Bannon v Nauru Phosphate Royalties Trust [2019] VSCA 303

CONTRACT - Whether claims for monthly entitlements prior to June 2009 statute barred.

CONTRACT - Whether finding of overpayment of funds advanced to applicant in excess of funds expended on behalf of respondent made on pleaded claim - Whether finding of overpayment open on the evidence - Whether onus of proof reversed - Whether claim barred by Nauruan law - Open on pleadings to claim overpayment - Finding of overpayment open on the evidence - Onus of proof not reversed - Nauruan law does not apply to defeat claim for set off or counterclaim - Akai Pty Ltd v People's Insurance Co Ltd [1996] HCA 39; (1996) 188 CLR 418, John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 applied.

EMPLOYMENT - Notice of termination of employment - Whether notice of termination valid - Whether provider of notice authorised on behalf of Board - No error in finding notice of termination of employment was valid - Applicant acted consistently with having been given notice - Claims for accrued annual and long service leave - Whether records accurate - Whether entitlement to annual leave loading - Claims for superannuation entitlements - Whether such claims subject to maximum superannuation salary base in Superannuation Guarantee (Administration) Act 1992 (Cth).

INTEREST - Whether interest payable on claim and counterclaim separately - Interest payable on amount reduced by set off.

COSTS - Proceeding included claims for penalties under the Fair Work Act 2009 (Cth) ('FWA') - Where claims under the FWA only abandoned on first day of trial - Where trial judge struck out FWA claims with effect from date of issue of proceeding for lack of jurisdiction - Strike out order based on incorrect view that costs regime under s 570 FWA otherwise inapplicable - Costs orders made under s 24 Supreme Court Act 1986 (Vic) without regard to s 570 - Proceeding was 'in relation to a matter arising under [the FWA]' given applicant sought to enforce FWA claims up to first day of trial - Strike out order substituted with effect after date of abandonment - s 570 regime applies up to date of abandonment in relation to claim - No separate orders in respect of counterclaim where success only on basis of set off - Order made under s 570(2)(b) where unreasonable inclusion of FWA claims - No interference with costs discretion after date of abandonment - Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342; Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221 cited.

1 This appeal relates to the determination of a series of claims by Paul Bannon against his former employer, the Nauru Phosphate Royalties Trust ('NPRT' or 'the Trust'). The total of such claims was $4,020,333.

2 Following an 18 day hearing in the Trial Division of this Court, McDonald J gave judgment in September 2018[1] holding that:

(a) Bannon was estopped from claiming fees otherwise payable pursuant to his contract of employment in respect of services provided as Secretary and/or Director of 19 subsidiary companies of NPRT between July 2005 and 30 June 2014 ('secretarial fees'). Bannon had claimed $3,111,000 in this regard;

(b) the companies in respect of which Bannon could claim secretarial fees did not include two related companies which were not subsidiaries of NPRT and no entitlement to such fees arose with respect to them in any event;

(c) further and alternatively, NPRT had a partial limitation of actions defence to the claim for secretarial fees;

(d) Bannon was given 12 weeks' notice of termination on 31 March 2014 and had no claim for damages against NPRT for a sum equivalent to salary in lieu of notice;

(e) Bannon was entitled to $222,153.62 in lieu of 288.8 days of accrued annual leave;

(f) Bannon was not entitled to claim a 17.5 percent leave loading with respect to his annual leave entitlement;

(g) Bannon had a contractual entitlement to 50 percent of accrued sick leave upon termination of employment amounting to $105,769.13;

(h) Bannon was entitled to back pay in consequence of a salary increase approved by the Board of NPRT in May 2013. This resulted in an additional entitlement of $71,045.18 inclusive of superannuation;

(i) Bannon was entitled to $46,153.80 for 12 weeks' redundancy pay;

(j) Bannon had accrued long service leave of 17.2 weeks resulting in an entitlement of $66,153.85;

(k) NPRT was entitled to set off the amount of $141,052.91 against the damages otherwise payable to Bannon. Such sum represented funds advanced on account of expenses incurred by Bannon on behalf of NPRT which exceeded the amount actually expended;

(l) interest was awarded with respect to the net figure of damages arrived at after the set off.

3 On 29 October 2018, his Honour determined applications for consequential costs orders and ordered:[2]

• paragraphs of the statement of claim purporting to rely on the Fair Work Act 2009 (Cth) be struck out with effect from the commencement of the proceeding;
• NPRT pay Bannon damages in the sum of $370,222.67 together with interest in the sum of $120,489.57;
• subject to certain specific exceptions each party pay 50 percent of the other party's costs on a standard basis.

4 Bannon now seeks leave to appeal the Court's decision with respect to the following matters:

(a) the issue of estoppel relating to secretarial fees in respect of subsidiary companies;

(b) the relevant meaning of 'subsidiary company' in his contract of employment and his consequent entitlement with respect to services provided to related companies;

(f) the quantum of his long service leave entitlement;

5 NPRT seeks leave to cross-appeal with respect to the decision as to costs.

6 For the reasons which follow, we would refuse leave to appeal the trial judge's decision with respect to Bannon's claims save with respect to the estoppel issue. We would grant leave to appeal with respect to the estoppel issue but dismiss the appeal.

7 We would grant leave to NPRT to appeal his Honour's decision with respect to costs and allow such appeal by NPRT. We would set aside orders 1 and 3 made by his Honour and substitute the following:

(1) Paragraphs 36-38 and D and E of the prayer for relief of the statement of claim are struck out with effect from 17 April 2018.

(3) That, subject to paragraph 4, there be no order as to the parties' costs in respect of the claim and counterclaim, save that:

(a) the defendant is to pay 50% of the plaintiff's costs of the claim and counterclaim on a standard basis incurred from 17 April 2018;

(b) the plaintiff is to pay 50% of the defendant's costs of the claim and counterclaim on a standard basis incurred from 17 April 2018.

8 In addition, the following will be added to paragraph 4:

(d) that the plaintiff is to pay the defendant's costs thrown away by reason of the inclusion of the claims made under the FWA.

A procedural issue: is the application out of time?

9 NPRT contends the application for leave to appeal was made out of time.

10 In its written case, NPRT 'observed' that the principal judgment (as opposed to the judgment on costs) was delivered on 14 September 2018, and the application for leave to appeal was made 73 days later. NPRT asserted that the application was not competent in relation to the grounds arising from the principal judgment.

11 This assertion is incorrect. Although the principal judgment was delivered on 14 September 2018, no orders were made on that day. Orders, including as to costs, were made on 29 October 2018, the parties having been given time to consider the judgment and make submissions as to costs. The application for leave to appeal made on 26 November 2018 was therefore made within the 28 day time period specified in r 64.05 of the Supreme Court (General Civil Procedure) Rules 2015 (the 'SC Rules').[3]

12 NPRT is a body corporate established under the Nauru Phosphate Royalties Trust Act 1968 (Nauru) (the 'NPRT Act'). The NPRT Act established the Nauruan Land Owners Royalty Trust Fund (the 'Fund').[4]

13 The Fund received many millions of dollars derived from the proceeds of phosphate mining upon the island of the Republic of Nauru. The Fund was invested in assets, particularly real estate in other countries including Australia. The beneficiaries of the Fund were landowners in the Republic of Nauru whose property had been the subject of mining.

14 A principal function of NPRT was the administration of the Fund and the distribution of payments to beneficiaries of the Fund. Section 19 of the NPRT Act established the Fund and contemplated an annual distribution of moneys to the beneficiaries as follows:

19 Nauruan Land Owners Royalty Trust Fund

(1) A fund is hereby established, to be known as the Nauruan Land Owners Royalty Trust Fund.

(2) In this section the expression 'Ronwan Interest' means the aggregate business profits, dividends, interest and rents earned by the Fund in respect of each year ending on the 30th day of June after deducting all provisions, costs and expenses necessarily and properly made or incurred in connection therewith and after taking into account any business losses incurred and any costs and expenses incurred by the Trust in accordance with section 32.

(3) The Ronwan Interest earned by the Fund after the first day of July 1989 and until 30 June 1990 and for each 12 months ending 30 June thereafter, shall be ascertained by the Trust and applied in the manner herein provided.

(4) On or before 31 October of each year but subject to any extension granted by the Minister and notified in the Gazette, the Trust shall (upon such proof as the Trust shall with the approval of the Minister determine) issue each beneficiary, or where there is a trustee for a beneficiary, to the trustee; a statement of the beneficiary's account in such form as the Minister shall approve.

(5) Subject to any direction given in accordance with subsection (7) the Trust shall (in such manner and upon such proof of entitlement as the Trust, with the approval of the Minister, determines) pay to each beneficiary, or where there is a trustee for a beneficiary, to the trustee, at the time of issue of the statement pursuant to subsection (4) or if the statement is issued before 31 October, not later than that date, the Ronwan Interest credited to the account of the beneficiary in respect of the preceding year ended on 30 June.

15 Bannon commenced employment with NPRT as an administrative assistant in October 1994. In April 2003, he was appointed Acting Secretary of NPRT and on 22 July 2003 he was appointed Secretary on an ongoing basis. The position of Secretary to the Trust was a statutory one.[5] As Secretary, Bannon was the most senior employee of NPRT. He was the head of NPRT's administrative office which was based in Melbourne. The office had a staff of four.

16 In the course of July 2003 Bannon was further appointed to act as Company Secretary of some 22 subsidiaries of NPRT. In addition, he was appointed to act as Company Secretary for two further companies, Central Pacific (Downtowner) Pty Ltd and Randwick Nominees Pty Ltd, which he contends should be regarded as subsidiaries of NPRT for the purposes of calculating his entitlement to remuneration.

17 In April 2004, the assets of NPRT, together with those of a number of other entities associated with the Republic of Nauru, were placed in receivership. The receivers took control of a number of property assets in Melbourne and Sydney.

18 For the balance of his employment Bannon thus performed his duties knowing that the financial future of NPRT was uncertain and in circumstances where NPRT was constrained in the performance of its functions by the receivership.

19 On 24 August 2007, Bannon and NPRT entered into a written employment contract ('the 2007 contract'). The recitals to the 2007 contract stated:

1. The Employee has been in the full time continuous employment of the Employer since 3 October 1994;
2. On 22 July 2003 (hereinafter called "the Commencement Date") the Employee was appointed by the Employer to act as Secretary to the Employer on and subject to the terms and conditions hereinafter contained and the Employee accepted such terms and conditions;

1. The Parties hereto agreed prior to the Commencement Date to record the terms and conditions of the Employee's said Employment by the Employer but had not done so and are now desirous to record all of the agreements and understandings made between the Parties hereto concerning such employment in this Contract of Employment with the intention that the terms and conditions hereinafter contained shall be legally binding on the Parties hereto and shall apply in respect of the Employees [sic] employment at all times from the Commencement Date.

20 Schedule 1 to the 2007 contract set out Bannon's duties:

In addition to the Duties set out below, the Employee's Duties in this position include all those that would normally attach to a Company Secretary. The Employer may change these Duties during the course of the Employee's employment after consultation with the Employee.

The Employee's Duties include assisting the Employer to:

1. Follow Board policies and procedures.

1. Co-coordinate the completion and dispatch of Board agendas, briefing papers and minutes of proceedings.
2. Established [sic] and properly maintain the necessary Registers required to be kept under the Corporations Act.

4. Hold meetings in compliance with applicable laws.

1. Comply with ASIC and Australian Taxation Office statutory requirements if applicable.

6. Obtain advice regarding their regulatory and statutory requirements.

7. Keep statutory records up to date.

8. Comply with the Nauru Phosphate Royalties Trust Act.

1. Keep the board advised in respect of the accounting, administration and property functions of the Trust.

10. Co-ordinate external parties in respect of operational decisions.

11. Analyse and review recommendations made by external parties.

12. Compile proposals in relation to external advice.

21 It can be seen that sch 1 referred in part to the NPRT Act.

22 Section 32 of the NPRT Act imposed a specific obligation upon the Secretary to prepare an annual administration budget:

32 Annual Administration Budget

(1) The Secretary to the Trust shall prepare an Annual Administration Budget for the Trust which shall be submitted before 30th June each year for consideration and approval by the members of the Trust.

(2) The Annual Administration Budget shall set out the projected administration costs and related expenses of the Trust (including taxes, rates, charges, duties and other like amounts, commissions and fees) likely to be incurred by the Trust on behalf of the funds administered by the Trust in the ensuing financial year.

(3) Following approval of the Annual Administration Budget by the Trust, the Secretary shall provide to the Minister responsible for the Trust a copy of the Annual Administration Budget.

(4) The Annual Administration Budget may be reviewed and revised by the members of the Trust at any time before or during the financial year to which it applies.

(5) The Trust shall inform the Minister of any revisions to the Annual Administration Budget made under clause (4) of this section.

(6) Payment of the administration costs and related expenses of the Trust shall be sourced from or through the deduction or set-off against receipts of income earned by the funds under the administration and/or control of the Trust, except that in the event that the Trust has insufficient income to meet such costs and expenses, the outstanding balance of any such costs and expenses shall be paid from moneys appropriated by Parliament from the Treasury Fund.

23 The Nauru Phosphate Royalties Trust (Amendment) Act 2009 substituted the word 'shall' in s 32(1) for the word 'may' where it first appears. It also amended s 32(6) to impose the primary obligation for meeting administration costs upon NPRT.

24 Schedule 2 to the 2007 contract set out Bannon's remuneration:

Remuneration

The Employee's remuneration whilst employed by the Employer will consist of the following:

1. Yearly Salary: $80,000 to be paid on a Fortnightly basis;

1. The use of a company car for private and business use which at the time of this agreement is a 2001 Holden Commodore Acclaim. The provision of this car includes running expenses such as fuel, oil, maintenance and repairs as required;
2. Any entitlement at law to leave loading or other forms of salary loading or payment required by law to be made;
3. During each period that the Employee acts as a Director or Secretary of a subsidiary company of the Nauru Phosphate Royalties Trust, a Monthly Entitlement of $1,500 in respect of each such subsidiary company;
4. All unpaid entitlements from the Employee's previous employment with the employer will be carried forward;
5. The payment of such other payments and such other entitlements as is provided for in this Agreement;
6. Superannuation contributions equivalent to 9% of the Employee's base salary and the Employee's entitlements under paragraph 4 of this Schedule 2, pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth) to a superannuation fund selected by the Employee or, if no fund is chosen by the Employee, to an eligible fund nominated by the Employer;
7. At any time the Employee may request the Employer to pay part of the salary component into the Employee's nominated super fund. This is in addition [to] the statutory requirement of the Employer's contribution under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992. Provided that there is no detriment to the Employer in so doing and such payment is permitted by law and deductible to the company then the company will comply with that request. The Employee's salary shall be reduced by the amount of such payment.

25 On 17 October 2007, the Board members of NPRT (Ms Alvina Aremwa, Ms Ruby Thoma, Mr Doneke Kepae and Ms Clarissa Jeremiah) agreed to increase the base salary paid to Bannon from $80,000 to $140,000. The Board's members signed a memorandum the following day which stated:

The Trustee [sic] of the Nauru Phosphate Royalties Trust, in a meeting held on Wednesday 17th October, 2007 have unanimously agreed to increase the base salary paid to Trust Secretary, Mr. Paul Bannon, from $80.000 − $140.000 per annum a monetary increase over the currently paid of $36,000 since April 2003 up to present.

26 Shortly after 18 October 2007, Bannon arranged for a payment of back pay to be made to himself totalling $295,475. This represented the salary increase approved by the Board, together with superannuation. At trial, NPRT contended that the back pay was not authorised but ultimately failed in this contention.

27 The most contentious aspect of Bannon's remuneration package concerns the fees payable to him as Secretary and/or Director of subsidiary companies pursuant to cl 4 of sch 2 of the 2007 contract. No claim was made for fees payable under this clause during the period of his employment.

28 Nonetheless, reference was made to the relevant item under sch 2 in March 2013 when Bannon sought a further increase in salary.

29 On 1 March 2013, Bannon wrote a letter to Mr Alexius Namaduk, the then Chairman of NPRT in the following terms:

Dear Chairman,

Re: Secretary to the Trust - Salary review / increase

The purpose of this paper is to seek your approval to grant an increase in the annual salary paid to myself in performance of the role of Secretary to the Nauru Phosphate Royalties Trust.

Background

• I have been in full time employment with the Trust since October 3rd 1994.
• On July 2nd 2003, I was appointed to the position of Secretary to the Trust.
• The current employment contract between the Nauru Phosphate Royalties Trust Board and myself was executed on August 24th 2007.
• Details specific to my remuneration are found in Schedule 2, items 1 − 4.
• Further, on October 18th 2007, the Board unanimously agreed to increase the annual salary paid to me from $80,000 to $140,000.
• By agreement, the Trust has not had to outlay the expense of a company car as this represented part of the justification behind the salary increase that occurred on October 18th 2012.[6]
• Although payable under my contract of employment, I have not sought payment of the fees payable to myself under Schedule 2 item 4, as a result of the continued receivership of the Trust and the associated tight financial liquidity associated with it.
• No review of my salary has occurred since October 2007.

• Mr Chairman, I would welcome your consideration to the following variations of my contract:
  • An increase in the Annual base salary from $140,000 to $200,000 pa. Given the financial assets of the Trust amount to approximately $100m, a salary of $200,000 represents a cost of 0.02 of 1% of the total funds under management. This is on the low side of similar financial institutions remunerations, where 2.5% (on average) of funds under management is paid as a base salary.
  • The provision of a fully funded company car to a maximum of $40,000. In this regard I propose my current car be purchased from me by the Trust at an agreed rate.

Mr Chairman, I realise the increases sought represent a significant increase over and above the current level paid, however in my opinion they are reflective of the fact that no increase has been forthcoming for in excess of 5 years. The increase of $60,000 represents an increase of approx. 43% or 8.5% for each of the five years no increase was provided.[7]

30 This letter was forwarded to the Chairman on 19 March 2013 under cover of an email which stated as follows:

Chairman,

I realise the timing may well be inappropriate, however I attach for your kind consideration a letter from myself seeking your consideration for an increase in the annual salary paid. I further attach a copy of my employment contract as well as the variation to it dated October 185th [sic] 2007.

I would welcome the opportunity of discussing this matter with you further should you desire.

I had wanted to discuss this matter with you in Fiji or whenever we were due to meet next.

Kind regards

Paul Bannon

Secretary to the Trust

31 The letter of 1 March 2013 was signed by each of the four members of the Board as 'approved'. The approval was noted to take effect from the pay period ending 22 May 2013. Despite the approval, Bannon did not seek to implement the increase until 24 June 2014. He then sent an internal memorandum to NPRT's finance manager in the following terms:

Romys,

For your kind information and action, would you please refer to the attached wages letter dated March 31st 2013 duly signed by the former Chairman of the Trust Mr Alex Namaduk. The wages letter was ratified by the board at a meeting in Melbourne on May 13th 2013.

I have elected not to give effect to the increase as yet as a means of implementing an enforced savings program upon myself as the speculation concerning the Trust and its future was subject to increased speculation and uncertainty.

With the closure of the Trust scheduled for Monday June 30th 2014, would you kindly:

1. Refer to the attached worksheet and arrange for payment of my back pay adjustment in the amount of $46,400 (net).
2. Ensure the back pay adjustments are included within the 2013/2014 wage records summaries.
3. The final pay from 18 June to 30 June 2014 is calculated at the new rate.
4. My superannuation adjustments are calculated and paid accordingly.

32 Bannon was not paid the requested back pay prior to the termination of his employment on 30 June 2014. The extent of his entitlement to back pay was disputed at the trial.

