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HomeMy WebLinkAbout1982-0169.Zapp.82-08-19 DecisionClUE74NCE SETTLEMENT BOARD ADVANCE Ca) T. P.A RT; IV, N OR TYPOCR,3.PHICA 7 CHA N. 7S rAy ,-^,PPE1-.E: IN THE COPY -FL) BE DISTRIOL177.D c. P.2.7:731STRAi:! 01110.0•11INIMMINI.NOMMIIMile.!..3 etlftsia.....••••.114.101.1.i..11Meedit V.4 169/82 IN THE MATTER OF AN ARBITRATION Under THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before THE GRIEVANCE SETTLEMENT BOARD Between: OLBEU (Mr. Paul Zapp) Grievor - and - The Crown in Right of Ontario (Liquor Control Board of Ontario) Employer Before: For the Grievor: For the Employer: Hearings: E.B. Jolliffe, Q.C. - Vice-Chairman S. Kaufman Member J. Morrow - Member P.J. Cavalluzzo, Counsel Golden, Levinson Barristers and Solicitors M.P. Moran, Counsel Hicks, Morley, Hamilton, Stewart & Stone Barristers and Solicitors June 18 and June 30, 1982 DECISION The grievance of Mr. Paul Zapp followed his dismissal' by the Liquor Control Board in March, 1982. He had been Assistant Manager of the Bard's store No. 554 in Don Mills until suspended on January 20. The case has its origin in the disappearance of funds on December 31, 1981, when the grievor was Acting Manager in charge of the store. Grounds for dismissal were stated in the letter (Exhibit 7) to Mr. Zapp from Mr. J.E. Jennings, Director of Store Operations, dated March 19, as follows: This refers to events which have rise to your being relieved. from duty by letter of January 20, 1982. After investigation it has been decided that the Board requires that you reimburse the amount of $1,500.00 found to be missing in the funds for December 31, 1981. Because of this disappearance of funds and of the cash register tapes on other dates and the falsification of records, your employment with the Board is terminated effective March 19,1982. It will be noted that the above letter did not accuse the grievor of theft. However, the grounds stated were substantial, involving the falsification of records as well as the disappearance of $1,500. The case would be more difficult if the facts were in dispute, but this is not such a case. All the material facts, damaging as they may be, are now admitted by the grievor. The proper inferences to be drawn are very much in dispute, as is the appropriate result. When the disappearance of funds was first discovered by auditors on January 20, the grievor denied all knowledge of it, even after it was found that the sales report for December 31 (Exhibit 2) had been falsified, obviously for the purpose of concealing the loss. On January 22, the grievor gave Mr. Jennings a letter (Exhibit 10) containing the following statements: I have been instructed by my area manager to submit an explanation as to the discrepancy between the cash register tapes and the daily sales report, and an accompanying cash shortage of $1500.00. I have been going over what occurred on that day and how the books were balanced. It was the day of period end, and two days prior to a price change and I was operating the store with one other full time employee. Our sales for that day were slightly more than a normal Saturday, and with the normal duties of period end, price change, setting up cash, and doing the payroll, I personally was quite busy. I have attempted to uncover what actually occurred and how the discrepancy came about, but I am unable to account for the $1500.00 shortage. A shortage which I as the acting manager accept full responsibility for. I have discussed what could have happened with Mr. French ie: forcing the figures to balance to cash or not accounting for manual voids, both explanations which I would have to discount because it is not the prescribed method which I would use and I would not miss something like a manual void. I can only hope that the discrepancy will turn up either in the book work or in a misplaced envelope. That is the only explanation I can offer. I value my position with the LCBO and I enjoy my work. I sincerely hope that what has happened will be cleared up in the very near future. 4 Nevertheless, one month later (and four weeks before his dismissal) the grievor offered a more truthful explanation. Acting on the advice of his wife and a friend he sought and obtained an interview on February 22 with Mr. Jennings and his assistant, Mr. C. Ball. He then gave them a hand-written state- ment (Exhibit 11) which corresponds closely with his testimony at the arbitration hearing on June 18. It is here quoted in full, because it is --- in his own words an account of what had happened and an expression of penitence for his failure to make full disclosure at an earlier date: Gentlemen; My family and I went through trying times a few years back. With some hard work and a lot of understanding we got things back on track. Then one of the proudest and most satisfying moments of my life. I was promoted to "Clerk 4 -Acting Assistant Manager in a C store." Everything was on an upswing. My wife and I were very happy. Just making ends meet but happy and proud considering the situation just a few years prior. My daughter is in nursery school and my son in junior kindergarten. My wife has an Avon route in the neighbourhood as well as being treasurer of my daughters nursery school. I was going extremely well on the job. Things kept getting better. I received word that I would be attending a Management Seminar at Kempenfeldt Bay in January. There were rumors of pro- motions coming up in February. Great! Management Seminar in January - Promoted in February. Or so I hoped. 