Adams v Westfield Holdings Ltd

APPLICANT Mr M J Kimber SC and Mr D S Inverarity of counsel Solicitor: Mr D Gardner Cutler Hughes & Harris LEGAL REPRESENTATIVES: RESPONDENT Mr P M Kite SC and Mr P J Newall of counsel Solicitor: Mr M Stewart Speed and Stracey

JUDGMENT:

• 75 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: HUNGERFORD J Friday, 30 June 2000 Matter No IRC 5679 of 1998 RICHARD GRAHAM MURRAY ADAMS v WESTFIELD HOLDINGS LIMITED Application for orders under s 106 of the Industrial Relations Act 1996 re unfair contract. JUDGMENT 1 The applicant, Richard Graham Murray Adams, has moved the Court for orders against Westfield Holdings Limited pursuant to s 106 of the Industrial Relations Act 1996 in relation to an alleged unfair contract of employment and a collateral arrangement made between them in mid-1995. The claimed orders sought either variation in respect of notice of termination, bonus payment, redundancy payment and share options or avoidance of the said contract and collateral arrangement from their commencement, together with orders for interest and costs. 2 The way in which this matter developed in terms of the factual background and the formation of a relationship between the parties was not really in dispute. The issues sharply dividing the parties were the proper inferences to be drawn from the facts in assessing whether the impugned transactions were unfair, harsh or unconscionable so as to establish the grounds for relief under s 106 and, in any event, the nature and extent of relief to be allowed on discretionary considerations. 3 Very much, it seemed to me, the respondent resisted the claims on the basis that the applicant, as the respondent's senior counsel said, was "a well-experienced, highly-qualified, senior executive" who "had good bargaining power" and "there is just not a scintilla of evidence to suggest … if there be an excess of bargaining power in favour of the company, that it was used". On the other hand, the applicant's senior counsel emphasised in opening that "if [the respondent] had told the story as the contract was operated at the end of the day [it] would never have got Mr Adams to come and join Westfield. … It induced him to come to the organisation and then they relied upon the fine print from the terms of the option plan to say, sorry you did not make it for 5 years". And so issue was joined. 4 The power exercisable by the Court under s 106 of the Industrial Relations Act is to "make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract": sub-s (1). A contract may be found to be unfair "at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason": sub-s (2). A contract may be declared wholly or partly void, or varied, "either from the commencement of the contract or from some other time": sub-s (3). In making an order under the section, a further order may be made "as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case": sub-s (5). A "contract" is relevantly defined in s 105 of the statute as meaning "any contract or arrangement, or any related condition or collateral arrangement …"; and an "unfair contract" is defined as one "that is unfair, harsh or unconscionable". 5 It is appropriate first to review the factual background and conveniently that may be done by reference to the grounds stated in the amended summons for relief which, to that extent, were as follows : 1. The Respondent is and was at all material times a corporation duly incorporated in the State of New South Wales and as such is liable to be sued and by its corporate name and style.

2. In or about late 1994 the Applicant held a senior and secure position with National Australia Fund Management in Melbourne with a remuneration package that included share entitlements in addition to a salary package excluding bonus entitlements valued at approximately $195,000 per annum.

3. In the months immediately prior to 5 May 1995, the Respondent, having resolved to approach the Applicant (and not vice versa), made certain representations to the Applicant that were intended to (and did) induce the Applicant to resign from his secure employment to take up a senior position with the Respondent.

(a) if the Applicant performed well then he would receive an annual bonus of 40% of salary each year; and

(b) he would be allocated 30,000 share options in the Respondent.

The representation as to bonus was in fact a misrepresentation as in spite of the fact that the Applicant had "superior performance" and achieved all set performance objectives he did not receive an annual bonus of anything like 40% of his remuneration package and received no bonus whatsoever for the financial year ended 30 June 1998.

The Applicant was also misled with respect to the bonus offer in that he was not advised that his bonus could be withheld in spite of superior performance; was not advised that the Respondent could "defer" any consideration of his annual bonus entitlement; and was not informed that in his case the bonus would be calculated by reference to the success or failure of particular specified projects.

The Respondent's representation with respect to the Applicant's share options was in fact a misrepresentation in that the Applicant was not advised that his right to those options would only arise if he was still in employment with the Respondent after a five year period and that any possible access to all or any of those options within that five year period depended upon the exercise of an "absolute discretion" bestowed upon the directors of the Respondent.

The Applicant was also misled with respect to the share options in that he was not advised at or before the time that he commenced employment with the Respondent that, subject to the possible exercise of the said "absolute discretion" in his favour, his share option entitlements would lapse completely if he was terminated (even for reasons unconnected with his own performance or behaviour) at any time within the first five years of his employment.

The terms of the Respondent's share option plan were not drawn to the Applicant's attention at or before the time that he agreed to take up employment with the Respondent and, accordingly, the Applicant was denied the right and opportunity either to refuse the offer of employment or to re-negotiate the terms of that offer, on the basis of a proper understanding that his right to benefit from the share option scheme was conditional upon him retaining employment for five years or otherwise receiving an exercise of the Respondent's "absolute discretion" in his favour at any time before five years had elapsed.

The Applicant worked diligently and effectively for the Respondent between June 1995 and his termination in July 1998 and that commendable performance was reflected not only in increases in his remuneration package and the payment of at least one substantial bonus during the course of his employment but also in the fact that his ultimate termination was not attributed to his poor performance or behaviour.

On termination the Applicant : (a) received one month's notice and three months' pay in lieu of notice but such notice and payments were unfair and unreasonable in all the prevailing circumstances;

(b) was not paid any bonus for the financial year ended 30 June 1998 even though he had met all set performance objectives and should have received a bonus of 40% of his remuneration package;

(c) Only received an entitlement to exercise 45,000 of 150,000 share options in circumstances where it would have been fair and proper for such discretion to have been exercised so as to permit the Applicant to retain all of his 150,000 share options in the Respondent until the specified maturity date for those options, especially in circumstances where the Applicant stood ready will ( sic ) and able to fulfill his contract of employment with the Respondent on an ongoing basis and was only denied the opportunity to do so by virtue of the Respondent's decision to make his position redundant. 6 After negotiations, the respondent by letter dated 5 May 1995 offered the applicant employment in the position of Deputy General Manager, Wholesale Trusts, and, after further discussions on 8 and 11 May 1995 concerning relocation costs of the applicant and his family from Melbourne to Sydney, the offer was formally accepted on 15 May 1995 by the applicant who then commenced the employment on 5 June 1995. The offer letter, which of course on acceptance became part of the contract of employment, made provision for a commencing remuneration package on a total employment cost basis (salary, superannuation, car and miscellaneous) of $225,000 to be reviewed at 1 January 1996 and annually thereafter. As to notice of termination of employment, the contract stated : You may terminate your employment at any time by giving Westfield no less than three months notice in writing. Westfield may dispense with your services for reasons other than just cause by giving one months notice and in that case will make a termination payment equivalent to six months base remuneration if such occurs in the first year of your employment, and thereafter the payment will be three months base remuneration.

Termination for just cause will require only summary notice and in that case you will have no entitlement to any termination payment mentioned above.

The contract dealt with the share options in these terms : In accordance with the Company's Executive Incentive Scheme you will be granted 30,000 (thirty thousand) options at the first Board Meeting after your commencement. More may be granted from time to time based on your performance and company circumstances.

And, as to the bonus, the contract stated : Further, you will be eligible for an annual discretionary bonus based upon the divisional results achieved. It will not have a particular cap, but the nominal target for superior performance will be up to 40% of the package. 7 The amended summons alleged that the contract of employment was unfair within the meaning of s 106 in the following respects : (a) It contains an express termination clause that permitted the Respondent to terminate the Applicant by the provision of one months notice and three months base remuneration, being a provision which is (on its face) unfair and unconscionable given the Applicant's age, qualifications, the senior managerial nature of his position, his length of service with the Respondent, the fact that he was induced by the Respondent to give up secure employment to take up his position with Respondent, the Applicant's legitimate expectation as to the continuity of his employment with the Respondent (given sound performance), as well supported by the existence of the Applicant's right to exercise very valuable share options but only after the effluxion of five years employment.

(b) It failed to contain the termination clause set out in order 3(a) above, in circumstances where such an express term would have been fair and reasonable in the prevailing circumstances.

(c) It failed to contain the additional share option clause set out in order 3(b) above in circumstances where the inclusion of such a clause would have been fair and reasonable and necessary to ensure that the Respondent's representations as to share options were not misrepresentations causing loss and damage to the Applicant.

(d) It failed to contain the additional bonus entitlement clause set out in order 3(c) above in circumstances where the inclusion of such a provision would have been both fair and reasonable and necessary to ensure that the Respondent's representations as to bonus entitlements in the wake of sound performance did not become misrepresentations causing loss and damage to the Applicant.

(e) Failed to contain any further provision as to redundancy entitlement as set out in order 3(d) above in circumstances where it would have been fair and reasonable and appropriate for such a clause to have been included.

(f) At the point of termination, it operated unfairly or harshly and unconscionably in that it failed to provide the Applicant with severance payments that were fair and reasonable in all the circumstances and permitted his entitlement thereafter to exercise valuable share options to be lost through no fault, behaviour or actions of his own.

(g) It permitted the Respondent to both defer and deny bonus payments to the Applicant contrary to his reasonable and legitimate expectation that such bonuses would flow at substantial levels on an annual basis if he achieved his performance objectives (which he did).

(h) It permitted the Respondent to only advise the Applicant as to the harsh and unconscionable terms of the share option scheme at a point in time after he had already accepted employment and commenced work with the Respondent ie at a time when the Applicant no longer had any bargaining power with respect to that matter.

(i) It permitted the Respondent to render the Applicant redundant without making any redundancy payment to him at all. 8 The primary remedy sought by the applicant in the amended summons in relation to the contract of employment was for an order varying it in part, either ab initio or from some other time, so as to : (a) Delete the termination provision "Westfield may dispense with your services … payment will be three months base remuneration" and insert instead the following clause namely : "Westfield may dispense with your services for reasons other than just cause by giving 12 months notice or 12 month's pay in lieu of that notice, with such sum to be calculated by reference to your remuneration package at that time."

(b) Insert a new clause (at the end of paragraph 5 of the letter of offer dated 5 May 1995) namely :

"Notwithstanding the current terms of the company's executive incentive scheme (or any future variations thereto), in the event that you are terminated on the grounds of redundancy at any time after three years from the issue date of any options, then your entitlement to exercise any and all options held by you as at the termination date shall not lapse but shall continue until the specified maturity date."

(c) Insert a new clause (at the end of the sixth paragraph in the letter of offer dated 5 May 1995) namely :

"Superior performance in any year will be determined by reference to your achievements as measured by reference to agreed performance objectives and not by reference to the progress, success or failure of any particular project. The calculation and payment of bonus entitlements shall be made in July each year and such process and payment shall not be deferred for any reason. In the event that such performance objectives are found to have been achieved (or substantially so) then you will be entitled to receive a bonus calculated by reference to 40% of your remuneration package."

(d) Insert the following new clause (at the end of paragraph 9 of the letter of offer dated 5 May 1995) namely :

"In the event that your services are terminated on the grounds of redundancy you will be entitled to a redundancy payment equal to four weeks pay per year of service with such sum to be calculated by reference to the full value of your remuneration package as at the termination date. Such payment shall be in addition to your entitlements to notice of termination or payment in lieu thereof." 9 In the alternative, the applicant sought an order declaring void ab initio the contract of employment made with the respondent on 15 May 1995. 10 Pursuant to the contract's provisions concerning the share options under the respondent's Executive Incentive Scheme, on 29 June 1995 the respondent executed a deed poll, copy of which together with related documentation was forwarded to the applicant on 11 July 1995, concerning the issue to him of 30,000 options over the respondent's ordinary shares. The options were granted subject to the terms and conditions contained in the deed and at an exercise price of $11.23 per option. The issue date of the options was 23 June 1995 and the maturity date was 23 June 2000; the allotment date was defined as "any one of the following dates namely the Maturity Date, that date which occurs thirty (30) days prior to the Maturity Date, that date which occurs sixty (60) days prior to the Maturity Date and that date (if any) nominated by the Directors in writing to the Executive in circumstances where the Directors exercise their discretion to permit the early exercise of Options pursuant to Clause 4"; and the lapse date was defined in the deed as meaning "the first to occur of the Maturity Date and, subject to Clause 6, the date the Executive ceases to be an employee of the Westfield Group". The deed expressly acknowledged that the share options were issued pursuant to the terms of the Executive Incentive Scheme which scheme was incorporated in the deed by annexure thereto; under cl 9 of the deed, if there was "any inconsistency between the terms of this Deed and the terms of the Executive Incentive Scheme, the terms of the Executive Incentive Scheme shall prevail". 11 The provisions of the deed poll directly relevant for present purposes were cll 4, 5 and 6 thereof, which provided : 4. Options may be exercised by the Executive giving to Westfield prior to an Allotment Date not less than fourteen (14) days written notice of intention to exercise Options on the Allotment Date specifying any Exercise Number. Notwithstanding the provisions of this Clause 4, the Directors may in their absolute discretion permit the exercise of Options on such date as they in their absolute discretion determine being a date other than one of the specific dates referred to in the definition "Allotment Date" provided that such date occurs prior to the Maturity Date.