33 On 9 November 2012, the receivers paid a sum of $85,215,466 into the New South Wales Supreme Court. The amount represented a surplus arising from sales by the receivers of properties of various Nauruan entities. During the course of the receivership the receivers had realised assets which secured loan facilities granted by GE Capital to Ronsi Business Pty Ltd and Republic of Nauru Finance Corporation and discharged the debts owing under the facilities. The receivers held the surplus proceeds of sale as trustees for the Nauruan entities. The funds in court were ultimately paid out to NPRT on or about 1 November 2013.

34 During 2013 and 2014, the Republic of Nauru passed legislation providing for the distribution of funds to beneficiaries and the winding up of the NPRT. The explanatory memorandum relating to the Ronwan Distribution Bill 2013 (Nauru) summarised the circumstances in which this took place:

The Government of Nauru was elected with a mandate for - among other matters - the finalisation and vesting of the Nauruan Land Owners Royalty Trust Fund (the Fund) to the Landowners.

Since its enactment in 1968:-

(i) the number [of] Land Owners interested in the Fund has grown exponentially;

(ii) Land Owners have indicated:-

(a) disapproval of what they consider intermeddling with the operation of the Fund by previous Governments;

(b) disappointment with the external administration of the Fund;

(c) a desire to self-manage any part of the Fund to which they may be entitled;

(iii) The Government is mindful that a number of substantial assets comprising part of the Fund were the subject of appointment of external receivers & managers from 2004;

(iv) The Government is sympathetic to the concerns of Land Owners and moreover considers that it would be beneficial for funds comprising the fund - at the option of respective Land Owners - to be deposited or invested in Nauru, rather than wholly invested off-shore.

The Government is further mindful that:-

(i) the Bendigo Bank is anticipated to establish a bank branch in Nauru in early 2014.

(ii) the majority of the Fund is in liquid form and has in recent months been repatriated to the control of NPRT after protracted court disputes in Australia;

(iii) As far as is practical to do so, it would be desirable for the administration and regulation of matters concerning the Fund to take place within Nauru.

(iv) the will of the electorate and the Land Owners is that the Fund be gotten in and vested or distributed to the Land Owners without any undue delay.[8]

35 On 31 March 2014, Bannon together with the other employees of NPRT received an email from Mr Andrew Jacobson, lawyer for the Board, headed 'Notice of Redundancy'. The email stated in part:

Dear Paul, Mary, Kham & Romys,

I confirm as has been made known previously, that Nauru Phosphate Royalties Trust (NPRT) will be closing down its Melbourne Branch office on Monday 30 June 2014 and that the current employment positions of all staff of the Melbourne office shall be made redundant on 30 June 2014.

...

36 Bannon disputes that this email constituted valid notice of termination of his employment contract and has claimed damages in lieu of notice.

37 When Bannon's employment was terminated he was not paid accrued annual and long service leave entitlements. The quantum of these entitlements was also disputed at trial. He also had, and was not paid, contractual entitlements to 50 percent of accrued but untaken sick leave and for redundancy pay. His entitlement to both untaken sick leave and redundancy pay was not disputed at trial, however the salary basis for calculating such entitlements was disputed.

The preliminary construction issues: the meaning of 'monthly entitlement' and the meaning of 'subsidiary company' of NPRT

38 Before turning to the proposed grounds of appeal, it is convenient to address two contentions raised on behalf of the applicant which address the ambit of the provision of the 2007 contract relating to the provision of services to subsidiary companies. It is convenient to repeat the relevant provision:

The Employee's remuneration whilst employed by the employer will consist of the following: ...

1. During each period that the Employee acts as a Director or Secretary of a subsidiary company of the [NPRT], a Monthly Entitlement of $1,500 in respect of each such subsidiary company;

39 The applicant contends first that the entitlement did not stipulate that the secretarial fees were to be payable at a particular time. It is submitted that the secretarial fees were monthly entitlements in the sense of being calculable by reference to monthly periods, not payable monthly.

40 Secondly, it is submitted that the entitlement with respect to subsidiary companies extended to an entitlement with respect to services performed as Company Secretary for two related entities which were not subsidiaries within the meaning of the Corporations Act 2001 (Cth).

41 Insofar as the first question is concerned, the applicant submits that the secretarial fees were not subject to a contractual stipulation as to the time for payment, unlike Bannon's salary, which was expressly required to be paid fortnightly by cl 1 of sch 2 of the 2007 contract.

42 In consequence, it is submitted that the secretarial fees were payable, like accrued untaken annual leave entitlements, upon termination of employment. The point raised bears both on the nature of the entitlement in respect of which the trial judge held an estoppel arose and upon the alternative question of whether a partial defence would arise in any event under s 5(1) of the Limitation of Actions Act 1958.

43 The trial judge rejected the applicant's construction of 'monthly entitlement':

I reject Mr North's submission that Mr Bannon's fees entitlement is analogous to an entitlement such as long service leave. Clause 4 of sch 2 confers a 'Monthly Entitlement' of $1,500 during each period that Mr Bannon acts as a Secretary or Director of a subsidiary company of NPRT, in respect of each subsidiary company. This entitlement accrues and is payable on a monthly basis. This conclusion is reinforced by the obligation under cl 7 of sch 2 to pay superannuation contributions of nine per cent of the monthly entitlement 'pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth).'

...

The [Superannuation Guarantee (Administration) Act 1992 (Cth)] imposes an obligation upon an employer to pay superannuation contributions on a quarterly basis.[9] A failure to do so renders the employer liable to recovery proceedings under pt 4-15, sch 1 of the Taxation Administration Act 1953 (Cth). The requirement under cl 7 of sch 2 for NPRT to make quarterly superannuation contributions of nine per cent in respect of Mr Bannon's fees entitlement, points strongly to the conclusion that the fees entitlement under cl 4 accrued and was payable on a monthly basis.

In addition to the matters set out above there is authority for the proposition that, absent a term of a contract to the contrary, where the performance of work is governed by a contract, a cause of action for breach accrues upon the performance of the work, rather than when a demand for payment is made.[10] There is no provision in the 2007 contract, the effect of which is that a cause of action for non-payment of the monthly entitlement arises upon the service of a demand for payment. Mr Bannon's claim for breach of contract for non-payment of Secretary/Director fees is statute barred prior to 29 June 2009.[11]

44 In our view, the trial judge was correct. The plain meaning of the words providing for remuneration in respect of a monthly entitlement 'during each period that the employee acts' in the requisite capacity, is that the employee is entitled to receive monthly payments.

45 There was no practical constraint arising from the nature of the entitlement, such as may occur with respect to annual leave, which prevented or inhibited the taking of the entitlement from month to month. One may compare the practical constraints in cl 7 of the 2007 contract which governed the employee's entitlement to annual leave.

7.1 The Employee is entitled to four (4) weeks annual leave per year of service in accordance with Division 4 of Part 7 of the Workplace Relations Act 1996.

7.2 Annual leave accrues on a pro rata basis and is credited to the Employee on a [sic] annual basis. Unused annual leave will be cumulative from year to year.

7.3 Annual leave will be given and taken in periods agreed to between the Employee and the Employer.

7.4 The Employer can also direct the Employee to take up to 2 weeks' annual leave during a particular period where more than 8 weeks of annual leave has been accrued.

7.5 The Employer has the right to refuse the granting of annual leave based on the demands of the business.

46 We further agree with his Honour that the absence of a provision requiring a demand to be made as a condition of the obligation for payment supports the view that the secretarial fees became payable upon the completion of each month's service.

47 The obligation imposed by the Superannuation Guarantee (Administration) Act 1992 (Cth) ('SGA Act') for employers to pay superannuation contributions on a quarterly basis also, as his Honour noted, points to the conclusion that the fees entitlement under cl 4 accrued and was payable on a monthly basis.[12] We therefore reject the applicant's construction of the phrase 'monthly entitlement'. The applicant's construction would read words into the 2007 contract, 'calculated on a [monthly] basis', which are simply not there. The entitlement accrued and was payable on a monthly basis.

48 The second construction issue relating to cl 4 of sch 2 relates to the phrase 'Director or Secretary of a subsidiary company of [NPRT]'. Clause 27 of the 2007 contract provided that it was governed by the laws of the State of Victoria.

49 The applicant's claim for damages arising out of his entitlement to fees as a Secretary or Director related to 19 companies. As we have said, there was an issue at trial as to whether two of these companies were subsidiary companies within the meaning of cl 4 of sch 2.

50 It is common ground that the two companies were not subsidiaries of NPRT within the meaning of s 46 of the Corporations Act 2001 (Cth). As the respondent submits, the evidence was to the following effect:

(a) NPRT did not hold any shares in either Central Pacific (Downtowner) Pty Ltd nor Randwick Nominees Pty Ltd;

(b) Bannon was appointed as a Director of each of the two companies by the Nauruan Government and not by the Board of NPRT;

(c) Bannon's own evidence was that 'I don't consider Central Downtowner a subsidiary'. He also deposed by affidavit that 'Central Pacific (Downtowner) Pty Ltd is not a related entity of NPRT';

(d) The sole shareholders in Randwick Nominees Pty Ltd were Theodore Moses and Kenneth Walker. Bannon confirmed in cross-examination that he understood the shareholders held the shares on behalf of the Nauruan Government.

51 The trial judge dealt with the applicant's submissions as follows:

Mr Bannon submits that the objective common intention of the parties to the 2007 contract was not to have regard to the strict legal definition of 'subsidiary' but to regard all relevant companies within the Nauruan government's effective control as 'subsidiary companies' of the defendant. Mr Bannon submits that 'subsidiary company' in the context of the 2007 contract should be read and understood as being similar to an 'associated entity' as defined in s 50AAA of the Corporations Act. Mr Bannon submits that both Randwick Nominees Pty Ltd and Central Pacific (Downtowner) Pty Ltd were subsidiary companies of NPRT in this sense.

The phrase 'subsidiary company' has an unambiguous meaning in accordance with s 46 of the Corporations Act. Neither Randwick Nominees Pty Ltd nor Central Pacific (Downtowner) Pty Ltd is a subsidiary of NPRT within the meaning of s 46. Mr Bannon's submission that 'subsidiary company' should be read as being similar to an 'associated entity' is an invitation to rewrite cl 4 of sch 2. I reject this submission. Neither Randwick Nominees Pty Ltd nor Central Pacific (Downtowner) Pty Ltd is a subsidiary company of NPRT within the meaning of cl 4 of sch 2 of the 2007 contract.[13]

52 There was no error in this reasoning. Whilst the 2007 contract did not itself define 'subsidiary company', the term should be given its ordinary meaning under Victorian law. The extrinsic evidence does not establish that the parties objectively intended to regard all associated companies under the effective control of the Nauruan Government as 'subsidiary companies' of NPRT, as was contended by the applicant.

53 In the course of submissions made on his behalf, the applicant referred to correspondence relating to Randwick Nominees Pty Ltd in March 2007. At that time, Bannon requested payment by Randwick Nominees Pty Ltd of fees payable to Hon. Roland Kun MP - former Chairman/Director of the company; Ms Aremwa - then Chair/Director of the company; and himself, then Director/Secretary of the company.

54 Ultimately, Ms Aremwa advised Bannon (in her capacity as chair of Randwick Nominees Pty Ltd) that he would be paid for the work he had undertaken for that company. Omitting formal parts, the email stated:

I've just been in a meeting with the Minister and amongst other things, we discussed Randwick Nominees.

We both agreed that 43 months at $1,000 per month be paid to Paul Bannon - current Director/Secretary.

The Minister and myself did our duties as Chair of NPRT while you took on the job separate from your role as Secretary to the Trust. You did your job well and your claim is justifiable. We will ratify this at the next board meeting.

55 In our view, the reference to Bannon's performance of a 'job separate from your role as Secretary to the Trust' does not assist his case.

56 The applicant also points to the evidence of two of the directors of NPRT as demonstrating the common intention of the parties. Mr Elvin Brechtefeld was first appointed to the Board of NPRT in June 2012. Ms Sharain Hiram was first appointed in March 2014. Neither could give evidence bearing on the circumstances at the date of the contract.[14]

57 It follows that properly understood the applicant's claim to monthly entitlements accrued monthly and related to 17 companies. As such, it comprised a claim for $2,898,000.[15]

59 Proposed ground 1 of appeal is: the trial judge erred in determining that the applicant's claim for secretarial fees was defeated by an estoppel by convention or alternatively equitable promissory estoppel as those findings were not supported by the evidence, and the trial judge should have held that the applicant was entitled to payment of the fees in accordance with his contract of employment.

60 The trial judge treated the estoppel issue carefully and in detail.[16] It is necessary to traverse that treatment because the ultimate question raised by ground 1 is whether his Honour was entitled to draw the factual inferences from the evidence as a whole which formed the basis of his conclusions as to the estoppel issues.

61 His Honour commenced his treatment of the topic by identifying a series of contextual matters including the following.

• The defence of estoppel was added by amendment during the course of the trial.
• The terms of the 2007 contract conferred a monthly entitlement of $1,500 (plus nine percent superannuation) in respect of services rendered as Secretary and/or Director of each subsidiary of NPRT.
• Upon execution of the 2007 contract on 24 August 2007, NPRT was immediately liable to pay Bannon a sum of approximately $1.15 million.[17]
• Bannon's ongoing entitlement to secretarial fees was over two and a half times his base salary.
• Due to the receivership and the liquidity situation which it created, NPRT could not have met its liability with respect to secretarial fees as at the date of the contract.
• Bannon made no claim for secretarial fees during the course of his employment.
• From April 2009 onwards, s 32 of the NPRT Act imposed an obligation upon Bannon to report on the annual administration budget to both the Board of NPRT and the Minister responsible for NPRT.
• During the period Bannon was under a statutory obligation pursuant to s 32 of the NPRT Act, no audited accounts of NPRT were finalised. Throughout this period the Board and the Nauruan Government were entirely reliant upon the administration budgets and unaudited accounts prepared by Bannon as the source of information regarding the ongoing financial position of the Trust.
• Auditors for NPRT were appointed in 2008 and sought to produce audited accounts. But no draft set of accounts was produced to Bannon or the Board by the auditors in the following years.
• In each year of his employment after August 2007, Bannon's contractual entitlement with respect to secretarial fees increased by more than $250,000. As a result, a failure to refer to any accrued and ongoing liability in this respect meant that the difficulty of the financial position of NPRT was seriously understated.
• Bannon prepared unaudited accounts for the year ending 30 June 2008 which made provision for employee entitlements of $278,530 but did not disclose his entitlement to secretarial fees, which at that time by his reckoning was approximately $1.8 million. He gave evidence that the failure to include reference to this entitlement was 'an omission rather than an intentional lack of inclusion'.
• In subsequent years, Bannon did not include the accrued or ongoing liability for secretarial fees in the annual administration budgets prepared by him. Bannon gave two explanations for this. First, the Trust did not have the capacity to pay the secretarial fees at that point in time, and secondly, there was a distinction to be drawn between claims which were likely to require payment in the following year and the secretarial fees which were not intended to require payment until the receivership concluded. As explained by Bannon, the distinction between the two categories was a fine one.

The budget, again, is an attempt obviously to include the expenditure that is likely to be incurred in the next 12 months. I did not anticipate the receivership of the Trust - sorry, the receivership of the Trust may or may not have concluded during that particular period of time and, if it did, it was then my intention obviously to raise the director and secretarial fees, but because of the uncertainty I limited the budget inclusion to just the statutory amounts that were payable by the Trust in the event that the office closed. But, as I said, the budgets were prepared in this manner since 2004, and actually - and we worked within this environment that may or may not be the case.

• Notwithstanding this attempted explanation Bannon conceded that the accumulated value of the secretarial fees should have been included in the annual administration budgets if the budgets were to provide properly for employee expenses upon the closure of the trust.

We interpolate that the transcript of Bannon's evidence includes the following passage:

The practice was to, what, to include provision in the budget for the full expense associated with the close down of the Trust; that's correct isn't it? --- Best estimates, Mr Millar, yes.

Best estimates of what the Trust would have to pay out if it closed, and that includes all of the leave entitlements that you've run through; that's correct? --- Yes, but I'm sure that there would have been omissions in a number of other sub-heads that probably wouldn't have been sufficient if the office did in fact close, such as removal costs or things like that.

On that basis, if you're approaching the framing of the budget with the need to include provision for employee expenses upon closure of the Trust, you needed another $2.2 million included there, didn't you? --- If that's the accumulated value of the secretary and directors entitlements, then yes, that's correct.

So again, the document that you've produced for the year ended 30 June 2010 is materially misleading? --- Yes, on the basis - sorry, yes, that is correct.

62 His Honour then analysed further the evidence relating to the administration budgets for the years ending 30 June 2010 and 30 June 2011. It is unnecessary to repeat that analysis in full but we note the following matters.

• The administration budgets provided estimates for the salaries of those in the Melbourne office including ongoing entitlements such as annual leave, long service leave and sick leave. No provision was made for Bannon's secretarial fees.
• The administration budget for the year ending 30 June 2011 was provided to the Board of NPRT under cover of a note which expressly stated:

The 2010/2011 Administration Budget of the Nauru Phosphate Royalties Trust endeavours to encapsulate all potential liabilities facing the Nauru Phosphate Royalties Trust for the financial year in question.

• Bannon acknowledged in cross-examination that the liability for secretarial fees was a potential liability which should have been included in the administration budgets.
• The note to the Board also stated:

Salaries expatriate ... has been prepared on the basis of a worst case scenario in which staff entitlements are not utilised during the financial year in question - that is no annual leave is utilised during the financial year.

• Bannon sought to distinguish between the worst case scenario referred to and the potential liability for secretarial fees which he said would be negotiated on completion of the receivership.
• In fact, as his Honour noted, the proceeds of the receivership were provided to NPRT in November 2013 but no discussion took place between Bannon and the Board concerning an entitlement to secretarial fees between November 2013 and 30 June 2014.
• Bannon maintained in evidence that the Board knew of his entitlement even though it had not been exercised and was not disclosed in the administration budget.[18]
• Bannon said statutory entitlements of employees were included in the administration budget because the Trust had the capacity to meet them, but he did not include the secretarial fees because the Trust would not have had the capacity to meet them until the receivership was complete.[19]

63 The trial judge then analysed the evidence relating to the administration budget for the year ending 30 June 2012. We note the following matters.

• The 2012 budget was also provided under cover of a note which again stated 'the 2011/2012 Administration Budget of the Nauru Phosphate Royalties Trust endeavours to encapsulate all potential liabilities facing the Nauru Phosphate Royalties Trust for the year in question'.[20]
• Contemporaneous email documentation demonstrates the Board reviewed the budget in considerable detail.