5 An excellent opportunity to prove myself came when the manager decided to take vacation the last week in December. It would be busy. I wanted everything to be perfect. It wasn't to be. On DeceMber 31st we were very busy. I was counting a deposit one of the cashiers had just handed me. There was supposed to be fifty twenties and fifty tens. Before finishing my count I was called' out of the,office by one of the cashiers. The same thing had happened a countless number of times during the Christmas period and the week leading up to New Year. You would just sit down to count a deposit and someone would need you for something else. I figured I would be out of the office for just a minute so I placed the deposit in the upper right hand drawer of my desk. When I got out on the floor there was a customer who wanted to exchange liquor for some wine. It took longer than I expected and I got side tracked by another customer on my way back to the office. When I finally made it back to the office the drawer was empty. I checked all the drawers. I checked the deposit slips hoping one of the other guys had come across it and put it in an envelope. Finally I checked the safe in the office hoping once again that some- one had come across it and placed it in there. There was nothing. I was going to ask if anyone had been in the office. I panicked. The only thing I could think of was that everything that I had worked so hard for was going to be lost. Nb promotion. NO recognition. From there on I just kept compounding the problem. I have always wanted to come forward with the truth. I am so terribly sorry and ashamed that it took me so long to admit my mistake. Sargeant Derry informed me that there were no grounds for charges and that he did not think that I had taken any money. Armed with that information it would have been easy for a dis- honest person to cary on with the lie. I come forward now because I have always known that it is the right thing to do. Please believe that I did not deliberately intend to cause any inconvenience. The thought of a suspension or possible demotion for not properly safe guarding board funds was truly terrifying. So much so it altered my thinking at the, time. I am very proud to be an employee of the Liquor Control Board. I know that I can, and given the opportunity, will continue to do a good job and be an asset to the board. This past while has been hell to me and has taught me an invaluable lesson. Truth is the best course despite the consequence. Again I am truly sorry and ashamed. I hope and pray that' you will allow me to continue my employment with the' board and not judge my indescretion (sic) too harshly. Yours sincerely Paul Zapp The only matter of importance omitted in the above statement was the fact that the grievor had falsified the sales report in an effort to conceal the loss of $1,500. The changes, however, were so clumsily made that they quickly became apparent to the auditors on January 20 when they compared the report with the tapes which recorded the. day's receipts. No doubt he was referring to that mistake (among others) when he said that: "From there on I just kept compounding the problem." In his testimony, however, the grievor was candid about the falsification. On Thursday, December 31, he told no other . employee about the lost money, but did inform his wife. On Sat- urday, January 2, he was in the store from 9 a.m. to 6.15 p.m. He testified: "I thought it was too late to report it. I knew it would come out eventually, but I couldn't bring myself to dis- close it at that time." Shown Exhibit 2, he agreed the cash figures were wrong, and said: "I intentionally made changes in a number of transactions. I did not alter the tapes that day .but had an opportunity to change them. I took Marks.' tape and changed the resulting figure not the tape --- to reduce the total by $1,500." Thus the auditors subsequently found the difference between the tape total and the receipts entered on Exhibit 2, the daily sales report. Two other matters were of concern to management. The auditors reviewed tapes and sales reports covering a period of several weeks prior to January 20. In a memorandum to Mr. Jennings from Mr. A.I. Hughes, Manager of Store Audits, (Exhibit 4) the following finding was reported: Through the course of checking other cash register tapes it was discovered that the following cash register tapes were missing: December 17, 1981 amounting to $7,530.15 and $2,396.85; December 22, 1981 amounting to $3,446.40, $8,239.75 and $8,790.75 with voids for $156.00; December 29, 1981 amounting to $6,464.30 with voids for $47.10. The store manager, staff and ourselves could not locate these cash register tapes. The fact that the audit tapes for three, days in December were missing gave rise to the suspicion that there could have been other losses, forever unknown because