff to feel concerned for their safety;

(ix) on 22 June 2016 you telephoned one of the Company’s directors and conveyed, with menace, the threat that: ‘I’m just calling to tell you that it starts today. I am going legal and I will bring you all down’. At that time you are directed to stay away from the Business premises;

(x) as a result of your conduct, on 21 and 22 June 2016 the Company:

(A) informed you that it had received formal complaints from staff involving you;

(B) requested you to take temporary leave, on full pay, until a review of the situation was conducted; and

(C) requested that you refrain from attending the office until further notice,

(together, ‘The Company’s Request’)

(xi) despite the Company’s Request, on 23 June 2016 you attended the Company’s bank, National Australia Bank:

(A) alleging that the Company’s director and practice manager had misappropriated funds; and

(B) demanding access the Company’s accounts - despite not being a signatory to them (excepting the trust account)

(xii) on about 24 June 2016 (and again despite the Company’s Request), you contacted the Company’s IT provider, Pinpoint IT Australia, threatening to ‘sue them if they did not restore access to the Company’s email account’; and

(xiii) In addition, you have misused the Company’s car for personal benefit, failed to meet set quotas and targets and failed to account to the Company’s directors, since at least April 2016.”

[28] I will shortly make findings as to whether this alleged conduct occurred and, if so, whether it constituted a valid reason for Mr Conicella’s dismissal. Before doing so, I will consider the principles applicable to HLC’s reliance on alleged conduct on the part of Mr Conicella that took place well before the dismissal.

Principles concerning alleged conduct prior to June 2016

[29] In Toll Holdings Ltd t/a Toll Transport v Johnpulle, 15 a Full Bench of the Commission considered (at [15]) the question of reliance by an employer on earlier conduct on the part of an employee when making a later decision to dismiss the employee (references omitted):

“It may be accepted that, under the general law, an employer is disentitled to summarily dismiss an employee for an earlier instance of misconduct on the part of that employee where the employer with full knowledge of the misconduct had decided to retain the employee in employment. It would be difficult to conclude for the purpose of s.387(a) of the FW Act that an employer who had condoned misconduct by an employee in this way and had thus lost the right of summary dismissal at law nonetheless had a valid reason for dismissing that employee. The Commissioner therefore did not err in declining to find that the instances of misconduct described in the second, third and fourth allegations against Mr Johnpulle constituted valid reasons for his dismissal. It may also be accepted that, for the purpose of s.387(h), the Commissioner was entitled to treat as relevant that Toll had previously elected not to dismiss Mr Johnpulle for his earlier instances of inappropriate behaviour towards Mr Karzi. However the fact that Mr Johnpulle had (as the Commissioner found) engaged in the earlier instances of inappropriate behaviour did not thereby become otherwise irrelevant in the consideration of whether his dismissal was harsh, unjust or unreasonable. The Commissioner’s own findings supported the conclusion, stated in Toll’s dismissal letter, that Mr Johnpulle had engaged in a “pattern of unacceptable behaviour” towards Mr Karzi and had persisted in that behaviour notwithstanding that he had been told by the Team Leader to cease such behaviour and he had agreed to do so. That was necessarily a highly material consideration which, while not necessarily being determinative, was adverse to the conclusion that the dismissal was harsh, unjust or unreasonable. It was also relevant to the issue of reinstatement, since it went to the degree of risk that Mr Johnpulle might repeat such behaviour in future if reinstated.”

[30] The relevance of instances of prior misconduct by an employee to a finding of “valid reason” under s.387(a) was also recently considered by a Full Bench of the Commission in Diaz v Anzpac Services (Australia) Pty Limited [2016] FWCFB 7204 at [12]-[16] (references omitted):

“[12] It is correct, as submitted on behalf of Mr Diaz, that there is some division in the authorities concerning whether mitigating factors relevant to whether dismissal was a proportionate sanction for any misconduct on the part of the relevant employee should be considered under s.387(a) or under s.387(h), although we note that in the recent decision of Sayers v CUB Pty Ltd, the Full Bench said that the “balance of authority under the FW Act” was in favour of such mitigating factors being considered under s.387(h). However, we consider that the authorities are clear that s.387(a) requires consideration, in a case where misconduct is the reason for dismissal, first as to whether the relevant conduct occurred, and second, if the conduct did occur, whether it was of sufficient seriousness or gravity to constitute a valid reason for dismissal. In this respect we endorse the analysis in Bista v Glad Commercial Cleaning at paragraphs [34]-[42] in relation to the consideration required by s.387(a).

[13] As was made clear in Bista, assessing whether a particular instance of misconduct is of sufficient gravity to constitute a valid reason for dismissal is not the same thing as considering whether dismissal was a disproportionate penalty for the misconduct. The former is “concerned with whether the conduct in question, considered in isolation, was intrinsically capable of constituting a valid reason for dismissal”. The latter involves taking into account a range of potential mitigating factors, which may include matters such as the employee’s length of service and disciplinary record, and weighing them against the gravity of the misconduct in order to determine whether dismissal was too harsh a penalty.

[14] In respect of the former task, it is not correct, as Mr Diaz submits, that the specific acts or omissions which constitute the relevant misconduct can be divorced from contextual matters relevant to the seriousness of that conduct. In Sayers v CUB Pty Ltd, the Full Bench made it clear that the “conventional position” in considering the valid reason issue is to take into account contextual matters bearing upon the degree of culpability on the part of the employee. The majority judgment in B, C and D v Australia Post might be read as standing for the proposition that contextual matters which operate to diminish the culpability of the employee should be taken into account under s.387(h) rather than s.387(a). However that does not assist Mr Diaz, because the majority also made it clear that the following matters, which concern the employee’s misconduct assessed from the employer’s perspective, arise for consideration in relation to the valid reason issue under s.387(a) (emphasis added):

“The acts or omissions that constitute the alleged misconduct on which the employer relied (together with the employee’s disciplinary history and any warnings, if relied upon by the employer at the time of dismissal) but otherwise considered in isolation from the broader context in which those acts or omissions occurred.”

