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[2003] NSWIRComm 65
mixed. Leave to appeal and cross appeal granted; cross appeal dismissed; appeal upheld in part. Orders of Haylen J varied by recalculating monetary awards to account for mitigation (reducing the notice...
An Australian accountant (Bastian) accepted a two-year Singapore posting after representations that continuity of employment and a home position would be available; when told in April 1999 there was no position for him on return, his employment ended on 2 July 1999. The primary judge found the arrangement unfair and ordered monetary relief including ten months' pay and other items. On appeal the Full Bench granted leave, upheld the unfairness finding and most orders, but held the primary judge erred in not applying mitigation to the notice component. The Full Bench apportioned the ten months into four months' notice (subject to reduction by earnings in the first four months after termination) and six months' redundancy (not reduced), and confirmed currency conversion should be as at the date of termination. Appellants ordered to pay 80% of costs.
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John Bastian was a Pricewaterhouse accountant in Sydney who became a director and, in mid‑1997, accepted a two‑year Singapore posting to head a regional project finance advisory joint venture (paras 1, 10–11). He accepted the Singapore role after representations from senior personnel that a position would be found for him on return and that the posting would further his career prospects (paras 16–17). In April 1999 he was told he was no longer required on the Athens project and that his contract with the Singapore entity would terminate on 2 July 1999, with no position for him in Singapore, Australia or elsewhere (para 2).
Bastian brought proceedings under s 106 of the Industrial Relations Act 1996 alleging the arrangement amounted to unfair treatment and sought redundancy pay, reasonable notice, and a discretionary bonus, among other relief (para 3). Haylen J at first instance found unfairness, ordered ten months' pay for redundancy and notice calculated on the respondent's package as at 27 April 1999, awarded a one‑off bonus and reimbursement of a loss on a car purchase, and addressed currency conversion in a supplementary judgment (paras 3, 49).
The appellants sought leave to appeal. The Full Bench granted leave, held there were seven issues to decide (identity of employer, NSW connection, unfairness, remuneration package, notice and redundancy, mitigation, and conversion from S$ to A$), and then heard the appeal and cross‑appeal (paras 5–9). The Full Bench: (a) accepted the primary judge’s factual findings on employer identity and the NSW connection (paras 12–15); (b) upheld the finding of unfairness (paras 16–17); (c) expressed reservations but declined to disturb the primary judge on including Singapore allowances in the notice/redundancy calculation because that issue had not been fully argued (paras 18–20); (d) held that mitigation principles must be applied to the notice component but ordinarily not to redundancy payments and found error in the primary judge’s failure to reduce the notice component by earnings obtained after termination (paras 24, 31–45); (e) apportioned the ten months’ award into four months’ notice (reducible by earnings) and six months’ redundancy (not reducible) (para 45); and (f) dismissed the cross‑appeal and affirmed conversion at the date of termination (2 July 1999) for currency calculation purposes (paras 46–53). The Full Bench varied the orders accordingly and awarded costs against the appellants (paras 54–55).
There are four interlocking strands to the Full Bench’s reasoning.
Factual findings on employer identity and NSW connection were left undisturbed. The Full Bench emphasised the limited scope of appellate review of primary fact findings: where the findings were open on evidence, they should stand (paras 10–13, 15). Haylen J had concluded the Australian partnership retained an employment connection with Bastian while he worked in Singapore, and that the Singapore company was part of a joint arrangement in which the Australian firm had interests (para 12). The Full Bench found those conclusions sustainable on the evidence (para 13).
Unfairness turned on inducement and absence of protective terms. The primary judge found, and the Full Bench accepted, that the representations made by senior staff induced Bastian to accept the posting; he was not told clearly whether his Australian employment would be terminated and therefore could not make an informed choice or negotiate protective terms such as secondment, continuity of service, notice and redundancy entitlements (paras 16–17). The Court applied the classic unfair contracts test framed as a matter of morality rather than strict legal technicality and referenced authorities endorsing implication of good faith and protective clauses (para 16).
Mitigation rules apply, but redundancy is ordinarily different from notice. The Full Bench considered the common law mitigation rules (summarised in McGregor and cited in Westfield v Adams) and the amendment to s 106 (s 106(6)) that requires the Commission to take mitigation into account (paras 27–31, 39). The Full Bench’s key methodological proposition was that s 106(6) does not remove the Commission’s discretion: the Commission must take mitigation into account, but what is "just in the circumstances" remains a discretionary call (paras 29–36). The Court accepted the established approach that mitigation ordinarily reduces payments in lieu of notice but that redundancy or severance payments are typically treated like debts (liquidated sums) and not ordinarily discounted for mitigation unless there are special reasons (paras 25–26, 32).
Application to the facts: the notice component must be reduced by post‑termination earnings. On the facts, Bastian had obtained employment with KPMG commencing 2 August 1999. The Full Bench found that the KPMG position was reasonably comparable to what he could have had in Sydney and therefore the mitigation principle should be applied to the notice component (paras 41–44). Because the primary judge had awarded a single lump sum for notice and redundancy without apportionment, the Full Bench apportioned the ten months into four months as notice and six months as redundancy, so only the former is to be reduced by earnings in the first four months after termination (para 45).
Currency conversion at date of termination. The Court reasoned that the monetary awards were intended to compensate for loss as at the date of termination, particularly as the respondent had returned to Australia, so conversion of Singapore dollars into Australian dollars should be done at the termination date (2 July 1999) rather than at date of judgment (paras 46–53).