such tapes were not available for comparison with daily sales reports. A possible explanation has been offered by the grievor. At some time in December a distillery representative ,, one Maclean, had billed a customer for an order previously arranged, but the customer refused to pay, claiming he had already made payment at the store. The grievor testified: "I checked through some tapes but did not find the sale. The following day the customer came in with the sales slip. Then we made a-second search and found it." He had been helped with the tapes by Mr. Jim Watson, a full-time clerk. The witness Harvey Brown, another clerk, knew of the Maclean incident. He had seen Mr. 4pp and Mr. Watson unrolling tapes and searching for confirmation that the complaining customer actually paid for the liquor picked up, which had been ordered in connection with a banquet permit. According to Mr. Brown (as well as the grievor) the search took "a whole day," and sometimes tapes were spread on the floor. He said one of his own duties was to put tapes in bags at regular intervals, staple the bags and place them in storage. He had never before known tapes to be lost. On this point, Mr. Arthur Hughes, the Manager of Store Audits, after 26 years of experience with the L.C.B.O., said he had found tapes missing on not more than four occasions, and he believed these were due to the "remodelling of the premises." Ordinarily of course it is the auditors who review tapes. The evidence fails to prove that the tapes 9 for December 17, 22 and 29 were lost as part of a scheme to conceal theft of cash from the L:C.B.O. If the grievor had such a scheme, or any part in it, the all-important tapes for December 31 would also have disappeared. The existence of that tape made it possible for the auditors (within 40 minutes of commencing their audit of January 20) to discover --- and prove --- a shortage of $1,500. If the tape had been destroyed, this would be difficult, probably impossible. The inference to be drawn is that the tapes for dates earlier in December were lost, mislaid or misplaced during the course of the search made as a favour to Mr. Maclean and his customer. Another matter of concern to management at the L.C.B.O. was the record of Store No. 554. For the 10 periods from April 1, 1981, to January 2, 1982, there was a "net shortage" of $9,247.75, being "store stock differences" determined by reference to "the store copy and the records at Head Office Accounting Department of the store perpetual inventory" (Exhibit 5). There were shortages of several hundred dollars in each of the first seven periods, a shortage of $2,145.00 in Period No. 8, an overage of $442.70 in Period No. 9 and a shortage of $3,783.95 in Period No. 10. In addition, the audit of January 20 (for the period January 4 to 19) established ahother shortage of $1,732.50. It is not a very good record, as conceded by the Store's - 10 - Manager at the time, Mr. M.H. Webb, who was away on vacation from December 2.2, 1981, to January 4, 1982. However, other stores also have); shortages and Mr. Webb said of the figures for his store: "I don't now consider they were high." The auditor .. of January 20, Mr. Creighton French, said they had been "way out of line" for such a small operation. He would have expected to find shortages of "only five or six hundred." Further, Mr. French reported several errors or irregularities in procedures at the store such as "cash tapes not folded," or "no signatures on voids" and "inadequate supervision at lunch time." If these suggest an operation lacking in efficiency, the grievor as Assistant Manager can be held partially but not solely responsible. Also worthy of note, several employees at the store in December were pant-timers, taken on to cope with the rush in that season, and it is not to be expected that their efficiency would equal that of full-time experienced clerks. The most important finding made by the Auditors, Messrs. French and Periora, was, reported in writing on January 21, (Exhibit 3) as follows: The following cash tape had an unaccountable discrepancy. December 31, 1981. Tape read $12,135.50. Daily sales read $10,635.50.- Short $1,500.00. Cashier does not recollect any discrepancy. Bookeeper (sic) has no reason for changing entry does not recall any discrepancy. It was also reported of course to Mr. Hughes that the Daily Sales Report, Exhibit 2, signed by Mr. Zapp, had been altered in several particulars, including the false figure for cash sales. Entries appear to have been made with a pencil, not a pen, a practice which seems questionable. We turn now to the evidence relating to events on Thurs- day, December 31. Witnesses have agreed that December 24, the day before Christmas, had been the busiest day of the year; December 31 came second. It is a self-serve store, but at 2.30 p.m. all the staff were fully occupied. Three part-time clerks were serving as cashiers; other employees were handling stock from storage. Mr. Zapp was in the Manager's office, which is directly in line with the cashiers' stations. The curtains were not closed over the office windows, so that customers in line as well as the cashiers could see into the office and probalby glimpse