[15] It is clearly the case that the gravity of an employee’s misconduct is increased in circumstances where the employee has previously engaged in conduct of the same or a similar conduct and has been warned not to repeat it. To put this another way, the employee’s defiance of the earlier warning(s) is an intrinsic aspect of his or her misconduct, and necessarily forms part of the assessment of the gravity of the misconduct. We do not consider that it is in any way controversial for such circumstances to be taken into account in determining whether there is a valid reason for dismissal under s.387(a). We therefore do not consider that Mr Diaz has demonstrated any arguable case of error in respect of the approach taken by the Senior Deputy President under s.387(a). Nor do we consider that Mr Diaz has identified any question of general application or any disconformity in the authorities in this respect.

[16] We would add that Mr Diaz’s submission that the outcome of his case might change depending upon the paragraph of s.387 under which his prior disciplinary record was considered is both artificial and counter-intuitive. That prior disciplinary record was, as the Decision makes clear, the critical factor which caused the Senior Deputy President to conclude that the dismissal was not unfair. It seems to us to be logically inexplicable that the dismissal could become unfair merely because that same disciplinary record was considered under s.387(h) rather than s.387(a), since in either case the degree of relevance of that disciplinary record and the weight to be assigned to it in assessing the fairness of the dismissal should be the same. Section 387 does not require any greater or lesser weight to be assigned to paragraph (a) as compared to paragraph (h); provided each specified matter in s.387 is properly taken into account, the weight to be assigned to them is a matter for the Commission member in the exercise of his or her discretion.”

[31] In my view, the following principles are apparent from these authorities on the question of reliance by an employer on earlier instances of misconduct on the part of an employee when making a later decision to dismiss the employee:

• where an employer with full knowledge of earlier instances of misconduct on the part of an employee has decided to retain the employee in employment, those earlier instances of misconduct cannot, of themselves, constitute valid reasons for dismissal;



• however, the earlier instances of misconduct may be relevant to the question of whether there was a valid reason for dismissal because they may increase the gravity of later misconduct, particularly where the earlier misconduct was of the same or a similar character and the employee was warned not to repeat it, thereby contributing to a finding that the reason(s) for dismissal were “sound, defensible and well founded”; 16 and



• the earlier instances of misconduct and any warnings in relation thereto may also be “relevant matters” (s.387(h)) to an assessment of whether the dismissal was too harsh a penalty in the circumstances.

Alleged conduct in December 2015

[32] HLC had full knowledge of the alleged instances of misconduct on the part of Mr Conicella in December 2015. It made a conscious decision to retain Mr Conicella in his employment. Accordingly, the instances of alleged misconduct in December 2015 cannot, of themselves, constitute valid reasons for dismissal.

[33] On Friday, 4 December 2015, the staff of HLC participated in a staff Christmas party at a restaurant in Maitland. Ms McAllister gave evidence, which I accept, that one of the female employees of HLC was following Mr Conicella “around and hanging on his every word”. 17 Over the weekend immediately following the Christmas party Mr and Mrs Conicella argued, including about what happened at the Christmas party.

[34] On Monday, 7 December 2015, Mr Conicella arrived at HLC’s business premises. Ms McAllister gave evidence, which I accept, that she heard Mr Conicella yelling from the front reception area and “it was obvious he was angry from his body language and tone”. 18 Ms McAllister asked the staff to leave the business premises, which they did. Mr and Mrs Conicella then proceeded to argue. Ms McAllister did not “interject unless asked a question”.19 I accept Ms McAllister’s evidence that Mr Conicella was yelling during the argument and Mrs Conicella was upset and her voice was raised. I reject the evidence given by Mr Conicella in cross examination, first, that he was not yelling and his voice was only “slightly raised”, and secondly, that there were raised voices but no yelling. At one point during the argument Ms McAllister gave evidence, which I accept, that she became concerned Mr Conicella was going to “get physical” with Mrs Conicella, so Ms McAllister stepped in between them and said words to the effect: “Don’t you dare touch her”.20 To his credit, Mr Conicella immediately took two steps back, calmed straight down and sat down for the remainder of the argument.21 Both Ms McAllister and Mrs Conicella expressed the view during the argument that Mr and Mrs Conicella could not continue working together because it was having an adverse impact on the business. At the end of the argument Ms McAllister told Mr Conicella to take some time off, with pay, and get himself some help to deal with his issues.

[35] Mr Conicella denies that he took the balance of the year off work. I accept his evidence in that regard, because Ms McAllister agreed that he did attend the office and undertook some work in the period from 8 December 2015 to the end of the year. I find that Mr Conicella did take some paid time off work in December 2015 and January 2016, but he also did some work for HLC during that time.

[36] I am satisfied that Mr Conicella acted inappropriately in attending work on 7 December 2015, yelling in the workplace, acting in such a manner that it was reasonable for Ms McAllister to direct staff to leave the workplace while Mr and Mrs Conicella argued between themselves, and acting in an intimidating way toward Mrs Conicella in the workplace. I am also satisfied that Mr Conicella was, in effect, warned that conduct of this type was not satisfactory. The warning came in the form of a direction to take some paid time off and get help to deal with his issues.

[37] On 10 December 2015, Ms Lee-Anne Spencer gave evidence, which I accept, that she received a telephone call at home from Mr Conicella, who ranted and raved at Ms Spencer that she had ruined his marriage, destroyed two other marriages, and had destroyed people’s lives. Ms Spencer was understandably upset by this conversation and called Ms McAllister in tears to tell her what had happened. 22 Ms Spencer declined to put a formal complaint in about the matter.

[38] Mr Conicella accepts that he spoke to Ms Spencer by telephone on 10 December 2015, but denies that he said words to the effect of those alleged by Ms Spencer. I prefer Ms Spencer’s evidence in relation to the content of this conversation. Ms Spencer gave evidence in a direct and frank manner. She had a good recall of relevant events. The fact that she was so upset by the telephone discussion and she immediately reported it to Ms McAllister supports her version of events.

[39] I accept that Mr Conicella acted inappropriately in his communication with Ms Spencer on the evening of 10 December 2015. I am also satisfied that Mr Conicella’s conduct during that discussion had a sufficient connection with the employment relationship to warrant it being relied on by HLC in making a decision about the termination of Mr Conicella’s employment. 23

Alleged conduct in February/March/April 2016

[40] HLC contends that in February, March and April 2016 Mr Conicella became extremely agitated and yelled in directors meetings. It is also alleged that he refused to take part in any decision–making in directors meetings.