5. In the event that Notice of Exercise is given to Westfield pursuant to Clause 4 of this Deed, Westfield may at its option either :

(a) cancel the Options to which Notice of Exercise relates and in consideration of such cancellation pay the Executive an amount determined by the formula :

P = the amount to be paid; N = the number of Options to which the Notice of Exercise relates: S = the average of the sale prices of Westfield Ordinary Shares quoted on the Australian Stock Exchange Limited Sydney at the close of business on each of the five (5) business days immediately preceding the date of issue of the Notice of Exercise; E = the Exercise Price; or (b) subject to the prior receipt by Westfield of payment of the Exercise Price in cleared funds for each Option exercised, issue to the Executive on that Allotment Date that number of Westfield Ordinary Shares that is equal to the Exercise Number. 6. The Options hereby granted will lapse in respect of any Westfield Ordinary Shares that are not the subject of a Notice of Exercise given in the manner provided in clause 4 prior to the Lapse Date or, if such Westfield Ordinary Shares are the subject of such a Notice of Exercise, Westfield has not exercised its option pursuant to Clause 5(a) and has not received payment of the Exercise Price in cleared funds by the Allotment Date in respect of such Westfield Ordinary Shares. Notwithstanding the previous provisions of this clause, in the event that the Executive dies or is permanently disabled, the directors may, in their absolute discretion, permit the Options to continue to be held by the legal personal representative or by the heirs of the Executive and in such event the Options hereby granted, unless earlier exercised in accordance with the terms of this Deed, will not lapse until the Maturity Date. 12 The terms and conditions of the Executive Incentive Scheme annexed to the deed, for present purposes, provided in paras 2 and 11 : 2. Options may be exercised on the basis of one fully paid WHL ordinary share for each Option adjusted as provided in Paragraphs 7. and 8. ("the Option Entitlement") by the Optionholder giving to WHL not less than fourteen (14) days written notice of intention to exercise ("notice of exercise") prior to an Option Exercise Date. An Option Exercise Date in respect of any Options shall occur on the Maturity Date in respect of those Options and respectively on those dates occurring thirty (30) days and sixty (60) days prior to such Maturity Date. The Maturity Date in respect of any Options shall be that date which occurs upon the fifth anniversary of the date that the Options were issued ("the Issue Date"). In addition, the directors of WHL may in their absolute discretion permit earlier exercise of the Options at any other time prior to the Maturity Date for those Options.

11. It will be a term of Options issued pursuant to the Australian Scheme that in the event the Optionholder ceases to be employed by the WHL Group, the Options will lapse although, where an Optionholder dies or is permanently disabled, the directors of WHL in their absolute discretion may permit the Options issued to such Optionholder to continue to be held by the legal personal representative or by the heirs of such Optionholder. 13 By letter dated 22 December 1997 from the respondent, the applicant was advised that at the Annual General Meeting of the respondent held on 13 November 1997 there had been a capital reconstruction by splitting the existing shares on a 5-for-1 basis so that a shareholder who held 100 ordinary shares of $1.00 each would then hold 500 ordinary shares of 20 cents each; in the result, the applicant's 30,000 share options at an exercise price of $11.23 per ordinary share increased to 150,000 options but at a reduced exercise price of $2.246 per ordinary share. The manner in which the deed poll as a collateral arrangement as to the share options was said to offend s 106 as being unfair, harsh or unconscionable was set out in the amended summons in this way : (a) It contains a definition of "the lapse date" and an express clause (namely clause 6) that permit (and permitted) the Respondent to regard the Applicant's share option entitlements as having lapsed as and from his termination date in circumstances where the Applicant had never been advised of this fact prior to accepting the Respondent's offer and in circumstances where there was no warrant for such a provision to exist especially when the termination of the Applicant's employment was not at the election of the Applicant or based on his serious and wilful misconduct or poor performance.

(b) It failed to provide an express clause as set out in order 4(a) above in circumstances where the inclusion of such a provision was fair and reasonable and necessary to protect the Applicant's share option entitlements.

(c) It operated unfairly or harshly and unconscionably in that the Respondent intentionally and deliberately represented to the Applicant that he would be entitled to valuable share options if he joined the Respondent and thereafter denied him the substantial proportion of that entitlement without any, let along any good, reason.

(d) It operated unfairly or harshly and unconscionably in that it permitted the Respondent to receive the benefits of its representation as to the Applicant's share option entitlements (ie the Applicant joined the Respondent and worked diligently for it for three years) and yet was able to avoid, in substantial part, the intended burden of those representations.

(e) It permitted (and indeed expected) an executive with potentially valuable share options to work consistently and diligently for the Respondent over a number of years as consideration for such share options, but also permitted that executive's entitlement to ultimately exercise those options to be swept away by the Respondent's unilateral decision to terminate the executive's services before the specified allotment date under the scheme.

(f) It contained an express provision that, save with the benefit of the exercise of "absolute discretion" by the Respondent's directors, the Applicant would receive no benefit whatsoever from the share option scheme unless he remained in employment with the respondent for at least five years, in circumstances where the requirement for an executive to wait five years was itself harsh, unfair and unconscionable.

(g) It contained an express provision that left the question of the Applicant's share option entitlements in the event of a termination before the effluxion of the said five year period to depend upon the "absolute discretion" of the Respondent's directors without any requirement that those directors "have regard to" or " take into account ", matters such as the fact that an entitlement to very valuable share options was used as an inducement to attract and retain the Applicant; the fact that even under the terms of the share option plan the Applicant had worked for more than 60% (approximately 63%) of the required five year period; the fact that the Applicant was being made redundant and not terminated for reasons associated with poor performance or misconduct.

(h) It failed to include a term that required that the director's discretion (at least in redundancy situations) could not be exercised in such a way as to leave the executive (as an absolute minimum) with share option entitlements less than that proportion of overall entitlements that reflected the proportion of the specified five year period that the Applicant worked for the Respondent, including the extra time that he would have worked for the Respondent had been permitted to work out an appropriate notice period.

(i) It permits the Respondent "at its option" (clause 5 of the scheme) to cancel the options and provide a cash consideration for those options rather than issue shares in the Respondent in circumstances where there is no warrant for the provision of such an "option" to the Respondent (as opposed to the Applicant) where the operation of such a provision has the real potential to cause loss to the Applicant (especially in circumstances where the Respondent's share price has been increasing substantially with the effluxion of time) in that the provision of cash (calculated on the basis of termination date share market value) rather than shares to him could well deprive the Applicant of a significant financial benefit in the future (via the sale of the shares at significantly higher prices than the option exercise price).

(j) It permitted the designated directors of the Respondent to exercise their "absolute discretion" without regard to the factors identified in sub-paragraph (g) above. 14 The primary remedy claimed in relation to the deed poll as a collateral arrangement was an order varying it in part, either ab initio or from some other time, so as to : (a) Insert the following new clause at the end of the provisions of the Deed Poll dated 29 June 1995, namely :

"Notwithstanding the current terms of the company's executive incentive scheme (or any future variations thereto) in the event that you are terminated on the grounds of redundancy at any time after three years from the issue date of any options, then your entitlement to exercise any and all options held by you as at the termination date shall not lapse but shall continue until the specified maturity date for those options."

(b) Delete all reference to Westfield having an "option" to provide a cash sum in lieu of issuing shares (ie delete clause 5(a)). 15 In the alternative, an order was sought declaring void ab initio the deed poll with respect to the applicant's share option entitlements. 16 On 13 July 1998, the applicant was advised that his position with the respondent was redundant and he was, in accordance with the contract of employment, terminated on one month's notice with the payment of three months' salary; he worked the notice period and left the employment on 13 August 1998. In addition to statutory and contractual payments due to him, the applicant was advised that a Committee of the respondent's Board of Directors had decided, pursuant to cl 4 of the deed, to permit him to exercise on 30 September 1998 such of the share options held by him to take up a maximum of 45,000 ordinary shares in the respondent; the applicant so exercised the options, leaving 105,000 share options which lapsed under cl 6 of the deed. 17 At the date of the termination, the applicant's total remuneration package was $250,000 per annum on the basis of which the monetary amounts claimed by him in respect of each of the heads of claim for the primary remedy and for the alternative remedy may be summarised thus - Primary Remedy Alternative Remedy Notice (12 months less 4 months paid) 166,667 166,667

Bonus (40% of $250,000) 100,000 100,000

Redundancy (4 weeks salary per year of service for 3 years) 57,684 57,684

Share options (Grant of options or compensation based on difference between exercise price and market value adjusted for income tax) 105,000 options 1,108,274

Total: $324,351 $1,432,625

Interest was claimed on the total amount found to be payable. 18 The applicant gave evidence as the sole witness in his case and a substantial affidavit sworn by him was read. The respondent answered the applicant's evidence with affidavits sworn by five persons, each of whom was extensively cross-examined, namely - Victor Patrick Hoog Antink, then General Manager of the respondent's Wholesale Trusts Division to whom the applicant was responsible and, since October 1999, Director of Funds Management for the respondent after secondment to the position of Chief Executive Officer with St Lukes Group Limited in New Zealand; Graeme Peter Maher who was the Director of Human Resources for the respondent; Frederick George Hilmer, Managing Director and Chief Executive Officer of John Fairfax Holdings Limited, who was a director and the Deputy Chairman of the respondent and Deputy Chairman of Foster's Brewing Group Limited; David Michael Gonski who was a director of the respondent and who held various other directorships, including Deputy Chairman of Coca Cola-Amatil Limited, Chairman of Hoyts Cinemas Limited and a director of ING Mercantile Mutual Bank Limited, John Fairfax Holdings Limited, Angus & Coote Limited and Mercantile Mutual Holdings Limited; and Craig van der Laan de Vries who was a solicitor and the Company Secretary of the respondent. 19 It is clear from the applicant's evidence that he was a well-qualified and experienced executive in the industry of financial and funds management, including experience at corporate board level as a director and adviser at international level on the acquisition and divestiture of corporations. After obtaining a Bachelor of Commerce in 1970, he qualified as a chartered accountant in 1973 and obtained the degree of Master of Business Administration in 1977; during that period he was engaged principally in specialised computer auditing of property development companies and of financial institutions, such as banks, insurance companies and fund managers. 20 There then commenced a 13-year period from October 1975 to January 1989 of employment by various companies in the Citibank Group both in Australia and in the United States. It was during that period from June 1982 to August 1984, while the applicant was a vice-president in Citibank's Corporate Finance Department in New York engaged in a number of structured financing transactions for domestic and foreign corporations, that he first met many of the respondent's senior executive directors who were concerned with the purchase of a shopping mall in Warren, Michigan. On returning to Melbourne, the applicant as an executive director of various subsidiaries of Citibank was concerned to establish new businesses in Australia in the private banking, custody and fund management areas. In early-1987 he was appointed Managing Director of Citicorp Scrimgeour Vickers Australia Limited with responsibility for the strategic development of the business and its day-to-day management. 21 For a 2-year period from January 1989 to October 1990, the applicant held the position of Managing Director of Heine Management Limited and an executive director of EuroLynx Limited in the promotion of property and mortgage based unit trusts to retail investors. However, after an approach to him in mid-1990 the applicant re-joined the Citibank Group as Marketing Director for The Citibank Private Bank and an executive director of Citicorp Investments Limited; in those positions his principal responsibilities were the development and implementation of a marketing plan for a wealth management service to individuals and the creation of the Citifunds Global Trust providing access to global cash, bond and equity markets. He was retrenched from the Citibank Group in December 1991 by reason of redundancy. 22 From about October 1992 to May 1995, the applicant was employed in the position of Executive Director - Institutional Marketing with National Australia Fund Management Limited with responsibility for the development and implementation of a marketing strategy to build wholesale funds under management, including the allocation of investment funds across both Australian and international markets. He resigned from that position in May 1995 to assume employment with the respondent and from which point in time the circumstances directly relevant to the present matter arose. It is perhaps significant to note that his remuneration package with National Australia Fund Management comprehended an annual base salary of $190,550 plus associated benefits to the value of $4,500 and an incentive bonus of up to 15% of base salary with entitlement to participate in the employer's Share Acquisition Plan. At the time of joining National Australia Fund Management, the applicant said he had the intention to remain with that company but changed his mind because he found the environment "generally fairly regimented … I had been used to being in an environment where I had the opportunity to voice my views … and to debate them and at the end of the day the collective view is that if the idea does not have merit that is fine". 23 Although not then actively looking for another position, the applicant said the possibility of employment with the respondent arose after a friend of his in Sydney happened to meet Mr Steven Lowy, Managing Director - Australia of the respondent, who mentioned that the respondent was looking for somebody to set up the wholesale trusts initiative; the applicant's name was suggested for employment in that respect. The applicant then telephoned Mr Steven Lowy and was referred to his brother, Mr David Lowy as the Managing Director - Corporate and International for the respondent. The applicant and Mr David Lowy met on 23 December 1994 and negotiations opened for the applicant to join the respondent. The positive nature of the discussions led the applicant on 28 December 1994 to write to Mr David Lowy confirming his confidence in being able to assist the respondent in the position discussed. 24 In response, the applicant was contacted on 1 February 1995 by Mr David Benn, Managing Director of Korn Ferry International Limited which specialised in senior management recruitment, who advised him that he was acting on behalf of the respondent for the recruitment of the head of the respondent's proposed Wholesale Trusts Division. However, Mr Benn said that "although David Lowy had been interested to meet you again, he feels that you do not have enough financial structuring experience"; it was arranged that the applicant would write to Mr Benn setting out reasons why he believed he was suitably qualified to perform the role. And so it was that, and after some further discussions between the applicant and Mr Benn, the applicant on 17 March 1995 met four executive directors of the respondent being Mr Steven Johns - Group Finance Director, Mr Steven Lowy, Mr Frank Lowy - Chairman and Mr David Lowy. It is significant to note that in the discussion with Mr Frank Lowy the applicant was informed there were two positions available and he expressed greater interest in the wholesale trusts role because he was "more interested in building something new, rather than managing an existing operation". 25 On 24 March 1995 the applicant met with Mr Benn who confirmed he was being seriously considered for the role of General Manager of Wholesale Trusts and, as requested, he advised he was "looking for a minimum base salary of $250,000 plus appropriate incentives such as a significant annual bonus if I perform"; Mr Benn responded "that the level of remuneration you are seeking should not be a problem". The applicant then was disappointed on 3 April 1995 when Mr Benn advised him that Mr Hoog Antink would be appointed as General Manager of the Wholesale Trusts Division but that the respondent was interested in talking to him about the position of Deputy General Manager. 26 Having in mind the way in which the case was argued, I think it important to recite the evidence as to what then occurred by way of negotiations between, on the one hand, the applicant and, on the other hand, Mr Hoog Antink and Mr Benn for the respondent leading to the terms and conditions on which the applicant eventually joined the respondent. The applicant's evidence in that respect was stated in his affidavit in the following terms : 31. At 7.30 am on Tuesday 11 April 1995, I met Victor Hoog Antink for breakfast at the Parkroyal Hotel in Little Collins Street, Melbourne. During this meeting we discovered that we had very similar backgrounds and professional interests. During the course of this meeting, Victor explained his understanding of the objectives of the Wholesale Trusts Division and our respective roles. In particular, Victor and I exchanged words to the effect:

Victor Hoog Antink : "We will both be involved in developing a series of unit trust products, both listed and unlisted, to raise development capital for the Westfield Group from both domestic and international institutional investors."

Richard Adams : "The objectives are both challenging and very exciting. However, I am only interested in joining as deputy if we have a very clear understanding that we will work together as a team."

Victor Hoog Antink : "I am happy to work with you on a team basis and I agree that we will work together on all transactions."

Based on this conversation and the understanding that I thought Victor and I had, I said words to the effect:

Richard Adams : "I am interested in joining Westfield as your deputy."

When David Benn telephoned me on or about Wednesday 19 April 1995 with Westfield's initial offer of employment and we had a conversation with words to the following effect:

David Benn : "Westfield is prepared to offer you the position of Deputy General Manager, Wholesale Trusts on a base salary of $210,000 per annum with an annual bonus entitlement of up to 50% of base salary, plus an allocation of 30,000 options over Westfield shares at the current market price."

Richard Adams : "The base salary is well below the $250,000 level that I have previously indicated is necessary to adequately compensate me for the extra costs of living in Sydney."

David Benn : "You shouldn't forget that your annual bonus will be worth up to 50% of your base salary if you perform and you should also appreciate that the options are potentially very valuable if the Westfield share price continues to grow at its historic rate of 30% per annum."

Richard Adams : "The bonus and options are all 'blue sky', but what is most important to me is an adequate base salary to compensate for the higher cost of living in Sydney."

During the conversation, I also said words to the effect:

Richard Adams : "I will not be able to move my family to Sydney for at least 18 months due to the fact that my youngest daughter is less than half-way through year 11 and has recently changed schools after a difficult time at her previous school. As a result, my wife is very reluctant to move her again until she finishes year 12 at the end of 1996. In addition, my wife's mother is elderly and frail and it may be very difficult to move her. As a consequence, I will have to commute to Sydney on a weekly basis until these matters are resolved."

David Benn : "I will discuss these matters with Frank Lowy when I meet with him at 3.30 pm tomorrow afternoon ."

32. I spoke with David Benn again on Friday 21 April 1995 after his meeting with Frank Lowy and he said words to the effect:

David Benn : "Frank is very sympathetic to your situation and is prepared to provide you with 10 economy class return airfares from Sydney to Melbourne."

Richard Adams : "I would prefer to buy my own airfares, but the real issue is an adequate base salary."

Richard Adams : "I will be entitled to a salary review at National Australia Fund Management in September 1995 and I expect an increase to about the level of Westfield's offer. In addition, I expect to receive a bonus of up to $15,000 in late May/early June 1995. As a consequence Westfield's offer is inadequate."

33. On Monday 24 April 1995 I spoke with David Benn and said words to the effect:

Richard Adams : "In an effort to find a solution to the base salary situation, I am prepared to trade some of my bonus entitlement in order to achieve a higher base salary. In particular, I would like to suggest a $225,000 base salary and a bonus entitlement of up to 40%. However, we also need to find a solution to my National Australia bonus entitlement if I resign before it is paid. In addition, I would like further information on the job description, salary packaging options and the terms of the company's superannuation scheme."

36. I believe that I next spoke with David Benn on Tuesday 2 May 1995 when we had a conversation with words to the following effect:

David Benn : "Westfield is prepared to make you the following final offer, which is a base salary of $225,000 per annum, an annual bonus of up to 40% of salary, 30,000 options and a one-off payment of $15,000 to compensate you for the loss of the National Australia bonus and medical reimbursement."

Richard Adams : "The offer is acceptable subject to me receiving a formal written offer."

David Benn : "The offer is subject to receiving adequate references and satisfactory evidence of your educational and professional qualifications."

37. On Thursday 4 May 1995 I faxed to David Benn a list of referees and copies of my University degrees and my membership certificate for The Institute of Chartered Accountants in Australia.

38. On Saturday 6 May 1995 I received by courier a letter of offer from David Lowy dated Friday 5 May 1995. The letter of offer was largely as I expected, but I was surprised to see that the incentive bonus was not necessarily capped at 40% and that the letter included termination terms which had not previously been mentioned. While the termination terms were less than what I considered to be prevailing market practice I decided not to raise it and cause further delays as David Lowy was insisting on acceptance of his offer by 10 May and I was confident that I would be at Westfield for many years and therefore it was unlikely to be particularly relevant. I did not seek any legal advice as to the terms of the offer as I felt comfortable with the discussions I had had with David Lowy, Victor Hoog Antink and David Benn. … 27 On 15 May 1995, the applicant forwarded to the respondent written acceptance of the position of General Manager, Wholesale Trusts on the terms offered. He thereupon commenced employment on 5 June 1995 as agreed. 28 It is significant that in late-June 1995 Mr Hoog Antink asked the applicant whether he knew "that the Westfield share options are hand-cuffed for 5 years". The applicant replied in the negative and he said he "was annoyed that I had not been told this important piece of information during the negotiations of my terms of employment". Rather than raise the matter with Mr David Lowy, the applicant decided not to make a major issue of it because his expectation was he would still be employed by the respondent in 5 years' time and it was probably a little early in the relationship to raise such problems; he put it down to "an unfortunate over-sight by Westfield and/or David Benn". Nevertheless, the applicant maintained in his evidence he would not have accepted employment with the respondent if he had known the options would lapse if he was not employed for 5 years. Mr Hoog Antink did not respond to this aspect in his affidavit but, during cross-examination, he gave the following evidence about the expected length of employment in the context of the share options scheme : Q. Do you agree you went there expecting to have a long term future with Westfield, was that your expectation? A. My word.

Q. If you had been informed in negotiations with Westfield that what you were considering or what they were offering you was a speculative venture that may or may not get off the ground, and may well be determined or rejected as an idea in a one or two year period, had you been told that you might well have thought twice about coming on board with Westfield, do you agree with that? A. Yes, I would have thought twice, but I wouldn't have changed my view.

Q. Nevertheless, when you came on board in terms of what you understood to be the opportunity, you saw it as a real opportunity to make in the long term a substantial sum of money out of this new idea, is that right? A. Correct.

Q. So when you found out soon after you started that there was a five year handcuff or qualification period with respect to the proposition, did you go and complain to anybody about that? A. Yes, I did go and complain but not about that particular clause.

Q. With respect to the handcuff clause, you didn't complain about that? A. No.

Q. Can I suggest in light of what you told us in terms of your expectations of Westfield you didn't complain because you had every reason to believe you would be there for five years in any event, is that right? A. I believed I would be there because I believe in my own ability to succeed, but that if I didn't succeed I didn't regard it as being something that I expected to get, because I would be too embarrassed to hang around, I would leave.

Q. You always understood from your experience, I take it, if you resign from employment where there are share options, you walk away from them? A. Yes.

Q. And the attraction of those share options was one of the things - potential value of the share options was one of the reasons why you decided to come on board, that would be right? A. Was one of the things I considered, yes.

Q. As I understand the evidence you have just given, at the times you negotiated the package you didn't call for the terms of the option scheme, is that right? A. That is correct.

Q. Why not? A. I discussed what I considered to be the salient terms of the option scheme, they were the number of options, the price and the duration.

Q. What do you mean by duration? A. Being five year options. They were the facts that were volunteered by Dave Benn, who did all the negotiations with respect to salaries prior to my appointment.

Q. What did you understand by saying that they were five year options, what does that mean? A. It means they are exercisable only after five years.

Q. At the time you were negotiating the package you say you were advised by Westfield that if you resigned, left of your own accord, before five years your options would lapse; was that something you knew before you accepted the offer? A. Yes.

Q. But you did not know that if you were made redundant that they would also lapse, before five years? A. Correct.

Q. That is what you found out when you got the deed poll? A. Correct.

Q. But you elected not to complain because you were confident that you would survive the full five years in any event? A. Yes.

Q. At the time you were negotiating your package I suggest to you nobody in Westfield or on behalf of Westfield told you that this was a short term speculative venture that might last only one or two years, that is true, isn't it? A. Yes.