the two desks therein. During the period in question no other witness had Mr. Zapp in view, which is natural since all other employees were very busy. There is no reason to disbelieve the grievor's account of what occurred. At about 2.30 a part-time clerk named Marks brought to - 12 - the office a package of $1,500 in cash. This is the usual procedure it is not appropriate that any cashier should have much more than $1,500 on hand. Thus, on a busy day, the Manager or Assistant t. Manager would receive as many as eight or nine visits from cashiers seeking to turn in their excess cash. It would then be the duty of the recipient to count and record the money and put it in the office safe. Normally the cash is picked up by Brinks the next day for deposit in a bank. While counting, the grievor was called by Ms. Linda Wells, the cashier nearest to him. She drew his attention to a customer who had brought back some liquor but wished to exchange it for wine. As a part-time cashier, she was not qualified to conduct such a transaction. In any event she was busy with other customers and the full-time clerks were otherwise engaged. Possibly the grievor was a little flustered by his responsibility as acting manager and by the rush of business that day. Possibly also he was anxious (as L.C.B.O. employees are encouraged to be) to satisfy an eager customer. Whatever the reason, he did not finish the . count but thrust the money into a drawer of his desk, which he claims cannot be locked. It turned out that the customer wanted advice about wine, as wine-purchasers sometimes do, and detained the grievor for about - 13 - 15 minutes at the wine-shplves. On the way back to the office the grievor was intercepted briefly by another customer. The first customer broughtt a cartload of wine to the office where an exchange was arranged and he paid the difference between the new purchase. and the former purchase. But when the grievor looked in the drawer of his desk, the money was gone. Apparently the grievor did not suspect other employees; he did not mention the loss to any of them. He was undoubtedly conscious of his negligence in leaving the money where he did with the curtains open, one door open, and the desk in plain view of the public. He had received ample warning of the risks in a circular (Exhibit 8) addressed by the L.C.B.O. to all store managers on September 23, 1981, --- about three months before December 31. It was as follows; Re: Safeguarding Board Funds Recently there was an incident of theft in one of our stores. TWo persons working together were able to steal cash from the office of the store. While the employee in charge of the store was pre- paring a deposit, he was lured from the office by a person who feigned an injury: Cur employee put the money in a desk drawer and went with the customer to investigate the alleged accident. In his absence from the office, the accomplice of the first person entered the office and took the funds from the desk drawer. Both men fled from the store. It is Board policy that funds should never be left unattended unless they are secured in the locked store safe or locked cash register. - 14 - Money is never to be kept in an unattended desk drawer or cash drawer. The circular ought to have mentioned that the curtains on the windows of an office should always be drawn closed when money is being counted. It is folly to go through that exercise in full wiew of customers --- of whom there would be many in the • vacinity on the afternoon of New Year's Eve. This lesson --- among many others --- can be learned from Mr. Zapp's experience on December 31, 1981. It assumes special importance in view of the fact that most L.C.B.O. sales are transacted on a cash basis. Even Store No. 554 --- one of the small outlets --- could take in as much as $1,500 an hour on a busy day, a tempting target for larceny. Nevertheless, the circular had explicitly warned managers that "money is never to be kept in an unattended desk drawer or cash drawer." Mr. Zapp's treatment of the money on December 31 was a violation of that rule and amounted to extreme negligence, as shown by the disastrous result. It was grave misconduct, as the grievor himself seems to have realized at the time. We cannot conclude, --- as the employer's counsel suggested in argument --- that "the evidence points to theft" by the grievor. There was certainly theft that afternoon, but we think the grievor's testimony is credible --- weighed by its - 15 - content and also his demeanour. No other evidence supports an inference that the grievor himself took the money. What has been established is that the grievor was guilty of negligence, for which he and his family have already paid a heavy price. Much more serious was the grievor's behaviour after the loss of -the money. Clearly, he was stricken by panic and despair, knowing that the event jeopardized his hopes and ambitions. It was not misconduct to be panic-stricken, but the steps he took, futile and irrational though they were, did constitute grave mis- conduct. On January 2 Mr. Zapp spent the day at the store, pre- pared and signed the daily sales report for December 31, in which he deliberately under-stated cash receipts