[41] Mr Conicella was both a director and an employee of HLC. During directors meetings he was wearing his directors’ “hat” and was not acting in his capacity as an employee of HLC. For that reason, I am satisfied that it would not be appropriate to have regard to any conduct on the part of Mr Conicella during a directors meeting in deciding whether there was a valid reason to dismiss him as an employee or whether his dismissal as an employee was harsh, unjust or unreasonable.

Alleged conduct on 6 April 2016

[42] HLC alleges that on 6 April 2016 Mr Conicella verbally abused a staff member, Ms Nadine Borrett, at the front of the business premises, during business hours and in front of a client.

[43] Mr Conicella denies the allegation. He gave detailed evidence about the events leading up to and including his discussion with Ms Borrett at the front of the business premises on 6 April 2016. 24 It is clear from Ms McAllister’s evidence that Mr Conicella has denied the allegation that he verbally abused Ms Borrett since the matter was first raised with him on 8 April 2016.25

[44] In support of the allegation HLC relies on:

(a) Ms McAllister’s “understanding” of what happened on 6 April 2016. Ms McAllister accepts that she was not a witness to the event. 26 It is clear that her “understanding” is based on what she was told by one or more unidentified persons. In those circumstances, I give little weight to Ms McAllister’s evidence in relation to this allegation;

(b) Ms Borrett’s witness statement and the written complaint she gave to HLC on 8 April 2016. 27 In circumstances where Ms Borrett was not available for cross examination and Mr Conicella denies the serious allegations made by Ms Borrett, I am only willing to give limited weight to the contemporaneous written complaint made by Ms Borrett; and

(c) Ms Bidner gave evidence that on 20 April 2016 she received a phone call from a client (who was not called to give evidence) who “mentioned that she was out the front of our office and witnessed Paul and two girls screaming and yelling at each other in front of the company cars. I believe she was referring to Danielle Deacon and Nadine Borrett, as I witnessed the same thing”. 28 Ms Bidner did not explain whether she “witnessed’ these events from inside or outside the office, nor did she say whether she heard any part of the conversation between Ms Borrett and Mr Conicella. I give limited weight to Ms Bidner’s evidence in relation to this allegation.

[45] Ms Deacon’s witness statement deals with the events on 6 April 2016, but she does not make any mention of any verbal abuse by Mr Conicella towards her sister, Ms Borrett. 29 In any event, Ms Deacon was not available for cross examination, with the result that I give her evidence limited weight.

[46] The allegation that Mr Conicella verbally abused Ms Borrett on 6 April 2016 is of a serious nature. It is, and has always been, denied by Mr Conicella. HLC did not conduct any detailed investigation into the matter at the time that it occurred. For the reasons set out above, I am only prepared to give limited weight to the evidence relied on by HLC in relation to the allegation. Accordingly, on the evidence before me I am not satisfied, on the balance of probabilities, that Mr Conicella verbally abused Ms Borrett on 6 April 2016.

Alleged conduct in April/May 2016

[47] HLC alleges that in April or May 2016 Mr Conicella refused to provide HLC’s directors with information reasonably requested by them in relation to the performance and/or discharge of his duties.

[48] Ms McAllister gave the following evidence in support of this allegation: 30

“At subsequent Directors’ Meetings in April and May, Paul would not be forthcoming with information about his work performance, including where he had been and what he had been doing in work hours. When pressure was applied in regards to his job performance, as referral numbers were not on target, Paul would get defensive and start yelling. Sue and I both had told him at these meetings that he was not being profitable for the business and that if he did not improve his performance, that we would not continue to carry him. At the time the Legal Department was also struggling to meet targets and I was under pressure to improve performance. Paul would not be accountable for his department, which now consisted of him with some assistance from one of the Conveyancing assistants … yet he wanted both Sue and I to account to him for our work numbers and profitability. These meetings ended with Paul yelling and hurling abuse and accusations at Sue and Sue getting upset and leaving.”

[49] Ms Bidner attended various Directors Meetings for the purpose of taking notes. She gave the following evidence in relation to what she observed at those meetings: 31

“At various Directors Meetings, in which I was present for note–taking purposes, when Paul was questioned about his team’s productivity and asked to put forward plans for marketing and business development he would get irate and irrational. All departments were being scrutinised, not just his, but he would very rarely give a response and would talk around the issues and make excuses for their low productivity. Attached and marked “B” are copies of Meeting Agendas and Meeting Notes.”

[50] The documents contained within attachment B to Ms Bidner’s witness statement include Directors Meeting notes for February, March and April 2016, but not May 2016. The Directors Meeting notes for April 2016 record that the meeting took place at Mr Hill’s house and confirm that various operational and management issues were discussed. The notes do not record or suggest that any discussions were held with Mr Conicella in relation to his performance or conduct as an employee of HLC.

[51] In light of Ms McAllister’s evidence that the request for information from Mr Conicella in April and May 2016 took place in “Directors Meetings” and the Directors Meeting notes for April 2016 confirm that the matters discussed in that meeting were of an operational and managerial nature, I am satisfied that Mr Conicella attended and participated in those meetings in his capacity as a director of HLC. It follows that if there was any failure or refusal by Mr Conicella to respond in an appropriate way to any of the questions or requests communicated to him in those meetings, they are matters which may have justified some action being taken against Mr Conicella as a director of HLC, but HLC is not permitted to rely on those matters to establish that it had a valid reason for Mr Conicella’s dismissal as an employee of HLC or that his dismissal as an employee was not harsh, unjust or unreasonable.

Alleged conduct in June 2016

[52] There is no dispute that on 21 June 2016 Mr Conicella attended the business premises of HLC and spoke to Ms Stephens and Ms Kinsley. Mr Conicella says he informed Ms Stephens and Ms Kinsley that his marriage with Mrs Conicella had irretrievably broken down, they were no longer living together, and he did not wish them to discuss Mr and Mrs Conicella’s personal issues inside or outside the office. 32

[53] Ms Stephens’ contemporaneous note made on 21 June 2016 is in the following terms:

“… Paul came to the doorway and advised us to be careful of what we were saying to people as it will be and has been repeated and that we shouldn’t trust the people we think we can trust.