29 It was not until 11 July 1995 that the applicant received from the respondent a copy of the deed poll made on 29 June 1995 specifying the terms of the grant of 30,000 options over Westfield shares at an exercise price of $11.23 each; annexed to the deed poll was a document setting out the terms and conditions of the Executive Incentive Scheme concerning options. 30 For the balance of 1995, the applicant and Mr Hoog Antink worked together on the development of the wholesale trusts until about early-December 1995 when Mr Hoog Antink was asked by the respondent to establish the Westfield America Trust which meant he was only able to spend minimum time on the Wholesale Trusts Fund; in the result, the applicant assumed that responsibility largely on his own. However, by late-July 1996 it became apparent that the required level of funding from institutional investors to establish the wholesale trusts was at a level lower than that originally envisaged. The applicant's unchallenged evidence was that his personal efforts to establish the wholesale trusts was acknowledged and, in early-August 1996, Mr David Lowy informed him that the failure to do so "was not due to any lack of effort on your part, but was due to a range of factors outside your control". In about September 1996 the wholesale trusts initiative was abandoned. 31 In view of the lack of success in establishing the Wholesale Trusts Fund, both the applicant and Mr Hoog Antink did not receive their annual bonus otherwise due in July 1996. Despite requests by them for payment of the bonus, the respondent refused to do so. 32 As it happened, in late-July or early-August 1996 the Australian Government announced the proposed sale of Commonwealth Fund Management which was an unlisted unit trust with substantial assets, including joint ownership of a trust on behalf of the respondent of four regional shopping centres managed by the respondent. It was arranged that the applicant and Mr Hoog Antink should pursue the possibility of the respondent acquiring Commonwealth Fund Management, or at least the property funds management portion thereof, as part of the respondent's wholesale trusts. Eventually, in about late-January 1997, the respondent and Commonwealth Financial Services (the management arm of Commonwealth Fund Management as part of the Commonwealth Bank) entered into a participation agreement for the management of the property fund under the terms of which the applicant was appointed as the Retail Asset Manager and one of the respondent's representatives (the other being Mr Hoog Antink) to the Portfolio Committee. However, by late-1997 it became apparent, both to the applicant and to Mr Hoog Antink, that participation in the management of the Commonwealth Fund Management property produced significantly less financial returns for the respondent than expected so that the respondent should terminate its relationship. That occurred on or about 29 June 1998, as a consequence of which the applicant had no specific position with the respondent and unsuccessful efforts were made to obtain alternative employment for him elsewhere in the respondent's organisation. He was thereupon made redundant. 33 I interpose to comment that much was made in Mr Hoog Antink's evidence that effectively the applicant could have been made redundant in September 1996 with the demise of the wholesale trusts initiative and that his appointment as Retail Asset Manager was of much lesser status justifying a much lower remuneration than paid to him. However, the applicant's evidence, not contradicted by any evidence from Mr David Lowy, was that on his appointment as Retail Asset Manager in late-January 1997 the applicant was asked by Mr David Lowy - "Is the Retail Asset Manager role big enough for you given your experience?"; the applicant responded - "If we look at the Asset Manager role alone it probably isn't. However, I do have a much bigger role given my membership of the Portfolio Committee. In addition, I see my involvement giving Westfield an opportunity to leverage the overall CFS relationship". It was subsequently resolved that Mr Hoog Antink would have responsibility on behalf of the respondent for the overall relationship with Commonwealth Financial Services. 34 It is appropriate to emphasise in the complex of facts which occurred and the particular claims made as to bonus and share options that the uncontradicted evidence of the applicant was that at no stage was a formal performance review conducted with him by either Mr David Lowy or Mr Hoog Antink; specifically, he said that "at no time was there any criticism by David Lowy or Victor Hoog Antink of my performance or my commitment to the roles that I was asked to perform". Indeed, by memorandum dated 27 October 1997 to all staff from Mr David Lowy, Mr Steven Lowy and Mr Johns concerning the Westfield Performance Management Program, the process of planning and objective setting as part of the half-yearly remuneration review was detailed. In a further memorandum dated 21 November 1997 directed to the subject of the respondent's remuneration system, it was emphasised that remuneration policy was to "reward and pay for performance" and that remuneration decisions would be based on "1. an analysis of the contribution that each person makes to the results we achieve as a company 2. company performance 3. market comparisons"; reference was then made to the assessment of bonuses and to performance based remuneration. 35 As part of the Performance Management Program, the applicant in early-September 1997 prepared and discussed with Mr Hoog Antink draft performance objectives for himself but they were not finalised at that time. At a further meeting on or about 1 April 1998 performance objectives for the applicant for the year ended 30 June 1998 were settled with Mr Hoog Antink and, apart from reference to the Commonwealth Fund Management situation, one of the objectives for the applicant was to "Develop a Capital Raising/Fund Management initiative to replace the Westfield Wholesale Fund". In his affidavit, the applicant said he had effectively satisfied all of the performance objectives which had been agreed; Mr Hoog Antink did not challenge that statement in his affidavit in answer. However, under cross-examination Mr Hoog Antink did not agree that the applicant had achieved the set objectives. Notwithstanding the express statement in the applicant's affidavit that he "had effectively satisfied all of the above Performance Objectives", Mr Hoog Antink explained the omission from his affidavit, as he said, because the applicant's affidavit "doesn't reflect the assessment of meeting those objectives". That was plainly, it seems to me, contrary to the very terms of the applicant's affidavit and the problem was compounded by Mr Hoog Antink explaining the omission in his own affidavit on the basis he was "superficially" happy to accept the applicant's assertion he had met all objectives. 36 The equivocation in Mr Hoog Antink's evidence concerning the applicant's performance was furthered as to the payment of bonus to the applicant under the respondent's performance based remuneration system as was evident from the following cross-examination : Q. So do you ask his Honour now to accept that he didn't achieve these objectives? A. We are only talking about one objective that I would like to clarify.

Q. Are you asking his Honour now to say that it was wrong to suggest that he hit all those objectives, is that right? A. I think its a matter of interpretation of what was meant by the objectives. The last objective says that he has to submit a proposal and what I'm trying to get across is submitting a proposal is not the objective. The objective is to come up with a proposal that is implemented to create value. That was what I meant by that and hadn't been reviewed. Submitting a proposal had been achieved. What was intended by the objective had not been achieved.

Q. Could I test that with you this way. Firstly, may I ask you this question: I take it that you agree with me, given the performance documents that we have seen that I have taken you to in annexures N and O to Mr Adams' affidavit, that the question of performance as objectives and that whole system was regarded as relevant to the determination of bonus; you agree with that, don't you? A. No.

Q. The performance objectives and the achievement of them were a matter of entire irrelevance to the question of bonus; is that what you assert? A. No.

Q. Which is it? A. The plan was put in in the first instance in 1997/1998. It was still in embryonic form and was being done to make sure that people were working consistently to meet objectives. It was to form a future guide for salary and bonus determination, but everyone was at pains that it wasn't the be all and end all in respect of certainly the first year.

Q. Hold on, we might be at cross purposes again. In that answer you have just suggested that it was to provide guidance with respect to matters including bonus, is that right? A. It's not the be all and end all.

Q. Please Mr Hoog Antink, but that was one of the things it was supposed to help you with as a guide with respect to bonus determination, albeit not the be all and end all, is that fair comment? A. It is a guide, yes.

Q. And it follows from that, one would have thought as a matter of logic, if objectives are set pursuant to the company's system and you meet them all, that you would have an expectation that you would get a bonus, that would be a fair comment, wouldn't it? A. Recognising all of the other constraints in determining a bonus, one would say yes.

Q. Could I suggest to you this, at the time that you and Mr Adams were hired you weren't provided with any criteria or an indication as to how a bonus was going to be determined; that's true, isn't it? A. That's incorrect.

Q. You say you were told? A. Yes, it was in relation to - it was subject to divisional performance.

Q. Well, obviously not subject purely to Divisional performance, as we have already established. Did they tell you it would be beyond Divisional performance? A. No, at the time they didn't. They subsequently made exceptions.

Q. Were you told that even if you put in a Herculean effort working day and night on the proposal, month after month in the interests of the company, regardless even if that was all accepted that you had worked above and beyond the call of duty to put a proposal together, that that would amount to zero unless it be accepted by the company as a worthwhile proposal? A. It was certainly discussed that this is a company based on performance and goals and unless the goals are kicked, there won't be the rewards.

Q. You don't suggest that was said to you in terms at the time you were hired, was it? A. Yes, it was.

Q. By whom? A. By Frank Lowy.

Q. Before or after you started? A. Before.

Q. I see. So from your point of view you were under no misapprehension about that matter when you started, in the context of bonus, is that right? A. I knew that you had to perform to collect the bonus.

Q. And you understood "perform" to mean perform successfully to the satisfaction of the Lowy's, in their view? A. Correct, and that was based on profitability. 37 After commencing employment on 5 June 1995 on a salary of $225,000, the applicant's remuneration was reviewed annually and resulted in increases effective from 1 January 1996, 1 January 1997 and 1 January 1998 in amounts respectively of $12,000 (new salary $237,000), $8,000 ($245,000) and $5,000 ($250,000). The advice of the new salary rate was in the form of a letter to the applicant from either Mr Frank Lowy or Mr David Lowy in which standard terminology seemed to be used. For instance, the letter contained the following paragraphs : Westfield's success over the years has been a direct result of the hard work and dedication of the Westfield team. Whilst the effort of individuals is extremely important, it is the ability to contribute as a team which has enabled us to achieve the growth and corporate recognition that we enjoy today.

I am confident that with your continued efforts the company can look forward to another successful year. 38 As to payment of bonus to the applicant, the letter of advice to him dated 8 December 1997 stated that "You will be aware that in recognition of your performance during the year you were also paid a bonus of $75,000". In his 3 years of employment, the applicant was not paid any other amount by way of bonus and the bonus which was paid to him was, as Mr Hoog Antink said, "an exception". Mr Hoog Antink, however, who was then on a salary of about $250,000 per annum, received a bonus of $125,000 in the year 1997 and he received another bonus payment at the end of 1998 of 50% of his then salary. 39 As to share options, the letter to the applicant advising each annual remuneration review contained the comment that "In addition, during the past year there has been a substantial increase in the potential future value of your share options (relevant details for that year were then stated)"; it was not until the second advice dated 2 December 1996 that reference was made to the fact that the "options may only be exercised at the time and in the manner provided in your Option Deed if you are an employee at the time of exercise". The letter ended with the comment - "I am confident that with your continued efforts the company can look forward to another successful year". 40 The termination of the applicant's employment was effected by Mr Hoog Antink on 13 July 1998 in the presence of Mr Maher, the respondent's Director - Human Resources. It was common ground that, in the circumstances of the position occupied by him as they developed and as referred to earlier, the applicant was redundant. He worked during the one month's notice period finalising matters concerning the Commonwealth Fund Management project and the termination was actually operative on 13 August 1998; in accordance with the strict terms of the contract of employment, he was then paid 3 months' remuneration plus statutory entitlements. At the discussions on 13 July 1998, Mr Hoog Antink informed the applicant an office and secretarial support in Melbourne or Sydney would be made available to him while he was looking for a new position. Further, he was invited to make application to the respondent's directors to permit the early exercise by him of the 150,000 share options standing to his credit; he shortly thereafter made such an application. 41 By memorandum dated 16 July 1998 to the respondent, the applicant detailed his response to his termination in light of the respondent's proposed terms of severance. Having obtained legal advice, he sought, on a then "without prejudice" basis, the following benefits : · I consider a termination payment equivalent to six months remuneration package to be more reasonable in my circumstances. · I accept your offer of the use of an office and secretarial support in either Melbourne or Sydney. · In the circumstances, I believe that it is fair that the Directors should exercise their discretion under clause 4 of the Deed Poll dated 29 June, 1995 to permit me to exercise my full entitlement of 150,000 options. · Subsequent to the 13 July meeting, I have been advised that while bonus payments for the 1997/98 financial year have not yet been finalised, my request will be given consideration. In support of my bonus entitlement, I would like to advise that I have successfully achieved or satisfied all of the agreed objectives as detailed in my Performance Plan. A number of these objectives were achieved in spite of considerable obstacles and in my opinion demonstrate superior performance. Accordingly, I consider that a 40% bonus for superior performance would be reasonable. · In addition, I expect to be fully reimbursed for all legal costs incurred by me in resolving the terms of my termination. · Notwithstanding that notice of termination has been given, I remain willing to be re-employed by the Westfield Group and I would be prepared to consider a different role to that which I have performed over the last three years. In particular, I believe that I possess a range of skills and experience which could be of considerable value to the organisation.

In conclusion, I would like to advise that I have enjoyed the opportunity to work for an organisation as dynamic as Westfield. Further I believe that I have been a loyal and committed member of the Westfield team. While I respect the right of the organisation to terminate my services, I do expect to be treated equitably and fairly, especially when it is recognised that :- · I was recruited from a secure position into my current role, · Commuting from Melbourne on a weekly basis has caused considerable disruption to my family life, and · Termination will result in a significant loss of career prospects.

However, I sincerely hope that we are able to amicably resolve the outstanding matters so that we can go forward in spirit of friendship and mutual respect. 42 In answer to the applicant's proposals, on 21 July 1998 Mr Maher wrote to the applicant in the following terms : I summarise the position so that there is hopefully no further misunderstandings:

You state in the heading to the memo 'Westfield Proposal' and then refer to 'proposed terms of termination'. In fact no proposal was made at the meeting on 13 July 1998 or subsequently.

At the meeting on 13 July 1998: · We drew your attention to your letter of 15 May 1995 in which you agreed that your employment could at any time come to an end by giving one months notice and in that case a payment equivalent to six months remuneration would be made if it occurred in the first year of employment and thereafter the payment would be three months. We indicated that Westfield would honour the agreement. · We suggested, as a matter of goodwill, that you might like to use an office and secretarial support whilst looking for a new job, as well as taking advantage of out placement services. · We drew your attention to the provisions of the share option scheme under which your options would lapse by not having served the minimum five year employment period and in particular drew your attention to the discretion of the Directors to waive that period. We encouraged you to make an application to the Directors for this purpose.

You state only part of the reason given for your employment ending. At the meeting on 13 July 1998, we reviewed the history of your appointment as Deputy General Manager Wholesale Trust and that how by September 1996 that position had become redundant by reason of the new Wholesale Trust Division not getting off the ground. Rather than have your employment end at that time, Westfield sought to find for you alternative roles as you were aware. Although your role was then different from that which you were employed, Westfield continued to pay your full remuneration.

You state that you were recruited from a secure position. You voluntarily decided to end your employment with a different organisation in Melbourne in 1995 and agreed on 15 May 1995 the basis on which you would receive payment if your employment also ended with Westfield. In our meeting on 17 July 1998 you accepted that you made this agreement freely.

You state that commuting from Melbourne on a weekly basis has caused considerable disruption to your family life. Your ( sic ) originally said at the time when you negotiated the terms on which you were prepared to be employed that you and your family proposed moving from Melbourne to Sydney. At your choice, this did not happen and you commuted to Sydney on a weekly basis.