Before this Full Bench decision, the law as articulated in Westfield v Adams and the Full Bench’s prior authorities recognised two key points: mitigation is a relevant consideration in s 106 awards, and there is a distinction between payments in lieu of notice (where mitigation commonly reduces awards) and redundancy/severance (where mitigation ordinarily does not reduce awards) (paras 25–26, 39). The amendment to s 106(6) (post‑trial) made mitigation express statutory requirement but did not specify how mitigation should operate; the Full Bench interprets the amendment as requiring consideration but not displacing the Commission’s discretionary judgment (paras 27–36).
After this decision, practitioners have a clear statement that:
Thus, the decision refines application of mitigation to mixed awards and confirms currency conversion principles in the context of cross‑jurisdictional remuneration.
This Full Bench decision itself engages and follows Westfield v Adams on mitigation principles and clarifies the role of the s 106(6) amendment, that mitigation must be considered but that the Commission retains discretionary judgment about what is ‘just’ (paras 25–36). The decision is careful to leave open that redundancy payments can be reduced in exceptional cases; it does not create absolute rules but provides a framework for apportionment of undifferentiated awards and for converting foreign currency at the date relevant to the compensatory purpose (paras 31–36, 45, 49–53). As this is a Full Bench decision of the Commission in Court Session, it is authoritative within that jurisdiction and will be cited on mitigation, apportionment and currency conversion issues. Practitioners should therefore expect tribunals and courts dealing with unfair contract claims to apply the same approach to apportionment and to the application of s 106(6).
Conclusion: Brent v Bastian is a significant Full Bench decision clarifying how mitigation must be considered in s 106 unfair contract awards, how redundancy differs from notice for mitigation purposes, how undifferentiated awards should be apportioned so mitigation can be applied correctly, and that currency conversion for compensatory awards should reflect the date tied to the loss (commonly the date of termination). Practitioners advising on overseas postings, drafting secondee clauses, or litigating unfair contract claims should take careful steps to: (1) document continuity or secondment arrangements and specify which entity bears redundancy risk; (2) delineate the components of remuneration and their domestic comparators; and (3) expect mitigation to be applied to notice awards, with redundancy treated differently unless special factors justify otherwise (paras 16, 24–26, 31–45, 49–53).
Industrial Relations Commission of New South Wales in Court Session
CITATION : Brent v Bastian [2003] NSWIRComm 65 FIRST APPELLANT/FIRST CROSS RESPONDENT Noel Brent & Ors practising under the business name PricewaterhouseCoopers
SECOND APPELLANT/SECOND CROSS RESPONDENT PricewaterhouseCoopers Advisory Pty Ltd PARTIES : THIRD APPELLANT/THIRD CROSS RESPONDENT PricewaterhouseCoopers Administration Pty Ltd
RESPONDENT/CROSS APPELLANT John Bastian FILE NUMBER: IRC 8583 of 2001 CORAM: Wright J President; Walton J Vice-President; Boland J Appeal - Cross Appeal - Unfair Contract - Identity of employer - Connection with New South Wales - Whether there was unfairness - Whether appropriate to calculate money orders under s 106(5) of the Industrial Relations Act on the basis of a remuneration package applicable to a foreign posting - Notice and redundancy - Mitigation - Reliance on s 106(6) - Whether conversion of foreign currency to Australian currency should be done at date of judgment or date of termination - Approbate and reprobate - Leave to appeal and cross appeal granted - Appeal upheld in part - Cross appeal dismissed CATCHWORDS : Unfair Contract - Identity of employer - Connection with New South Wales - Whether there was unfairness - Whether appropriate to calculate money orders under s 106(5) of the Industrial Relations Act on the basis of a remuneration package applicable to a foreign posting - Notice and redundancy - Mitigation - Reliance on s 106(6) - Whether conversion of foreign currency to Australian currency should be done at date of judgment or date of termination - Approbate and reprobate - Leave to appeal and cross appeal granted - Appeal upheld in part - Cross appeal dismissed LEGISLATION CITED : Industrial Relations Act 1996 s106 s 106(6) s188(1) Industrial Relations Amendment (Unfair Contracts) Act 2002 Davies v General Transport Development Pty Ltd (1967) AR (NSW) 371 Day v Lumley Life Ltd (1999) 90 IR 70 John Bastian v Noel Ashley Brent & Ors practising under the business name PricewaterhouseCoopers & Ors [2001] NSWIRComm 316 Electricity Commission of New South Wales v Clissold [1981] 1 NSWLR 284 Knowles v Anglican Property Church Trust (No 2) (1999) 95 IR 380 New South Wales v Health and Research Employees Association of New South Wales (unreported, Fisher CJ, Bauer and Hill JJ, 31 March 1993) Perrott v Xcellenet Australia Limited (1998) 84 IR 255 CASES CITED : Pullen v R & C Products Pty Ltd (1994) 60 IR 183 Reich v Client Server Professionals of Aust Pty Ltd ( Administrator appointed) (2000) 49 NSWLR 551 (2000) 99 IR 69 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Ross v GN Comtext (Aust) Pty Ltd (2000) 107 IR 1 Rothmans Distribution Services Ltd v Full Court of Industrial Court of New South Wales (1994) 53 IR 157 Thompson v His Honour Judge Byrne (1999) 196 CLR 141 Westfield Holdings v Adams (2002) 114 IR 241 Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 HEARING DATES: 08/22/2002; 08/23/2002 DATE OF JUDGMENT: 04/10/2003
APPELLANTS/CROSS RESPONDENTS Mr J J Fernon of counsel Solicitor: Ms E Lynch Baker & McKenzie LEGAL REPRESENTATIVES: RESPONDENT/CROSS APPELLANT Mr G P McNally of counsel Solicitor: Mr D Baldry Bradfield & Scott
JUDGMENT: - 24 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION
CORAM: Wright, J President Walton J, Vice-Present Boland J Thursday 10 April, 2003
NOEL ASHLEY BRENT & ORS (PRACTISING UNDER THE BUSINESS NAME PRICEWATERHOUSECOOPERS) v JOHN BASTIAN
Appeal and cross appeal against two judgments of Justice Haylen given on 3 December 2001 and 7 December 2001 in Matter No IRC 2078 of 2000 JUDGMENT OF THE COURT [2003] NSWIRComm 65
1 John Bastian, the respondent in these proceedings, was an accountant working in the firm of Pricewaterhouse in Sydney from about August 1993. He became a director in 1994 in the Infrastructure Services Group within the Pricewaterhouse Corporate Finance Division. In 1997 a merger occurred and Pricewaterhouse became PricewaterhouseCoopers. From about July or August 1997 Mr Bastian worked in Singapore under a two year contract of employment with the second appellant, PricewaterhouseCoopers Advisory Pty Ltd, as the head of a project finance advisory services joint venture servicing Asia.