I told him if people were telling him I am saying anything I would like to know as I haven’t said anything and I want to know if people are talking about me behind my back, as it wouldn’t be the first time.

He told me that he wasn’t pointing fingers he was just warning us that we need to be careful. I again told him that’s fine but if it was meant to be me then I want to know and I left the room. As I left the room and was in the hallway I could hear him say that Sue was the one that was bringing up their separation and not him and she was the one who wanted it kept quiet etc. Jess K spoke to him as I left the hallway.

I was out the front reception desk when he came around to say he was just warning us and it wasn’t personal. I told him I don’t care, I am sick of the drama and the crap that goes on, that I wished I hadn’t even come here and what a great job they did with me & Danielle. And I went into the kitchen.

Before Paul left I was in the kitchen and he came in to tell me what was said wasn’t personal. I told him I don’t really care, I am over the drama – I’m here to work. I also apologised if I spoke to him in an unprofessional manner as an employee. He asked what I meant about me & Danielle and I told him that half the reason I came here was to work with my best friend again as we enjoy it and work well together and that didn’t turn out great. I also added that I’m not blaming anyone personally for that but I stayed here to do a job and even that isn’t easy any more. I said I do not want to be a part of anyone’s drama at all. Jam’a came in and asked if she could have me for a minute then I walked out of the kitchen.”

[54] In her witness statement Ms Stephens confirms the truth and accuracy of her contemporaneous note. She also explains that she was upset at the time of the incident because she felt that she was “being brought into personal matters as I did not feel it was appropriate or relevant to my employment”.

[55] Ms McAllister’s file note of her discussion with Ms Stephens on 22 June 2016 is in the following terms:

“Jess had already done some notes about the incident. I felt that in her notes she was downplaying the incident as I am aware that Paul had followed her out of the room and cornered her in the kitchen, not once but twice. I am also aware that she had been crying. She said that she hadn’t felt intimidated by Paul but was just angry that he was bringing her into their personal matters again. She said she felt that his comments were directed at her rather than anyone else which he then confirmed by following her out of the room saying ‘I know who you talk to’. She said that she got a bit heated back at Paul and may have spoken out of line which she apologised to him for but she felt that he was putting her in a position where she had to defend herself.”

[56] Ms Kinsley’s contemporaneous note made on 21 June 2016 includes the following information relevant to her discussion with Mr Conicella earlier that morning:

“Approx. 8:50am - Paul came into my room at the office, Jess Stephens was present, he said that he thought we should know that any time we talk about Sue or him it always gets relayed back to him and Sue. He said that it’s like a whole web inside the office here and everything we say about them it gets relayed straight back to them both. So we should consider that next time we talk about them. Jess Stephens said words to the effect I want to know who you’re talking about if you’re referring to me, I want to know what’s been said about me if that’s the case.

I said I don’t play this ‘he said she said’ bullshit so leave it. He said that the issues between him and Sue were nothing to do with the office. I said then stop talking about them here, he replied with when have I ever discussed the separation with any of you. I said no but you argue all the time together at the office, we hear everything. He continued to talk Jess Stephens about it as she left the room and walked out into reception. I heard him say to her that I know who you talk to, I know you talk to her and her and as he said that he pointed down the hallway and into Sue’s room.

I said just leave it! We’re here to do our job and that’s it.

Him and Jess continued to talk in the reception area/kitchen area.

Sue then arrived for the day he followed her into her room and stopped the door being closed with his hand, I heard heated words but not sure exactly what was said. He stormed down the hallway…”

[57] In her witness statement Ms Kinsley confirms the truth and accuracy of her contemporaneous note made on 21 June 2016. She also states during the conversation on 21 June 2016 Mr Conicella “moved to stand in the doorway with his arms resting on each side of the doorway… I found his behaviour and body language on that morning to be intimidating although I did not feel that the comments were directed at me, rather Jessica Stephens.”

[58] Ms McAllister’s file note of her discussion with Ms Kinsley on 22 June 2016 is in the following terms:

“Jess had already done some notes about the incident. She told me that she felt intimidated by Paul during the incident as he was standing in the doorway to her room with his arms against the door frame blocking the only exit to the room with his chest pushed out. She said he was trying to come across as if he was concerned that they didn’t know that there were traitors in the office repeating what they say but Jess took it as a general warning that ‘whatever you say will get back to me’ and she found that intimidating.”

[59] Although Mr Conicella gives only a brief description in his witness statement of his conversation with Ms Kinsley and Ms Stephens on 21 June 2016, there is no dispute between the three participants to the conversation about the topics they discussed. I accept the contemporaneous notes prepared by Ms Kinsley and Ms Stephens as an accurate account of those discussions. In my view, the content of those discussions was not inappropriate. In a small office in which there was much gossip about various employees’ personal lives, Mr Conicella was making the point in his conversation with Ms Kinsley and Ms Stephens that discussions of that kind get back to him. Mr Conicella was trying to stop the office gossip concerning his marital problems with Mrs Conicella. He was always going to struggle to achieve that objective in circumstances where he and Mrs Conicella had regularly brought their relationship problems into the workplace and aired them for all to hear and see. For their part, Ms Kinsley and Ms Stephens were informing Mr Conicella that they were sick of Mr and Mrs Conicella’s problems being brought into the workplace and they just wanted to get on with their jobs.

[60] In circumstances where neither Ms Stephens nor Ms Kinsley were available to be cross examined and they do not say in their file notes that they were intimidated by Mr Conicella on 21 June 2016, I am not prepared to, and do not, find that they were so intimidated. Ms Stephens told Ms McAllister that she had not felt intimidated by Mr Conicella on 21 June 2016. She also explains in her witness statement that she was upset on 21 June 2016 because she felt that she was “being brought into personal matters”, rather than by reason of some conduct on the part of Mr Conicella. Ms Kinsley’s actions on the day do not suggest she was intimidated. For example, she told Mr Conicella, a director of the business in which she was employed, “don’t play this ‘he said she said’ bullshit so leave it”.