You state that the termination will result in a significant loss of career prospects. You have only been with Westfield for 3 years and during this period you were aware after less than 18 months that the position you were employed in was redundant. You began employment with Westfield when you were 47 and you are now 50. With this short period of time of your employment with Westfield, we cannot see how there is any loss of career prospects.

Westfield will treat you equitably and fairly. This is a mutual matter which we would have thought was based on each keeping his word.

Would you please inform us whether you will honour your agreement contained in the letter dated 15 May 1995. 43 By letter dated 13 August 1998 to the applicant from Mr van der Laan, the respondent's Company Secretary, he was provided with a copy of the minutes of a meeting of a Committee of the Board outlining the decision in respect of his options which was that he was permitted to exercise on 30 September 1998 up to a maximum of 45,000 of those options. The Committee comprised two directors of the respondent, Mr Hilmer and Mr Gonski, and in the minutes of the meeting held on 12 August 1998 the documents and matters considered by them were identified. In particular, the minutes recorded that the Committee had : (c) carefully considered the request from Mr Adams and reviewed the above documents, specifically taking into account the age of Mr Adams and that his position with the Company had become redundant, and having particular regard to the Memo from Mr Adams dated 18 July 1998;

(d) noted that any immediate exercise of the options might not be the same as an exercise at the five year date. The Committee was mindful that a benefit sought to be gained for shareholders in their approval of the option scheme was an alignment of senior executive's interests with that of shareholders in achieving a sustained improvement in the Company's share price over a five year period, and that the exercise of the discretion would result in Mr Adams receiving an immediate benefit rather than at the expiration of the five year period. Moreover the benefit was no longer subject to equity market risk or the risk that Mr Adams left employment for other reasons, either of his own volition or the Company's before the five year period expired. 44 In the result, the Committee resolved to permit the applicant to exercise such of the options referred to in the deed poll to take up a maximum of 45,000 ordinary shares in the issued capital of the respondent. The applicant duly exercised the options and obtained the corresponding number of shares on payment by him to the respondent of the exercise price of $2.246 each in the total amount of $101,070. However, the applicant informed Mr van der Laan that he did so "without prejudice to what may be determined to be my remaining entitlements to a fair grant of share options or other reasonable payments in the circumstances of the termination of my employment". The remaining 105,000 options thereupon lapsed and were lost. 45 At the time the applicant was informed of the director's decision regarding the share options in a meeting with Mr Maher and Mr Hoog Antink on 13 July 1998, Mr Maher's affidavit said he advised the applicant about his request for payment of bonus in the following terms : Westfield does not consider a bonus is warranted. As outlined in your engagement letter of 5 May 1995, the payment of a bonus is discretionary and based on Divisional results. You were paid a bonus of $75,000 on 24 April 1997 for CFM and in the company's view nothing has occurred in the last 12 months that warrants a bonus being paid. 46 Under cl 6 of the deed poll, consistent with the terms of para 11 of the Executive Incentive Scheme then applicable to the applicant, it will be recalled that the options issued lapsed in the event the executive (optionholder) ceased to be employed by the respondent prior to the relevant exercise date on maturity unless the directors permitted earlier exercise; however, the provisions went on to provide that the directors may permit the options to continue to be held where the holder "dies or is permanently disabled". 47 Not insignificantly, on 12 November 1998 at an Annual General Meeting of shareholders of the respondent a new Executive Option Plan was approved to replace the earlier Executive Incentive Scheme as it applied to the applicant. In the explanatory notes to the meeting it was stated as to the provisions of the Executive Option Plan: Options are widely considered to be very effective in providing long-term incentives to key executives.

As part of the Group's strategy for the future, the Board wishes to be in a position to grant options tailored to reward senior executives and officers for the achievement of milestones important to the Company or the attainment of testing performance hurdles.

The flexibility of the Option Plan Rules will enable the Board to approach the design of executive options on a case by case basis.

Where the Board requires a hurdle to be achieved before options may be exercised, it may utilise one or more of a number of appropriate performance hurdles. These include growth in the Company's Total Shareholder Return relative to an appropriate index such as the ASX 100 Industrials Accumulation Index, improvement in Return on Equity, and growth in Earnings Per Share.

Performance would be measured relative to the performance hurdle over an appropriate period (such as a period of three years from the option grant). If the performance hurdle is not achieved at that time, the option may be subsequently exercised if the hurdle is achieved within the life of the options.

Alternatively, the Board may impose a project-specific hurdle such as completion of a retail development on time, fully tenanted and within budget.

Where options are exercised, the Board may impose a restriction period during which the holder may not dispose of the resultant shares.

The foregoing examples are not intended to fetter the powers and discretions of the Board under the Option Plan Rules to implement other arrangements. (emphasis added) 48 Further, in the summary of the Executive Option Plan as to the early exercise of options it was said : (g) Early Exercise - options may be issued on the basis that early exercise may be permitted if the eligible employee ceases employment/engagement by any Participating Company in circumstances such as death, retirement, ceasing employment/engagement because of illness, incapacity, redundancy or where otherwise permitted by the Board, or on a takeover, scheme of arrangement or winding up. 49 Thus, it will be seen that the circumstances of death or permanent disability as providing a basis, albeit at the absolute discretion of the directors, for the retention of the options for exercise at the relevant maturity date were extended to cover inter alia "redundancy". A common feature of the circumstances identified was that they all concerned cessation of employment with the respondent for a reason through no fault of or beyond the control of the executive concerned. The explicit inclusion of redundancy as a circumstance enabling the early exercise of options is most significant for present purposes, particularly as it was introduced a mere 3 months after the applicant was terminated because of redundancy. The other significant feature of the new scheme was the express mention of "a period of three years from the option grant" over which period the performance of an executive would be measured so as to entitle the executive to the grant of options as a reward for meeting performance hurdles. 50 It is to be noted that although the circumstance of "redundancy" was mentioned in the explanatory notes of the Executive Option Plan it was not expressly referred to in the Rules of the Plan itself as it seems the respondent took the view that it was for the information of shareholders as an example of a situation where the directors may exercise their discretion to permit the early exercise of options. It seemed also in that respect there was no change in the respondent's view in introducing the new Plan to what it had been under the former Scheme as applicable to the applicant. Mr van der Laan gave this evidence: Q. We also note … from the new scheme, the 1998 scheme, there is now an express reference to redundancy in the context where permanent disability and death are referred to, namely that that context being factors that may well warrant an exercise of discretion to allow an executive to hold on to options that would otherwise lapse, do you understand that? A. I think the reference you are making is to a statement which appeared in the explanatory memorandum which was sent to shareholders for the meeting at which the approval was obtained.

Q. You are quite right --? A. I don't know if that actually appears in the plan.

Q. You are quite right, it doesn't. Can you assist us in that regard? Do you have any knowledge as to why it was that reference to redundancy was contained in the explanatory notes sent to shareholders in November 1998? A. The documentation for the new scheme represented a comprehensive redraft of the company's option plan, option documentation, and in the context of the explanatory memorandum which was being sent to our shareholders, it was the desired place to forward them all the relevant facts in the context of their approval of a plan of that nature, in the context of circumstances in which the board might exercise a discretion to allow the exercise. There was considered to be a need to cover examples of some circumstances where that may be appropriate but subject, of course, to the board's ultimate discretion as to whether or not that was an appropriate case.

Q. Yes? A. Offered one of a number of examples of circumstances in which the board might exercise a discretion which was granted to by the board under the plan.

Q. I understand that, but we know from the 1993 scheme there was no reference to redundancy in any of the materials, as I understand it, and yet in 1998 we have an express reference to redundancy? A. True.

Q. Were you party to any discussions about the appropriateness of adding redundancy to this category of reasons why discretion may be exercised in an employees' favour? A. In the context of the preparation of the documentation for the meeting, I was involved in the writing of those words, yes.

Q. What was the reason for now regarding redundancy as another example where discretion may be exercised in favour of the worker, what was the reason? A. I'm not sure that there was any change in the view of the company towards whether that was a reason or not, it was the case of placing the context, that a comprehensive new set of documents, a factor which was relevant. 51 Another aspect of significance, it seems to me, arising from the evidence of Mr Hoog Antink was the position in which the applicant became placed in December 1995 when the respondent required Mr Hoog Antink to accept as his primary responsibility the establishment of the Westfield America Trust to raise funds to purchase and develop shopping centres in the United States; as a result, he was unable to concentrate his efforts on the establishment of trusts within the Wholesale Trusts Division as the majority of his time and effort was directed to the Westfield America Trust. As to this, the applicant said in his affidavit : 49. In late November or early December 1995, Victor Hoog Antink asked if he could have a meeting with me during which we had the following conversation or words to the effect:

Victor Hoog Antink: "Frank and David Lowy have asked that I focus solely on the establishment of the Westfield America Trust and that you focus solely on the Westfield Wholesale Fund. I appreciate that this is not in accordance with our agreement that we would work together on all transactions, but you have to understand that I don't have any choice in this matter."

Richard Adams: "Although I'm' not happy about the arrangement I'm a team player and I will respect the wishes of the Westfield Executive."

50. From December 1995 to July 1996, I worked almost solely on the development of the Westfield Wholesale Fund, including the negotiation of the terms of property acquisitions, the development of a Trust Deed, the drafting of an Information Memorandum and marketing the Fund to institutional investors and their consultants. The Westfield Wholesale Fund was structured as an unlisted unit trust to facilitate investment by large institutional investors, such as superannuation funds, in regional shopping centres managed by the Westfield Group.

51. By late July 1996 it was apparent that we would not be able to raise the required level of funding from institutional investors to establish the Westfield Wholesale Fund in the form that we had originally envisaged. In my opinion, this was due to a number of factors which mitigated against a successful launch of the Westfield Wholesale Fund at that time, including :

(a) Strengthening sentiment by institutional investors towards investment in commercial office buildings and away from investment in regional shopping centres;

(b) A three month delay in launching the Fund due to changes proposed by several State Revenue Offices to the stamp duty regime for unlisted unit trusts;

(c) Dissatisfaction by a number of potential investors with their existing investment in a competing unlisted unit trust vehicle managed by Lend Lease; and

(d) Concerns by a number of potential investors and their consultants in relation to the conflicts of interest inherent in a structure, where the Westfield Group acted as fund manager representing the interests of investors in the Fund, as well as being the manager of the Fund's property assets and responsible for all development activities.

52. In subsequent meetings in late July and early August 1996 with David Lowy, in his office, he said words to the following effect:

David Lowy: "I acknowledge that our failure to successfully establish the Westfield Wholesale Fund was not due to any lack of effort on your part, but was due to a range of factors outside your control." 52 In response, Mr Hoog Antink said in his affidavit : 14. A short time later I had a conversation with Mr Adams to the following effect:

"I have been asked by the Executive Committee to establish the Westfield America Trust. I am not going to be able to spend much time on the Wholesale Trust. You are going to have to progress it by yourself. Do you feel comfortable doing it on your own?"

"Very much so. I want the opportunity to try and establish the Trust by myself."

15. I refer to paragraph 49 of Mr Adams' affidavit. I did not say that my involvement with the Westfield America Trust was not in accordance with some agreement with Mr Adams. I did not say to Mr Adams that I did not have any choice. The Executive Committee had asked me to work on a particular project, and that is what I intended doing. Nor did Mr Adams say to me he was not happy with the arrangement. Mr Adams was keen to progress the project himself. Mr Adams has never raised with me any concerns that he was working on the Wholesale Trust project alone. I provided to Mr Adams what assistance I could.

16. Mr Adams remained exclusively committed to and had full responsibility for continuing to try to establish wholesale trusts and he continued to report directly to me. By about August 1996 investors had only agreed in principle to acquire less than 50% of the units in the Trust, including the 25% of units to be acquired by TAC. In about September 1996 the efforts to establish the wholesale trusts were abandoned as the efforts had not been successful and did not look like becoming successful. 53 Whether or not the involvement of Mr Hoog Antink with the Westfield America Trust was in accordance with some agreement earlier with the applicant when both of them were discussing on 11 April 1995 their respective roles, the fact remained that Mr Hoog Antink was the General Manager of, and with responsibility for, the Wholesale Trusts Division and that continued to be the position even when he was involved with the Westfield America Trust; the applicant, even though during this period he worked alone on the development of the respondent's Wholesale Trusts Fund, was the Deputy General Manager. That that situation arose less than 6 months after the project was initiated by the respondent effectively removing Mr Hoog Antink, a most senior and experienced executive from what seemed to me to be a small, specialised and discrete unit working on a team basis, must be a matter of concern as against the interests of the applicant. In other words, in the accepted difficulties found in launching a new initiative, Mr Hoog Antink as the senior responsible executive was, for all practical purposes, removed from the effort. Given that the wholesale trusts initiative failed about 6 months later, but by reason of factors beyond the applicant's control, it nevertheless may be wondered what would have been the position had the Westfield America Trust been organisationally and managerially integrated into the Wholesale Trusts Division as involving both Mr Hoog Antink and the applicant. 54 Although Mr Hoog Antink explained that the Wholesale Trust Division was concerned with products in which funds were directly deposited by investors according to fluctuations in property prices, whereas the Westfield America Trust was publicly listed on the stock exchange and therefore subject to daily market fluctuations, he was responsible for both areas. Although one of those areas failed the other succeeded and, in the context of bonuses earned as a result of performance, Mr Hoog Antink gave the following evidence under cross-examination : Q. As I understand your evidence about your own bonuses, you did remarkably well in the bonus department in the absence of kicking too many goals? A. I would like to suggest to you that I kicked some giant goals. I raised $402 million in the first year I was there. It was the largest public company float in Australian history in the property sector.