64 His Honour next addressed the evidence relating to a document titled 'Budget Working Papers 2012-2013'.[21]

• Bannon agreed that during the process of establishing a budget for each financial year he did not disclose the secretarial fees.[22]
• Further, there was never any agreement or explicit discussion with the Board concerning his approach.[23]
• The 1 March 2013 letter, which we have quoted above,[24] did not make a claim for the payment of secretarial fees but noted that Bannon had not sought payment of them.
• There is no evidence that the Board shared an expectation that an invoice would be presented for the secretarial fees upon the completion of the receivership.
• Nor was there evidence that the Board was aware on an ongoing basis of the existence or quantum of the entitlement.
• The evidence of Ms Aremwa, who was Chairman of the Board in 2007, did not, on analysis establish such awareness.[25]

Ms Aremwa believed that the contents of the financial reports prepared by Mr Bannon were accurate and relied upon those reports when making decisions as a Board Member. Those reports never included any reference to Mr Bannon's accrued or ongoing entitlements to Secretary/Director fees. Ms Aremwa believed that Mr Bannon was entitled to be paid something for the work which he was undertaking for subsidiaries. However, she thought there were less than ten subsidiaries. There was 'nothing to them, only the names and the accounts and all that.' She believed that any liability to pay Mr Bannon the fees for Secretary/Director duties he undertook rested with the subsidiary companies themselves. Ms Aremwa's evidence supports a finding that between August 2007 and March 2013 (being the date of Mr Bannon's letter of 1 March 2013 requesting a pay increase) NPRT assumed that Mr Bannon had no entitlement to be paid Secretary/Director fees by NPRT.[26]

66 Likewise, the evidence of Ms Thoma, the other signatory to the 2007 contract supported the conclusion that she assumed there was no liability to pay Bannon fees beyond those identified in the accounts he prepared.[27]

67 The evidence of three other Board members - one of whom (Ms Clarissa Jeremiah) had been a Board member at the time of execution of the 2007 contract in August 2007 and when Bannon received approval for the salary increase in October 2007 - demonstrated no knowledge of an entitlement by Bannon to the secretarial fees.[28]

68 The above evidence established a continuing course of dealing between Bannon and NPRT which assumed as its basis that there was no ongoing liability on the part of NPRT to pay the secretarial fees. We will return to the most significant features of this course of dealing shortly but first it is desirable to summarise the trial judge's conclusions with respect to the fact and consequences of NPRT'S reliance upon the shared assumption as to its ongoing obligations.

69 His Honour concluded that NPRT suffered detriment in consequence of the reliance upon the shared assumption, namely:

(a) the amount in issue was very substantial;[29]

(b) NPRT accepted, adopted and implemented annual administration budgets which fundamentally misstated the potential liabilities of the Trust;[30]

(c) no ongoing provision was made for the accrued and continuing claims in respect of secretarial fees;[31]

(d) the distribution to landowners commenced and proceeded for more than six months before Bannon made claim for his entitlements;[32]

(e) the net sum available for distribution to landowners was less than that to be inferred on the basis of the administration budgets prepared by Bannon and accepted by NPRT and the Minister.[33]

70 In summary, the evidence analysed by the trial judge demonstrated that:

• Bannon did not claim secretarial fees at any point during his employment.
• Bannon did not make payment to himself of any of such secretarial fees during the course of his employment despite having the capacity to do so.
• Bannon presented ongoing accounts to the Board in a way which both implicitly and explicitly purported to state all the ongoing potential liabilities of NPRT with respect to the entitlements of employees.
• Such accounts failed to identify either the accrued or potential liability of NPRT with respect to the secretarial fees.
• The Board of NPRT examined and accepted the accounts prepared by Bannon and, in particular, annual administration budgets which were provided in accordance with his statutory duty under ss 32(1) and (2) of the NPRT Act.
• There is direct evidence that on at least one occasion the administration budget was presented directly to the Minister at a board meeting but it may also be inferred from the presumption of regularity that the administration budgets generally were presented to the Minister in accordance with Bannon's statutory duty.
• No provision was made by NPRT in the administration budgets for the existing or continuing liability in respect of the secretarial fees.
• There was no agreement between Bannon and NPRT that liability for the secretarial fees would be deferred until the completion of the receivership.
• There was no advice by Bannon to the Board that Bannon was postponing a claim for secretarial fees otherwise due to him until the completion of the receivership.
• There was no claim by Bannon for the secretarial fees when NPRT received substantial sums from the receivership.
• At the time distribution to beneficiaries commenced of funds released by the liquidator no accounts had been presented to the Board or the Minister identifying any accrued liability for secretarial fees payable to Bannon.

71 We would add that in our view the significance of the above matters was accentuated by the fact that the applicant had a contractual duty to keep the Board advised in respect of the accounting and administrative property functions of the Trust. No advice was given to the Board explaining the omission of reference to the secretarial fees within the administration budgets. No advice was given as to the level of accrued continuing entitlements under cl 4 of sch 2 of the 2007 contract. The fact that the annual administration budgets fell to be understood as giving a true picture of NPRT's financial position on their face was thus in part a product of Bannon's failure to give further advice.

72 After addressing the evidence, the trial judge summarised the principles governing estoppel by convention. The relevant principles were elaborated by Tobias JA in Ryledar Pty Ltd v Euphoric Pty Ltd,[34] in a passage adopted by this Court in FJ & PN Curran Pty Ltd v Almond Investors Land Pty Ltd:[35]

.... estoppel by convention is a form of estoppel founded upon an assumed state of affairs by the parties whether as to a matter of fact or a matter of legal effect which both will be estopped from denying: Con-Stan Industries of Australia Pty Ltd v Norrich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 at 244-245. That assumed state of affairs takes as a given the terms of the contract as known to and understood by the parties but from which the parties have departed for the purpose of their furtherance of their relationship under the contract.

As Dixon J therefore observed in Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 at 676, belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs.

In his recent book, Estoppel by Conduct and Election (2006) Sydney, Thomson Sweet & Maxwell, at 115 [8-0001], KR Handley described estoppel by convention in the following terms:

"When parties make a statement of fact or of mixed fact and law the conventional basis of their transaction ... both are estopped from questioning its truth for the purpose of that transaction. Estoppels by convention can be created ad hoc, expressly, by a course of dealing, or by other acts and declarations. In such a case 'there must be some mutually manifest conduct by the parties' with the intention of effecting their legal relationship."

In Amalgamated Investment & Property Co Ltd v Texas Commercial International Bank Ltd (in liq) [1982] QB 84 at 121, Lord Denning MR observed:

"To use the phrase of Latham CJ and Dixon J in [Grundt] ... the parties by their course of dealing adopted a 'conventional basis' for the governance of the relations between them ... They are bound by the 'conventional basis' in which they conducted their affairs. The reason is because it would be altogether unjust to allow either party to insist on the strict interpretation of the original terms of the contract - when it would be inequitable to do so having regard to dealings which have taken place between the parties."

His Lordship also observed (at 121) that:

"[t]here is no need to enquire whether their particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it."

The principles were restated by Lord Steyn in delivering the principal speech in The "Indian Grace" (No 2) [1997] UKHL 40; [1998] AC 878 at 913, where his Lordship said:

"... an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared ... or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption."

Recently the principles were restated by Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5 [30], where his Honour observed (at 89,913 [30]; 56,215 [30]) that the doctrine of conventional estoppel precluded either party to a contract from denying an assumption which has formed the conventional basis of the relationship between them. Accordingly, it is necessary to determine whether the parties have in fact adopted such an assumption as the conventional basis of their relationship.

His Honour then stated the matters necessary to establish conventional estoppel (at 89,914 [32]; 56,215 [32]) as being that:

(a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;

(b) the defendant has adopted the same assumption;

(c) both parties have conducted their relationship on the basis of that mutual assumption;

(d) each party knew or intended that the other act on that basis; and

(e) departure from the assumption will occasion detriment to the plaintiff.

In noting the differences between promissory estoppel and conventional estoppel his Honour then observed with respect to the latter (at 89,914 [33]; 56,216 [33]) that it:

"[33] ... is focussed on the consensual basis of the parties' relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved so as to hold both parties to their common understanding.

73 The trial judge referred to the judgment of Brereton J in Moratic Pty Ltd v Gordon[36] and the reasons of Gleeson JA in Sze Tu v Lowe.[37] As he further observed, an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, where the assumption is made by one and acquiesced in by the other. His Honour went on to say:

The assumption must be proved by evidence. This does not mean that inferential reasoning is unavailable to prove the assumption. It is not necessary that the parties believe the assumption to be true and the parties may adopt as the conventional basis of a transaction between them, an assumption which they know to be contrary to the actual state of affairs. Unconscionability is not an element of estoppel by convention. It must be proved by the plaintiff that there is a connecting link between some action or inaction taken and the assumption. This will be established by the plaintiff proving reliance upon the assumption to act in a way which it would otherwise not have done.[38]

74 The applicant accepted that his Honour's statement of the relevant principles was correct in law. In the present case, NPRT sought to establish an estoppel by convention by proving:

(a) NPRT was induced by Bannon to adopt an assumption as to the terms of its legal relationship with Bannon;

(c) both parties conducted their relationship during Bannon's employment on the basis of that mutual assumption as to his entitlements;

(d) each party knew that the other would act on the basis of the assumption; and

(e) departure from the assumption would cause detriment to NPRT.

75 His Honour stated his conclusions with respect to the existence of a shared assumption between the parties as follows:

From 24 August 2007 until 1 March 2013 (the date of Mr Bannon's letter to Alexius Namaduk seeking a $60,000 salary increase) relations between Mr Bannon and NPRT were conducted on the basis that, notwithstanding cl 4 of sch 2 of the 2007 contract, Mr Bannon had no entitlement to be paid Secretary/Director fees by NPRT. Between 24 August 2007 and 1 March 2013 Mr Bannon never made any reference, either verbally or in writing, to the existence of his fees entitlement. He was the senior employee of the Trust's Melbourne office. He had the authority to facilitate payment of his accrued and ongoing fees. In October 2007 he facilitated a payment to himself of $295,475. This represented 4.5 years back pay of the $60,000 salary increase approved by the Board on 17 October 2007. Mr Bannon did not facilitate payment to himself of his accrued and ongoing fees entitlement. Further, he made no reference to his accrued entitlements in the annual administration budgets which he prepared post-2007. He was aware that Board Members relied upon the accuracy of the administration budgets when making financial decisions regarding the Trust's operation.

Mr Bannon advanced two explanations for his failure to claim fees during the course of his employment. First, he decided not to pursue the fees because NPRT lacked the capacity to pay and he did not wish to be the creditor who would place the Trust into liquidation and cost the jobs of the people that he worked with. Second, Mr Bannon did not include any reference to his accrued fees entitlement in annual administration budgets on the basis that he did not anticipate that in any of the years he had prepared an annual budget that he would be making a claim for payment of his accrued fees. He therefore considered it unlikely that the Trust would actually incur any liability to make the payment in any given year. As to this explanation, it is inconsistent with Mr Bannon's evidence that since the appointment of receivers in 2004 the Melbourne office of the Trust had constantly operated under a threat of closure upon the release of the receivership funds. Further, the explanation is underpinned by an assumption, which I reject, that the Trust's liability to make payment did not crystallise until Mr Bannon made a demand for payment.

For the period 24 August 2007 to 1 March 2013 there is no evidence of Mr Bannon explaining his reasons for failing to facilitate payment to himself of his fees entitlement under cl 4 of sch 2 of the 2007 contract. During this period relations between Mr Bannon and NPRT were conducted on the basis that he did not have any entitlement to be paid Secretary/Director fees by NPRT.

As set out earlier in this judgment, I have concluded that NPRT assumed during the period 24 August 2007 to 1 March 2013 that Mr Bannon had no entitlement to be paid by NPRT the fees prescribed by cl 4 of sch 2 of the 2007 contract. Mr Bannon acquiesced in NPRT's assumption. He did so by never making any reference to the existence of an entitlement to be paid between 24 August 2007 and 1 March 2013. He presented administration budgets to the Board and the Minister for the Trust which included no reference to any liability to pay his accrued and ongoing entitlements. The present case is not one where the Trust has acted on an assumption independently of any conduct by Mr Bannon. Mr Bannon's failure to include any reference to a very substantial accrued and ongoing liability in the administration budgets 'crossed the line' between Mr Bannon and the Trust, thereby manifesting his assent to the Trust's assumption that he had no entitlement to be paid Secretary/Director fees by the Trust.[39]

76 His Honour then rejected a series of submissions made on behalf of Bannon asserting that the terms of the 2007 contract itself and the conduct of Bannon were inconsistent with the asserted estoppel[40] and that evidence relating to work done for Randwick Nominees Pty Ltd as Secretary/Director supported the conclusion that there was no shared assumption of the kind contended for.[41]

77 The trial judge further rejected a submission that the parties' conduct was consistent with an equally plausible assumption to that said to underpin the estoppel, namely that Bannon was deferring payment of his accrued entitlement until the financial position of the Trust improved.[42] This was because the administration budgets never made any reference to Bannon's accrued, ongoing or future entitlements.

78 His Honour then reiterated his conclusions that NPRT had relied upon the shared assumption and had, in consequence, conducted its financial affairs and reported to the Minister on the basis that it had no liability to pay the secretarial fees.

79 Further, Bannon's letter of 1 March 2013 did not terminate the estoppel by convention, because whilst referring to his contractual entitlement it made no claim for accrued or ongoing secretarial fees. To the contrary, it relied upon the non-receipt of such fees as a factor supporting a substantial salary increase.[43]

80 Moreover, no claim was made for secretarial fees when NPRT received substantial funds from the receivership.

81 In the circumstances, his Honour concluded that an ongoing estoppel by convention was established.[44]

82 In the alternative, his Honour concluded that having regard to his findings of fact the evidence established a promissory estoppel up until November 2013.[45]

83 His Honour stated the elements of promissory estoppel as requiring NPRT to establish:[46]

(i) It assumed that a particular legal relationship existed or would come to exist between it and Mr Bannon;

(ii) Mr Bannon induced it to adopt that assumption or expectation;

(iii) It acted or abstained from acting in reliance on the assumption or expectation;

(iv) Mr Bannon knew of NPRT's action or intended NPRT to act in that way;

(v) NPRT's action or inaction will cause it to suffer detriment if the assumption or expectation is not fulfilled;

(vi) Mr Bannon has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.[47]

As Secretary of the Trust Mr Bannon was responsible for providing the annual administration budget to the Minister responsible for the Trust. Section 32(2) of the Act provides that the budget is to set out the projected administration costs and related expenses of the Trust likely to be incurred by the Trust on behalf of the funds administered by it in the ensuing financial year. Mr Bannon's annual entitlement to Secretary/Director fees and superannuation was an administration cost of the Trust likely to be incurred in the ensuing financial year. His failure to include his fees entitlement in the annual budget was not merely an act of acquiescence or silence. It was a positive representation to the Trust and the Minister that the Trust would not incur any liability to pay Secretary/Director fees in the forthcoming year.

NPRT acted on the basis of Mr Bannon having no entitlement to be paid fees by:

(a) Not making any payment of fees;

(b) Not making any provision for payment;

(c) Providing administration budgets to the Minister which included no reference to Mr Bannon's accrued and ongoing entitlements; and

(d) Proceeding with the distribution of the receivership residual without making any allowance for Mr Bannon's fees entitlement.

Mr Bannon knew that NPRT was acting on the basis set out above.

Earlier in this judgment I concluded that NPRT had established that it would suffer detriment if Mr Bannon was permitted to depart from the conventional basis upon which relations between him and the Trust were conducted. That reasoning applies equally for the purposes of promissory estoppel.[48]

85 Once again, the applicant does not join issue with his Honour's statement of the relevant principles but takes issue with his Honour's conclusions of fact essentially upon the same bases as he challenges his Honour's findings in support of the conclusion with respect to estoppel by convention.

86 His Honour went on to consider whether any promissory estoppel was suspensory rather than permanent.

87 His Honour characterised the 1 March 2013 letter as foreshadowing that once the receivership was over, and the Trust's financial position had improved, Bannon would seek payment of secretarial fees going forward. In our view, this characterisation was correct.

88 If however the letter is to be regarded as an assertion by Bannon of an entitlement to be paid secretarial fees as at 1 March 2013 then any promissory estoppel would cease to have effect upon the expiry of a reasonable period of notice for departure from the Trust's assumption that it was not liable to pay the secretarial fees. His Honour held that this reasonable period would be until November 2013.

89 On this assumption, promissory estoppel ceased to preclude Bannon from claiming secretarial fees from November 2013. This is coincidentally the point in time in which surplus funds held by the receivers were paid out to NPRT.

90 It is sufficient for our purposes to say that we agree with his Honour's characterisation of the letter of 1 March 2013 and that, in consequence, any promissory estoppel ended upon the payment of the proceeds of the receivership out of court to NPRT on or about 1 November 2013. Promissory estoppel would thus not preclude a claim for eight months of secretarial fees totalling $168,000.[49]

The parties' submissions with respect to proposed ground 1 on appeal

91 In his written case, the applicant agitated the following matters. First estoppel by convention was raised only during the course of the trial and in response to discussion with the trial judge. In this regard, we note that nothing turns on this fact as no challenge has been made to the procedural fairness of the course adopted.

92 Secondly, it is submitted that the trial judge erred in finding that:

(a) NPRT assumed that it had no liability to pay Bannon for secretarial fees; and

93 In our view, the matters identified by his Honour as emerging from the evidence, which we have summarised above, overwhelmingly justified the inference that NPRT assumed that its actual and potential liabilities with respect to costs in the nature of secretarial fees were as set out in the administration budgets submitted to it by Bannon.

94 The applicant's submissions combined three primary elements. First, the applicant contended that the proper characterisation of his entitlement to secretarial fees was not one which accrued monthly. Obviously enough if there was no present entitlement to the secretarial fees until they were demanded then the course of conduct upon which NPRT relied could not easily be said to give rise to an estoppel by convention. For the reasons we have given concerning the construction of the 2007 contract, however, we reject this threshold contention.

95 Secondly, the applicant contended that the Board always knew of his continuing contractual entitlement. Particular reliance was placed upon the evidence of the two Board members who signed the 2007 contract (Aremwa and Thoma). Because of the emphasis placed on this matter in oral submissions we shall return to it in some further detail below. But we are not persuaded that this evidence demonstrated that there was a continuing understanding of the applicant's ongoing entitlement to secretarial fees. To the contrary, the fact that the Board considered and approved the annual administration budgets in the terms in which they were submitted confirms that the Board accepted them as stating the true financial position of NPRT as best it could be estimated from year to year.

96 Thirdly, the applicant submitted that the annual administration budgets were directed to stating expenses that were likely to be incurred in the following year and that the secretarial fees were not included because he did not propose to claim them until the receivership was concluded. There are a series of difficulties with this proposition. At a factual level it is difficult to see why other accrued staff entitlements which would arise if the office were closed down fell to be included in the budgets but the secretarial fees did not. Moreover, the evidence showed that there was a real prospect the company would be wound up throughout the period of budgeting in question. Further, there were express statements made to the Board by Bannon that the annual administration budgets stated all potential liabilities of NPRT. In these circumstances, the annual administration budgets gave rise to an assumption on the part of NPRT that they did in fact state all potential liabilities including liability for the secretarial fees. Bannon acquiesced in the continuing assumption which he created. Moreover, the critical question is not what was Bannon's ongoing subjective intention but rather the assumption he created as to the objective obligations of NPRT.

97 During the course of oral submissions on the appeal it was put on behalf of Bannon that it was no part of NPRT's case at trial that Bannon misled the Board of NPRT. In fact, the proposition was put squarely to Bannon in cross-examination and he conceded that budget documents produced by him were materially misleading if they were understood to disclose potential liabilities upon the closure of the Trust.

98 We return then to the evidence of the Board members upon which the applicant sought to rely to establish that NPRT had a continuing understanding that the applicant had an ongoing entitlement to claim secretarial fees.

99 In oral submission on the appeal, senior counsel for Bannon submitted that each of the two key trustees (Ms Aremwa and Ms Thoma), who signed the 2007 contract, said 'they knew that he was entitled to the fees, but they had not calculated the amount, or had not been told of the amount, because ... it was continuing.'

100 It was further submitted that a fair reading of the evidence of these witnesses was that 'they maintain that they knew that there was in fact an entitlement, and that it was to be paid, and that he did a good job. He provided the service, and that "he was owed a lot of money", to use the term they used, and ... everybody in the court knew Mr Bannon was owed a lot of money.'

101 It will be recalled that the trial judge took a different view of the overall effect of the evidence of Ms Aremwa[50] and Ms Thoma.[51] We therefore turn to their evidence.

