Brooke- Cowden v PricewaterhousCoopers Services Pty Ltd

LEGISLATION CITED: Industrial Relations Act 1996 Employment Protection Regulation 2001

Schwartz v Central Sydney Area Health Service & Anor [2002] NSWIRComm 79 Westfield Holdings v Adams (2002) 114 IR 241 Brent v Bastian (2003) 124 IR 223 CASES CITED: English v Aradlay Insurance Brokers Pty Ltd [2005] NSWIRComm 253 Federal Termination, Change and Redundancy Case (1984) 8 IR 34 Employment Protection Act Case (1983) 7 IR 273 Caulfield v Broken Hill City Council (1995) 60 IR 221

APPLICANT Mr R Alkadamani of counsel Solicitor: Ms M Archer Haywards Solicitors LEGAL REPRESENTATIVES:

RESPONDENT Mr R Reitarno of counsel Solicitor: Ms F Inverarity Truman Hoyle Solicitors

JULIE DEBRA BROOKE-COWDEN v PRICEWATERHOUSECOOPERS SERVICES PTY LTD

Application under s. 106 of the industrial relations Act 1996 JUDGMENT [2006] NSWIRComm 173

1 By amended summons, the applicant, Julie Debra Brooke-Cowden, has sought certain relief against the respondent, PricewaterhouseCoopers Services Pty Ltd, under s 106 of the Industrial Relations Act 1996 ("the Act").

2 Relevantly, ss 105 and 106 of the Act are in the following terms:

In this Part: "contract" means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. "unfair contract" means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument.

s 106 Power of Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) 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.

3 The proceedings arise out of the circumstances in which the applicant's employment by the respondent as a solicitor in a law firm came to an end.

4 In October 1999, whilst employed with another law firm as an associate solicitor, the applicant was approached by Messrs Bruce McLean and Andrew Spearritt, then partners in the law firm Dunhill Madden Butler, to ascertain whether she would be interested in becoming employed as a solicitor within the workers' compensation group operated by that firm. As it transpired, Dunhill Madden Butler was in the process of merging with the law firm PricewaterhouseCoopers. Ultimately the applicant became employed by the respondent on 20 December 1999 as an associate solicitor. The applicant's supervising partner was Mr McLean and though she also assisted Mr Spearritt and other solicitors within the practice group, she said that she built up her own practice, substantially involving the GIO, resulting on 1 July 2001 in a promotion to the status of senior associate. However, from late 2002, and particularly by mid-2003, the applicant had became aware of rumours concerning the continued viability of the workers' compensation division of the respondent's law practice. It was about that time that the applicant responded to a number of calls that she received from recruitment agencies regarding possible alternative employment, culminating in an interview with personnel in the workers' compensation section of the law firm Abbott Tout in early July 2003. In cross-examination, the applicant said that when she attended the Abbott Tout interview she was interested in finding out about the firm and was happy to explore other employment scenarios. However, she declined a second interview with Abbott Tout representatives and said that she indicated that she would let them know if she wanted to take the matter any further. She said that at that stage, as nothing had been said by any of the partners in the respondent's workers' compensation practice, she decided not to pursue alternative employment further. She said that she was happy working for the respondent, although she thought that it was likely that she would receive a job offer from Abbott Tout if she wished to pursue the matter further.

5 By October 2003, many of the employees in the workers' compensation group, including non-professional staff, were aware of rumours to the effect that the future security of that group within the respondent was in question. The partners in that area were observed to be conducting a number of "closed- door meetings" and were frequently absent from the office during working hours. Such insecurity within the group, according to the applicant's evidence was only fuelled by the refusal of the partners in that area to confirm or deny rumours about its future.

6 The applicant said that she approached Messrs McLean and Spearritt seeking more precise information but was told by Mr McLean that the situation at that time was "not clear" and staff would be advised when something was happening. Yet, at the same time Mr Purcell, a partner in the insurance division of the respondent firm, of which the workers' compensation group formed part of, was advising employees within the larger division that their employment was secure.

7 The applicant said that she had again spoken to a person from Abbott Tout at about the end of October 2003 and had left the door open to pursue further employment with that firm.

8 At approximately 4:15pm on 26 November 2003 Mr McLean asked the applicant to meet with him and Mr Spearritt. She was told that the respondent firm "is undergoing significant restructuring, and the workers' compensation and general insurance divisions will be moving to another firm which will probably be Hunt & Hunt". The applicant said that she was told by Mr Spearritt that she would be offered an associate's position with Hunt & Hunt as that firm did not have senior associate positions, and that partnership at Hunt & Hunt would not be possible for about 18 months. The applicant responded that she was concerned about a possible move to Hunt & Hunt because that firm was no longer on the GIO Panel and she might not be able to secure work from her "largest client" in the future. She also said that she was concerned to retain her status as a senior associate otherwise her career might be seen to be regressing. The applicant was told that a formal offer would be made to her in writing in the following week and she was told to keep the contents of the discussion confidential.