[61] There is a dispute between Mr Conicella and Ms McAllister as to what was said in the discussion between the two of them and Mrs Conicella at the workplace on 21 June 2016. Ms McAllister asserts that Mr Conicella was yelling and made threats that he was “going to go legal”, the business will have to close, and Mrs Conicella will never work again after Mr Conicella tells everyone what she has been doing to the business. Mr Conicella accepts there were raised voices in the meeting, but not that he was yelling. Mr Conicella denies that he said the business would have to close or that Mrs Conicella had been doing anything wrong in the business. Mr Conicella accepts that he said he was “going to go legal”, but claims he meant by those words that he was going to get legal advice.

[62] I prefer Ms McAllister’s evidence over Mr Conicella’s evidence in relation to this conversation on 21 June 2016 for the following reasons:

(a) First, Mr Conicella’s assertion that he said he was “going to go legal” but meant he was going to get legal advice is not credible. The ordinary meaning of the expression “go legal” suggests that something more than obtaining advice is intended. The expression is usually used as a threat. Further, the context of an obviously heated discussion in which there were at least raised voices and very sensitive matters were being discussed suggests it is likely that Mr Conicella intended to make a threat; and

(b) Secondly, for the reasons set out below, I am satisfied that on 21 June 2016 Mr Conicella said to Ms Bidner that he had evidence of her being involved in embezzling money from HLC and he would “take us all down” and on 22 June 2016 Mr Conicella said to Ms McAllister that “I am going legal and will bring you all down”. These were all serious threats, in similar terms, made by Mr Conicella at about the same time as his conversation with Ms McAllister and Mrs Conicella on 21 June 2016.

[63] There is no dispute that on 21 June 2016 Mr Conicella had a conversation with Ms Bidner about a parcel which had been delivered in her name. In the parcel was a GPS tracker which Mrs Conicella had purchased on-line and, so it would seem, intended to use to track Mr Conicella’s whereabouts. Mr Conicella was understandably upset about this issue when he confronted Ms Bidner about the parcel which had been delivered in her name. Ms Bidner did not deny signing for the parcel but she explained that she knew nothing about its contents. I accept Ms Bidner’s evidence that Mr Conicella proceeded to:

• accuse her of lying about the parcel;



• tell her that he had evidence of her being involved in embezzling money from the company as there is a bank account in her name and that he would “take us all down”; and



• tell her that he was going immediately to his lawyers as the things that Mrs Conicella had been up to would ruin the company and that she did not know who she was dealing with.

[64] I also accept Ms Bidner’s evidence that she felt shaken and intimidated by Mr Conicella’s conduct in this regard.

[65] I found Ms Bidner to be an impressive witness. She had a good recollection of events and was firm in her beliefs and views about what had happened and the impact of Mr Conicella’s conduct. She was not shaken in cross examination. Her recollection of her conversation with Mr Conicella on 21 June 2016 was supported by a contemporaneous note she made on 22 June 2016. Further, although she is employed by HLC as the Office Manager/Business Development Manager, she is a far more independent witness than Mr Conicella, Ms McAllister or Mrs Conicella (had she been called as a witness).

[66] On 22 June 2016, Ms McAllister received file notes from staff about what they had observed and heard on 21 June 2016. Ms McAllister proceeded to interview staff in relation to those matters on 22 June 2016.

[67] Prior to the receipt of any complaints or file notes from staff on 22 June 2016, I am satisfied that Ms McAllister had formed the view that Mr Conicella should be “removed” from HLC. So much is clear from the following evidence given by Ms McAllister in her witness statement:

(a) on 21 June 2016, Ms McAllister said to Mr Conicella words to the effect: “If you were my husband and I found out what you’ve done then I wouldn’t be able to work with you either. You can’t seriously think that you two can continue to work together. There can’t be this kind of friction and arguing in the office. You can’t bring the staff into your personal matters, there’s already been too much of that at Christmas with the Dani thing”; 33 and

(b) on 21 June 2016, Ms McAllister had a conversation with Mrs Conicella “about getting an appointment with Greg, our accountant – who has the share agreements and the company documents, to see what we could do about removing Paul [Mr Conicella] from the company, as he had clearly not been effective in his role for quite some time and was becoming useless as a Director”. 34

[68] That Ms McAllister had formed the view on 21 June 2016 that Mr Conicella should be “removed” from HLC does not mean that I should ignore either the allegations of what Mr Conicella did after 21 June 2016 or Ms McAllister’s evidence in relation to those matters, but it does, in my view, mean that Ms McAllister’s evidence in relation to the events that allegedly took place on 22 and 23 June 2016 insofar as they concern Mr Conicella should be treated with some caution. I have treated that evidence with the appropriate caution.

[69] Ms McAllister gave evidence that Mr Conicella telephoned her on 22 June 2016 and spoke words to the following effect with menace in his voice:

“I’m just calling to tell you that it starts today. I’m going legal and will bring you all down.”

[70] Ms McAllister says that she responded by telling Mr Conicella to “not go anywhere near the office. Stay away”, at which time he hung up.

[71] In cross examination Mr Conicella initially said that he could not recall having a telephone discussion with Ms McAllister on 22 June 2016. Mr Conicella denied saying to Ms McAllister words to the effect of those alleged by her.

[72] Ms McAllister produced telephone records to corroborate her evidence that she received a call on her mobile telephone from Mr Conicella on the morning of 22 June 2016. This evidence persuades me that such a call did in fact occur. Further and notwithstanding the caution I have exercised in considering Ms McAllister’s evidence, in light of the similarities between the threats allegedly made by Mr Conicella to Ms McAllister in this telephone call on 22 June 2016 and the other threats made by him to Ms McAllister and Mrs Conicella on 21 June 2016 and Ms Bidner on 21 June 2016, together with the fact that Ms McAllister sought legal advice in relation to these matters on the afternoon of 22 June 2016 from external solicitors, I am satisfied on the balance of probabilities that a conversation between Ms McAllister and Mr Conicella took place in the terms alleged by Ms McAllister on the morning of 22 June 2016. I found Ms McAllister’s evidence in relation to this conversation to be credible and reliable. It clearly had a significant impact on her, as it would to any director and shareholder of such a business.

[73] By letter dated 22 June 2016, Mr Conicella was directed to “take temporary leave, with pay, until a review of the situation is conducted … you are to refrain from attending at the office until further notice.”