• Ms Aremwa was a member of the Board of NPRT between 2005 and 2014 and chair of the Board for various periods within that time.
• She retired on 31 March 2014 after disagreement with the relevant Minister concerning the appointment of Andrew Jacobson as Secretary of NPRT.
• She thought Bannon worked OK and was very good for NPRT. He negotiated some good settlements relating to taxation disputes.
• She explained that the trustees used Bannon's credit card in circumstances that arose after the receivership commenced.
• For a number of years Bannon acted as Secretary without a written contract.
• She described the drafting of the contract and her signature of it on behalf of the Board.
• She observed that Bannon was a good record keeper.
• She participated in an agreement in October 2007 to increase Bannon's base salary from $80,000 to $140,000.
• She understood this would be backdated to 2003.
• The trustees all signed the document approving the increase.
• Another raise was requested in 2013 and she was aware Bannon had not had a raise since 2007.
• The trustees unanimously agreed to the raise at a meeting held in a Brisbane motel.
• The relevant records have been sent to Nauru.
• She was not aware what directors of subsidiary companies were paid.

• The presentation of financial information by the Secretary to the Board was very important in making decisions for the Trust.
• The pay increase in 2007 was retrospective.
• She does not think Bannon told the Board of his entitlement to Director's fees when he negotiated a salary increase in 2007. Bannon did not say anything like NPRT already owed him $1.5 million for those fees.
• She can't say whether if she had been told of an entitlement to total salary and fees of something like $450,000 per annum she would have agreed to the salary increase.

I'm not sure, that's way too back, I knew he's been working a lot of time for that - for the Randwick Nominees stuff, it's a lot of stuff.

• She relied on the accuracy of information in documents, such as the financial report for the year ending 30 June 2008, in order to help make decisions.
• She can't remember if Bannon told her of administration expenses beyond those set out in the document.
• So far as she can remember Bannon did not tell her that he was owed about $1.5 million in employee entitlements.
• Bannon did not ever tell her that NPRT would need to provide an additional $350,000 per annum for secretarial fees.
• If the administration costs were $3 million higher, than there would be $3 million less to distribute to the landowners.
• When the pay rise was discussed in 2013 she thought Bannon's full remuneration package was $140,000.
• She knew Bannon was getting the salary and she knew that Bannon would be getting something for Randwick Nominees Pty Ltd, which he was working for.
• At the time Bannon told her that both she and the Minister together with Bannon had moneys due to them from Randwick Nominees.
• She didn't know where the payment from Randwick Nominees came from. She did not understand 'the Randwick thing'.
• Bannon worked for other entities under NPRT, but there was nothing to them: 'only the names and the accounts and all that'.
• She thought there were less than 10 other entities.
• She knew Bannon was getting something because he worked with them.
• The entities were a separate thing from the Trust.
• The payments he received relating to subsidiaries were not from NPRT.
• She knew he was owed back pay in 2013.
• She knew he was owed back pay both as a Secretary and Director.
• Everyone in the room knew that the Trust owed Mr Bannon 'a lot of money'.
• She did not know how much he was owed in 2013.
• She knew there were 'entity things' but she did not know how much they were worth.

103 When this evidence is analysed it demonstrates Ms Aremwa did not understand NPRT was liable on an ongoing basis for work performed by Bannon as Director/Secretary of subsidiary entities. To the contrary, Ms Aremwa believed the subsidiaries were of no real substance, less than 10 in number and that Bannon was paid not by NPRT but by the subsidiaries for the work done for them.

104 The statements about general knowledge that Bannon was owed money do not demonstrate the ongoing knowledge by Board members of Bannon's entitlement to secretarial fees for which the applicant contends.

• She was first appointed to the Board of NPRT in 2005 and remained on the Board until 30 June 2014.
• She did not join in the decision to terminate Bannon's employment.
• Jacobson acted as lawyer for the Board.
• She remembers approving some salary pertaining to the remuneration of directors of subsidiary companies.
• She recalls the contract with Bannon being entered into in 2007.
• The subsidiaries usually had someone in Melbourne dealing with the subsidiaries all the time, but as the Trust got into financial difficulties and the people in Melbourne were no longer recruited by entities from Nauru, they got Bannon to be responsible for those subsidiaries.
• She recalls that in 2007 there was a contract with a pay rise. She read the contract and signed it. She also approved the pay rise.
• She approved a further pay rise in 2013.
• In November 2015, she was in a different camp from the other three directors in relation to a proposed counterclaim against Bannon.
• Bannon's credit card was used by the Board.

• She agreed that she was heavily reliant on the Secretary to provide commercial information to the Board.
• A copy of the 2007 contract was kept in the Nauru office.
• She burnt the paperwork she had relating to NPRT because after she resigned she had nowhere satisfactory to file it.
• She originally had a copy of the contract. She signed it and 'whatever it says, it says'.
• Bannon should have been receiving $140,000 per annum after she signed off on it.
• Bannon did not tell her that in addition to his salary he was entitled to approximately $350,000 per annum for Director's and Secretary's fees.
• He did not tell her that in October 2007 he was entitled to back pay of about $1.2 million for Director's and Secretary's fees.
• But given what he did she would not deny him the money.
• She knew about the entities and knew that they were paid money but did not ask exactly how much.
• She needed to rely on the information Bannon was presenting when making her decisions as a trustee.
• In the course of doing her job as trustee Bannon never mentioned that he had a claim for Director's fees.
• As she remembers, Bannon never told her that an amount of about $350,000 for Director's or Secretary's fees should be included in the employee costs within the business from one year to the next.
• If by mid-2013 his total Director's fee claim was $3 million, that would come out of Fund number 2.
• If the claim were paid there would be $3 million less to be distributed to beneficiaries. Three million dollars too much has gone back to the landowners in Nauru.
• She was paid about $2,400 a year as a Board member.
• Bannon never disclosed he was entitled to receive about $350,000 per annum for his services on subsidiaries' Boards.
• But the amount of $1,500 for each was recommended by NPRT's legal advisor in 2007.
• When the pay increase was discussed in 2013 she did not have a copy of the contract. She did not have the schedule referred to in the letter requesting an increase.
• She did not know there was a claim in the wings for about $3 million.
• If she had known she would still have supported the increase:

I disagree with what you are saying, that you're assuming that I would not pay his $200,000; I would. What - you have no idea how hard Paul worked and he saved a lot of money for the trust because litigations were taking place left right and centre. In that short period, I was two weeks as chairman; we were to appeal a litigation by Command, who had won the case against the Trust in the lower court and then all of a sudden, due to Paul's hard work and negotiation, they decided to settle out of court, which saved the Trust a lot of money. Millions.

• Jacobson was authorised to act on behalf of the Board in March 2014.
• When some $85 million which had been paid into the New South Wales Supreme Court was released to NPRT some 16 percent was paid to the landowners.
• She does not know what happened to the balance.
• The Government of Nauru, not the Board, fixed the figure of 16 percent.

107 Once again this evidence does not establish a continuing knowledge on the part of the Board as to Bannon's contractual entitlements. Much less does it establish some collateral arrangement that payment of them was deferred. Rather, it demonstrates that the Board members relied upon the financial information supplied to them by Bannon.

108 In our view, the evidence as a whole demonstrates NPRT assumed and conducted its financial affairs on the basis that it had no liability to pay Bannon the secretarial fees.

109 The failure to claim the secretarial fees or to make payment to himself of them, was coupled with a deliberate course of stating the actual and potential liabilities of NPRT to the Board on a basis which did not include what was in relative terms a very substantial ongoing liability.

110 The applicant further submits that the trial judge erred in finding that:

• NPRT demonstrated reliance on the alleged assumption by:

(1) not paying Bannon the secretarial fees and not making provision for payment of the secretarial fees;

(2) proceeding to distribute the receivership residual to landowners without making allowance for Bannon's claim; and

(3) conducting its 'financial affairs' and reporting to the Minister on the basis that it had no liability to pay secretarial fees; and

• NPRT would suffer detriment if it had to pay the secretarial fees due to the size of the sum claimed by Bannon, no allowance having been made when distributing the funds to landowners and the misrepresentation of the true state of NPRT's finances from 30 June 2008.

111 In our view, the continuing acceptance of the annual administration budgets proposed by Bannon demonstrates reliance upon them. Further, there was no subsequent revision of the budgets by the Board as might have occurred under the statutory scheme. The parties acted on the basis of a shared assumption that NPRT was not liable for the contractual monthly entitlements to secretarial fees. No money was claimed and no money was paid. No provision was made for future payment.

112 In consequence, if the assumption upon which NPRT budgeted is wrong then NPRT acted to its detriment, in that it continued to incur staffing costs and conduct its Melbourne office on a basis which was, if Bannon's claim succeeds, more than $3 million more costly than it was led to believe.

113 If Bannon is correct, NPRT will be saddled with a liability to pay secretarial fees which it did not know or believe was an ongoing cost of Bannon's services.

114 Further, the accrued cost of so doing will affect the sum ultimately available for payout to the landowners.

115 On the appeal, senior counsel for the applicant submitted that a sequence of Nauruan legislation (which was not presented in full to the trial judge) demonstrated that the payment of funds to landowners following the completion of the receivership occurred in accordance with a statutory scheme culminating in the Ronwan Consolidation Act 2014 ( the 'RC Act') which had retrospective effect. In turn, it was submitted that the payments to landowners did not result from the operation of s 19 of the NPRT Act nor was it the result of a discretionary decision of the Board based upon its understanding of the financial position of NPRT.

116 We accept this to be so but it does not change the fact that the ongoing accrual of entitlements to secretarial fees involved the accumulation of a hidden and substantial cost, which would affect the funds available for distribution to landowners if the applicant were permitted to depart from the ongoing assumption which he created as to the financial position of NPRT.

117 The relevant detriment was the increased cost of the ongoing operations of NPRT which continued at a level which NPRT assumed was significantly lowers.

118 Much was also made in oral submission on behalf of the applicant of the fact that no final or audited accounts were prepared for NPRT during the course of the receivership.

119 Once again, we accept that this was so but in our view this rendered NPRT particularly vulnerable to a misrepresentation of its financial position by Bannon. The absence of such accounts did not mean that the Board members placed no reliance upon the budgetary information supplied to them by Bannon. To the contrary, it made such information doubly important when assessing whether ongoing expenditure should be approved in accordance with the annual administration budgets.

120 If Bannon is permitted to depart from the assumptions stated in the annual administration budgets, NPRT will be saddled with a liability to pay secretarial fees which it did not know or believe were an ongoing cost of its operations.

121 NPRT will therefore suffer detriment of the kind elaborated by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd.

the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment.[52]

122 On the appeal, NPRT further submitted that there was detriment simply in the requirement to pay the accumulated amount of secretarial fees in a lump sum rather than progressively year by year. Reliance was placed upon the decision in Moratic.[53]

123 In the circumstances of this case and in particular the ongoing receivership affecting the liquidity of NPRT, we doubt that this proposition can be made out.

124 Nonetheless we agree with the trial judge that NPRT suffered detriment in the relevant sense for the reasons we have identified above.

125 Insofar as promissory estoppel is concerned the applicant refers to and repeats the submission that the evidence points in the opposite direction from a mutual assumption that the 2007 contract should not apply.

126 As Brereton J observed in Moratic,[54] the cases emphasise that a party who seeks to set up an equitable estoppel of this kind must show that the other party has made an unequivocal representation that they did not intend to enforce their strict legal rights. In Legione v Hateley, Mason and Deane JJ identified a number of rules which have been established as applicable to estoppel in pais as also being applicable to promissory estoppel:[55]

First, it has long been recognized that a representation must be clear before it can found an estoppel in pais (Low v Bouverie; Newbon v City Mutual Life Assurance Society Ltd; Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd). "Every estoppell, because it concludeth a man to alleadge the truth, must be certaine to every intent, and not to be taken by argument or inference" (Coke's Littleton, 352b). In Western Australian Insurance Co Ltd v Dayton, Isaacs ACJ, referring to the requirement that a representation must be "unambiguous" if it is to found an estoppel in pais said:

"The word 'unambiguous' is explained by Kay LJ in Low v Bouverie, the word and its explanation occurring on the same page. The Lord Justice says: 'It is essential to shew that the statement was of such a nature that it would have misled any reasonable man, and that the plaintiff was in fact misled by it'. Bowen LJ says: 'It must be such as will be reasonably understood in a particular sense by the person to whom it is addressed'. This is confirmed in George Whitechurch Ltd v Cavanagh by Lord Brampton and in Bloomenthal v Ford by Lord Herschell."

The requirement that a representation must be clear before it can found an estoppel is, in our view, applicable to any doctrine of promissory estoppel (see Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd; China-Pacific SA v Food Corporation of India.

127 In our view, the representations contained in the annual administration budgets when coupled with the failure to claim or make payment to himself of the ongoing entitlements accruing under the contract, constituted a continuing series of representations by Bannon, of a kind which would be reasonably understood by the Board members as demonstrating that Bannon did not claim his contractual entitlements. And the representations were so understood.

128 No error has been demonstrated in the findings by the trial judge that:

(a) NPRT assumed that Bannon had no entitlement to be paid the secretarial fees;

(c) Bannon's failure to include his entitlement to the secretarial fees in the annual administration budgets was a positive representation to NPRT and the Minister that NPRT would not incur any liability to pay the secretarial fees in the forthcoming year;

(d) NPRT acted on the basis of Bannon having no entitlement to be paid the secretarial fees.

129 Accordingly, although we would grant leave to appeal on proposed ground 1 we would dismiss the appeal.

130 Proposed ground 2 of appeal is: the trial judge erred in determining that in the alternative, the applicant's claim for the secretarial fees was statute barred in respect of any period prior to 29 June 2009, and should have held that the applicant's claim for secretarial fees was not statute barred to any extent.

131 It follows from our conclusions with respect to the construction of the phrase 'monthly entitlements' that this proposed ground must fail.[56]

132 Proposed ground 3 of appeal is: the trial judge erred in his construction of the expression 'subsidiary company' in the contract of employment, with a conclusion that Central Pacific (Downtowner) Pty Ltd and Randwick Nominees Pty Ltd were not each a 'subsidiary company of the Nauru Phosphate Royalties Trust' for the purposes of the contract of employment and thus Bannon was not entitled to payment of secretarial fees in respect of those companies, and should have held that those companies were 'subsidiary companies' as contemplated by the parties to the contract of employment, so that Bannon was entitled to secretarial fees in respect of them.

133 It follows from our conclusion with respect to the construction of the phrase 'subsidiary company' that this proposed ground must fail.[57]

134 Proposed ground 4 is: the trial judge erred in determining that in respect of the 2014 financial year, Bannon was advanced funds that exceeded the amount he expended on behalf of NPRT, entitling the respondent to a payment of damages by Bannon of $141,052.91, and should have dismissed the whole of the counter claim.

135 Bannon submits that this finding could not be made on NPRT's pleaded claim, was not open on the evidence and resulted in an impermissible reversal of the onus of proof by the trial judge. In submissions made to us, but not to the trial judge, Bannon also contended that the counterclaim was effectively barred in full by legislation passed by the legislature of Nauru in 1968 and 2014.[58]

136 In the second further amended defence and counterclaim dated 6 June 2018 ('SFADC'), NPRT counterclaimed in respect of 'unauthorised' payments made to Bannon.

137 Paragraphs 42A and 42B of the SFADC are as follows:

42A During his employment by the defendant, additional unauthorised payments were made to the plaintiff, or on the plaintiff's behalf, of not less than $405,011.

Particulars

The accounts of the defendant include payments from the defendant's funds to the plaintiff, for the years 1 July 2011 to 30 June 2014, in accordance with the report provided by T G Fitzgerald dated 8 February 2018, supplemented by amendments dated 1 May 2018, copies of which has been provided to the Plaintiff and which are available for inspection at the offices of the lawyers for the Defendant by prior appointment, comprised as follows:

In accordance with the report of TG Fitzgerald, such sums remain payable in addition to the loan account claim of $243,048 (referred to at paragraph 42 above) the backpay adjustment of $295,475 (referred to at paragraph 42C below).

Further and in the alternative, for the period 1 July 2013 to 30 June 2014, the Plaintiff received overpayments from the Defendant of not less than $162,090, comprised as follows:

42B The payments referred to in paragraph 42A were paid without a lawful basis, and further were in breach of the Fiduciary Obligations and the Integrity Terms, by reason of which the defendant has suffered loss and damage of not less than $405,011.

138 The trial judge recorded that in its final form, NPRT's counterclaim relevantly included, among other claims, a claim in respect of 'unauthorised payments' to Bannon of $211,197 during the period 1 July 2011 to 30 June 2014, being the difference between the quantum of funds advanced to Bannon for NPRT related expenses and the amount of expenses actually incurred by him.[59]

139 The trial judge observed that during the period 1 July 2011 to 30 June 2014, NPRT deposited significant sums of money into Bannon's bank account in respect of NPRT related expenses.[60] He recorded NPRT's submission that as at 30 June 2014, it had deposited $211,197 in excess of the amount actually expended by Bannon on its behalf during that period. In reply, Bannon contended that there was no proper evidentiary foundation for finding that as at 30 June 2014, he had been advanced funds in excess of the money he had actually expended on NPRT's behalf.[61]

The primary issue for determination in relation to the Trust's unauthorised payments claim is whether, and if so to what extent, Mr Bannon was advanced funds which exceeded the amounts he actually spent on behalf of the Trust. This issue consumed a significant proportion of the 18 days of hearing, particularly Mr Bannon's evidence in respect of Exhibit A which is discussed in detail below. I accept the criticism levelled at the form in which the unauthorised payments claim in paragraph [42A] of the counterclaim is pleaded. Paragraph [42A] does not clearly allege that Mr Bannon retained funds at the time of termination of his employment which exceeded the upfront reimbursement sums advanced to him. Nevertheless, Mr Bannon was placed squarely on notice by the way in which the case was conducted that a primary issue in the proceeding was whether he had been advanced funds in excess of amounts he had actually expended on behalf of the Trust. Mr Bannon was given a fulsome opportunity to address the case as conducted.[62]

141 In the Reasons, the trial judge described the system for reimbursement of NPRT expenditure incurred by Bannon.[63] He recorded that after 2009-2010, Bannon received large upfront payments from NPRT to meet anticipated expenses, describing this as a system of 'upfront reimbursement'. Future expenditure would be estimated in the first instance and later substantiated by way of invoices. In the event that Bannon was advanced more money than he actually spent on behalf of NPRT, the amount of the next advance would be reduced to reflect the fact that Bannon had previously been advanced more than he had spent.[64] The trial judge found that the way in which the system operated from 1 July 2010 to 30 June 2014 was illustrated by a running sheet prepared by NPRT's bookkeeper which reconciled cash and credit card expenses incurred by Bannon against upfront advances during the first six months of 2013. The running sheet showed a transfer of $55,000 to Bannon's bank account in a number of payments in May and June 2013 and recorded expenses over that same period totalling $51,220.09.[65]

142 The trial judge found that there was no evidence to support a finding that the 'upfront reimbursement' of funds to Bannon was unauthorised.[66] He then proceeded to consider, on the evidence available, whether Bannon did actually receive (and retain) funds in excess of the amounts that he expended on behalf of NPRT. Although only one witness had attempted to give evidence in support of the counterclaim (the forensic accountant called by NPRT, Mr Thomas Fitzgerald[67]), the trial judge considered that documentary evidence 'of significant probative value' had been tendered: credit card statements, bank statements, expense claims and a package of documents entitled, 'Mr Bannon's reconciliation of his reimbursable expenditure for the 2014 financial year', which became Exhibit A.[68] Furthermore, Bannon himself was examined and cross-examined at length.