2 Whilst he was based in Singapore, Mr Bastian was called upon to assist Pricewaterhouse in Athens following that city's election as the host city for the 2004 Olympic Games. Pricewaterhouse in Athens had been appointed as financial adviser to the Games. In April 1999 Mr Bastian was advised he was no longer required to work on the Athens project, that his contract with the second appellant would terminate on 2 July 1999 and would not be renewed and there were no other positions for him in Europe, Australia or elsewhere.
3 Mr Bastian's employment was subsequently terminated. He sought relief pursuant to s 106 of the Industrial Relations Act 1996 claiming unfair treatment, redundancy pay, reasonable notice and a discretionary bonus payment for his work on the Athens Olympics. In a judgment handed down on 3 December 2001 (John Bastian v Noel Ashley Brent & Ors practising under the business name PricewaterhouseCoopers & Ors [2001] NSWIRComm 316), Haylen J found that the relevant contract and/or arrangement involving Mr Bastian was unfair. His Honour made orders the effect of which was to award Mr Bastian ten months' pay for redundancy and notice at the "package applicable as at 27 April 1999", a "one off" bonus of AS$40,000, a "one off" reimbursement of S$17,140 for the loss made on the purchase of a motor vehicle in Singapore and interest.
4 The respondents below applied for leave to appeal and appeal against the judgment and orders of Haylen J. Mr Bastian cross appealed against his Honour's finding that the moneys owing to him should have been converted from Singapore dollars to Australian dollars as at July 1999, the date of his termination, rather than December 2001, the date of judgment. It should be noted that the conversion question was addressed by Haylen J in a supplementary judgment handed down on 7 December 2001.
5 Section 188(1) of the Act provides that an appeal may only be made with leave of the Full Bench. Section 188(2) provides that leave will be granted if the Full Bench is of the opinion that the matter is of such importance that, in the public interest, leave should be granted.
6 We adopt the approach laid down in Knowles v Anglican Property Church Trust (No 2) (1999) 95 IR 380 both as to leave to appeal and as to the nature of an appeal under the Industrial Relations Act. Leave to appeal will not, as a general rule, be granted unless the appellant demonstrates that the appeal proceedings "raises substantial issues of principle or law or has wider implications for the jurisprudence of this Commission, including whether the decision has widespread practical application" (see Knowles at 382). We consider this matter raises substantial issues of principle so as to justify granting leave to appeal. In particular the appeal raises again the issue of mitigation which appears to be an issue, at least at present, of significance in the unfair contracts jurisdiction of the Court Session. We grant leave to appeal and cross-appeal.
7 The appellants contended that the trial judge failed to properly take into account the respondent's actions to mitigate loss and further contended that payments in relation to redundancy were to be taken into account in determining mitigation of loss. In making this submission the appellants placed considerable reliance on s 106(6) of the Industrial Relations Act. Section 106(6) was inserted in June 2002 by the Industrial Relations Amendment (Unfair Contracts) Act 2002. Section 106(6) provides: In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.
8 Given that the amendment post-dated the decision at first instance, we do not consider it has any application to the proceedings. Nevertheless, given that it figured prominently in the debate on mitigation, it is appropriate that in our consideration of the issue of mitigation we make some observations about the application of s 106(6).
9 There were seven issues raised by the appeal and cross appeal as follows: 1. The legal relationship between the respondent and the appellants.
The legal relationship between the respondent and the appellants
10 In order to understand this issue it is necessary to provide additional background information. Whilst he was working in Sydney for the Pricewaterhouse partnership (which later became the first appellant), Mr Bastian had discussions in 1996 and 1997 with Mr Tony Poulter, who was head of project finance for the European arm of Pricewaterhouse based in London, regarding the setting up of a regional Asian based project finance team. Arising out of these discussions, in June 1997 various Pricewaterhouse practices from Asia, Europe, the USA and Australia joined together in a Memorandum of Understanding for the purposes of establishing project finance advisory services in Asia. Part of the proposal was for the establishment of a company that would be owned by the individual Pricewaterhouse firms. This company was subsequently established and is the second appellant, the Singapore company.
11 Following discussions and negotiations with Mr Poulter and Mr Allan Watson, a partner with the Australian firm, in July 1997 Mr Bastian left Sydney to take up his appointment in Singapore as the head of the joint venture. An issue in the proceedings before Haylen J was whether, upon taking up his Singapore appointment, Mr Bastian's employment with the first appellant was terminated. Another issue was whether, while he was in Sydney, Mr Bastian was employed by the first appellant or by the third appellant.