The subsequent year I raised 465 million by way of capital notes. I raised 100 million by way of an equity placement. I made $2 million in fees on the side with respect to the placement of Southgate into Paladin.

The subsequent year I raised 175 million by way of capital notes in the New Zealand market on behalf of St Lukes. Collectively I have raised in excess of one billion for Westfield in the fund management area for which they collect fees in perpetuity.

Q. You say that arose as a consequence of a decision to separate your efforts from that of Mr Adams that you were -- A. -- partially, yes.

Q. So although you and he started as a team to work together on the development of these trusts, that changed at the behest of the Westfield company, is that right? A. That's correct, but it was done on the basis that at the time Richard reconfirmed that he was - he felt more than capable. In fact, as you are probably aware, he was in fact applying for my job and --

Q. Yes. A. -- And he regarded himself as more than capable of managing the whole of the wholesale fund, was given that responsibility when I went to Westfield America, was asked if he needed extra assistance and indicated he felt comfortable in pursuing that activity, but if he needed assistance he would ask for it.

Q. It would be right to say, however, he was not happy about the team, as it was characterised by you, at the outset, the team being broken up and you being branched off into these other pursuits; that would be fair comment, wouldn't it? A. I think in some way he felt frustrated by the team.

Q. Well, you were moving into a product that had already been well-established, the America Trust was already in existence? A. Wrong. The America Trust did not exist. It was created in 1996 with an initial public float. It was the first time that it had ever been created in Australian corporate history that investment in US property assets were listed entirely on the US market, it was a new product. 55 It will be apparent from that evidence, I think, that Mr Hoog Antink was, to continue his analogy, giantly successful with the Westfield America Trust. And that was during a period when the applicant was attempting to counter external market factors in developing the initiative contrary to his expectation, reasonably so on the evidence, on joining the respondent but 6 months earlier that both he and Mr Hoog Antink would work together as a team to establish and develop the Wholesale Trusts Division. The situation as it thus emerged was somewhat dismissive of the situation in which the applicant found himself, particularly as to the non-payment of bonus but on the admitted high standard of performance of his work, by the respondent branching out into a new initiative in the form of the Westfield America Trust and removing the expertise of Mr Hoog Antink from the Wholesale Trusts. At the least, the applicant's long-term job security was thereby placed at risk as were his expectations as to bonus. And so it came to be, as Mr Hoog Antink said, in September 1996 that the applicant was really redundant with the demise of the Wholesale Trusts and he was only saved until July 1998 by the Commonwealth Fund Management project. As it has happened, Mr Hoog Antink was able to secure his position and now occupied the role of Director - Funds Management for the respondent. 56 Finally in this review of the evidence, I should refer to the circumstances of the share options which formed such a large part of the proceedings and of the relief sought by the applicant. The options were issued to him under the Executive Incentive Scheme which was approved at an Annual General Meeting of shareholders on 29 November 1993. In the covering letter to shareholders giving notice of the Annual General Meeting, the Chairman of the respondent referred to the proposal to create a new scheme which, like the then existing 1988 scheme, would "provide for the issue of options with respect to ordinary shares in Westfield Holdings Limited ("Options") to senior executives of the Group selected by the Directors". As the Chairman said : Directors believe that by providing an opportunity for executive directors and senior executives to directly link their rewards to the creation and growth of Shareholder wealth, the new Schemes will create a performance based incentive that is directly tied to the future growth and expansion of the Group.

The explanatory memorandum for the Executive Incentive Scheme issued to shareholders stated : The purpose of these Schemes is to provide a means for rewarding executive directors of WHL (other than the Chairman Mr F P Lowy) and selected senior executives of the WHL Group in a way that enables them to share in the growth of Shareholder wealth by providing a performance linked incentive that is directly tied to the future growth and expansion of the WHL Group.

The specified details of the scheme contained the following paragraph : 7. In the event that an executive ceases to be an employee of the WHL Group prior to exercising Options held, those Options will lapse, although, in the case of the death or permanent disablement of an executive, the directors in their absolute discretion may permit the Options to continue to be held and to be exercised by the legal personal representative or heirs of the executive. 57 It will be clear, therefore, that the purpose of the Executive Incentive Scheme in issuing share options to executives, such as the applicant, was to provide a reward to enable them to share in the benefits enjoyed by shareholders in a manner linking their performance to growth and expansion of the respondent. In other words, as I understand it, relating the benefits of the scheme to executives as part of a team effort. Indeed, the advices of the annual remuneration review from either Mr Frank Lowy or Mr David Lowy to the applicant were explicit in referring to the "substantial increase in the potential future value of your share options over the year" and to the respondent's success during the previous year being "the direct result of the hard work and dedication of the Westfield team" in the context of the individual executive's "ability to contribute as a team which has enabled us to achieve the growth and corporate recognition that we enjoy today". Reference was made too to "your continued efforts". It is perhaps difficult, then, having in mind the purpose of the Executive Incentive Scheme and the concept of a reward from it in a temporal sense to understand the loss of the options if an executive ceased to be an employee before serving for 5 years, subject, of course, in the case of death or permanent disablement for the directors in their absolute discretion to permit the options to continue to be held and to be exercised. In terms of a balanced approach, one may immediately question why an executive who has contributed to the team effort should lose his options, either in whole or in part, where his employment similarly comes to an end without any failure on his part. The apparent vice, and hence any unfairness, in such a situation has been addressed in the new 1998 Executive Option Plan which, at least in the explanatory notes, adds "redundancy" to the expressly specified circumstances enabling the early exercise of options before the maturity date. 58 In the result, as I have said earlier, Mr Hilmer and Mr Gonski decided that the applicant should be able to exercise 45,000 of his 150,000 options, that is, 30% of them. Mr Hoog Antink, however, recommended as part of the applicant's termination benefits that he should be permitted to exercise 60% of the options, that is, 90,000 of them. The directors ultimately accepted the view of Mr Hilmer and Mr Gonski. As it happened, at the date of his redundancy the applicant had completed approximately 63% of the 5-year period to qualify for the full vesting of the share options. 59 On leaving the respondent's employ on 13 August 1998, the applicant about one month later commenced a 3-month consultation assignment with Templeton Investment Management (Australia) Limited for a fee of $25,000 per month. In early-December 1998 the assignment was extended for a further period of 3 months and it has since continued on a week-to-week basis but was subject to review about a week after the applicant gave evidence. To that date, he had been unable to obtain permanent employment nothwithstanding discussions with a number of potential employers; given his present age, early fifties, the applicant said that an executive recruitment consultant had advised him that it may take 12 months or more to secure an appropriate appointment in the current Melbourne employment market. 60 For the applicant, Mr M J Kimber SC and Mr D S Inverarity of counsel provided a detailed and comprehensive outline of submissions. Counsel did so by reference to each of the four heads of claim in terms of unfairness of the contract of employment, the Executive Incentive Scheme and the deed poll. Those heads were the notice claim, the bonus claim, the redundancy claim and the share options claim. In his opening address, Mr Kimber illustrated the nature of the case to be advanced by the applicant. Given a licence in the language used by counsel in putting a case, I nonetheless consider the thrust of what Mr Kimber said to be quite cogent in light of my view of the evidence as it eventually emerged. Senior counsel put it this way : If they had gone and told the real story, it would have gone like this, "Salary of $225,000 per annum.

Bonus - well yes, but only if we feel like giving you one in any year and there is a further rider, that question of bonus, you still might get it even if you hit every performance objection that we set for you so just understand that, the bonus is entirely in our hands regardless of how well you do.

The forty percent figure is really meaningless as to bonus, meaning don't read anything into the reference to forty percent because that is not designed to create in you any expectation that you are going to get forty percent or anything like that.

It does not have any work to do. It is just on a piece of paper so it is not to create any expectation that it is even likely or possible that you will get a bonus of that type each year.

Coming to the third component of our offer to you of share options, there is thirty thousand share options mentioned but you have not got any right to those unless you happen to be with us for five years. In fact you have got no right to them at all unless you last five years.

Two things we need to tell you, firstly understand this, that if you leave or we sack you at any time before the five years term they will all lapse and that will be regardless of whether you jump or whether we push you so please understand that, you have got to be here five years and then you will have the right to them but if you leave for any reason except ill health prima facie they will lapse.

The best you will be able to do is perhaps in the exercise of our absolute discretion we might throw you a bone if we feel like it.

Secondly as to five years and your ability to survive five years in this organisation, please do not get excited about it and you will hear the respondent's case and do not get excited about being here for five years because this is a speculative venture and it may not get off the ground and we may decide for whatever reason having regard to changes we might decide at any time it is not worth the effort and we will pull the plug on the whole thing for whatever reason at any time and that is why we have the notice period in the contract itself and we will give you one month's notice and one month's pay ( sic ).

Now we have told you the true story, would you like to leave your secure job at the National Australia Bank and come and work for us, we are really putting on the table $225,000."

That was the reality of the offer. We say it is overwhelming, if they had told the story as the contract was operated at the end of the day they would never have got Mr Adams to come and join Westfield.

They deliberately put the three arms of the package. They negotiated three arms of the package and then at the end of the day they said to him, well there are a couple of things that we did not mention, quite fundamental ones. We say that was unconscionable. It induced him to come to the organisation and then they relied upon the fine print from the terms of the option plan to say, sorry you did not make it for five years.

As to bonus we do not have any obligation to give you the bonus. We just said that and you have not done as well as we think you should have apparently. You have to ask how attractive in those circumstances it would have appeared. We say it was done for that very reason. You could not afford to tell the whole story because you would be hard pressed to attract people if you weren't to put all these limitations on matters that are otherwise said to be rights or entitlements.

Indeed and I do not suggest this is subject to any evidence, when you compare it back until the true story, perhaps you might attract a senior executive to take up such a speculative role when you offered him half a million dollars a year, he might say I will come for $500,000 and accept all the risks. Maybe that would be a way that he would respond if you knew what the true story was and we say the reason it was done that way is maths, and you do not have an affidavit from Mr Lowy nor an affidavit from Mr Benn. Mr Adams again on what happened, what was said and how it all came about is not the subject of challenge. What is relied upon were not terms of the written contract that emanated at the end of those negotiations and you will see in materials at the end of the day plenty of remarks from human resources people at Westfield and lawyers for Westfield saying "You knew what you were getting into. You signed a contract". It says, "We can get rid of you after a month." It says, "Up to forty percent bonus" and "You are now aware that there are all these restrictions on your ability to access the bonus. What are you complaining about. You entered into this, that is the way it goes" and that is what is happening your Honour, finally with respect to the respondent's approach, reading the materials you would swear that Westfield believes that they did Mr Adams a favour by keeping him for three years, that he was lucky, that it was very generous and that really you should not be too concerned about how they manage to get him into the game.