143 The trial judge concluded that the counterclaim in respect of the period 1 July 2011 to 30 June 2013 should be rejected, primarily because of deficiencies in NPRT's discovery.[69]

144 However, the trial judge found that there was a clear delineation between the periods 1 July 2011 to 30 June 2013 and 1 July 2013 to 30 June 2014 in that, for the period 1 July 2011 to 30 June 2013, Bannon was hampered in defending the counterclaim by reason of NPRT's financial records, particularly 'payment vouchers', having been returned to Nauru.[70] The evidence before the Court did not include payment vouchers for the period 1 July 2011 to 30 June 2014. Although there were MYOB records for the entire period evidencing the payments which were made to Bannon over and above salary and allowances, they did not show how much of the payment was actually expended by Bannon. [71]

145 The trial judge accepted that Bannon had been prejudiced by his inability to access payment vouchers in respect of expenses incurred during the period 1 July 2011 to 30 June 2013, based on Bannon's evidence that payment vouchers would have been generated by the expense claims that he lodged during this period. The trial judge considered that the difficulties in assessing damages arising from NPRT's failure to produce payment vouchers for the period 1 July 2011 to 30 June 2013 should be resolved against NPRT.[72] However, he found that Bannon was not prejudiced in meeting the claim for the period 1 July 2013 to 30 June 2014 by reason of inadequate discovery because, during that financial year, Bannon did not submit any expense claim forms.[73] This, so the trial judge found, was symptomatic of a complete breakdown in NPRT's systems governing reimbursable expenditure.[74]

146 The trial judge found that, notwithstanding the absence of any properly maintained expense reconciliation running sheets after 30 June 2013, there was a substantial body of evidence that provided a foundation for findings as to the amount which was advanced to Bannon by way of 'upfront reimbursement payments' during the 2014 financial year[75] and the amount which Bannon actually expended on behalf of NPRT during this period.[76] Some of this evidence was in Exhibit A, which was a lever arch folder prepared by Bannon containing a summary of his reimbursable expenditure for the 2014 financial year that had been forwarded by Bannon's solicitors to NPRT's solicitors prior to the commencement of the proceeding in response to NPRT's refusal to pay his statutory and leave entitlements.

147 The trial judge found that Exhibit A contained detailed expense reimbursement claims for each month of the 2014 financial year,[77] based on Bannon's credit card and bank account records, together with receipts that he had retained. In Exhibit A, Bannon had identified payments received as $421,678.15 and reimbursable expenditure of $267,088.09. Bannon's own reconciliation of his reimbursable expenditure had resulted in a differential of $154,590.06.

148 There was little dispute about the exact amount of the advances made to Bannon during the 2014 financial year. The trial judge identified three separate sources of evidence, including Exhibit A, that supported a finding that the exact quantum of upfront payments made to Bannon during the 2014 financial year was $426,178.15.[78]

149 The trial judge defined the difference between the amount of upfront payments and the amount of expenditure as the 'reimbursable expenditure deficit', which he calculated to be $162,990.06.[79]

150 Bannon contended that the reimbursable expenditure deficit was explicable by reference to cash transactions and/or financial records not discovered by NPRT. In relation to the latter, the trial judge observed that Bannon did not submit any expense claim forms throughout the 2014 financial year and, as a result, no payment vouchers would have been generated, and that this was conceded by Bannon.[80]

151 In identifying the reimbursable expenditure, the trial judge took Bannon's own figure of $267,088.09, which he first adjusted to deduct two items of travel allowance which were not legitimate, leaving a balance of $263,188.09. He then took into account Bannon's evidence that the difference between the amount advanced as 'upfront reimbursement' and the identified reimbursable expenditure was referrable to expenditure made in cash.[81]

152 The trial judge gave detailed attention to how much of the reimbursable expenditure deficit could be attributed to cash expenditure.[82] Exhibit A itself referred to cash transactions totalling $6,575.37 (of which $2068.76 was supported by receipts). Nonetheless, the trial judge agreed that it did not follow that the extent of Bannon's liability to NPRT should only be reduced by the $6,575.37 in cash payments evidenced by Exhibit A. The trial judge identified all cash withdrawals from Bannon's Classic Plus account and Bannon's MasterCard account during the 2014 financial year. He found that the total of all cash withdrawals from these accounts was $59,064.86. If this amount was added to the sum of $263,188.09 evidenced by Exhibit A, the total expenditure amounted to $322,252.95, leaving a shortfall of $103,952.20.[83]

153 However, based on Bannon's own evidence that approximately 90 percent of expenditure for NPRT for travel and accommodation was incurred on his credit card, supported by evidence of the proportion of cash expenditure versus credit card expenditure during the 2013 financial year, the trial judge assessed that Bannon's cash expenditure during the 2014 financial year was 10.8 percent of his total expenditure. Hence, Bannon's credit card expenditure as evidenced by Exhibit A ($256,612.72) represented 90 percent of total expenditure of $285,125.24. If 10 percent of this total expenditure was by way of cash, $28,512.52 had to be added to the amount expended on his credit card. This reduced the expenditure deficit of $162,990.06 by a further $21,937.15, leaving a deficit balance of $141,052.91.[84]

154 The trial judge made two qualifications to this finding. The first qualification was that it assumed that at the commencement of the 2014 financial year, NPRT was not indebted to Bannon by reason of him having incurred expenditure during the 2013 financial year that was in excess of the sums advanced to him by NPRT as 'upfront reimbursement'.[85] Bannon made no submission that the assessment of Exhibit A should proceed from the premise that he was owed money by NPRT. Furthermore, the running sheet for the period 30 April 2013 to 30 June 2013 disclosed that he had been advanced $55,000 by way of upfront reimbursement and had incurred actual expenses of $51,220.09.[86]

155 The second qualification concerned a claim by Bannon that he had $8,000 of his own cash in a safe located at NPRT's Melbourne office. The trial judge did not accept this evidence, which first emerged on day 16 of the trial.[87]

156 The trial judge did not find credible Bannon's claim that there existed documents in Nauru which would assist him in his defence of the counterclaim in respect of the 2014 financial year. In his evidence, Bannon accepted that he did not submit any document during the 2014 financial year spelling out how he had expended funds advanced to him.[88] Bannon was asked by the trial judge but failed to identify a document which would have been relevant to the 2014 financial year from which payment vouchers could have been produced. There was no evidence of any running sheets having been prepared post 14 October 2013, which was consistent with Bannon's failure to have submitted any claim forms during the 2014 financial year.[89] The trial judge found that expense claims were not submitted, with the result that office staff did not have supporting documentation which would have permitted a reconciliation of credit card and cash expenditure.

Was the claim for overpayments open on the pleadings?

157 Bannon submits that the finding that he was advanced funds that exceeded the amount he expended on behalf of NPRT by an amount of $141,052.91 was not available to be made on NPRT's pleaded claim. Paragraphs 42A and 42B refer to 'additional unauthorised payments' and payments being made 'without a lawful basis' and in breach of fiduciary obligations and integrity terms in the 2007 contract. The claim that Bannon received 'overpayments' was not pleaded, but was only included in the particulars to paragraph 42A. Bannon submits, correctly, that the trial judge made no findings in relation to unauthorised payments or payments being made without a lawful basis, and, indeed, found to the contrary that 'there is no evidence to support a finding that the upfront reimbursement of funds to Mr Bannon was unauthorised'.[90]

158 In these circumstances, so Bannon submits, for the trial judge to consider whether Bannon was advanced funds which exceeded the amounts he actually spent was a departure from the issues to be determined on the pleadings. The finding that 'if money was advanced to Mr Bannon which exceeded amounts actually expended by him on behalf of [NPRT] [Bannon] was subject to fiduciary duties to repay to [NPRT] any excess funds'[91] was not open based on NPRT's pleadings.

159 In our view, the counterclaim clearly raised as an issue whether Bannon had received payments from NPRT in the form of advances for future expenditure which he had no entitlement to retain. Paragraph 42A of the counterclaim in its final form put the alternative claim as follows:

Further and in the alternative, for the period 1 July 2013 to 30 June 2014, the Plaintiff received overpayments from the Defendant of not less than $162,090, comprised as follows:

160 The pleadings allege an overpayment, referable to payments received from NPRT less reimbursable expenditure.

161 Although the pleadings classified all of the payments in question as 'unauthorised' or as having been made 'without a lawful basis', an advance that turns out to be an overpayment because less is spent than anticipated is not, without more, 'unauthorised' or made 'without lawful basis'. In this case, there is no reason to believe that the payments giving rise to the overpayment were made unlawfully or without authority. However, it is implicit that the retention of the overpayment by the employee is unauthorised, having regard to the purpose of the payment.

162 Furthermore, there is no suggestion that Bannon was in any way taken by surprise by this claim. Mr Fitzgerald's reports attempted to grapple with the task of identifying payments made to Bannon and payments to which Bannon was entitled, 'including expenditure reimbursement claims'. He was asked to review Bannon's expenditure claim for the 2014 financial year. Bannon was cross-examined extensively about these matters. Bannon had himself identified the fact of overpayment in preparing Exhibit A. The outstanding question was as to the extent of the overpayment and whether the quantum could be established having regard to deficiencies in NPRT's discovery.

163 It was open to NPRT on the pleadings to claim the overpayment, assuming that it could prove the quantum.

Was the finding of overpayment open on the evidence?

164 Bannon submits that NPRT's claim relating to the 2014 financial year suffers from the same problems as the claim relating to the period 1 July 2011 to 30 July 2013 due to NPRT's inadequate discovery. The trial judge accepted that all of NPRT's records were shipped back to Nauru in April 2015, that those records included payment vouchers recording the payee, the account allocation and the narration/description as to what the payment related to and that the evidence before the Court did not include payment vouchers for the period 1 July 2011 to 30 June 2014.

165 Furthermore, Bannon contends that the trial judge made a fundamental error in accepting Exhibit A as 'complete evidence' of him having received more money than he expended in circumstances where his evidence was that had he had access to the documents removed from the jurisdiction he would have been able to complete his reconciliation, and Exhibit A was incomplete and inconclusive. The trial judge's reasoning failed to take into account the existence of other documents of NPRT that might have assisted in the quantification and were not discovered or produced and the lack of independent witness evidence regarding the 2014 financial year.

166 Bannon submits that his failure to submit expense claims during the 2014 financial year cannot result in a finding that no other documents held in Nauru would have assisted him. Save for the expense claims, the documents removed from the jurisdiction were of the same nature as those found by the trial judge to have been required by NPRT to prove its claim against Bannon for the 2011 to 2013 financial years.

167 Bannon submits further that the trial judge made an erroneous assumption that, at the commencement of the 2014 financial year, NPRT was not indebted to Bannon by reason of him having incurred expenditure during the 2013 financial year which was in excess of the sums advanced to him.

168 These submissions ignore the methodology used by the trial judge. His starting point was the amount of the 'upfront reimbursement' advances, about which there was no dispute. The amounts advanced were identifiable from Bannon's bank statements, which were included and tallied in Exhibit A.

169 Exhibit A was Bannon's reconciliation and it was tendered by Bannon. In his evidence, Bannon described Exhibit A as follows:

It is a complete picture, I believe, of the amounts that were paid from [NPRT] into my account. In terms of the other way, I don't believe it is a full accounting of the reimbursable side of things...

170 The trial judge also had regard to Mr Fitzgerald's evidence concerning the total payments which were received by Bannon into his Classic Plus account and the proportion of those payments transferred to his credit card account.

171 Having identified the amount of the advances, it was then a question of identifying Bannon's expenditure on behalf of NPRT. Most of this could be found in Bannon's credit card statements. Exhibit A contained a list of expenditure from this source. Bannon was asked by the trial judge whether he was confident from his review of his credit card statements that he was able to identify all of the relevant items of expenditure and he said that he was 'reasonably confident' of that. He said the 'hole' that he was trying to explain was not necessarily created by the credit card account, it was the cash component. He agreed that the expenditure was either by credit card or in cash.

172 In order to work out the cash component that should be added to the recorded expenditure, the trial judge used a simple method, largely based on Bannon's own evidence. Cash withdrawals of $1,000 or more from Bannon's bank accounts were accepted to be for NPRT related expenditure. Unaccounted for cash expenditure for the 2014 financial year was estimated based upon Bannon's evidence that 90 percent of his expenditure on airfares and accommodation went through his credit card, which was consistent with the fact that during the 2013 financial year the percentage of expense claims for cash expenditure was 10.8 percent of total claims.

173 In our view, this was a logical, transparent and fair way for the trial judge to proceed, using the best evidence available to him. The only uncertainty related to cash expenditure. That expenditure could be, and was, estimated by the trial judge based on reasonable assumptions. He gave Bannon credit for unaccounted cash transactions likely to have been undertaken. He did not treat Exhibit A comprehensive or complete; rather, he used parts of it, along with the oral evidence given at trial, to quantify, as best he could, the 'hole' described by Bannon.

174 It is well established that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can.[92] In this case, the trial judge used the best evidence available to him to assess the loss to NPRT resulting from Bannon receiving more in advances than he expended on behalf of NPRT during the relevant period. We see no error in the exercise undertaken by the trial judge.

175 We reject the proposition that the claim in relation to the 2014 financial year ought to have been thrown out on the same basis as the claims for the previous years, namely, that Bannon was disadvantaged by inadequate discovery by NPRT. The relevant failure to make adequate discovery was the failure to discover payment vouchers for the 2011 to 2013 financial years.[93] However, the trial judge found, on the evidence, that no payment vouchers were created for the 2014 financial year. In other words, the specific forensic disadvantage identified by the trial judge did not arise in respect of the 2014 financial year. There was a logical basis for distinguishing between the two periods. Insofar as Bannon was disadvantaged by the absence of payment vouchers for the 2014 financial year, that was a problem at least in part of his own making. It was not due to inadequate discovery by NPRT.

176 Finally, in circumstances where Bannon did not claim that he was owed money for expenditure during the 2013 financial year, it was reasonable for the trial judge to assume he was not and to estimate the reimbursement deficit for the 2014 financial year on that basis.

177 Bannon submitted that the trial judge's acceptance of Exhibit A as evidence of NPRT's claim against Bannon reversed the onus of proof by requiring Bannon to justify his 'accountable expenses' or 'reimbursable expenses'. At law, NPRT was required to plead and prove some breach of contract or restitutionary cause of action, which it did not do.

178 It was not in dispute that while he was employed by NPRT, Bannon had an obligation to account to NPRT for expenditure in circumstances where money was advanced to him for the purpose of being spent on behalf of NPRT. He was not entitled to retain monies that he did not spend. Exhibit A was prepared on that basis.

179 For the 2014 financial year, Bannon's own reconciliation in Exhibit A showed that he received more money from NPRT than he was able to justify as reimbursement. He prepared Exhibit A having had 'four or five months to do so' using the available information. And, as discussed, the trial judge went to considerable trouble to work out the credit card expenditure and the likely cash expenditure, based on the evidence available.

180 In our view, the fact that Bannon's evidence was used in support of the counterclaim does not mean the onus of proof was reversed. Bannon's analysis represented the best evidence of the transactions in question.

181 Bannon seeks to rely on provisions in the RC Act or the NPRT Act (together the 'Nauruan Acts') to defend the breach of contract claims brought by NPRT by way of set off and counterclaim.[94]

32A Personal liability of members

The members of the Trust shall not be personally liable for any act or omission done or omitted to be done in the bona fide exercise or purported exercise of their powers and duties as members or directors or as other office-bearers of corporations with which the Trust is associated, and they shall be indemnified by the Republic in respect of any liability howsoever incurred in connection with any such act or omission.

7. Protection of Members and Others

...

7.2 From the commencement of this Act, every: Chair, member including every acting member, Secretary, employee and agent of the Trust and every Member of Parliament of the Parliament of Nauru, prior to the commencement of this Act, shall :-

(i) Not be liable nor responsible howsoever for;

(ii) Be fully and absolutely held harmless in respect of; and

(iii) Shall be fully released and discharged from any liability for:

(a) Any and all acts, things done, omissions, failures, negligence, recklessness, abandonment and breach of trust, save to the extent of any fraud, prior to the date of commencement of this Act, in respect of:-

A. The Trust;

B. Any or all of the Funds;

1. Any asset, funds, monies, right, interest or entitlement, at any time, of, or in respect of, the Trust; and/or

1. Any corporation or body associated or previously associated with the Trust, or any or all of the Funds;
2. Any corporation or body in which the Trust or any or all of the Funds holds or at any time held any shares or capital; and

(b) And any and all loss, damage, harm or injury, in part or whole, caused or contributed to, or resulting from, any of the matters specified under part (a) of this sub-section 7.2.

7.3 No action, suit or prosecution or other proceeding shall be brought against any person in respect of any act done bona fide in pursuance or execution or intended pursuance or execution of the provisions of this Act, the Nauru Phosphate Royalties Trust Act 1968 and/ or the Nauru Phosphate Royalties (Payment and Investment) Act 1968 or any of the Bills, Acts, Regulations and/or purported Regulations specified under sub-section 2.3.[95]

184 The trial judge did not address this argument, as it was not raised at trial, despite appearing fleetingly in the pleadings. It is not raised in the proposed grounds of appeal in the Application for Leave to Appeal or in the applicant's written case. A folder of Nauruan legislation was filed three days before the hearing of the appeal and the operation of the relevant provisions of the Nauruan Acts was raised for the first time in oral submissions on appeal. In these circumstances, the argument should not now be entertained. A party should not be allowed to raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial.[96] In this case, evidence of the Nauruan Acts and their operation should have been raised at trial. We will not allow the argument to be made now for the first time.

185 In any event, as the Nauruan Acts are foreign statutes, they will only apply to contractual claims if, applying Australian private international law principles, the proper law of the 2007 contract is Nauruan law.[97]

186 As a majority of the High Court stated in Akai Pty Ltd v People's Insurance Co Ltd where the statute in question is a foreign law:

the question will be whether, subject to any local law which qualifies what otherwise would be the applicable common law principles of choice of law, the common law rules in the Australian forum pick up the foreign statute as part of the lex causae by the application of which the dispute is to be resolved by the Australian court.[98]

187 This approach was confirmed by a majority of the High Court in John Pfeiffer Pty Ltd v Rogerson:

In cases which have some 'foreign' element and concern the law of contract, or concern questions of status, it has long been accepted that the courts should identify and apply the law which governs the issue or issues that fall for decision. Thus, in cases concerning contracts, the courts seek to identify the proper law of the contract and, in cases concerning questions of status, they seek to identify the relevant governing law. The process of choice of law has, therefore, been well understood and accepted in these areas.[99]

188 When determining proper law in relation to a contract, the court will look to see whether the parties have expressed an actual intention as to the proper law of the contract.[100] Here, cl 27 of the 2007 contract nominates 'the laws of the State of Victoria' as the law of the contract. There is nothing in the pleaded case, the trial decision, or the submissions in the current application to suggest that the Court should override the parties' express choice of Victorian law as the law of 2007 contract.[101]

189 Accordingly, the Nauruan Acts do not fall for consideration, save to the extent they have been incorporated under Australian law into the employment contract. There is no reference in the 2007 contract to the RC Act. Some defined terms from the NPRT Act were incorporated in the 2007 contract and it specified that Bannon's duties included assisting NPRT to comply with the NPRT Act.[102] However, none of this assists Bannon in relying on the Nauruan Acts to defend the claims raised by NPRT in its set off or counterclaim.

190 The argument raised before us based on the Nauruan Acts is misconceived. The Nauruan Acts do not apply to defeat the claim for set off or counterclaim.