[74] On 23 June 2016, Mr Conicella attended a local branch of the National Australia Bank. He says that he did so for the purpose of making some enquiry about his mortgage, but while he was there he requested from the National Australia Bank a copy of HLC’s office bank statements. The bank manager refused to give Mr Conicella access to the statements on the basis that he had never been a signatory on that account.

[75] Mr Conicella’s evidence in relation to what happened at the local branch of the National Australia Bank on 23 June 2016 is not very convincing. On the previous day Mr Conicella had been suspended from duty pending a review of various complaints and in the past two days he had made serious accusations concerning the embezzlement of money and threats that he would take the business down. Add to that the fact that Mr Conicella was not a signatory to HLC’s office account and he knew, or ought to have known, that the bank statements would be available within HLC’s records, but he did not request them from HLC. On the basis of those matters, I do not accept Mr Conicella’s evidence that he was at the National Australia Bank for the purpose of making enquiries about his home loan and just happened to request a copy of the office account bank statements. This finding goes to Mr Conicella’s credibility, but does not establish that he was acting inappropriately or in breach of some duty or obligation in requesting a copy of the bank records from the National Australia Bank. In that regard, I note that a director has the right to obtain or inspect a range of information and documents from the company of which they are a director. 35 I am satisfied that on 23 June 2016 Mr Conicella was acting in his capacity as a director of HLC and on the basis of a genuine belief held by him that he was entitled to inspect the office bank account statements of HLC.

[76] On about 24 June 2016, Mr Conicella contacted HLC’s information technology provider, Pinpoint Computer Services, for the purposes of finding out why his email account for HLC had been disconnected and why he was not getting any work emails on his mobile phone. Mr Conicella was informed that Pinpoint Computer Services had received instructions from HLC to change all passwords and all accounts and that Mr Conicella’s emails had been forwarded to another staff member of HLC. Mr Conicella was upset about this and had not previously been told by HLC that any such change would or might be made. HLC alleges that Mr Conicella threatened to sue Pinpoint Computer Services if they did not restore his emails. The only evidence in support of that assertion is Ms McAllister’s hearsay evidence of her discussion with an unnamed manager at Pinpoint. On the basis of that evidence, I am not prepared to, and do not, make a finding that Mr Conicella made such a threat to Pinpoint. I am satisfied that Mr Conicella did not act appropriately in relation to his communications with Pinpoint Computer Services concerning this issue.

[77] The final allegation in the termination letter is that Mr Conicella “misused the Company’s car for personal benefit, failed to meet set quotas and targets and failed to account to the Company’s directors, since at least April 2016”. No detailed or persuasive evidence was adduced in relation to these very broad allegations. In those circumstances, I am not satisfied that this allegation is made out on the evidence adduced in these proceedings.

Conclusion as to valid reason

[78] I am satisfied that Mr Conicella acted inappropriately on 21 and 22 June 2016 in making serious threats towards, and seeking to intimidate, Ms Bidner, Ms McAllister and Mrs Conicella. His conduct in that regard gave HLC a sound, defensible and well-founded reason for his dismissal.

[79] I am also satisfied that Mr Conicella acted inappropriately in December 2015 in the manner set out above. HLC was aware of this conduct at the time and made a conscious decision to continue Mr Conicella’s employment. HLC cannot, therefore, rely on the December 2015 conduct per se as a valid reason for dismissal, but it increases the gravity of later misconduct in June 2016, thereby contributing to a finding that the reasons for dismissal were sound, defensible and well founded. For these reasons, I find that there was a valid reason for Mr Conicella’s dismissal related to his conduct.

Notification of the valid reason and opportunity to respond (s.387(b)&(c))

[80] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made 36, and in explicit37 and plain and clear terms.38 In Crozier v Palazzo Corporation Pty Ltd a Full Bench of the Australian Industrial Relations Commission dealing with a similar provision of the Workplace Relations Act 1996 stated the following (at [73]):

“As a matter of logic procedural fairness would require that an employee be notified of a valid reason for the termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”

[81] An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality. 39

[82] Mr Conicella was notified of the reasons for his dismissal in the letter of termination dated 30 June 2016. However, for the reasons set out above in relation to my finding that HLC did not undertake a reasonable investigation, I am satisfied that Mr Conicella was not notified of those reasons before the decision was made to terminate his employment, nor was he given any opportunity to respond to such reasons.

Unreasonable refusal by the employer to allow a support person (s.387(d))

[83] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[84] There is no positive obligation on an employer to offer an employee the opportunity to have a support person:

“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”40

[85] Apart from his discussions with Ms McAllister leading up to his suspension on pay from 22 June 2016, Mr Conicella did not have any discussions with Ms McAllister or any other person on behalf of HLC in relation to his dismissal or the reasons for it. Accordingly, the issue of a support person being present did not arise.

Warnings regarding unsatisfactory performance (s.387(e))

[86] Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employee about the unsatisfactory performance before the dismissal.

[87] Save for an alleged failure to “meet set quotas” and “account to the Company’s directors, since at least April 2016”, the balance of the reasons for dismissal set out in the letter of termination relate to Mr Conicella’s alleged conduct, rather than his performance.

[88] Because I have already found that Mr Conicella did not, on the basis of the evidence adduced in these proceedings, fail to “meet set quotas” or “account to the Company’s directors, since at least April 2016”, the existence or otherwise of warnings is not relevant.

Impact of the size of the employer’s enterprise on procedures followed (s.387(f))

[89] It is clear that HLC is a small business. It employed about 10 employees, including Mr Conicella, at the time of his dismissal. The small size of HLC’s business undoubtedly impacted on the procedures followed in effecting the dismissal, but nonetheless there was no good reason why HLC could not have given Mr Conicella an opportunity to respond to allegations made against him prior to deciding to summarily dismiss him.

Absence of dedicated human resources management specialist/expertise on procedures followed (s.387(f))

[90] Like many small businesses, HLC did not, at the time of Mr Conicella’s dismissal, have dedicated human resource management specialists or expertise. However, that did not excuse it from failing to afford Mr Conicella the opportunity to respond to the allegations made against him.

Other relevant matters (s.387(h))

[91] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.