12 His Honour found at par [139] of his judgment that: [T]here was an arrangement between the first respondent and the second respondent whereby the applicant performed work in Singapore. In performing that work, there was work performed in an industry in and of New South Wales arising from the interests of the first respondent, its shareholding in the second respondent and the aim of the joint venture that, by co-operation, signatory firms such as the first respondent could do business in Singapore. Even if I am wrong about the New South Wales connection with the second respondent, the first respondent maintained an employment connection with the applicant during his work in Singapore. He did not resign to join the joint venture and remained on the books of the first respondent as an employee. The first respondent therefore remains liable for any unfairness in the Singapore arrangement regardless of the liability of the second respondent, and remains liable for any overall unfairness arising out of these arrangements. In this consideration I have not mentioned the third respondent because I regard it as no more than a service company for the partnership in Australia. The third respondent was never, in any relevant sense, the employer of the applicant.
13 We consider his Honour's findings regarding the relationship between the respondent and the first appellant were open to him on the evidence and there was no relevant error.
14 It was submitted for the appellants that there was no evidence to sustain a conclusion that any contract or arrangement after July 1997 required Mr Bastian to perform work in an industry in and of New South Wales. Further, it was submitted that Haylen J misapplied the test in Perrott v Xcellenet Australia Limited (1998) 84 IR 255 where it was held that, in determining whether the necessary connection with New South Wales existed, the test was whether the contract concerned required a person to perform work in an industry in and of New South Wales. It was contended that his Honour assessed the relevant "connection" by looking to whether there was any available association or "link" with New South Wales and this was an insufficient connection.
15 We consider there was sufficient evidence for his Honour to make the relevant connection with New South Wales, either on the basis of the first appellant's interests in the Singaporean joint venture in the form of the second appellant or on the basis of the respondent's employment connection with the first appellant. It is true that the bulk of the respondent's work was performed outside of New South Wales but as it was noted in Perrott the place where the work is performed is but one factor in assessing the relevant connection with New South Wales.
16 In relation to the question of unfairness, Haylen J found at pars [141] and [142]: The applicant's case is that the contract with the first respondent was unfair insofar as it failed to treat him as being on secondment to the second respondent, or to treat him as being on leave of absence and thereby maintaining his continuity of employment. If either of these courses had been adopted, he would have been entitled to reasonable notice and redundancy upon termination of his employment in 1999. It is to be remembered that the letter of termination indicated that there was no position for him in Singapore nor in Australia, or in any of the European firms operating under the PriceWaterhouse global network. This decision was said to have been reached "with the knowledge of the Australian firm". The first and second respondents' lack of precision in dealing with transfers and secondments clouds the full import of the arrangements that are made whereby employees perform work in other PriceWaterhouse global entities. So it was in Mr Bastian's case. He was asked to go to Singapore in circumstances where the respondents were keen to pursue an expanding, potential market. They had no other suitable candidate and were not prepared to pay to recruit a star for the job. They knew the task would be initially difficult and that the second in charge was likely to take over the role. Other senior staff from PriceWaterhouse firms were placed there on secondment. It is not surprising that the applicant, in pursuit of his desire to become a partner, was persuaded that the acceptance of this position would permit him to show his true capacity and strengthen his claim for partnership and perhaps work with other entities within the PriceWaterhouse global operation. The late inclusion of the term that there would be no guarantee of a position in Australia at the end of two years was explained away by the desire not to set a precedent for Australians going overseas to work for other PriceWaterhouse entities. At the time that this appointment in Singapore was being finalised, Mr Bastian was entitled to know, in clear and unmistakeable terms, whether or not his employment with the Australian firm was terminated in order for him to be able to make an informed judgment about the value of the offer that was being made to him. He was also entitled to be informed as to whether he was just a "fill in" for two years while they looked for somebody better. If he had been forewarned of these matters, he could have there and then asked for appropriate separation payments or perhaps persisted in seeking different terms to take up the Singapore position. He was denied that opportunity by the way in which the respondents negotiated the package of arrangements for the Singapore position. In addition, if he had been told that his employment in Australia would be terminated and that he would only have two years in Singapore and that it would be the end of his career in PriceWaterhouse, he could easily have chosen to remain in his position in Sydney and not attempt to prove his worth on the international stage. There was no suggestion that there was anything about his performance in his role in the Sydney office of the firm that warranted his termination in the middle of 1997. He could have simply remained in that position. To the contrary, performance assessments made during that period showed him to score highly in terms of competence and technical ability although there were some criticisms of his personal style. The representations that I have found in substance made by Poulter and Watson were designed to assure Mr Bastian that, whatever happened, a position would be found for him when he left the Singapore position. All of these matters helped mask the situation that the respondents now say was brought about by Mr Bastian accepting their offer to move from his Sydney employment.
142 In my view, the contract and/or the arrangement entered into by the respondent and Mr Bastian was unfair. Quite apart from the matters mentioned above, the contract or arrangement should have contained some protective clause enabling him to receive appropriate notice on termination and appropriate redundancy or severance pay in the event of such an occurrence: it should have provided for secondment or some continuity of service and it should have clearly specified which PriceWaterhouse entities were responsible for the provision of these benefits. In my view, the circumstances of this case nominated it for the application of the classic test enunciated in the cases, namely, that the nature of the unfairness is a plain matter of morals not law. ( Davies v General Transport Development Pty Ltd (1967) AR (NSW) 371 per Sheldon J and the Full Court in Baker). There is also a resonance in this case of the need for the implication of good faith provisions discussed in Renard Constructions (ME) Pty Ltd v Minister for Public Works [1991] 26 NSWLR 234 and in Pullen v R & C Products Pty Ltd (1994) 60 IR 183. This is a case where the contract or arrangement was unfair and where the conduct of the respondents led to it becoming unfair. These matters are intertwined as indicated in the judgment in Rothmans Distribution Services Ltd v Full Court of Industrial Court of New South Wales (1994) 53 IR 157 at 160 and in Reich v Client Server Professionals of Aust Pty Ltd (2000) 99 IR 69.