192 Proposed ground 5 is: the trial judge erred in holding that the email from Jacobson to Bannon on 31 March 2014 constituted a valid notice of termination of Bannon's employment with NPRT and should have held that the contract of employment was breached when Bannon's employment was terminated without notice.

193 On 31 March 2104, Bannon received the following email from Mr Jacobson:

Dear Paul, Mary, Kham & Romys,

I confirm as has been made known previously, that Nauru Phosphate Royalties Trust (NPRT) will be closing down its Melbourne Branch office on Monday 30 June 2014 and that the current employment positions of all staff of the Melbourne Office shall be made redundant on 30 June 2014.

I have requested Mr Bannon during the past couple of weeks to make available to me, full details of your employment with NPRT. I would be pleased to receive this information as soon as practicable to enable your entitlements up to 30 June 2014 to be ascertained.

Details I would be pleased to receive include:-

(i) A summary of the date you commenced employment (and start and finish dates if you have changed roles in the course of your employment);

(ii) Copies of any agreements regarding your employment;

(iii) Your job description (or descriptions if you have changed roles in the course of your employment);

(iv) Details of your leave taken and leave entitlements;

(v) Any other matters you consider pertinent.

I am pleased to confirm that the Honourable Minister Bernicke has kindly indicated that if the Melbourne Office has completed all its functions and duties prior to 30 June 2014 to the satisfaction of the Board and Cabinet, NPRT will release all staff from their employment duties upon such completion but will continue to pay staff their full salary and entitlement up to 30 June 2014.

If you have any queries at any time, please do not hesitate to let me know.

Kind Regards,

Andrew Jacobson.

194 The judge held that the email was a valid notice of termination.[103] He found that there had been a decision of the Board on 31 March 2014 to appoint Mr Jacobson as Secretary in lieu of Mr Bannon that had formalised what had been the position in practice since early 2014.[104] Mr Jacobson immediately took steps to terminate Mr Bannon's employment by giving him 12 weeks' notice in accordance with cl 18.1 of the 2007 contract of employment.[105]

195 Before the trial judge, Bannon submitted that the notice was not valid because Mr Jacobson was not authorised by the Board to terminate his employment. Bannon told the Court that he was reassured by a number of Board members (who he named) not to worry about the email, and that he would be continuing as an employee beyond 30 June 2014. According to Bannon, the Board did not accept that Mr Jacobson's email constituted a valid notice of termination.

196 Bannon submitted that there was no evidence of Mr Jacobson's appointment in any capacity until 9 August 2016, when he was made 'Lawyer and Administrator' by notice in the Government Gazette and that the Board witnesses did not say that Mr Jacobson was authorised to take any steps in relation to the employment of NPRT's Melbourne office employees as at 31 March 2014.

197 The trial judge considered the evidence given by the relevant Board members in this respect and found that it did not accord with the evidence given by Bannon. He found that none of the witnesses named by Bannon recalled speaking with him about the email or telling him that he should ignore it.[106] In addition, there was evidence that on 31 March 2014, a majority of the Board had voted in favour of replacing Bannon as Secretary with Mr Jacobson.[107] Further, one of the Board witnesses named by Bannon gave evidence that Mr Jacobson was authorised to act on behalf of the Board because he was NPRT's lawyer; another confirmed that Mr Jacobson was authorised to act on behalf of the Board in March 2014.[108] Mr Bannon himself gave evidence that although Mr Jacobson did not have the formal title of Secretary, he had been running the Melbourne office from early 2014.

198 The trial judge also rejected Bannon's evidence that he did not believe he would be made redundant on 30 June 2014, finding that in May 2014, in accordance with the request made by Mr Jacobson, Bannon prepared a spreadsheet with details of all final payments due to employees, including to him, calculated to 30 June 2014.[109] The notice given by Mr Jacobson was taken by Mr Bannon to be effective and he took steps to prepare for his redundancy and for the redundancies of the others in the office named in the email.[110]

199 Our review of the evidence gives no cause to conclude that the judge misunderstood the evidence or gave it a meaning that it did not bear. Although the evidence of the Board members was at times confusing and contradictory as to what was agreed by them in relation to both Mr Bannon's removal from his position and Mr Jacobson's role, the findings of the judge were open to him. Appellate restraint is called for, the judge having been in the best position to assess the credibility and reliability of the witnesses.[111]

200 We see no error in the judge's conclusion that Mr Bannon was given a valid notice of termination or in his path of reasoning to that conclusion.

201 Mr Bannon had notice that his employment with NPRT would come to an end on 30 June 2014 and he acted consistently with having received that notice. He understood his employment was coming to an end and he acted on that knowledge.

203 Proposed ground 6 is: the trial judge erred in finding that NPRT's annual leave records were not accurate and making a deduction of 17 days from Bannon's entitlement, and should have held that Bannon was entitled to payment of outstanding annual leave on termination in accordance with the leave records of NPRT that were in evidence at the trial.

204 The dispute in respect of accrued annual leave was whether Bannon had accrued 305.8 days of leave as at 30 June 2014, as reflected in the annual leave records.

205 The trial judge observed that, although the records showed that between 3 October 2004 and 3 October 2011 Bannon took just over seven days per year of leave, thereafter (subject to three days in December 2011) there was no record of Bannon having taken any leave. The trial judge did not accept that the records were accurate in this respect.[112]

206 The trial judge referred to evidence of Bannon that in September 2012 he holidayed with his family at Disneyland USA for about one week. Bannon's evidence was '100%' that he submitted annual leave forms for this trip and other trips he took whilst on annual leave. When it was pointed out to him that the records contained no entry in relation to this trip, he stated that he had been given time off 'in lieu' of extra hours, and that there were other times when he was given time off in lieu. The trial judge stated: 'This evidence, which only emerged late in the trial, is inconsistent with Mr Bannon's earlier evidence that "100%" he had completed annual leave forms in respect of the Disneyland trip and other trips which he took when on leave'.[113]

207 The trial judge highlighted Bannon's evidence that, on average, he took five days of leave per annum. Further, the records in respect of the period up to 2011 were broadly in line with this in averaging seven days of leave per year. He inferred that 'this pattern of leave taking would have continued between 3 October 2011 and 30 June 2014.' Taking into account the three days of leave for December 2011, he thereby deducted a further 17 days for the period 1 January 2012 to 3 June 2014.[114]

208 Bannon submitted that the trial judge erred in his finding that NPRT's annual leave records were not accurate. He submitted that this finding was not open, and that there was no justifiable basis for the trial judge to have departed from the records. In oral submission it was suggested that Bannon's explanation for the Disneyland trip was entirely plausible.

209 NPRT highlighted that it lacked credibility that Bannon had not taken any leave after October 2011 (subject to the few days in December). It was further submitted that the evidence about Bannon in relation to his Disneyland holiday was either 'wrong, or at the very least, incomplete.' Bannon was thereby in no position to criticise the trial judge for attempting to construct a more credible annual leave balance. The approach of the trial judge was soundly based with no appeal point arising.

210 In determining that the leave records were not accurate in respect of the period October 2011 to June 2014, the trial judge based his finding on both objective evidence (being the previous pattern of leave taking shown in the records) as well as an assessment of Bannon's reliability as a witness. In particular, he did not accept the explanation of Bannon that he was given time off 'in lieu' for his trip to Disneyland.

211 We are not satisfied that any error was made in this approach. Given the finding was affected by impressions about the reliability of a witness, appellate restraint is also warranted.[115] We are not satisfied that the finding was demonstrated to be wrong by 'incontrovertible facts,' nor was it 'glaringly improbable.'[116] To the contrary, the objective evidence in respect of the earlier years supported the finding made.

212 Having then made a finding that the relevant records were unreliable in a particular aspect, the trial judge was entitled to derive an appropriate formulation based on all the evidence before him. No error was shown in his approach.

214 Proposed ground 7 is: the trial judge erred in holding that the 2007 contract did not provide an entitlement to annual leave loading, and should have held that the 2007 contract by cl 6 preserved the express entitlement to annual leave loading in the earlier contract of employment dated 3 October 1994 ('the 1994 contract').

215 The trial judge recorded that Bannon's claim contained in his final particulars sought 17.5 percent of his annual leave equivalent based on breach of an implied term 'following on from term [sic] of initial contract dated 3 October 1994 providing for 17.5% leave loading.'[117] As recorded by the trial judge, the initial contract of employment, the 1994 contract, contained the following provision:

Annual Leave accrues at the rate of four (4) weeks per annum for each year of service. This leave is subject to 17 ½% loading when being taken. There is no 17½% loading to leave owing at a future date of resignation or termination as based on the Clerk's Award Rate.[118]

216 However, the trial judge noted that Bannon pleaded reliance on an implied term in the contract of employment arising by the course of dealing of NPRT.[119]

217 He highlighted that it was not in dispute that whenever Bannon took annual leave he did receive a 17.5 percent leave loading. However, he found that such payments were not made pursuant to any contractual entitlement, given the 2007 contract only provided for leave loading where there was an 'entitlement at law' to such loading.[120] He also found that there was no basis to imply such a term. First, such a term was inconsistent with cl 25 (which provided that the agreement represented the 'whole agreement' between employer and employee). Secondly, he found that reliance upon the conduct of the parties based upon the terms of the 1994 contract did not support the implication given the 1994 contract provided for a different salary and made reference to the Clerk's award rate. Thirdly, the 1994 contract expressly provided that leave loading would not be paid on termination.[121]

218 Bannon did not challenge the decision of the trial judge that leave loading was not payable by reason of an implied term, nor that the 2007 contract only provided for leave loading required to be made 'at law.' Rather, he relied on cl 6.1 of the 2007 contract. This provided as follows:

It is acknowledged that the Employee has been employed by the Employer since 3rd October 1994 and that all accrued rights and entitlements on the part of the Employee immediately prior to the appointment of the Employee as Secretary on the Commencement Date are retained by the Employee and carried forward into such employment.[122]

219 Bannon submitted that such entitlement included the entitlement to leave loading under the 1994 contract. In oral submission it was also suggested that the last sentence in the annual leave clause of the 1994 contract was not 'carried over' in circumstances where there had been no termination.

220 NPRT submitted that the 1994 contract did not establish a right to leave loading. Bannon's submission overlooked the progression of Bannon from clerical to executive employment. More fundamentally, the submission ignored the fact that the 1994 contract specifically negated any entitlement to annual leave loading on termination.

221 In oral submission it was further submitted that the entitlement to 'accrued rights' under cl 6 only preserved a pre-existing entitlement to a payment, and that the 2007 contract substituted an obligation to pay annual leave loading only where there was an entitlement at law. This was consistent with Bannon's transition from a clerical role (subject to usual award terms which would include leave loading) to that of Secretary.

222 Although the 1994 contract appeared to be raised in particulars, there may be some doubt as to whether the argument put before us was properly pleaded given, as cited by the trial judge, the pleading relied on an implied term.

223 In any event, any entitlement to leave loading which could be accrued under the 1994 contract was subject to the express limitations that the right to payment only arose 'when [the leave was] being taken' and did not arise in respect of 'leave owing' at a future date of 'termination'.

224 A reasonable person[123] would thereby understand that there was no right to leave loading in respect of a claim for untaken leave sought as at the date of termination (as in Bannon's case).

225 Bannon's claim for leave loading therefore did not give rise to a right or entitlement under the terms of the 1994 contract which had 'accrued' pursuant to the terms of cl 6.1 of the 2007 contract.

227 Proposed ground 8 is: the trial judge erred in holding that superannuation contributions on Bannon's salary and secretarial fees were subject to the maximum contribution base under s 19(3) of the SGA Act and should have held that they were not so subject.

228 If the trial judge was wrong to reject Bannon's claim for secretarial fees in the sum of $3,111,000 or the applicant's claim for 12 weeks' pay in lieu of notice of termination then Bannon is also entitled to superannuation in respect of these sums.

229 Clauses 7 and 8 of sch 2 of the 2007 contract provide:

The Employee's remuneration whilst employed by the Employer will consist of the following:

...

1. Superannuation contributions equivalent to 9% of the Employee's base salary and the Employee's entitlements under paragraph 4 of this Schedule 2, pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth) to a superannuation fund selected by the Employee or, if no fund is chosen by the Employee, to an eligible fund nominated by the Employer;
2. At any time the Employee may request the Employer to pay part of the salary component into the Employee's nominated super fund. This is in addition [to] the statutory requirement of the Employer's contribution under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992. Provided that there is no detriment to the Employer in so doing and such payment is permitted by law and deductible to the company then the company will comply with that request. The Employee's salary shall be reduced by the amount of such payment

230 NPRT submitted that the entitlement to damages in respect of superannuation entitlements was subject to the maximum contribution base prescribed by ss 15 and 19 of the SGA Act. At the relevant date, s 15 relevantly provided for an indexed maximum contribution base. Section 19(3) provided:

If the total salary or wages paid by an employer to an employee in a quarter exceeds the maximum contribution base for the quarter, the total salary or wages to be taken into account for the purposes of the application of subsection (1) in relation to the quarter is the amount equal to the maximum contribution base.

231 The trial judge summarised the effect of this cap:[124]

For the year ending 30 June 2014, the maximum superannuation contribution base (ie. salary) was $48,040 per quarter.[125] Any salary received by Mr Bannon in excess of $48,040 was to be disregarded when calculating NPRT's statutory requirement to make contributions in accordance with the SGA Act. The prescribed superannuation contribution during this financial year was 9.25 per cent.[126] Therefore, the maximum superannuation contribution was $4,443.70 per quarter. For the year ending 30 June 2014, Mr Bannon was paid a salary of $140,000 (even though the Trust had agreed in May 2013 that he should be paid $200,000). Throughout the 2013/2014 financial year, Mr Bannon's quarterly salary was $35,000, which was $13,040 less than the maximum contribution base of $48,040. However, Mr Bannon's approved salary of $200,000 ($50,000 per quarter) is slightly in excess of the maximum superannuation salary base.

In August 2007 the maximum superannuation salary per quarter was $36,470.[127] Mr Bannon's base salary under the 2007 contract was $20,000 per quarter. Insofar as cl 7 of sch 2 referred to '[s]uperannuation contributions equivalent to 9% of the Employee's base salary and the Employee's entitlements under paragraph 4', the reference to superannuation contributions pursuant to the SGA Act on the fees entitlement was not otiose. Mr Bannon could have received $16,470 in fees per quarter on top of his base salary before reaching the maximum contribution base.

232 He went on to analyse the effect of cl 7 of the 2007 contract:[128]

The phrase 'pursuant to' in cl 7 means 'in accordance with'. Superannuation contribution rates prescribed by the SGA Act increase over time. Prior to 1 July 2013 the prescribed rate was 9 per cent. From 1 July 2013 the rate increased to 9.25 per cent. Thus, the reference in cl 7 to superannuation contributions equivalent to 9 per cent pursuant to the SGA Act, incorporated the prescribed rates in s 19(2) of the SGA Act. This is reflected in paragraph [19] of the Statement of Claim which pleads:

In accordance with section 19(2) of the Superannuation Guarantee (Administration) Act 1992 (Cth), for the financial year 1 July 2013 to 30 June 2014, the relevant superannuation charge percentage was 9.25%.

(a) NPRT was required to make superannuation contributions in accordance with the prescribed rates in s 19(2) of the SGA Act; and

(b) Such contributions were subject to the maximum contribution base prescribed by s 19(3) of the SGA Act.

My conclusion that the Trust's liability to make superannuation contributions under cl 7 of sch 2 is limited by s 19(3) SGA Act, is reinforced by cl 8 of sch 2. Clause 8 confers upon Mr Bannon the right to request NPRT to pay part of his salary into his nominated superannuation fund:

This is in addition [sic] the statutory requirement of the Employer's contribution under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992.

233 Bannon submits that only the prescribed rates but not the maximum contribution base were incorporated into the contract.

234 In our view, the trial judge's analysis was correct. Clause 7 required contributions in accordance with s 19 of the SGA Act as a whole.

235 Proposed ground 9 is: the trial judge erred in finding that interest was payable only on the net amount of damages payable to Bannon and calculating interest on that amount in accordance with s 60 of the Supreme Court Act 1986 ('SC Act'), and should have held that interest was payable on the whole of the successful components of the claim in accordance with s 58 of the SC Act.

236 As agitated by proposed ground 4 of the appeal, which we have addressed above, NPRT raised a cross-claim with respect to monies had and received by Bannon on account of expenses which were not in fact incurred.

237 NPRT raised the cross-claim in the first instance by way of a defence of set off and, in the alternative, by way of a counterclaim.

238 The trial judge allowed the set off. In consequence, he reduced the sum for which the applicant succeeded in recovering damages.

239 Bannon now contends that interest should have been awarded separately on the claim and counterclaim pursuant to s 58 of the SC Act on the basis that the claim constituted 'a debt or sum certain'.

240 In our view, the trial judge was correct to allow the set off. Rule 13.14 of the SC Rules provides:

Where a defendant has a claim against a plaintiff for the recovery of a debt or damages, the claim may be relied on as a defence to the whole or part of a claim made by the plaintiff for the recovery of a debt or damages and may be included in the defence and set off against the plaintiff's claim, whether or not the defendant also counterclaims for that debt or damages.

241 In the present case, the set off arose out of the performance of the same contract of employment as that which gave rise to Bannon's claim. A set off would have been available under the previous o 19 r 3 of the SC Rules because it involved mutual debts.[129]

242 Indeed, the nexus between the claim and the set off was so direct that it is at least arguable that equity would have allowed a set off in the absence of the statutory power. Because both the claim and the set off arose out of the performance of the same contract NPRT's equity might be said to impeach the title to the legal demand, or in other words go to the very foundation of Bannon's claim.[130]

243 But be that as it may, there can be no doubt that this was an appropriate case for the exercise of the statutory power. Indeed, Bannon did not ultimately submit any basis for concluding otherwise.

244 In turn, interest fell to be awarded under s 60 of the SC Act upon the resultant net sum of damages. Proposed ground 9 must fail.

245 The applicant's proposed ground 10 is: the trial judge erred in his ruling on costs set out in the Costs Reasons, which was perverse, failed to have regard to unsuccessful, hopeless and abandoned parts of the counter claim and was not reasonably open in the exercise of his discretion on costs.

246 The respondent also seeks leave to appeal the trial judge's Costs Reasons. NPRT's proposed grounds of cross-appeal are:

1. The learned trial judge erred in Order 3(a) of the Final Orders, and paragraph [58] of the [Costs Reasons], by making an order for the Defendant to 'pay 50% of the Plaintiff's costs of the proceeding', when such an order was not able to be made by reason of section 570 of the Fair Work Act 2009 (Cth).
2. The learned trial judge erred in Order 1 of the Final Orders, and paragraph [28] of the [Costs Reasons], by making orders striking out parts of the Statement of Claim 'with effect from 29 June 2015', when any such order should only have been made with effect from 29 October 2018, or alternatively, from 16 April 2018.
3. The learned trial judge erred in the exercise of his discretion on costs, by the making of Order 3(a) of the Final Orders, and the Court should have ordered that each party bear their own costs.

247 Bannon's statement of claim included claims that NPRT had breached s 44(1) of the Fair Work Act 2009 (Cth) ('FWA') by contravening various National Employment Standards ('NES') in respect of failure to pay annual leave (for each year of service), payment in lieu of notice, and redundancy pay. No order for compensation was sought under s 545(2)(b) of the FWA. Rather, Bannon sought civil penalties, to be paid to him, equal to 60 penalty units in respect of each breach of s 44(1) ('the FWA claims').

248 The inclusion of the FWA claims raised an issue as to whether the costs regime under s 570 of the FWA applied to the proceeding. This provided as follows:

Costs only if proceeding instituted vexatiously etc.