[92] The impact of the dismissal on Mr Conicella’s personal and economic circumstances is a relevant consideration in this matter. Mr Conicella was summarily dismissed. He has not been able to obtain alternative employment, despite his efforts to do so. Further, the other directors of HLC proceeded to remove Mr Conicella as a director of HLC following his dismissal, on the basis that the Constitution of HLC permitted the removal of a director who was no longer an employee. This means that Mr Conicella is now a minority shareholder in HLC, but he has little control over HLC because he is no longer an employee or director of the company. However, the seriousness of Mr Conicella’s misconduct in both December 2015 and June 2016 militates against a finding of harshness.

[93] Mr Conicella was employed by HLC for a relatively short period of time, namely 22 June 2015 to 30 June 2016.

[94] It is also relevant that Mr Conicella’s dismissal was closely related to a breakdown in his marriage with Mrs Conicella and the impact that had on HLC’s business.

Conclusion as to whether the dismissal was unfair

[95] Having considered each of the matters specified in section 387 of the Act, I am satisfied the dismissal of Mr Conicella by HLC was unreasonable because HLC failed to afford Mr Conicella procedural fairness in relation to the procedures leading up to the decision to summarily dismiss him.

Remedy

[96] In light of my findings that Mr Conicella was protected from unfair dismissal, and that his dismissal was unreasonable, it is necessary to consider what, if any, remedy should be granted to him.

[97] Mr Conicella seeks the remedy of compensation. He contends that reinstatement would be inappropriate because he does not have any trust or confidence in HLC. I agree, in light of the small size of HLC’s business and the inability of Mr and Mrs Conicella to work together following their marriage breakdown. I am therefore satisfied that reinstatement is inappropriate in this case.

[98] A compensation remedy is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal within the bounds of the statutory cap on compensation that is to be applied. 41

[99] Having regard to the fact that Mr Conicella has suffered financial loss as a result of his unfair dismissal, I consider that an order for payment of compensation to him is appropriate in all the circumstances of this case.

[100] It is necessary therefore for me to assess the amount of compensation that should be ordered to be paid to Mr Conicella. In assessing compensation, I am required by section 392(2) of the Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a) to (g) of this subsection. In undertaking this task, I shall use the established methodology for assessing compensation in unfair dismissal cases which was elaborated upon in the context of the current Act in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc (Bowden). 42

Remuneration Mr Conicella would have received, or would have been likely to receive, if he had not been dismissed (s.392(2)(c))

[101] Mr Conicella submits that he would have been employed by HLC for at least three months, and potentially for as long as six or twelve months had he not been unfairly dismissed on 30 June 2016.

[102] HLC submits that Mr Conicella would have remained employed for no longer than one to two months had he not been dismissed on 30 June 2016.

[103] I find on the balance of probabilities that Mr Conicella would have remained employed by HLC for a further period of 10 weeks had he not been dismissed on 30 June 2016, for the following reasons:

(a) There is no dispute that the marital relationship between Mr and Mrs Conicella had been problematic since about late 2015, many of those problems had spilt over into the workplace of HLC, the marital relationship irretrievably broke down in about June 2016, and the relationship between them has been acrimonious since at least that time. In circumstances where they both worked in, and were directors of, a small business and their marital problems had continually spilt over into the workplace since late 2015, there was no realistic prospect that they would have been able to continue to work together in a productive or meaningful way over the medium or long term after 30 June 2016. It was for those reasons that Mr Conicella had been seeking alternative employment since early 2016. 43 In addition, Ms McAllister gave unchallenged evidence, which I accept, that in about early June 2016 Mrs Conicella informed her that Mr and Mrs Conicella had separated, Mr Conicella had moved out of the matrimonial home, and Mr Conicella would remain with HLC until he found another job;44

(b) Even if Mr Conicella had not found an alternative job within a short period after 30 June 2016, I am satisfied that he would have been dismissed by HLC reasonably shortly after 30 June 2016, either on the basis of the kind of conduct in which I have found he engaged on 21 and 22 June 2016 or because his conflict with Mrs Conicella was incapable of resolution and was affecting the performance of work and HLC’s relationships with its clients and referrers. As to the latter ground of potential dismissal, I note that an employer may have a valid reason for dismissal on the basis of on-going interpersonal conflict between two employees in a small workplace where the conflict, for which each of the two employees were at fault, had reached the point where it had become incapable of any resolution and was affecting the performance of work. 45 Even though the relationship between Mr and Mrs Conicella had not caused a problem in the HLC business for the couple of weeks prior to 20 June 2016,46 I am satisfied, having regard to the long and difficult history of conflict between Mr and Mrs Conicella spilling into the workplace, that it would have been untenable for Mr and Mrs Conicella to continue to work in the same small business. The fact that the situation might equally have been resolved by the dismissal of Mrs Conicella could not by itself render Mr Conicella’s dismissal unfair in such circumstances;47 and

(c) Mr Conicella was only employed by HLC for just over a year at the time he was dismissed.

[104] In calculating the remuneration Mr Conicella would have earned had he not been dismissed, it is necessary to identify what his rate of payment would have been. The evidence establishes that Mr Conicella’s average gross weekly earnings as an employee with HLC were $1,474.03 (including superannuation) per week. I am of the view that Mr Conicella would have been likely to receive such weekly payments for 10 weeks after 30 June 2016 had he not been dismissed at that time.

[105] However, I also need to have regard to the fact that Mr Conicella received from HLC on his termination a “goodwill” payment of $1,587.39 (including superannuation) and one additional day’s pay of $294.81 48 (including superannuation), being payment for 1 July 2016 even though Mr Conicella was dismissed on 30 June 2016. Mr Conicella would not have received these extra payments had his employment continued beyond 30 June 2016.

[106] Mr Conicella would therefore have received $12,858.10 gross in remuneration in the 10 weeks following 30 June 2016 had he not been dismissed at that time (10 weeks x $1,474.03 – ($1,587.39 + $294.81) = $12,858.10).

Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f))

[107] Mr Conicella undertook paid work for Fire and Rescue NSW during his employment with HLC. He has continued such work since his dismissal on 30 June 2016, however the evidence shows that Mr Conicella has, on average, received an additional $133 gross per week in earnings from Fire and Rescue NSW in the period since his dismissal from HLC compared to the period prior to his dismissal. I am satisfied that Mr Conicella would not have earned that additional income from Fire and Rescue NSW had he remained in full time employment with HLC in the 10 weeks following his dismissal on 30 June 2016.

[108] Mr Conicella has not received any other remuneration since the termination of his employment with HLC.

[109] The calculation at this point is as follows:

(a) $12,858.10 (gross remuneration Mr Conicella would likely have earned had he not been dismissed by HLC and instead continued to be employed by HLC for 10 weeks after 30 June 2016)

(b) Less $1,330 (additional gross remuneration earned from Fire and Rescue NSW in the 10 week period after 30 June 2015 (10 x $133 = $1,330))

(c) Subtotal = $11,528.10

[110] This calculation is intended to put Mr Conicella in the position he would have been in but for the termination of his employment. 49

Other matters (s.392(2)(g))

[111] It is necessary to consider whether to discount the remaining amount for "contingencies". This step is a means of taking into account the possibility that the occurrence of contingencies to which Mr Conicella was subject might have brought about some change in earning capacity or earnings. 50 Positive considerations which might have resulted in advancement and increased earnings are also taken into account.

[112] The discount for contingencies should only be applied in respect to an “anticipated period of employment” that is not actually known, that is a period that is prospective to the date of the decision. 51 In this case, there is no such period that is prospective to the date of the decision.52

[113] I do not consider that there should be any adjustments for “contingencies” in the circumstances of this case.

[114] I have considered the impact of taxation, but I prefer to determine compensation as a gross amount and leave taxation for determination.

Viability (s.392(2)(a))

[115] There was no evidence that any particular amount of compensation would affect the viability of HLC’s business. No adjustment will be made on this account.

Length of service (s.392(2)(b))

[116] I consider that Mr Conicella’s period of service with HLC (just over 12 months) does not in all the circumstances justify any increase or reduction to the amount of compensation otherwise payable.

Mitigation efforts (s.392(2)(d))

[117] I am satisfied that Mr Conicella has made reasonable attempts to mitigate his loss. He has applied for many jobs since his dismissal on 30 June 2016, but has not yet secured alternative full time employment. I will make no adjustment on this score.

Misconduct (s.392(3))

[118] For the reasons set out above, I am satisfied that Mr Conicella engaged in misconduct and his misconduct contributed to HLC’s decision to dismiss him. For that reason, I will reduce the amount I would otherwise order under subsection 392(1) by 10%, which I consider to be an appropriate reduction on account of the misconduct. The amount then becomes $10,375.29 ($11,528.10 – 10% = $10,375.29)

Shock, Distress (s.392(4))

[119] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.

Compensation cap (s.392(5)&(6))

[120] The amount of $10,375.29 is below the compensation cap.

Instalments (s.393)

[121] No application was made to pay any compensation by instalments. I do not consider that payment by instalments is warranted.

Conclusion on remedy

[122] In my view, the application of the Sprigg formula does not, in this case, yield an amount which appears either clearly excessive or clearly inadequate. Accordingly, there is no basis for me to reassess the assumptions made in reaching the amount of $10,375.29. 53

[123] For the reasons set out above, I am satisfied that a remedy of compensation in the sum of $10,375.29 in favour of Mr Conicella is appropriate in the circumstances of this case. I will issue an order [PR587720] to that effect.

COMMISSIONER

Appearances:

Mr B Taylor, of counsel, together with Ms A Williams, solicitor from Arnold Lawyers, on behalf of the applicant;

Mr M Weightman, of counsel, together with Mr N Pidcock, solicitor from Fletcher Pidcock Lawyers, on behalf of the respondent.

Hearing details:

2016.

Newcastle:

October, 24 & 25;

November, 1.

 1   [2012] FWAFB 1359

 2   [2015] FWCFB 5264

 3   Ryman v Thrash at [43]

 4   Pinawin v Domingo at [38]

 5   Exhibit R1 at annexure E

 6   Pinawin v Domingo at [30]

 7   (1995) 185 CLR 410 at 465

 8   Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-8.

 9   Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373

 10   Ibid

 11   Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681 at 685

12 Ibid.

13 King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000) Print S4213 [24].

 14   Ibid

 15   [2016] FWCFB 108

 16   Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373

 17   Ex 1 at [17]

 18   Ex 1 at [20]

 19   Ex 1 at [20]

 20   Ex 1 at [20]

 21   Ex 1 at [20]

 22   Ex R7 at [4]-[5]

 23   Rose v Telstra Corporation Ltd (AIRC, Ross VP, 4 December 1998) Print Q9292, 11

 24   Ex A1 at [18]-[20]

 25   Ex R1 at [32]

 26   Ex R1 at [31]

 27   Ex R11

 28   Ex R6

 29   Ex A4 at [9]-[24]

 30   Ex R1 at [35]

 31   Ex R6 at [7]

 32   Ex A1 at [20]

 33   Exhibit R1 at [42]

 34   Exhibit R1 at [43]

 35   See, for example, s.198F of the Corporations Act.

 36   Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41]

 37   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151

 38   Previsic v Australian Quarantine Inspection Services Print Q3730

 39   RMIT v Asher (2010) 194 IR 1 at 14-15

40 Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1542].

 41   Kable v Bozelle, Michael Keith T/A Matilda Greenbank [2015] FWCFB 3512 at [17]

 42   [2013] FWCFB 431

 43   Exhibit R1 at [26]

 44   Exhibit R1 at [36]

 45   Lumley v Bremick Pty Ltd Australia t/a Bremick Fasteners [2014] FWCFB 8278 at [12]-[17]

 46   Ex R1 at [40]

 47   Ibid at [15]

 48   $1,474.05 per week / 5 working days in a week = $294.81

 49   Bowden at [24], citing Ellawala v Australian Postal Corporation Print S5109 at [35]

 50   Ellawala v Australian Postal Corporation Print S5109 at [36]

 51   Enhance Systems Pty Ltd v Cox PR910779 at [39]

 52   10 weeks after 30 June 2016 is 8 September 2016

 53   Smith v Moore Paragon Australia Ltd (2004) 130 IR 446 at [32].

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