by $1,500. He seems to have done this act of folly in the hope of postponing the day when his negligence would be exposed. At the time his character was not suficiently strong to make full disclosure. His "fixing the books" was ineptly executed. He did not lose or destroy the audit tape for December 31 and left Exhibit 2, the daily sales report, in a condition almost certain to draw attention and provoke sus- picion. He had more than enough experience to know that the audi- tors would be visiting the store in January and would probably compare Exhibit 2 with the tape for that day. In our view, his - 16 - misconduct on January 2 was that of a very confused and frightened young man, not the work of a calculating thief. Between January 2 and 20, the grievor did nothing to disclose the loss. Apparently he hoped that by good luck it would never come to light. At the same time he must have known this was unlikely. He was out of town on a management training course when he received telephone calls about the auditors' findings. Both on the telephone and after returning to Toronto he denied knowledge of the loss. As he said later in his statement of February 22: "I just kept compounding the problem." The real problem of course was his failure to report the loss on December 31. In argument at the hearing of June 30, counsel for the employer referred to the three reasons given for discharge in Mr. Jennings' letter of March 19, which was quoted at the outset of this decision. These were the disappearance of funds on December 31 and of the cash register tapes on other dates and also the "falsification of records." Mr. Moran said that each one of these reasons standing alone would justify discharge. The grievor was an Assistant Manager and his offences were more serious than if he had been a Clerk 3. As for the loss of money, Mr. Moran pointed out that the grievor had not followed the proper procedure for safeguarding - 17 - Board funds, he had failed to report the loss and failed to question other employees so that all opportunities to recover the money were lost. Falsification of records occurred two days after, it t . was deliberate and involved changes in the number of transactions as well as the amount of cash receipts. Thereafter, the grievor lied about it from January 20 to February 21. All this cast doubt on his explanations and such evidence pointed to theft by himself. Mr. Moran cited Bernardi, 102/79, another case in which a store manager had falsified records. It was also said that although the standard of proof in this proceeding was lower than in a criminal prosecution it would be higher than in a civil case. He referred to the recent judgment of Laskin C.J. in Continental Insurance Co. v. Dalton Cartage Co. Ltd. (1982) 131 D.L.R. (3d) 559. On the balance of probabilities, it should be concluded that the grievor himself took the funds. Mr. Moran said the disappearance of tapes for three dates earlier in December meant there could have been other losses. For the grievor, Mr. Cavalluzzo submitted that clear and convincing proof was required of such a serious offence as the theft suggested by Mr. Moran. The "balance of probabilities" was a "flexible concept," and he cited Douglas, 108/80 at page 9 and the Toronto Hydro case (1978) 19 O.R. (2d) 245 at page 246. - 18 - Counsel also discussed in some detail the evidence relating to the three missing tapes, the loss of $1,500, the falsi- fication of the figures on Exhibit 2 and the grievor's subsequent behaviour. Mr. Cavalluzzo submitted that intent to defraud had not been proved. What had been established was negligence and ,"a bad mistake," but the grievor became candid and forthright in his admis- sions to Mr. Jennings on February 22 and in his testimony before this Board. Thus the case was different from that of Bernardi, who had refused to admit guilt. Moreover, the grievor gave every sign of sincere contrition, which was consistent with his character and previous record. We have already indicated our view of the proper infer- ences to be drawn from the evidence in this case. The resulting conclusions may be summarized as follows: -(1) There is no evidence of wrongdoing on the part of . the grievor in connection with the missing tapes of December 17, 22 and 29. Significantly, Mr. Zapp was off duty on December 22. He was not the only employee who had access to tapes. Indeed, Mr. Brown states that it is his handwriting which appears on bags con- taining tapes for two weeks in December. It was natural to suspect - 19 - that there might be a link between the missing tapes and the money lost on December 31, but if the grievor had a schme for concealing losses by destroying tapes, he would surely have got rid of the tape for December 31. His failure to do so negatives the suspicion. It seems probable.. that the three tapes were lost during the search provoked by Mr. Maclean. (2) Evidence is totally lacking that the grievor him- self made away with the $1,500 lost on December 31. His guilt on that day cannot be inferred from his deplorable conduct on Jan- uary 2 and later. The only evidence as to the loss is that of the grievor himself, and there is nothing to contradict it. His cred- ibility