(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

(2) The party may be ordered to pay the costs only if:

(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or

(c) the court is satisfied of both of the following:

(i) the party unreasonably refused to participate in a matter before the FWC;

(ii) the matter arose from the same facts as the proceedings.

249 At various times prior to trial the trial judge raised the applicability of s 570, including by warning Bannon that, if he was going to maintain that there was a no costs regime on the basis of s 570, then he may also be bound by this position for the balance of the proceeding. However, no application for amendment was made. Rather, Bannon sought to rely on the protection of s 570 and opened his case on the morning of the first day of the trial on the basis that the FWA claims still formed a part of his case, as an 'alternative.'

250 However, on the afternoon of the first day of trial, on 16 April 2018, senior counsel for Bannon abandoned reliance on the FWA claims. Counsel for NPRT thereupon accepted that s 570 had been 'dropped' and that the proceeding 'now is prospectively without consequences under the Act.' He also indicated that leave to amend would be opposed.

251 In the result, Bannon did not seek to formally amend the pleadings. Rather, the matter proceeded on the basis that no claims under the FWA were to be considered and resolved thereafter (save as to costs).

252 After the principal judgment was delivered on 14 September 2018, the trial judge also raised (by email) the possibility of retrospectively striking out the FWA claims. On 29 October 2018, his Honour determined that he would strike out the FWA claims 'with effect from 29 June 2015' (being the date of issue of the proceeding) (order 1).

253 His Honour then went on to determine the question of costs pursuant to the usual powers under s 24 of the SC Act[131] unconstrained by s 570, and made the following orders:

1. Subject to the specific costs orders set out in paragraphs [4](a), (b) and (c) below:

(a) the defendant is to pay 50% of the plaintiff's costs of the proceeding on a standard basis, to be taxed in default of agreement; and

(b) the plaintiff is to pay 50% of the defendant's costs of the proceeding on a standard basis, to be taxed in default of agreement.

1. (a) The plaintiff is to pay the defendant's costs of and incidental to the defendant's summons filed on 27 July 2016 on a standard basis, to be taxed in default of agreement.

(b) The plaintiff and the defendant are to bear their own costs in respect of the applications heard by Ierodiaconou AsJ on 27 February 2017, being:

(i) the plaintiff's application to set aside the subpoena addressed to Ms Bannon; and

(ii) the various applications as detailed in paragraph [5](a) to (h) of Bannon v Nauru Phosphate Royalties Trust (No. 3) [2017] VSC 214.

(c) The plaintiff is to pay the defendant's costs of and incidental to the hearing on 26 April 2018 and the written submissions filed on 7 May 2018 on a standard basis, to be taxed in default of agreement.

254 NPRT has filed an application for leave to cross-appeal in relation to these orders. More particularly, it says that it cannot be ordered to pay 50 percent of Bannon's costs (under 3(a)) given s 570 applies to the whole proceeding (ground 1). It also challenges order 1 insofar as it retrospectively struck out the FWA claims (ground 2). Finally, it challenges the making of order 3(a) on the basis that each party should bear their own costs of Bannon's claim.

255 Bannon also challenges the trial judge's exercise of discretion as to costs (ground 10).[132]

Application of s 570 and inter-relationship with strike out (proposed grounds of cross-appeal 1 and 2)

256 A key issue, then, is the applicability of s 570 to the proceeding. This needs to be considered together with the challenge to the strike out decision before any consideration can be given to the general costs issue.

257 In considering the FWA claims, the trial judge observed that Bannon's only claim for relief under the FWA was for the imposition of penalties.[133]

258 He further found, consistent with the position of the parties before us, that given the Supreme Court was not an 'eligible court' under s 12,[134] it has no jurisdiction to impose the penalties, and that the FWA claims were 'hopeless and doomed to fail from the outset.'[135]

259 The trial judge determined that the proceeding was in a fundamentally different category to that of Aufgang v Kozminsky Nominees Pty Ltd[136] (which Bannon allegedly relied upon in bringing the FWA claims). That case was concerned with whether damages could be awarded equivalent to the minimum four week standard prescribed by the Workplace Relations Act 1996 (Cth) because this entitlement was imported into Mr Aufgang's contract of employment.[137] It provided no support for the proposition that the Supreme Court has jurisdiction to impose a penalty for a contravention of s 44(1).[138]

260 The trial judge noted that counsel for NPRT submitted that s 570 applied to the entire proceeding, notwithstanding the abandonment of the FWA claims on the first day of hearing. This was inconsistent with counsel's position on the first day of trial set out earlier (that the proceeding was 'prospectively' without consequence under the FWA).[139]

261 However, the trial judge said that it was 'not necessary' to express a concluded view on the question of whether the entire proceeding was constrained by s 570 because the claims were an abuse of process and ought be struck out with effect from 29 June 2015.[140]

262 He gave consideration to the submissions that Bannon had been warned that s 570 might be relied upon against him, and found that the history of the proceeding supported an inference that both parties wanted to keep s 570 'in the ring' to be relied upon. However, it was 'antithetical to the administration of justice' for the Court's powers under s 24 of the SC Act to be 'compromised' by a party pleading, but not pursuing, FWA claims which were an abuse of process.[141]

263 The trial judge also rejected the submission that it was unfair to strike out the FWA claims if this had the consequence that Bannon receive the benefit of a costs order which would otherwise not be available. First, he concluded that, irrespective of whether the claims were struck out, s 570 did not apply to the proceeding.[142] Secondly, if it did apply, it would also apply to the counterclaim.[143]

264 Ultimately, his Honour ordered that the FWA claims be struck out with effect from the date of commencement of the proceeding because 'from the outset the claims had no prospects of success'. He noted that the Court had power to do so in the exercise of its inherent jurisdiction and that it also had an express power to strike out claims which have no prospects of success pursuant to s 63 of the Civil Procedure Act 2010 ('CPA').[144] It followed that the power to order costs was not constrained by s 570 of the FWA.

265 Although he said it was 'unnecessary' for him to express a view, the trial judge found that the proceeding was not 'in relation to a matter arising under the FWA' under s 570. The FWA claims were 'plainly unarguable' and 'plainly untenable' from the outset such that there was insufficient nexus between those claims and the FWA.[145]

266 NPRT submitted that there were three reasons why the trial judge was in error in finding that s 570 was not enlivened. First, that it was sufficient if there were 'matters arising under the FWA', ie, the focus of the legislation was on the reference to 'matters' rather than the proceeding (citing Melbourne Stadiums Ltd v Sautner[146]). There were, on any view, valid causes of action or matters under the FWA, and it did not matter that the Court was an ineligible court. Secondly, that s 570 applied to all courts, given the legislation had not sought to limit the concept of a 'court' in s 570 to an eligible court. Thirdly, that it did not matter that the Court was in no position to exercise jurisdiction. While the earlier form of s 570 applied to a court 'exercising jurisdiction under this Act,' the current form of the provision does not depend on the presence of jurisdiction.

267 In oral submissions counsel took the Court to a number of authorities, including Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union[147] and Stanley v Service to Youth Council Inc (No 3),[148] and submitted that one looks at the subject matter of the claim and not the jurisdiction to be exercised. It was further submitted that the proceeding remained subject to s 570 even after the abandonment, given the FWA claims remained in the statement of claim (given the failure to amend).

268 NPRT also challenged the retrospective operation of the order made. It highlighted that there were limited circumstances in which courts may make backdated orders, as considered by Ormiston JA in the decision of Hartley Poynton Ltd v Ali.[149] Thus, although there may be circumstances where backdated orders were justified 'to overcome procedural irregularities and difficulties', the strike out here impacted upon substantive rights. NPRT had conducted litigation on the basis that the FWA claims were part of the claims before the Court, with the costs consequences thereby attracted. In particular, the fact that the proceeding was conducted as a 'no costs' proceeding may have affected how the parties viewed offers, since strategic decisions are made on the basis of an assessment of exposure, including as to costs. It followed that order 1 should only have an effective date of 29 October 2018.

269 It was conceded that, alternatively, 'some case could be made' for the order to operate from the date Bannon abandoned his claims, being 16 April 2018. However, this would reward Bannon for failing to amend. Further, that an operative date prior to 29 October 2018 would infringe the caution sounded by Ormiston JA in Hartley Poynton Ltd v Ali that a retrospective order cannot deem something to exist which does not exist.[150]

270 Bannon defended his earlier reliance on s 570 on the basis of the decision in Aufgang.[151] He also submitted that he only became aware of a decision of the Supreme Court of NSW in Re Optimisation Australia Pty Ltd[152] (which clarified the absence of jurisdiction) on 11 April 2018, shortly before the FWA claims were abandoned on the first day of trial.

271 In written submissions, Bannon suggested that, given the Supreme Court was unable to determine the FWA claims, it cannot be said that the proceeding 'relates to a matter arising under the FWA.'

272 Alternatively, it was submitted that, as the statutory claims were only ever pleaded in the alternative, and as they were 'so minor as to be insignificant in comparison with other causes of action', s 570 did not apply (citing the decision of Stanley).[153] In oral submission, it was emphasized that no time was spent on the FWA claims.

273 Bannon also submitted that, as the trial judge found that the Supreme Court never had jurisdiction, it was open to make the striking out order retrospective.

274 As a result of the retrospective striking out order, s 570 does not apply (even if it once did) given the proceeding does not 'relate to any matter arising under the FWA.' It is thereby important to consider the validity of the striking out order (proposed ground 2 of cross-appeal) first, prior to any consideration of the applicability of s 570.

275 In making the decision to strike out the FWA claims, the trial judge appears to have been influenced by a view that the general discretion ought not be affected by FWA claims which lack jurisdiction. He also found that, irrespective of whether the FWA claims are struck out, 's 570 does not apply to the current proceeding.'[154]

276 However, the cases suggest that s 570 has a very wide application and applies even in the absence of jurisdiction.

277 In Stanley White J reviewed the legislative history in some detail and highlighted that, as originally enacted in July 2009, s 570(1) provided:

A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569.[155]

278 This was to be compared with the terms of the current provision, which came into effect in January 2013, and which deleted the words 'exercising jurisdiction under this Act,' and substituted the words 'in relation to a matter arising under this Act.' White J highlighted that the effect of the amendment was to enlarge the scope of the limitation in relation to a relevant matter 'whether or not those proceedings involved an exercise of jurisdiction under that Act.'[156]

279 He further noted that the phrase 'in relation to' did not form part of the earlier Workplace Relations Act 1996 (Cth) and suggested that the costs limitation was greater than that provided by the earlier legislation.[157] He then stated:

The phrase 'in relation to' is usually taken to indicate some relationship or connection between two subject matters: Smith v Federal Commissioner of Taxation (1987) 164 CLR 513 at 533. The degree or closeness of the contemplated connection is to be determined by the statutory context: Joye v Beach Petroleum NL [1996] FCA 1552; (1996) 67 FCR 275 at 285.

Ordinarily, the requisite degree of connection in the context of s 570 will be satisfied when an applicant seeks to enforce an entitlement for which the FW Act provides.

The limitation on courts' powers with respect to costs operates in respect of any 'party to proceedings', provided that those proceedings relate to a 'matter' arising under the FW Act. On its face, the limitation operates whenever those considerations are satisfied, whether or not the proceedings also include claims under other federal legislation or in the accrued jurisdiction.[158]

280 In Sautner,[159] a five member bench of the Full Federal Court followed White J in Stanley and found that, once s 570 applies, it applies generally to the entire proceeding, including in respect of common law claims. Given the claims under the FWA were 'matters' within the meaning of s 570, the proceeding was, as a result, a proceeding 'in relation to a matter arising under that Act.'[160]

281 The cases suggest, then, that it is the subject matter of the claim that attracts the operation of the section irrespective of the court or the court's jurisdiction.

282 This approach is also consistent with a decision of the Full Federal Court in Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union.[161] In that matter, the court considered whether the trial judge was correct in finding that the court had no jurisdiction in relation to certain claims made under the FWA where the matter had already been resolved by the Fair Work Commission as arbitrator pursuant to a dispute resolution clause. The court found that the trial judge was correct in finding that the court had no jurisdiction. However, it went on to determine that the order for costs made by the trial judge should be set aside on the basis that s 570 applied, notwithstanding the absence of jurisdiction. The critical fact was that Energy Australia 'claimed relief under the FWA,' not whether the claim was one that the court had jurisdiction to determine.[162]

283 Here, then, the proceeding as originally constituted was one in relation to a number of 'matters' arising under the FWA. Consistent with the above authority, the proceeding thereby constituted a proceeding 'in relation to a matter arising under [the FWA]' even though the Supreme Court lacked jurisdiction to hear it. Insofar as his Honour relied on the absence of jurisdiction for his views about s 570 he has thereby fallen into error.

284 In oral submissions Bannon's main submission (apart from addressing the abandonment) was that the FWA claims were 'minor.' This was in reliance on certain obiter dicta statements in Stanley[163] wherein White J observed that the 'possibility' that a matter arising under the FWA 'may be so minor as to be insignificant in comparison with other causes of action' did not arise.[164]

285 We do not consider that the FWA matters were so minor as to be insignificant in comparison with other causes of action in this case. First, the claim for civil penalties is not raised as an alternative. It warranted consideration of substantive claims under the FWA in respect of annual leave (ss 87(1)(a) and 90(2)), payment in lieu of notice of termination (ss 117(1), 117(2)(b) and 117(3)), and redundancy pay (ss 119(1)(a) and 119(2)). Although the prayer for relief sought 60 penalty units (worth some $10,200) this was 'for each breach.' The maximum penalty that could be imposed for each contravention was also $51,000 given NPRT was a corporation.[165] Even without taking into account the number of breaches, the amount of $51,000 was larger than the value of a number of the other claims.[166] Secondly, the approach we have adopted is consistent with the approach in Coghill v Indochine Resources Pty Ltd (No 3) wherein Katzmann J found the requisite connection even where the claims were characterised as 'subsidiary' or 'alternatives'.[167] Finally, it is significant that the phrase 'in relation to' is viewed as an expression of wide and general import.[168]

286 Prima facie then, the proceeding (prior to the striking out order) was a proceeding 'in relation to a matter arising under the [FWA].' Notwithstanding that the striking out order involved an exercise of discretion, the trial judge fell into error in basing his decision on a wrong view of s 570. He has also allowed an extraneous matter to affect him, ie that s 570 did not, or ought not, apply to the proceeding where the Court lacked jurisdiction.[169]

287 The striking out order is to be set aside. However, an issue then arises as to whether there ought still be a strike out on the correct basis that s 570 was otherwise applicable up until 17 April 2018.

288 The fact that there was no prospect of success might ordinarily justify a strike out 'from the outset' and thereby justify the approach of the trial judge in any event. However, the making of such an order in this case does not sufficiently take account of the fact that the parties proceeded on the basis that the FWA claims were included as part of the claim up to the first day of trial, ie that the proceeding was effectively a 'no costs' proceeding.

289 In Hartley Poynton Ltd v Ali, Ormiston JA concluded that the power of courts to make orders nunc pro tunc derives from the Court's inherent jurisdiction to remedy a situation by dating an order in a way which gives effect to the justice of the case.[170] It is not generally to be exercised so as to alter substantive rights[171] and cannot deem something to have remained in existence which no longer remains in existence.[172]

290 A retrospective order backdated to the commencement of the proceeding would affect more than merely matters of procedure, and would deem something to exist which did not truly exist (namely a proceeding that did not include the FWA claims). We do not consider that it is in the interests of justice that an order be made with effect from the commencement of the proceeding.

291 However, equally, we do not consider that an order ought be made only prospectively on the determination of the proceeding. As highlighted already, Bannon abandoned his FWA claims on the first day of the trial. There were thereafter no 'live' FWA claims the subject of submission or adjudication by the trial judge. Notwithstanding, then, that no formal order was made to grant leave to Bannon to withdraw his FWA claims[173] or amend his pleadings, after 16 April 2018 the case proceeded on the basis that those claims were abandoned. From that time Bannon no longer sought 'to enforce an entitlement for which the [FWA] provides'[174] and, as a matter of substance, the proceeding no longer related to a 'matter arising under the [FWA].'

292 The making of a striking out order with effect from 17 April 2018 would thereby address the realities of the situation as it existed post 16 April 2018 and would give effect to the justice of the case. Thus, from 16 April 2018 the trial judge was faced with no more than a procedural irregularity in circumstances where the parties knew that the claims under the FWA were gone. Rather than deeming something to exist 'which did not exist', a strike out with effect from 17 April 2018 would correctly reflect the issues between the parties; namely, that while the proceeding related to matters arising under the FWA up until 16 April 2018, this was not the case thereafter.

• first, proposed ground 2 of cross-appeal is sustained as the strike out order should only have been made with effect from 17 April 2018;
• secondly, s 570 will apply to the proceeding up to and including, 16 April 2018, however, after that time the Court may make costs orders in the exercise of its general discretion under s 24 of the SC Act unrestricted by s 570;
• thirdly, proposed ground 1 of cross-appeal is also sustained given the trial judge has wrongly ordered the NPRT to pay 50 percent of Bannon's (entire) costs of the proceeding without regard to s 570.

294 It therefore remains to consider the appropriate costs disposition in light of this analysis.

Costs generally (Bannon's proposed ground 10 and proposed ground 3 of cross-appeal)

295 The trial judge observed that s 24 of the SC Act confers a wide discretion on the Court. He carefully set out the extent to which each party had succeeded or failed. He also highlighted that the amount of damages awarded to each party represented a relatively small proportion of their respective claims, though each had successfully defended significant aspects of claims brought against them.[175]

296 In respect of Bannon, he had failed in respect of the primary element of his claim being $3,111,000 for unpaid secretarial fees. He was unsuccessful in his claim for 12 weeks' pay in lieu of notice and for leave loading, but he was otherwise substantially or wholly successful in relation to his other claims. NPRT was unsuccessful in respect of the first three elements of its counterclaim and succeeded only in respect of the fourth element of that claim in respect of the 2014 financial year.[176]

297 The trial judge found that approximately 40 percent of the hearing was devoted to Bannon's claim, with the balance taken up with the counterclaim. His Honour did not consider it appropriate to apportion costs of the trial based on the hearing days which were devoted to the respective claims. He noted that a number of days were taken up with evidence of Mr Fitzgerald, which resulted in a substantial reduction in the quantum of the counterclaim. Further, that NPRT was unsuccessful in respect of three elements of its counterclaim.[177]

298 The trial judge also rejected a submission that the Court should have regard to the fact that Bannon's claim for secretarial fees was defeated by an estoppel by convention defence that was only pleaded during the trial. He found that no prejudice was shown and that Bannon had been on notice of a defence of promissory estoppel for some time.[178]

299 He also rejected a submission that NPRT's entitlement to costs should be reduced for various reasons, in particular:

• in relation to an alleged 'limited extent of success' on the counterclaim, he said that the same observation could be made in respect of Bannon's claim;
• in relation to the success being based on particulars to paragraph 42A of the SFADC, he rejected a submission that Bannon was not given adequate notice and that the particulars did not support the pleaded allegation;
• in respect of the late abandonment of claims, he found that the same criticism could be levelled at Bannon;
• in relation to the time taken by the counterclaim and lack of utility of Mr Fitzgerald's evidence, he considered that this was already taken into account in determining that a time based costs order was inappropriate.[179]

300 Ultimately, having regard to all of the matters, his Honour determined that NPRT should pay 50 percent of Bannon's costs of the proceeding, and Bannon should pay 50 percent of NPRT's costs of the proceeding.[180]

301 He further dealt with a submission that the costs of proving certain matters in a notice to admit dated 10 December 2015 ought be paid by NPRT pursuant to r 63.18 of the SC Rules.[181] He found that it was appropriate that there be no order that NPRT pay costs of proving various matters notwithstanding that Bannon had been successful (in respect of sick leave, long service leave, and redundancy). He found that NPRT had a legitimate basis for disputing these claims given they were based on a salary of $200,000.[182]

302 In relation to costs reserved by various orders made during interlocutory applications, his Honour found that these ought to be payable on the same basis as the costs of the trial, subject to exceptions.[183]

303 The first exception concerned a ruling on a summons brought by NPRT to amend its defence and counterclaim filed on 27 July 2016 which was substantially allowed. His Honour had regard to the fact that Associate Justice Ierodiaconou had recorded a number of criticisms of the manner in which the application was opposed by Bannon. In such circumstances he determined that it was appropriate that Bannon be ordered to pay NPRT's costs of and incidental to the summons filed on 27 July 2016 (order 4(a)).[184]

304 In relation to applications heard on 27 February 2017, the trial judge observed that Associate Justice Ierodiaconou published two rulings: one concerned an application by Bannon to set aside a subpoena; the second concerned applications brought by both parties. He found that, although Bannon was successful in setting aside the subpoena, this was only one of a number of matters for determination and ought be viewed alongside his (mixed) success in respect of the other matters. He ultimately determined that, as each party enjoyed a similar measure of success, it was appropriate that the parties bear their own costs of and incidental to the hearing (order 4(b)).[185]

305 Finally, the trial judge dealt with the costs of a hearing on the eighth day of the trial on 26 April 2018 which concerned an application by NPRT to amend its defence and counterclaim and objections to the admissibility of reports of Mr Fitzgerald. He noted that all of the arguments advanced on behalf of Bannon were rejected. Further, he considered that Bannon's approach was 'misconceived' in that he sought to strike out numerous paragraphs of the pleadings which were not the subject of the application to amend. He found that significant costs were incurred by NPRT in having to respond to 'voluminous material' and considered that Bannon should bear the costs incurred at the hearing of 26 April 2018 and submissions thereof (order 4(c)).[186]

306 NPRT submitted that Bannon should not receive his costs because he had pursued untenable FWA claims, and because of his failure at trial in his substantive claim for the secretarial fees. Rather, the order should have been for each party to bear their own costs on Bannon's claim.