17 Central to his Honour's findings relating to unfairness was the fact that despite the representations made to Mr Bastian to induce him to take up the Singapore post including that, whatever happened, a position would be found for him when the Singapore position expired, the respondent was effectively abandoned. After hearing the evidence Haylen J found that the representations were, indeed, made by both Mr Poulter and Mr Watson and that it was on the basis of those representations that Bastian moved to Singapore. In doing so, Mr Bastian was left worse off than if he had chosen to stay in Sydney where he would have been entitled to receive appropriate notice on termination and appropriate redundancy or severance pay in the event of his position having become redundant. We see no basis for overturning his Honour's findings of unfairness as they were open on the evidence.
18 The appellant's complained that in the award made in favour of Mr Bastian, Haylen J included as part of the respondent's remuneration package, all elements of his Singapore salary. This salary included additional allowances to compensate the respondent for living in Singapore, for example, rent and home leave. The appellants submitted that Mr Bastian returned to Australia in July 1999 after the term of the Singapore contract expired. Singapore-related expenses were then no longer incurred. Compensation for such expenses was, therefore, unjust. It was submitted that any award of compensation should have been assessed on Mr Bastian's Singapore base salary, which was approximately A$215,000.
19 We have some reservations about the notion that calculation of notice and redundancy payments should have been based on the respondent's total package, in this case, as that package included reimbursement of expenses incurred by virtue of the fact of having to live in Singapore. For example, as part of his total package the respondent was paid home leave of A$13,000, which represented the cost of a single return trip to Australia for Mr Bastian and his family flying business class. Having moved back to Sydney after his employment in Singapore was terminated, the rationale for home leave disappeared. Nevertheless, the home leave payment was included in the calculation of ten months' notice/redundancy pay. The reservations as to inclusion of the Singapore-related allowances in the calculation of the notice and redundancy payments are emphasised by the fact that upon his termination of employment, Mr Bastian immediately obtained employment with KPMG, which lasted until November 2000.
20 Despite our reservations about including Singapore-related allowances in the calculation of notice and redundancy pay it does not appear that this issue was the subject of any debate before the trial judge. Further, the evidence does not reveal which components of the respondent's salary (other than the obvious one of home leave) related peculiarly to living in Singapore. School tuition fees and family medical and dental insurance were included in the total package but amounts in respect of these elements of the remuneration package could just as easily have been part of a salary related to employment in Sydney (the limitations in the evidence would have presumably been addressed if the issue had been squarely raised below). In the circumstances, we do not consider it is open to the Full Bench to interfere with his Honour's orders in this respect.
21 Haylen J decided that the respondent's employment was terminated because his position had become redundant. His Honour determined that, according to the relevant principles, Mr Bastian was entitled to redundancy pay. Haylen J also considered the question of notice. At par [150] his Honour said: I accept the applicant's analysis of the evidence that there was no notice given in November 1998 or before the end of April 1999, in any relevant sense. I regard the relevant factors here to be: the quite senior position held by the applicant in heading the Singapore joint venture; his age, being 45 at the time of termination; the nature of the industry in which he was working and the highly specialised role he had undertaken; his service with the PriceWaterhouse entities for a period in excess of six years; his generally good work performance demonstrated over that period; his personal circumstances in being required to return to Australia with his family after a relatively short period in Singapore and re-establish his life and that of his family; and the likely difficulty of him obtaining employment of a similar nature and similar status with the potential for international appointments.
22 In respect of redundancy and notice, his Honour decided at par [151] that: Because of the difficulty of drawing a clear line between the two concepts of reasonable notice and redundancy, I am of the view that both these considerations, in this case, should be taken into account in deciding a monetary amount to be paid for all of the elements contained within these two notions. In my view, an amount equal to ten months' pay at the package applicable as at 27 April 1999 is appropriate in all the circumstances.
23 Mr Bastian was told at the end of April 1999 that he had no future with PriceWaterhouse after his term in Singapore expired at the end of June. Haylen J found, in effect, that Bastian was given two months' notice. The additional ten months' pay ordered by his Honour reflects a view on the part of the trial judge that a total of 12 months' notice and redundancy was appropriate in the circumstances. Given the factors taken into account by Haylen J, including the respondent's period of service with the various PriceWaterhouse entities, we consider that a total of 12 months' pay, whilst at the higher end of the scale for the present matter, is within the available range of what might be ordered in such circumstances. Consequently, we do not consider there was any appellable error.