has been challenged because of the lying he subsequently did, but there are other factors which make his explanations plausible. He was, as he said, doing well at his job. He had been promoted and expected another promotion; it is significant that he was selected for a management course in January. Aged 33, he had two children and a wife who worked. In that context it seems improbable that he would risk his whole future by stealing what amounted to less than one months's pay. The identity of the thief may never be known, but the circumstances bear a remarkable resem- blance to those described in the Management circular of September 23, 1981, quoted earlier in this decision. Unfortunately for Mr. Zapp, he had failed to take heed of that warning. He was guilty of negligence. 20 (3) Far more serious than the grievor's negligence on December 31, was his misconduct thereafter. The falsification of Exhibit 2 and the false statements made later certainly support the employer's view that he was not a trustworthy employee. In his defence, it has been pointed out that he eventually made full disclosure, does not attempt to justify his actions and is appropriately contrite. This panel of the Board has had the advantage of hearing and watching Mr. Zapp testify at considerable length. It is always difficult to assess the credibility of a witness in such a position. On balance, however, we think he was telling the truth when he testified on June 18. We have been asked to decide the issue on "the balance of probabilities," which is a legal, not a mathematical concept, but calls for the exercise of common sense and some understanding of human nature. The legal aspect was canvassed by Laskin C.J. in Continental Insurance, supra, who said among other things: "There is necessarily a matter of judgment involved in weighing evidence that goes to the burden of proof, and a trial Judge is justified in scrutinizing evidence with greater care if there are serious allegations to be established by the proof that is offered He then quoted with approval the words used by Lord Denning in Bater v. Bater (1950) 2 All E.R. 458 at page 459. - 21 - It is true that by our law there is a higher standard of proof in criminal cases than in civil cases, but this is subject to the qualification that there is no AhRolute standard in either case. In criminal cases the charge must be proved beyond reaaonable doubt, but there may be degrees of proof within that standard. Many great judges have said that, in proportion as the crime is enormous, so ought the pr6of to be clear. So also in civil cases. The case may be proved by a preponderance of probability, but there may be degrees of probability, within that standard. The degree depends on the subject-matter. A civil court, when considering a charge of fraud, will naturally require a higher degree of probability than that which it would require if considering whether negligence were established. It does not adopt so high a degree as a criminal court, even when it is considering a charge of a criminal nature, but still it does require a degree of probability which is commen- surate with the occasion. It must be kept in mind that although theft by the employee has been suggested or alleged, we are here engaged in a civil pro- ceeding, not a criminal prosecution. The words of Lord Denning and the Chief Justice are therefore applicable, including the statement that when considering a charge of a criminal nature, a degree of probability is required "which is commensurate with the occasion." On the whole, we conclude on "the balance of probabilities that the grievor's mistakes and misconduct did not spring from an intent to defraud his employer. We have found there was negligence, there was an indefensible falsification of the record, and there was a dishonest attempt to deny knowledge of the truth. All these amounted to grave misconduct, but we do not think they betoken a fraudulent design. On the contrary, to be blunt about the matter, Grade 4. E.B. )olliffe Dated this 19th day of August, 1982 Vice-Chairman we consider they were due to ineptitude or incompetence and a certain weakness of character. It does not follow that the grievor, having manifested such weakness, should be punished as though he were in fact a thief. By Section 18(2) of the Crown Employees Collective Bar- gaining Act, it is provided that "where the Grievance Settlement Board determines that a disciplinary penalty or dismissal of an employee is excessive, it may substitute such other penalty for the discipline or dismissal as it considers just and reasonable in all the circumstances." In our view the penalty imposed in this case was excessive and there must be a different penalty— Having regard to the gravity of the misconduct proved and admitted, we conclude that a suspension of six months without pay would be appropriate. Further, while we think that the grievor is capable of proving himself to be a loyal and useful employee, we are not prepared to direct that he be reinstated as an Assistant Manager. Our decision is that he shall be again employed on or before Monday, September 20, 1982, at a level not lower than that of a Clerk zzi Member J.H. lvbrrow Member