307 In oral submissions it was also highlighted that Bannon had abandoned many claims.

308 NPRT further submitted that the counterclaim was a separate proceeding which was not subject to s 570, and that NPRT was entitled to costs on its counterclaim.

309 Strictly this ought result in a replacement of orders 3(a) and (b) with an order for Bannon to pay NPRT's costs of the counterclaim, and each party to bear their own costs of the claim. However, because the claim and counterclaim were run together, an order requiring Bannon to pay 50 percent of NPRT's cost on both the claim and counterclaim represented a reasonable approximation (in order 3(b)). It followed that order 3(a) ought be struck out and replaced with 'save as otherwise ordered below, each party shall bear their own costs'.

310 No challenge was otherwise made to the orders contained at paragraph 4 given there was no reason to doubt the correctness of the trial judge's orders on costs reserved. Orders 4(a) and (c) were justifiable as orders made on the counterclaim, or as orders made by reason of the unreasonable acts or omissions of Bannon pursuant to s 570(2)(b) of the FWA. Order 4(b) was consistent with the application of s 570, and also reflected an assessment of the mixed success of the parties at the hearing on 27 February 2017.

311 Bannon rejected the suggestion that the FWA claims were an abuse of process and resulted in any breach of the CPA. He also relied on Aufgang as justification for bringing these claims.[187]

312 He submitted that he was a successful party and should receive the costs of his claims to at least 80 percent. He also highlighted substantially similar matters to those already considered by the trial judge.

313 In relation to the counterclaim, it was submitted that the trial judge should have held that NPRT pay Bannon's costs of the counterclaim to at least 90 percent plus indemnity costs for the late withdrawal of claims, alternatively, that NPRT pay all of Bannon's costs of the counterclaim on a standard basis. In so saying, Bannon relied on substantially the same matters he had raised before the trial judge.

314 In relation to the notice to admit, Bannon repeated his submission that costs ought be paid in accordance with r 63.18 of the SC Rules and claimed that such costs ought be ordered on an indemnity basis by reason of breaches of the CPA.

315 It was further submitted that all the reserved costs ought generally have been treated as costs in the cause given they were part of the process of defining the issues for trial. An exception was the setting aside of the subpoena to Ms Melissa Bannon of 3 May 2017 which should be the subject of an indemnity costs order given the subpoena was held by Ierodiaconou AsJ to have 'no legitimate purpose' and was also contrary to provisions in the CPA.[188]

316 The above submissions were made on the basis that s 570 did not apply to the proceeding. However, if s 570 applied, Bannon submitted:

...the failure of the Cross-Applicant to make appropriate admissions in respect of the claim, as well as its failure to file evidence, call relevant witnesses or make any sensible submissions in respect of its counterclaims, means that that [sic] the costs regime was enlivened notwithstanding the operation of s 570, by reason of the provisions of s 570(2)(b).

317 The starting position is that no costs were payable in respect of the proceeding up to, and including, 16 April 2018 unless they were covered by s 570(2).[189] This would apply to all costs reserved prior to that time. There was no error in making 'no order' in respect of the notice to admit in any event.

318 Although Bannon alleged that a costs order ought be made under s 570(2)(b), his submission did not rise above assertion. In particular, it was not shown that any conduct on behalf of NPRT 'caused' Bannon to incur costs. It is also significant that the trial judge did not make any indemnity costs orders against NPRT.

319 In relation to order 4(a), it will be recalled that the trial judge recorded criticisms of the manner in which the application was opposed. Such an unchallenged finding justifies the order on the basis that Bannon's unreasonable acts caused costs to be incurred. Order 4(a) will therefore stand.

320 Order 4(b) correctly reflects the application of s 570 and should also remain.

321 Order 4(c) would be covered by s 24 of the SC Act (given the costs were incurred after 16 April 2018) and ought to remain in circumstances where Bannon did not demonstrate any error in the exercise of the trial judge's discretion.

322 We also consider that the inclusion of the FWA claims was an unreasonable act given this Court lacks jurisdiction. First, even if Bannon had some subjective view that the Court was an eligible court (which was not the subject of evidence), it was 'unreasonable' to bring claims to a court which lacked jurisdiction. Moreover, even if regard is had to the subjective views of Bannon, it is significant that the FWA claims were still being pressed on the morning of the first day of trial. For the reasons given by the trial judge, Aufgang also did not provide support for the proposition that the Court had jurisdiction to impose a penalty for a contravention of s 44 of the FWA.[190]

323 The result is that Bannon ought pay NPRT's costs thrown away by reason of the inclusion of the FWA claims. This is also consistent with the concession of counsel that Bannon ought pay such costs under r 63.15 of the SC Rules[191] in any event.

324 In terms of the applicability of s 570 to the counterclaim, the matters pleaded in the counterclaim are pleaded both as a set off and by way of counterclaim and arose out of the same employment contract. In this way the two processes are 'linked'.

325 However, a counterclaim generally constitutes a separate proceeding which has an independent existence.[192] Given the counterclaim does not seek 'to enforce any entitlement for which the FWA applies' it does not appear to constitute a proceeding 'in relation to' a matter arising under the FWA.

326 However, even if s 570 of the FWA does not apply to the counterclaim and s 24 of the SC Act applies, it is inappropriate to make any order for costs separately in respect of the counterclaim in favour of NPRT. First, although the trial judge approached the matter on the basis that Bannon was entitled to damages of $511,275.58 and NPRT was entitled to damages of $141,052.91, he ultimately ordered the NPRT to pay Bannon the single sum of $370,222.67. In such circumstances, NPRT has been successful on its set off rather than its counterclaim. Secondly, the trial judge did not order costs separately in respect of the counterclaim, but made orders in respect of each party's costs 'of the proceeding.' This was a recognition of the interconnectedness of the two proceedings which, as accepted by NPRT, were 'run together'.[193]

327 In these circumstances, there is no justification for making any separate order in respect of the counterclaim, and certainly none in favour of NPRT. Rather, the costs of the entire 'proceedings' including the counterclaim, ought be treated in the same way, ie they ought lie where they fall, up to, and including, 16 April 2018.

328 In terms of the situation post 16 April 2018, the matters raised before us were similar to the matters already considered by the trial judge (as to time taken and extent of success). In circumstances where none of the substantive proposed grounds of appeal have been successful, there is no reason to interfere with the discretion of the trial judge that each side bear 50 percent of the other party's costs of the proceeding.

[1] [2018] VSC 532 ('Reasons').

[2] Bannon v Nauru Phosphate Royalties Trust (Costs Ruling) [2018] VSC 643 ('Costs Reasons').

[4] Nauru Phosphate Royalties Trust Act 1968 (Nauru), s 19(1) ('NPRT Act').

[8] Explanatory Memorandum, Ronwan Distribution Bill 2013 (Nauru).

[10] Coburn v Colledge [1897] 1 QB 702, 705−706; Swansea City Council v Glass (1992) 24 HLR 327, 333; Coshott v Barry [2012] NSWSC 850 [41]−[42]; Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd [2015] QDC 225 [128], [136].

[11] Reasons [134], [136]-[137] (citations in original).

[12] See ss 16, 19, 22 and 23 of the Superannuation Guarantee (Administration) Act 1992 (Cth) ('SGA Act') and discussion of the recovery proceedings an employer is exposed to if they fail to do so at Reasons [136] quoted above at [43].

[13] Reasons [34]-[35] (citations omitted).

[20] Reasons [65] (emphasis added). The note also concerned a statement indicating it was prepared on the basis of a worst case scenario.

[24] See [29] above.

[34] [2007] NSWCA 65; (2007) 69 NSWLR 603.

[35] [2019] VSCA 236 [214].

[36] [2007] NSWSC 5 ('Moratic').

[37] (2014) 89 NSWLR 317, 393 [431].

[38] Reasons [101] (citations omitted).

[39] Reasons [102]-[105] (citations omitted).

[44] Reference was made to the judgment of Edelman J in Minerology Group Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2016) 329 ALR 1. See Reasons [116]-[120].

[46] Reasons [122] (citation in original).

[47] Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 428−9.

[50] See [65] of our reasons above.

[51] See [66] of our reasons above.

[52] [1937] HCA 58; (1937) 59 CLR 641, 674.

[53] [2007] NSWSC 5 [41].

[54] [2007] NSWSC 5 [34].

[55] [1983] HCA 11; (1983) 152 CLR 406, 435-6 (citations omitted).

[56] See [38] following above.

[57] See [48] following above.

[58] Ronwan Consolidation Act 2014 (Nauru); Nauru Phosphate Royalties Trust Act 1968 (Nauru).

[59] Reasons [181]. The trial judge observed that during the course of the trial the counterclaim underwent significant amendment. In its original form, filed 13 November 2015, NPRT claimed damages totalling $363,510.95. In an amended counterclaim dated 12 August 2016, NPRT claimed $2,102,861 in damages in respect of alleged 'unauthorised payments' made to Bannon throughout his employment. It also made a number of other claims. These amendments to the counterclaim reflected concessions made by the expert accountant called by NPRT, Mr Thomas Fitzgerald, and were embodied in the SFADC, read in conjunction with Exhibit X: 'Defendant's recalculation of counterclaim on completion of expert evidence'.

[67] In relation to Mr Fitzgerald's evidence, the trial judge traced the evolution of his evidence from his first report in February 2018 through its amendment in May of that year and the concessions that he made in cross-examination regarding inaccuracies in his revised report. The net effect of these concessions was to reduce the 'accountable payment' sum of $405,011 to $211,197. The trial judge found that the revisions in Mr Fitzgerald's evidence were attributable to his lack of understanding of the way in which the system of reimbursable expenditure operated, whereby upfront sums were deposited into Bannon's Classic Plus account, of which a proportion was subsequently transferred to his credit card account: Reasons [232]. He also noted that Mr Fitzgerald had prepared his reports without having spoken to any employee of the Trust or to Bannon, this latter fact placing him at a particular disadvantage: Reasons [233].

[70] Reasons [236]. The trial judge observed that in April 2015, all of NPRT's records were shipped back to Nauru including 'payment vouchers'. Payment vouchers were created for payments made by Bannon on behalf of NPRT and recorded the payee, the account allocation and the narration/description as to what the payment related to.

[75] In relation to the 2014 financial year, the trial judge had regard to Mr Fitzgerald's evidence concerning the total payments which were received by Bannon into his Classic Plus account and the proportion of those payments transferred to his credit card account: Reasons [234].

[92] Commonwealth v Amann Aviation [1991] HCA 54; (1991) 174 CLR 64, 80-82 (Mason CJ and Dawson J). See also Justice James Edelman, McGregor on Damages (Thomson Reuters, 20th ed, 2018) 315-16 [10-001]-[10-1002].

[94] At paragraphs 21(b)(ii)-(iii), 22(d)(ii)-(iii) and 25(b)-(c) of his defence to the counterclaim, Bannon relies on s 32A of the NPRT Act and s 7 of the RC Act as indemnifying him from any loss or damage NPRT alleges it has suffered. Likewise, in paragraph 36(b)(iii) & (iv), Bannon claims an indemnity under s 32A of the NPRT Act and s 7 of the RC Act. These matters are also pleaded as a defence to the claim that NPRT has suffered loss as a result of Bannon's breach of the 2007 employment contract.

[96] Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 200 ALR 447, 461 [51].

[97] See eg, Akai Pty Ltd v People's Insurance Co Ltd [1996] HCA 39; (1996) 188 CLR 418, 442-3 ('Akai'); John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503, 519 [20] ('Pfeiffer'). See also Martin Davies et al, Nygh's Conflict of Laws in Australia (LexisNexis Butterworths Australia, 9th ed, 2014) 460 [19.49], 472-4 [19.93]-[19.102] ('Conflict of Laws in Australia'); Michael Pryles, 'The Applicability of Statutes to Multistate Transactions' (1972) Australian Law Journal 629, 637-639.

[98] Akai [1996] HCA 39; (1996) 188 CLR 418, 442-3 (citations omitted).

[99] Pfeiffer [2000] HCA 36; (2000) 203 CLR 503, 519 [20] (citations omitted).

[100] Akai [1996] HCA 39; (1996) 188 CLR 418, 440-442. See also Reid Mortensen et al, Private International Law in Australia (LexisNexis Butterworths Australia, 3rd ed, 2015) 419 [17.6] ('Private International Law in Australia').

[101] See generally Private International Law in Australia (LexisNexis Butterworths Australia, 3rd ed, 2015) 421-423 [17.9]-[17.13]; Conflict of Laws in Australia (LexisNexis Butterworths Australia, 9th ed, 2014) 448-451 [19.15]-[19.21].

[102] See sch 1 to the 2007 contract at [20] above.

[111] Lee v Lee [2019] HCA 28 [55].

[115] Lee v Lee [2019] HCA 28, 23 (Bell, Gageler, Nettle and Edelman JJ).

[116] Robinson Helicopter Company Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679, 687 [43].

[118] Reasons [164] (emphasis added).

[122] See also cl 5 of sch 2 of the 2007 contract which provides that all unpaid 'entitlements' from the employee's previous employment with the employer will be carried forward.

[123] Toll FGCT Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, 179 [40].

[124] Reasons [176]-[177] (citations in original).

[128] Reasons [178]-[179] (citation omitted).

[129] Edward Ward & Co v McDougall [1972] VicRp 49; [1972] VR 433.

[130] British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137; Eagle Star Nominees Ltd v Merril [1982] VicRp 57; [1982] VR 557; Ozden v Commonwealth Bank of Australia [2014] VSCA 127.

[131] Section 24(1) of the Supreme Court Act 1986 ('SC Act') provides: 'Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.'

[132] Defined in proposed ground 10 as Costs Reasons [38]-[69].

[134] Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) ('FWA') the 'Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.' The Supreme Court is not included as an eligible court under s 12.

[136] [2008] VSC 27 ('Aufgang').

[146] [2015] FCAFC 20; (2015) 229 FCR 221, 253-4 ('Sautner').

[147] (2018) 264 FCR 342.

[148] [2014] FCA 716; (2014) 225 FCR 357 ('Stanley').

[149] [2005] VSCA 53; (2005) 11 VR 568, 606 [73].

[151] [2008] VSC 27.

[152] Re Optimisation Australia Pty Ltd [2018] NSWSC 31; (2018) 362 ALR 374. Brereton J noted that the Supreme Court of New South Wales is not an 'eligible State court' as defined by s 12 of the FWA, nor is any other State Supreme Court. Accordingly, because it is not an 'eligible State court', the Supreme Court of New South Wales did not have jurisdiction in respect of claims under the FWA: see 467 [435], 469 [439].

[153] [2014] FCA 716; (2014) 225 FCR 357, 364 [33].

[155] [2014] FCA 716; (2014) 225 FCR 357, 365 [16] (emphasis added).

[158] Ibid 363 [26]-[28] (emphasis added).

[159] Sautner [2015] FCAFC 20; (2015) 229 FCR 221.

[161] (2018) 264 FCR 342.

[163] Stanley [2014] FCA 716; (2014) 225 FCR 357.

[164] Ibid 364 [33]; see also Coghill v Indochine Resources Pty Ltd (No 3) [2015] FCA 1131; (2015) 237 FCR 282, 289 [37].

[165] Section 12 of the FWA provides that 'penalty unit' has the same meaning as in s 4AA(1) of the Crimes Act 1914 (Cth) which at the time was $170. Sections 546(2)(a) and 546(2)(b) of the FWA provide that the maximum penalty per breach is 60 penalty units in the case of an individual and 300 penalty units in the case of a body corporate.

[166] Eg 12 weeks' redundancy pay ($46,153.85); 12 weeks' pay in lieu of notice of termination ($46,153.85); leave loading ($41,164.70).

[167] [2015] FCA 1131; (2015) 237 FCR 282, 289 [37].

[168] Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342, 365 [98] citing Fountain v Alexander [1982] HCA 16; (1982) 150 CLR 615, 629 (Mason J).

[169] House v The King (1936) 55 CLR 499, 505.

[170] [2005] VSCA 53; (2005) 11 VR 568, 609 [80].

[173] Pursuant to Supreme Court (General Civil Procedure) Rules 2015, r 25.02.

[174] Stanley [2014] FCA 716; (2014) 225 FCR 357, 363 [27].

[181] Rule 63.18 provides: 'Where a party serves a notice - (a) under Rule 35.03(2) disputing a fact, and afterwards that fact is proved in the proceeding; (b) under Rule 35.05(2) disputing the authenticity of a document, and afterwards the authenticity of that document is proved in the proceeding - that party shall pay the costs of proof, unless the Court otherwise orders.'

[187] [2008] VSC 27.

[188] Bannon v Nauru Phosphate Royalties Trust (Subpoena Objection) [2017] VSC 213.

[189] Sections 569 and 569A of the FWA were not applicable.

[190] [2008] VSC 27.

[191] Rule 63.15 provides: 'Unless the Court otherwise orders, a party who discontinues or withdraws part of a proceeding, counterclaim or claim by third party notice shall pay the costs of the party to whom the discontinuance or withdrawal relates to the time of the discontinuance or withdrawal.'

[192] This was conceded by junior counsel for Bannon; see also Clark v Loftus [2005] VSCA 155 [6].

[193] See Barescape Pty Limited v Bacchus Holdings Pty Limited (No 12) [2012] NSWSC 1591 [6] citing Polwood Pty Ltd v Foxworth Pty Ltd (No 2) [2008] FCAFC 168 [12]-[13].