24 In relation to the question of mitigation Haylen J found at par [156]: The respondents press that, should there be any order made for the payment of any sum to Mr Bastian, then the principles of mitigation should be applied. It is then submitted that, since he was able to obtain employment with KPMG at the same level as his position in the Sydney firm before he left for Singapore, no amounts should be payable at all. I reject that approach as I do not regard it as being just in the circumstances of the case. I accept, on the authority of the Full Court of the Commission in Court Session in Harcourt Brace that regard should be had to the principles of mitigation. That does not automatically mean that there should be discounted from any money order made in favour of the applicant sums of money earned during the period for which payment in lieu of reasonable notice had been ordered. Mr Bastian acted reasonably in accepting the first employment he could obtain on his return to Sydney, and while he acted reasonably in doing so, that employment was not at the senior level he had enjoyed nor at the rate overall with its prospects for large bonuses that was available to him while employed in Singapore. The complicating factor in this case is, as a matter of fairness, I have taken into account both the elements of redundancy and reasonable notice in finding that the contract should be varied to include a payment of the equivalent of ten months' salary on the total package upon termination. I do not believe that there is any warrant for applying the principles of mitigation to severance payments made on account of redundancy as a general principle or in the circumstances of this case. As I have indicated earlier, the TCR test case contemplated that specific provisions could be made when work was arranged with a new employer so that severance pay could be avoided. In concept, this is not such a case: there is nothing in the terms and conditions of the respondents which seem to embody such an approach to their non-award employees. It is because of these considerations that I do not believe it is appropriate or just in the circumstances of this case that there should be any amount deducted in mitigation because of the short period of employment that Mr Bastian was able to take up with KPMG. This approach seems to be consistent with the approach of the Full Court in New South Wales Health and Research Employees Association of NSW (unreported, 31 March 1993, pp 80 - 83) cited with approval in Harcourt Brace.
25 Since the handing down of the judgment at first instance, on 21 December 2001 a Full Bench of the Commission in Court Session gave judgment in Westfield Holdings v Adams (2002) 114 IR 241. After reviewing the law in relation to mitigation, the Full Bench held that: [I]n making an appropriate monetary order under s 106(5) it is proper to have regard to the common law principles relating to mitigation but recognising that in particular cases it will be inappropriate to apply mitigation. Ordinarily, where an employee has been successful in avoiding his or her loss, or has failed to take reasonable steps to avoid loss in the period following dismissal, the Court, in determining what is just in the circumstances of the case, should give consideration to whether, and to what extent, any money amount in respect of notice of termination that is contemplated to be the subject of an order under s 106(5), should be reduced by monies earned, or imputedly earned, in the relevant post-termination period. We emphasise that the application of the principle of mitigation in cases brought under s 106 represents one aspect of the consideration of what orders are "just in the circumstances of the case". 6) Further, the differing purposes of a payment in lieu of notice and a payment for redundancy or severance are important matters to be taken into account when considering the application of the principle of mitigation to a sum which may otherwise be ordered under s 106(5) of the Act. The principle of mitigation is unlikely to be a central consideration when assessing the appropriateness or magnitude of any payment the Court may order for redundancy or severance. Unless there are special considerations, it will not ordinarily be appropriate to reduce any redundancy or severance payments otherwise to be made as a result of orders under s 106 of the Act because of the efforts or success of an employee in obtaining alternative employment.
26 The Full Bench also said at par [148]: There is an additional reason why it will not ordinarily be appropriate to reduce any order otherwise appropriate in the nature of a redundancy or severance payment. The making of orders varying a contract so as to provide for a payment by way of redundancy or severance, as opposed to a period of notice, constitutes the provision for the payment of a liquidated sum payable upon termination: see Ross v GN Comtext (Aust) Pty Ltd and Day v Lumley Life Ltd (1999) 90 IR 70. As a result, the application of the principle of mitigation will not be appropriate because the principle of mitigation does not apply to debts.
27 Another development was the amendment to s 106 by the Industrial Relations Amendment (Unfair Contracts) Act 2002 in June 2002. As we noted earlier, s 106(6) is in the following terms: In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.
28 Whilst s 106(6) was introduced after judgment at first instance the appellants, nevertheless, rely on its terms to highlight a submission that Haylen J had not properly taken into account the fact that alternate employment was obtained and commenced by 2 August 1999 and so reduced any compensation for reasonable notice. The appellants further relied on the amendment to submit that, contrary to Westfield v Adams, s 106(6) required the Commission to take into account any action to mitigate loss, including for redundancy. In making this submission it would seem that the appellants were seeking to make out a case that given the provisions of s 106(6), which although they might not apply in the instant case, the Full Bench should, consistent with what s 106(6) now provides, reduce any compensation for redundancy because the respondent mitigated his loss by obtaining alternative employment.
29 Section 106(6) has no application to the proceedings. However, given that the appellants have relied on its terms to reinforce aspects of their submissions relating to mitigation, it is appropriate to make a number of observations about the provision. The amendment embodied in s 106(6) makes it clear that the Commission in Court Session must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss. However, the statute does not specify what course the Commission is to take once it has taken into account any action to mitigate loss. That is left to the discretion of the Commission. That this so is clear on the face of s 106(6). But in any event, as a matter of statutory construction, it is evident that it was the Legislature's intention to retain the Commission's discretion as to the application of the mitigation principle.
30 Section 106(6) requires the Commission, in making orders under the section, to take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss. One class of order that the Commission may make is a money order under s 106(5) provided the Commission considers the order "just in the circumstances of the case". We consider it follows that in making any money orders, what is just in the circumstances of the case will determine how the Commission is to exercise its discretion on a question involving mitigation.
31 Putting aside the question of redundancy, which we shall address separately, we do not consider there is any inconsistency between the amendment in s 106(6) and the Full Bench decision in Westfield v Adams. Once the trial judge has taken into account any action by the applicant to mitigate loss in accordance with the statutory requirement, the exercise of any discretion as to the application of the principle of mitigation should be carried out having regard to the approach in Westfield v Adams.
32 The approach in Westfield v Adams, in so far as it relates to mitigation, places a different emphasis on redundancy as opposed to payment in lieu of notice. It was said in that case that the principle of mitigation was unlikely to be a central consideration when assessing the appropriateness or magnitude of any payment the Court may order for redundancy or severance and that unless there were special considerations, it would not ordinarily be appropriate to reduce any redundancy or severance payments otherwise to be made as a result of orders under s 106 of the Act because of the efforts or success of an employee in obtaining alternative employment. It was also observed in Westfield v Adams that redundancy pay was in the nature of a debt and the principle of mitigation did not apply to debts.