Let us just worry about the proper operation of the terms of the contract that he signed with his eyes open and we say it misses the point entirely. 61 I have to say that the evidence of the applicant, viewed overall and which I accept, properly enables the inferences as referred to by Mr Kimber concerning the terms of the contract of employment as it was made and operated in practice to be reasonably open. The failure by the respondent, either by itself or by Mr Benn as its agent, to inform the applicant of the terms and conditions of the Executive Incentive Scheme insofar as the 5-year qualifying period for the vesting of the share options was concerned was a serious omission; it was one which, having in mind the redundancy occurring after 3 years' service, should not be visited against the interests of the applicant without adequate compensation. The same conclusion may be reached in relation to the lack of specificity concerning the entitlement to bonus, particularly having in mind the achievement by the applicant of the performance objectives as agreed with Mr Hoog Antink. Another significant omission, in my view, in the terms of the original contract was the express failure to deal with termination conditions in a situation of redundancy and where such conditions were not the subject of any discussion between the parties beforehand but rather were set out in the offer letter of 5 May 1995 as the respondent's first and final offer to the applicant. I am satisfied that those matters both separately and collectively constituted relevant unfairness in the contract of employment and in the Executive Incentive Scheme (and thus the deed poll) so as to offend the provisions of s 106 of the Industrial Relations Act as being unfair, harsh and unconscionable. 62 Specifically as to the way in which the contract worked out in practice, I consider that the removal of Mr Hoog Antink from active participation in the Wholesale Trusts Division a bare 6 months after it commenced was potentially against the interests of the applicant in that it provided a very real risk that the wholesale trust initiative would be under-resourced notwithstanding the satisfactory input by the applicant. That Mr Hoog Antink was directed to the Westfield America Trust, separate and distinct from the Wholesale Trusts Division, would likely prejudice the success of the wholesale trusts initiative and, hence, the career interests of the applicant; nothing to that extent was indicated to the applicant before he commenced employment with the respondent as being contemplated or even possible. I would conclude that the consequences of such action, whilst it may be undoubted that the respondent had a right to do what it did, should not sound against the interests of the applicant. He should receive appropriate compensation for what occurred by the early termination of his employment because of redundancy. 63 Mr P M Kite SC and Mr P J Newall of counsel appeared for the respondent and advanced submissions against the relief sought by the applicant. On the basic proposition that the applicant was "a well-experienced, highly-qualified, senior executive", senior counsel observed on the evidence that he was "a person confident in his own abilities, not only to perform but to negotiate his terms of employment" and who "knows his worth in the market place". Senior counsel emphasised that the applicant in accepting employment with the respondent was well aware of the risks involved in the respondent venturing into the new area of wholesale trusts and yet he did not seek to negotiate terms for termination of employment but rather accepted those offered by the respondent. In a real sense, so senior counsel submitted, the applicant by agreeing to the terms offered, including as to bonus and the share options, could not be heard to claim otherwise. The fact the applicant obtained employment at a remuneration rate of $300,000 per annum a mere two months after being made redundant, and still enjoyed that employment, and even though he did not have the benefit of share options, demonstrated that he was readily able to achieve suitable employment so as to minimise the effects of the redundancy in August 1998. 64 As to the claim for the payment of 12 months' remuneration on termination of employment, Mr Kite submitted that the one month's notice given plus the payment of 3 months' remuneration was reasonable in the context in which the terms of employment were negotiated and, in any event, the circumstances were not such as made the contract unfair in its operation, particularly having regard to the employment obtained by the applicant about one month after leaving the respondent's employ. Also, it was important to bear in mind that the applicant's immediate claim, initially on a "without prejudice" basis, on having been made redundant was for a payment of 6 months' remuneration and not the present claim of 12 months. 65 As to the claim concerning bonus, Mr Kite emphasised that it was "a performance bonus type scheme because it is measured by superior performance, to be based upon divisional results, depending on how well the division does and how the performance of the particular employee is said to contribute to that. Not just doing his job but superior performance". The difficulty with that proposition, as I have intimated earlier, is that the applicant achieved all of his performance objectives and the extent to which the Wholesale Trusts Division did not make a profit was not due to factors within the applicant's control; in fact, the secondment of Mr Hoog Antink to the Westfield America Trust during the early, and no doubt critical, period of the introduction of the wholesale trusts initiative was likely to have affected the divisional performance. In referring to the bonus which was paid to the applicant, being $75,000 in respect of one of the 3 years of his employment, Mr Kite submitted : In this case the wholesale trust did not succeed and then moved on to another project, CFM, which was anticipated to be one that would produce good revenues to the company. That did not eventuate but it is recognised that Mr Adams had contributed well to that deal and he was recommended a bonus for his contribution in respect of this deal. He produced revenue to the company as profit. The only money coming in at the first stage was the 160 thousand which did not meet Mr Adams salary, let alone the other costs. It was understood at that stage that it was a good deal. The fact it wasn't bringing money in at that stage did not detract from the fact that he was performing well in getting the deal. A bonus was recommended. The company proposed $50,000. Mr Adams disagreed and talked it over with Mr Lowy. They agreed on 75,000. 66 In terms of the claim as to the share options, Mr Kite relied upon the evidence of Mr Hilmer and Mr Gonski as demonstrating the exercise of a discretion in a fair way to permit the applicant to exercise on his redundancy 30% of the options issued to him. Mr Kite was at pains to distinguish a situation of redundancy from that where an executive died or was permanently disabled in that in the former situation the person was able to work, including for a competitor. As senior counsel said, "In one sense it would be incongruous to have someone enjoying the team effort while out there diligently working for a competitor". Of course, in the present case, it has to be said that this is not the situation with the applicant. 67 In supporting the discretionary decision made by Mr Hilmer and Mr Gonski, Mr Kite dealt with the nature and qualities of redundancies and submitted : Now, there is no doubt that the decision to terminate at the end of the day was the employers. We don't cavil with that here. This is a decision to terminate by Westfield but Mr Adams in a relevant respect had his future employment in his hands in that he was charged with developing a capital raising concept. Had he been successful in that, his employment would have continued. That's not to ascribe blame. It is to indicate that redundancies have about them a spectrum of circumstances and one should not fall into the difficulty of simply saying: Well all redundancies are the same and should be treated in the same way just as Mr Hilmer and Mr Gonski were at pains to say. Even with termination they wouldn't say for ever and a day you would never exercise any discretion in favour of a particular employee.

We submit that in allowing for a discretionary exercise, all of those sorts of circumstances can be catered for in a case by case basis. So much was made clear by Messrs Hilmer and Gonski.

Every case has to be considered on its merits. It is not possible to make one general rule which will apply in all circumstances to generally defined categories. The existence of an absolute discretion is, therefore, not on its face unfair, particularly when one has regard to the fact that such a discretion is guarded by the guided by the principles established under the Corporations Law and common law.

It is no mere whim, as our learned friend described it, the proper exercise of a discretion by the directors of a corporation. 68 The difficulty with Mr Kite's approach for the respondent concerning the share options is the fact that they were offered to the applicant by Mr Benn when he put the respondent's final offer but absent any indication at all that the options would lapse unless the applicant completed 5 years' service. Why the applicant was never provided with the details of the Executive Incentive Scheme or even that certain restrictions applied to the exercise by him of the options was never explained in the evidence and, as the applicant said, when Mr Hoog Antink advised him shortly after the employment commenced of the time qualification he was surprised; the evidence of the applicant was that the options were of such importance that he would not have accepted employment had he been aware of the full circumstances for their exercise. Mr Hoog Antink too was unaware in a redundancy situation the options would lapse unless 5 years' service had been completed. 69 Mr Kite submitted that the applicant's evidence that he was induced to join the respondent by the offer of options was not made out on the evidence but rather the real position was that the applicant was anxious and keen to do so to the extent of actively pursuing employment. I have referred earlier to the way in which Mr Kimber put the case for the applicant and indicated agreement with the general thrust of it. In a corresponding way, Mr Kite crystallised the respondent's approach in the following way : I've already submitted to your Honour that Mr Adams is a careful and skilled negotiator. What he wanted and what he put forward to Mr Benn was an adequate base salary and the opportunity to enhance that by performance based bonuses. Throughout the five months of negotiation and the enquiry no mention was made of the possibility of options. Mr Adams suggested he wanted $250,000 salary plus an incentive bonus based on performance. Mr Benn countered with an offer of 210 up to 50 per cent bonus and 30,000 options. So far as the negotiations go, that is basically the end of it in relation to options. No other mention of them. Concentration on base salary, that is what it is all the time. There is a little bit of a trade off between base and bonus in terms of the cap and the base comes up to 225. In addition he negotiates for replacements for the benefits he is likely to forego if he leaves National Australia Funds Management, that is his up coming bonus there of $13,000 and his medical benefits, $1,200 to $1,500 covered by the $15,000 one off payments and he successfully negotiates that. He doesn't come back on the options.

He says to Mr Benn in the course of that negotiation the options and the bonus are all blue sky, the real issue is my base, I need an adequate base salary. Your Honour has seen some of the definitions of "blue sky" from dictionaries, it's a jargon term. I asked Mr Adams whether he understood it as part of the jargon, he says it's often used, he accepts that one meaning is speculative, but he says he didn't use it in that context, he didn't use it in the context of no present or immediate value on it. He says the way I used it was to focus attention back on the base, the concrete figure, the thing, the cash based component, straight up front, not conditional on anything, not contingent, let's get back to the guarantee, we will worry about those contingent benefits. Let's look at the base. That is the context in which he used the term. With the greatest of respect to him, he is using it in the sense of saying, look, they are contingent, they are speculative, we don't really know what that is going to give me in the long term, if anything. What I need to be sure about before I come on this job is the adequate base. Unlike other matters of detail, he made no enquiry about the terms of the scheme. That, we submit, is consistent with the view he had at the time that these were blue sky, great if they happen, if they don't well nothing really lost.

He sought and was provided with information such as the job description, salary packaging alternatives, and the terms of the company super scheme. He agreed that the company provided him any information he requested without hesitation. He was careful before finalising the agreement to tick off matters of detail such as how he used the $15,000 figure, one off payment to cover relocation costs instead of just an up front payment, the potential of tax advantage, the company said that is fine as long as it's legal, and his skiing holiday. He says in transcript page 95 that these issues were coloured because he was trying to get everything out on the table, that is what he was trying to do, here are all the details, make sure everything was without on the table, and he made his enquiries about anything that concerned him, even down to his skiing holiday. However, he didn't make enquiries about the terms of the scheme. The answer to the question why is because he wasn't bothered about that, that was not the critical component. It was certainly part of the deal but not critical, not critical to his thinking, not his motivating factor.

My friend says he didn't make any enquiries about the options. He says he didn't have a duty to do so, in fact that is the company's responsibility, they have got to give him information whether he wants it or not and if they don't, well, that is their bad luck. Put the other way, my learned friend says, well, that's just not tenable to say that he is prepared to accept this benefit according to the terms identified and if he doesn't look into them, the proposition that that's his matter is just untenable. In fact, as we hear it, it's almost immoral. We submit we ought not lose sight of the level of executive we are dealing with and the nature of the negotiations that were being undertaken and who was driving this employment relationship. While he may not have had a duty to ask, it certainly is in the context absolutely in incongruous for something so important to him he made no enquiry. 70 In my view, the relationship between the parties as it was formed under the contract of employment made on 15 May 1995 and how it operated in practice is to be assessed in the context of the redundancy which befell the applicant after completing just in excess of 3 years' service. That redundancy, I am satisfied, manifested relevant unfairness in the terms of the impugned contract in that it initiated a termination of the employment with inadequate benefits available under the contract on its termination. And that was so in a situation where the redundancy was for causes beyond the applicant's control and where in making the original contract he had every reasonable expectation of long and secure employment at a senior executive level in a dynamic and developing corporate environment. 71 As it happened, the wholesale trusts initiative on which he was engaged failed, largely because of external market factors, but where his performance measured in terms of the agreed objectives had been met. To some extent at least, the demise of the Wholesale Trusts Division was affected by the transfer of its General Manager, Mr Hoog Antink, to concentrate on the Westfield America Trust, which proved a lucrative venture, thus denying a major and significant management resource to the new wholesale trusts area. Nevertheless, the applicant as the Deputy General Manager continued endeavours to successfully establish the project and, as acknowledged by Mr David Lowy, the failure to do so was not due to any lack of effort on the applicant's part but from factors outside his control. Similarly, the Commonwealth Fund Management project proved not to be viable and so the applicant found himself searching for a suitable position within the respondent's organisation but without success. On the respondent being unable to find a position in which to employ the applicant, he was thereupon made redundant with one month's notice and the payment of 3 months' remuneration. Even so, during the notice period he was required to finalise the Commonwealth Fund Management project, which he did, and he was then released. 72 As I have said, central to a consideration of this matter is the occurrence of the redundancy. In ICI Australia Operations Pty Ltd (t/as Dulux Australia) v Hutton [1993] 47 IR 288, a Full Court ( Bauer, Hill and Peterson JJ) of the former Industrial Court referred to the effect of a redundancy situation in determining whether a contract of employment terminated for that reason contained relevant unfairness under s 88F of the since repealed Industrial Arbitration Act 1940 as the statutory predecessor to the present s 106. Their Honours said (47 IR at p 296) : Redundancy is a new social and industrial phenomenon and the need to make appropriate provision in relation thereto by way of redundancy agreements and arbitral prescriptions arose as a result of the legislation which was the subject of the review in MTIA (1983) 152 CLR 632; 4 IR 284, namely, the Employment Protection Act 1982 of New South Wales and the principal cases related thereto decided by the former Industrial Commission of New South Wales, namely, the Shop, Distributive & Allied Employees Association (NSW) v Countdown Stores (1983) 7 IR 273 and the Shop, Distributive & Allied Employees Association (NSW) v Myer (NSW) Ltd (1983) 7 IR 300. To these cases might be added the cases which reviewed superannuation schemes in their relationship to the Employment Protection Act . The principal technological change and redundancy reviews by industrial authorities are the federal Termination, Change and Redundancy Case (No 1) (1984) 8 IR 34 and Termination, Change and Redundancy Case (No 2) (1984) 9 IR 115 and Re Clerks (State) Award (1987) 21 IR 29.