33 As earlier observed, it was contended, in effect, by the appellants that there is an inconsistency between the statutory requirement in s 106(6) to take into account any action to mitigate loss and the decision by the Full Bench in Westfield v Adams which states that, regardless of whether the applicant took any action to mitigate loss, it would not ordinarily be appropriate to reduce any redundancy or severance payments.
34 We do not consider there is any such inconsistency. Firstly, whilst it is now a statutory requirement that the Commission take into account any action to mitigate loss, as we have already observed, the amendment to the legislation did not remove the Commission's discretion to make money orders that are just in the circumstances of the case. That is to say, if in the Commission's discretion it determines there are good reasons, based on what is just, not to reduce money amounts (including redundancy pay) found to be payable to the applicant under s 106(5), even though the applicant has been successful in avoiding his or her loss, or has failed to take reasonable steps to avoid loss in the period following dismissal, s 106(6) does not remove the Commission's power to exercise such discretion.
35 Secondly, Westfield v Adams does not represent an absolute bar to reducing severance payments because of a failure of an applicant to mitigate his or her loss. Simply that, in the ordinary course, such a reduction would not be usually considered appropriate given the rationale for redundancy payments.
36 Thirdly, it may be presumed (although not conclusively: Thompson v His Honour Judge Byrne (1999) 196 CLR 141 at 157 citing Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 329, 351) that Parliament was aware of the Commission's view regarding mitigation and redundancy pay as expressed in Westfield v Adams and earlier cases. If it had been Parliament's intention to remove the Court's discretion in relation to the issue of mitigation or that the discretion should not apply to redundancy pay, this would only have required a simple legislative prescription. To use the phrase adopted by Hope JA in Electricity Commission of New South Wales v Clissold [1981] 1 NSWLR 284 at 291, we consider that in enacting s 106(6) the legislature was doing no more than giving a "sensible notification" of the importance or significance of mitigation in s 106 proceedings consistent with the broad discretion which has historically been vested in the Commission in Court Session in its unfair contracts jurisdiction, and emphasised that, whether or not an applicant took action to mitigate loss, this must be taken into account. 37 As explained in Westfield v Adams, there are sound reasons why, in the ordinary course, redundancy pay should not be reduced because the applicant had been successful in avoiding his or her loss, or had failed to take reasonable steps to avoid loss in the period following dismissal. The prescription in s 106(6) does not limit the Commission's discretion to exclude, in the ordinary course, redundancy pay from any application of the mitigation principle.
38 That brings us to a consideration of the trial judge's treatment of mitigation. His Honour found that Mr Bastian acted reasonably in accepting the first employment he could obtain on his return to Sydney. However, while he acted reasonably, the employment at KPMG was not at the senior level the respondent had enjoyed. It was at a lower overall rate of pay. It did not have the prospects for large bonuses that were available to him while employed in Singapore. Consequently, Haylen J held that it would not be just in the circumstances of the case to discount from any money order made in favour of the applicant sums of money earned during the period for which payment in lieu of reasonable notice had been ordered. His Honour also held that there was no warrant for applying the principles of mitigation to severance payments made on account of redundancy "as a general principle or in the circumstances of this case".
39 In Westfield v Adams at par [132] the Full Bench cited the three rules from McGregor on Damages that make up the common law principle of mitigation: 1) The plaintiff must take all reasonable steps to mitigate the loss to him consequent upon the defendant's wrong and cannot recover damages for any such loss which he could thus have avoided but has failed, through unreasonable action or inaction, to avoid. Put shortly, the plaintiff cannot recover for avoidable loss. 2) Where the plaintiff does take reasonable steps to mitigate the loss to him consequent upon the defendant's wrong, he can recover for loss incurred in so doing. Put shortly, the plaintiff can recover for loss incurred in reasonable attempts to avoid loss. 3) Where the plaintiff does take steps to mitigate the loss to him consequent upon the defendant's wrong and these steps are successful, the defendant is entitled to the benefit accruing from the plaintiff's action and is liable only for the loss as lessened. Put shortly, the plaintiff cannot recover for avoided loss.
40 The common law principle of mitigation would, if applied in this case, operate to reduce any compensation to be ordered in lieu of a reasonable period of notice to take account of the actions of the respondent in mitigating his loss. The question is whether it would be just in the circumstances of the case to so reduce any payment in lieu of notice.
41 Mr Bastian took steps to avoid his loss by gaining employment with KPMG commencing from 2 August 1999. Nevertheless, Haylen J considered the new employment was not at the standard the respondent had previously enjoyed in Singapore and that it would not be just to discount from any money order made in favour of the applicant on the basis of the mitigation principle.
42 There was evidence to the effect that the position Mr Bastian obtained with KPMG (director in the finance group on a salary of $250,000) was equivalent to the position he had when he left Sydney in July 1997. Further, that the respondent would not have received more than $250,000 remuneration package (excluding bonus) had he returned to his old position at PriceWaterhouse in Australia in 1999.
43 In this case, we consider that there was error in principle in failing to apply the principle of mitigation. It was necessary to apply the principle in consideration of the monies earned by the respondent after termination. Whilst it was submitted for the respondent that he was forced to take the first available job he was offered and would have preferred to wait and see what other jobs were available, the position he took up with KPMG could be considered to be reasonably comparable employment to what he would have enjoyed if he had been transferred back to Sydney to resume full time employment with the first appellant after the two year period in Singapore. We do not consider the appropriate comparison is with his Singapore package. We do not accept that the respondent was entitled to expect employment in Australia at a similar level to that he enjoyed in Singapore on a total annual remuneration package of A$415,700 plus bonuses and unless that, or something close to it, was achieved the mitigation principle should not apply. The respondent's status and remuneration package associated with the Singapore appointment was a one-off arrangement that had no relevance to employment in Sydney unless he had made such a success of the appointment that a partnership was in the offing on his return to Sydney. Such was not the case. Similarly we do not consider that the brevity of the employment with KPMG was a basis to ignore its significance for the respondent's obligation to mitigate his losses.
44 It follows that any monies ordered to be paid to the respondent in respect of pay in lieu of notice should have been reduced by monies earned after termination. We agree with Haylen J, for the reasons expressed in Westfield v Adams, that any monies ordered to be paid to the respondent in respect of redundancy should not be taken into consideration. The complicating factor here, however, is that the trial judge ordered ten months' pay for notice and redundancy and made no distinction between the two.
45 We have decided that of the ten months' pay, four months should be considered as referable to notice and six months' to redundancy. Accordingly, for the four months' period immediately following the date of termination, monies ordered to be paid to the respondent shall be reduced by the amount earned by the respondent in mitigating his loss over that period.
The conversion from Singapore to Australian dollars
46 This issue arises in the cross appeal. The background to the cross appeal is that in November 1999 the second appellant filed proceedings in the District Court of New South Wales claiming from the respondent the full amount of a car loan that was advanced to the respondent in Singapore. The respondent sought a stay of proceedings but the second appellant refused to consent. The District Court proceedings were heard on 6 October 2000. A judgment for A$137,591 including interest from 2 July 1999 was entered against the respondent, together with costs. That amount was paid by the respondent on 22 November 2000.
47 In the District Court proceedings, according to the evidence, judgment was given in the sum of S$114,500 converted to Australian dollars as at 17 October 2000 (the date of judgment) at the then applicable conversion rate of 0.9239 giving a judgment in Australian dollars of A$123,213.00 plus interest from 2 July 1999 of A$14,377.93 giving a total judgment of A$137,591.00.
48 In the proceedings before Haylen J, it was submitted that his Honour should undertake the conversion using the same approach adopted in the District Court, that is, conversion from Singapore dollars to Australian dollars should be carried out as at the date of judgment.
49 Haylen J held that the relevant date for conversion was the date he found the respondent's contract of employment ended, namely 2 July 1999. This produced an amount of A$356,212.46. Had the conversion been carried out at the date of judgment, the amount would have been A$436,323.92, a difference of some A$80,000.
50 The respondent submitted that the second appellant was "approbating and reprobating"; that in the District Court proceedings the second appellant sought a conversion date as the date of judgment and not the date when the cause of action arose but in the s 106 proceedings it took the reverse position.
51 In challenging Haylen J's decision to use 2 July 1999 as the conversion date the respondent submitted that his Honour failed to take into account the effect of the different stances taken by the appellants before him compared to the District Court. It was submitted that the change in position effectively deprived the respondent of an opportunity to properly set-off the amount of the car loan from the severance payments that the appellants were eventually ordered to make to him. This was due to the fact that although the second appellant received the benefit of the favourable exchange rate fluctuation in calculating the amount that the respondent owed to it, the appellants were unwilling to afford to Mr Bastian, in calculating what they owed to him, the very same favourable fluctuation, giving the appellants a benefit of some $80,000.
52 The effect of Haylen J's findings was that the respondent should have been paid ten months' pay on 2 July 1999. It follows, in our opinion, that the appropriate date for conversion is 2 July 1999. This is especially so given the respondent returned to Australia following the termination of his employment and it was, therefore, appropriate that he should have been compensated in Australian dollars. 53 As to the District Court proceedings, we observe these were proceedings in relation to a claim by the second appellant (the Singapore company) in respect of money owed to it by the respondent. As at the date of judgment in those proceedings the respondent owed the Singapore company S$114,500. Unless the conversion was done at the date of judgment the second appellant would have received either more or less than the monies owed to it by the respondent. On the other hand, as the appellants pointed out, if in the proceedings before Haylen J the conversion date was the date of judgment rather than the date of termination, the respondent would have received either more or less than the amount he should have received at the date of termination. His Honour's judgment in relation to the conversion issue discloses no error that would justify appellate intervention.
54 We consider that the appeal and the cross appeal should be considered together for the purpose of orders as the hearing of the cross appeal did not add materially to the time required for the proceedings. As observed earlier, the proceedings raised seven issues for determination. The respondent was successful in five of those issues which together represented the major issues in the proceedings, although the issue of mitigation on which the appellants succeeded, was crucial in leave to appeal being granted and the appeal being in part upheld. Treating the proceedings in the overall way mentioned, we consider that the appellants should pay 80 per cent of the respondents' costs.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Brent
Bastian
(1999) 90 IR 70
(1999) 95 IR 380
(1998) 84 IR 255
(1994) 60 IR 183
(2000) 49 NSWLR 551
(2000) 99 IR 69
(1992) 26 NSWLR 234
(2000) 107 IR 1
(1994) 53 IR 157
(1999) 196 CLR 141
(2002) 114 IR 241
(1996) 187 CLR 310
Leave to appeal and cross appeal granted; cross appeal dismissed; appeal upheld in part. Orders of Haylen J varied by recalculating monetary awards to account for mitigation (reducing the notice component of ten months' pay by earnings for the first four months post-termination, treating six months as redundancy not reduced), and by adjusting specified Singapore and Australian dollar amounts accordingly. Appellants to pay 80% of respondent's costs (paras 1-7, 45, 54-55).