In the context of modern sociological situations dismissals are frequently effected in circumstances of redundancy parallel to those of this case, not only with notice of termination or payment in lieu in accordance with the contract of employment and/or any applicable award but payments are also made to take account of the element of redundancy; and not infrequently the period of notice or payment in lieu is also increased over and above that provided in the relevant contracts and/or awards. In other words there has evolved a new concept or sociological event known as redundancy and which would in the usual industrial context attract redundancy payments. Such payments are now commonplace; they may be negotiated and/or may appear in awards or collateral agreements or arrangements. Indeed recent industrial legislation has made mandatory the insertion, on application, into awards of what are described as "Employment protection provision". For example the 1940 Act was amended in 1987 so to provide, and the 1991 Act also contains similar provisions. 73 In following the approach of the Full Court in that case, Hill J in Lavings v Barclay Mowlem Construction (NSW) Ltd (unreported, CT93/1233, 15.9.94 at p 12) referred to other similar authorities and concluded - "It seems undoubted on the authorities that the failure by an employer to make fair and reasonable provision for notice and severance benefits to an employee on termination for redundancy reasons can, notwithstanding its provisions governing notice on termination, render the contract of employment unfair": see also Barry v Incitec Ltd [1991] 45 IR 143, 148 and 155; and Baker v National Distribution Services Ltd [1993] 50 IR 254. I agree. The failure so identified by his Honour occurred in the present case and it should re remedied. 74 As to the bonus payment which arose for review at or about the time of the termination of the applicant's employment, the fact of redundancy, in my view, required careful attention to the terms under which the bonus was payable. It was claimed for the respondent that being based on performance, divisional results, no bonus was due because of the failure of the Wholesale Trusts Division. However, as I have said, the lack of specificity of the entitlement to bonus where the applicant met all of his performance objectives demonstrates in a redundancy situation an inherent unfairness in the contractual specification of the bonus conditions. The applicant's evidence, on the other hand, made clear his understanding that the bonus element was an important part of his total remuneration package as initially negotiated and that it was payable in an amount of up to 40% of base remuneration if the requisite performance levels were achieved. In that situation of some uncertainty as to the qualifying criteria, he received only one bonus payment in 3 years of employment and that was only paid as a resolution of a dispute concerning the payment of a bonus. The way in which, particularly in a situation of redundancy where all prior performance levels had been met, the respondent reserved unto itself the absolute discretion whether a bonus became payable, but in the absence of any published or available criteria by which that could be measured, represents to me a fundamental unfairness in the scheme. It should be corrected. 75 As to the share options in a situation of redundancy, and particularly where the applicant here as the optionholder had completed service at the date of redundancy of 3 years or 60% of the option vesting period, one is reminded of the words of the Full Bench ( Hill, Hungerford and Marks JJ) of the Court in GIO Australia Ltd v O'Donnell (1996) 70 IR 1 at 24, as follows : We are of the view that the options constituted an asset of potentially significant value. It was unfair that the 1993 contract, and the plan itself, failed to make reasonable provision for protection of the respondent's entitlements in relation to that asset in the event of the exercise by GIOA of the new and more drastic rights of termination granted to it by the June 1993 contract - a contract imposed by GIOA upon the respondent. In our opinion that unfairness is not, in the particular circumstances of this case, remedied simply by variation of the contract so as to provide for nine months' notice or payment in lieu.

We note that the plan, in providing for a lapse of options after the expiration of a period of three months from the date of cessation of employment, seemingly draws no distinction between various types of cessations and/or the reason/s therefor. A person summarily dismissed for gross and wilful misconduct has exactly the same entitlements as a person whose employment ceases through no fault of his/her own, for example, in cases of retirement for ill health or termination for redundancy reasons; each may exercise the options, assuming a current option exercise period, only for a period of three months after the employment ceases. We think that the 1993 contract and/or the plan, in the circumstances of this case, should, in fairness, have made provision for advancement of the first date for exercise of the options to the date of cessation of employment, that is from 18 January 1996 to 28 November 1994, and then provided some reasonable period for exercise of the options. 76 And so too here, in my view, the Executive Incentive Scheme and the deed poll were unfair in that no provision was made, other than for death or permanent disability, for the applicant as the optionholder to retain any right on redundancy to continue to be able to exercise any options other than in the absolute discretion of the directors of the respondent. Such a provision in a situation of redundancy, I think, is inherently unfair and should be remedied. 77 In regard to the options, one is reminded also of what the Full Bench ( Cahill V-P, Hungerford and Schmidt JJ) of the Court said in Westfield Ltd v Helprin (1997) 82 IR 411 at 435-436, a case not at all remote from the present case, as follows : His Honour took the view that the primary purpose of the scheme was to provide an incentive to executives to remain with Westfield and that it was in the nature of a windfall. We think that, in coming to this conclusion, his Honour paid insufficient regard to the evidence given by Mr Lowy in cross-examination that there were three purposes of the scheme - first, to reward employees for their past efforts; secondly, to provide them with additional remuneration in the future; and, thirdly, to operate as an incentive to remain in Westfield's employment. The second of those aspects was emphasised in correspondence sent from time to time by Mr Frank Lowy to Mr Helprin.

On termination, Mr Helprin had served for some three-quarters of the time he was required to be employed before the options could be exercised. In those circumstances, we take the view that his Honour erred in concluding that the option scheme was not harsh, unfair or unconscionable when, on termination without warning and otherwise than for cause, Mr Helprin was entitled to nothing under the option scheme, despite it being intended to provide him with additional remuneration both for past performance and during the period of operation of the scheme. This conclusion is reinforced by his Honour's finding that Mr Helprin's performance was not inadequate, but comparable with that of other leasing executives who were not dismissed by Westfield and who therefore were able to retain their valuable rights under the option scheme, and Westfield's concession that Mr Helprin had not been dismissed for cause.

His Honour observed that sympathy might have been excited by circumstances where employment was terminated by the employee on account of illness or a need to relocate on account of some pressing domestic necessity. Such circumstances, in his Honour's view, could be accommodated by the discretion given to directors to allow early exercise of the rights. A review by the directors of such circumstances was not, however, required under the option scheme. Nor was there such a review in Mr Helprin's case. We cannot agree with his Honour that in those circumstances the power of review provided a "safeguard against the provisions of the scheme being exercised in a manner which is unfair". 78 Here, of course, the directors exercised discretion in favour of the applicant being able to exercise 30%, that is 45,000 of his 150,000 options - the remaining 70% or 105,000 were lost. However, in a situation of redundancy where termination, like death or illness/disability, is beyond the employee's power or control calls, in my view, for more favourable treatment than an approach merely equating the entitlement to options in the same proportion as the completed service of the option qualifying period. That approach, adopted even in GIO and Helprin where there was an issue about the adequacy of the performance of the employee concerned, unlike in the present case, well exceeded what Mr Hilmer and Mr Gonski here decided to allow the applicant; Mr Hoog Antink would have allowed the applicant access to twice the options allowed by the directors. I think that result to be unfair and in need of correction. 79 I find that the contract of employment in the present case was a contract whereby work was performed in an industry; the performance bonus and the Executive Incentive Scheme (as to share options the subject of the deed poll) were related conditions of or collateral arrangements to the contract of employment. In the alternative, the contract of employment, the performance bonus entitlement, the Executive Incentive Scheme and the deed poll collectively constituted an overall arrangement whereby work was performed in an industry. The said transactions were, therefore, "contracts" answering the relevant description within the meaning of s 106 of the Industrial Relations Act . Specifically as to the aspects of the transactions which I find to be unfair under the section, I identify them as follows - (1) There was no discussion between the parties in the negotiations leading to the contract of employment relating to the conditions applicable to the applicant in a situation of redundancy. (2) The contract of employment as to termination terms, necessarily as including a redundancy situation, was proposed by the respondent to the applicant on a first and final offer basis. (3) The contract of employment in its terms did not expressly deal with termination of employment in the event of redundancy but equated the benefits to be allowed to the applicant in such a situation with those of a termination for any reason, other than for cause, namely, on one month's notice and 3 months' payment of base remuneration. (4) The contract of employment as to the entitlement of the applicant to an annual bonus, being the nominal target for superior performance of up to 40% of base remuneration, but otherwise with no particular cap, did not reasonably specify the criteria or performance measures by which that bonus was to be determined. (5) The operation in practice of the contract of employment as to bonus permitted it to be payable at the discretion of the respondent, such that no bonus was payable on termination even though the applicant satisfied all of his performance objectives. (6) The terms and conditions of the Executive Incentive Scheme and the deed poll as to options were not provided by the respondent to the applicant until about one month after he had commenced employment. (7) The final offer of employment to the applicant by the respondent included the options but without any indication that their exercise would lapse in the event the applicant ceased to be employed by the respondent before the maturity date. (8) The Executive Incentive Scheme and the deed poll failed to make any or any adequate provision for the continuation of the right to exercise the options where the applicant's employment was terminated by reason of redundancy or otherwise for reasons beyond his power and control. (9) The conduct of the respondent in effectively removing the General Manager of the Wholesale Trusts Division a bare 6 months after the applicant commenced as Deputy General Manager meant that the wholesale trusts initiative was under-resourced, thereby placing the applicant's employment at risk without any indication prior to the employment commencing of such a possibility. (10) The transfer by the respondent of the General Manager of the Wholesale Trusts Division to the Westfield America Trust denied the applicant the expected team approach in the operation of the Wholesale Trusts Division, and even though the Westfield America Trust was a legitimate business venture but separate from the Wholesale Trusts Division. (11) The decision of the respondent's directors to permit the applicant to exercise only 30% of his options entitlement but where the General Manager of the Wholesale Trusts Division recommended the applicant be permitted to exercise 60% of such options held by him.

In light of the findings thus made, I propose to make under s 106(1) of the Industrial Relations Act appropriate orders varying the contract of employment, the deed poll and the Executive Incentive Scheme to remedy the unfairness therein. 80 As to benefits on termination of employment, I consider the applicant was fairly entitled to one month's notice plus 9 months' payment of base remuneration as compensation for both notice and redundancy - he is thus entitled for this head, having in mind benefits allowed already by the respondent, to an additional payment of 6 months' base remuneration, that is $125,000. As to bonus, I would allow the payment to the applicant of 40% of his base remuneration in respect of the year ended 30 June 1998, giving an amount due to him of $100,000. Pursuant to s 106(5) the applicant is thus entitled to a monetary order in his favour of $225,000 to which should be added interest in respect of the period from the last date of employment up to judgment on the basis of the rates prescribed in Sch J to the Supreme Court Rules 1970 pursuant to s 94 of the Supreme Court Act 1970 - I assess such interest in the sum of $40,675, giving a total amount due to the applicant of $265,675. As to the options, I note the respondent's submission that if otherwise liability be found against it then the applicant should be allowed to exercise the options rather than monetary compensation being allowed. I consider that to be appropriate. I propose to allow the applicant to exercise the remaining 105,000 options on a date selected by him not later than 30 months after the date his employment terminated, that is, by 13 February 2001. The respondent should pay the applicant's costs of the proceedings.

81 I make the following orders - 1. The contract of employment made on 15 May 1995 between the applicant and the respondent as evidenced by the letter of offer dated 5 May 1995 from the respondent to the applicant is varied from its commencement by inserting the following provisions : (1) Provided that in the event your employment is terminated by Westfield by reason of redundancy at any time after three years' service you will be entitled to an additional payment by Westfield equivalent to six months' base remuneration. (2) Provided further that in the event your employment is terminated by Westfield by reason of redundancy at any time after three years' service, but nonetheless agreed performance objectives have been achieved (or substantially so) by you, then you will be entitled to the payment by Westfield of a bonus in respect of the year ended on 30 June immediately preceding the date of termination in the amount of 40% of your base remuneration as at the date of termination of employment. (3) Provided further that in the event your employment is terminated by Westfield by reason of redundancy at any time after three years' service you will be entitled, notwithstanding the current terms of the Company's Executive Incentive Scheme, to exercise any or all of the share options granted to you and such options shall not lapse but shall continue until the maturity date specified under the said Executive Incentive Scheme or such other date as may be determined by law. 2. The deed poll made on 29 June 1995 and thereto executed by the respondent in favour of the applicant as the executive, together with the annexed terms and conditions of the Executive Incentive Scheme, are varied from their commencement by inserting the following provisions : (1) Notwithstanding anything elsewhere contained in this Deed and in the Executive Incentive Scheme, in the event the Executive's employment is terminated by Westfield by reason of redundancy at any time after three years from the Issue Date of any Options then the Executive's entitlement to exercise any or all Options held shall not lapse but shall continue until the Maturity Date determined as being a date at the sole selection of the Executive not later than thirty months after the date the Executive's employment terminated. (2) In the situation referred to in paragraph (1) hereof, Westfield shall not be able to cancel the Options and to pay the Executive an amount of money in consideration thereof but shall issue to the Executive on the Allotment Date (as adjusted by the new Maturity Date) that number of Westfield Ordinary Shares equal to the Exercise Number. 3. The respondent shall pay to the applicant the amount of $225,000 plus interest of $40,675, a total amount due of $265,675.

4. The respondent shall pay the applicant's costs of the proceedings in an amount as agreed or, failing agreement, as assessed.

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