9 In cross-examination the applicant said that she was concerned that she was not being fully informed by Mr McLean about what was occurring.

10 It should be pointed out, as was conceded by the applicant in her affidavit evidence, that although she had continued to receive work from GIO on a "preferred" basis, the respondent's firm had also failed to be appointed to the GIO workers' compensation panel. There was however, an overall concern that there might not be sufficient work at Hunt & Hunt to ensure the viability of her practice.

11 By 1 December 2003 the applicant had not received a written offer of employment from Hunt & Hunt so she arranged to meet the Human Resources Manager of Abbott Tout the following day, where she explored the prospect of employment with that firm. However, she was told that the Managing Partner was stepping down from that position within the next two weeks and the employment of new staff was not a priority issue.

12 The applicant said that she approached Mr McLean on several occasions during the period 27 November to 10 December 2003 to discuss her employment prospects at Hunt & Hunt. She was told on each occasion that Mr McLean was either too busy or unavailable to meet with her.

13 The applicant received notice of a meeting with the respondent's personnel conducted at 9:30am on 10 December 2003. The notice of that meeting was conveyed by email forwarded at 9:14am that day. It said: "As you are aware, PricewaterhouseCoopers have been impacted by increasingly complex global audit independence issues. Within the workers' compensation and insurance areas specifically, these independence issues have placed greater constraints on our business. In light of this, we have decided to divest of parts of these practices".

14 The meeting was conducted by Mr Purcell, who, it was said, emphasised the stressful and difficult process that had been undergone by the partners. I should add that the applicant was critical of Mr Purcell in not making any reference to the stress created by the insecurity surrounding the employment of persons working within that area of the respondent's practice. Mr Purcell said that the Insurance Division would set up as a separate unit within Hunt & Hunt, to be known as Cell 31. "It is anticipated that we will be integrated into Hunt & Hunt within a period of two and a half years". Those attending the meeting were advised that they would be handed a letter of offer and that they would have until 9:30am on 12 December 2003 to accept the offer, and that employment would commence at Hunt & Hunt on Monday 15 December 2003. Mr Purcell said, in answer to a question from an employee in the word processing area, that any person who did not accept an offer of employment would not receive any redundancy pay.

15 At the conclusion of the meeting, the applicant received a letter from Hunt & Hunt offering employment. She said that she had not attended any interviews or met with any representatives from Hunt & Hunt, even though some partners from that firm were present at the meeting on 10 December. The persons present were told that a human resource representative from Hunt & Hunt would be available to discuss employment "for half an hour the following day".

16 The letter given to the applicant on Hunt & Hunt letterhead indicated that she was offered employment at senior associate level, commencing 15 December 2003. Her remuneration was the same as that paid by the respondents and annual leave, sick leave and long service leave entitlements accruing with the respondent were preserved. However, the applicant took exception to that part of the letter which denied her the right to sign letters of advice. She had until 19 December to accept the offer.

17 Shortly after receiving the letter the applicant was advised by Mr McLean that the reference to appointment as a senior associate was incorrect and that she was being offered a position of an associate solicitor. The next day she was advised that the last date of acceptance was 12 December and not 19 December.

18 The applicant said that she considered the offer from Hunt & Hunt and determined to reject it. One of the reasons which she said motivated this decision was the fact that she was aware of allegations against Hunt & Hunt made by a female partner of discrimination, about which she believed there had been a court case. Furthermore, she was concerned about the failure of Hunt & Hunt to be retained on the GIO workers' compensation panel. Indeed, she had been informed by a claims manager at the GIO that that company did not wish to give any workers' compensation work to Hunt & Hunt. In addition, the applicant was concerned that her status as an associate rather than a senior associate would be seen to be a backward step in terms of her career path. Furthermore, as the respondent's insurance division was to be quarantined and not integrated within Hunt & Hunt for a long period of time, she was concerned about her eventual prospects for partnership and her long-term career prospects. The mistakes which had been made in the letter of offer did not fill her with confidence concerning Hunt & Hunt and, finally, she was "upset and concerned that the only two female partners in the insurance division….had not been included in the move to Hunt & Hunt".

19 The applicant had a conversation with Mr McLean at about 10:00am on 12 December 2003 in which she indicated that she would decline the offer from Hunt & Hunt. Later that day she spoke to Mr Purcell, who endeavoured to persuade her to reconsider her position and said that he would personally mentor her if she came across with the insurance division to Hunt & Hunt.

20 In a further conversation with Mr McLean at about 3:00pm that day, the applicant indicated again that she did not wish to accept the Hunt & Hunt offer. She was told that there was no position available for her with the respondent and that her employment would terminate that afternoon. She was given a letter signed by Moira Crisswell over the title "Human Capital", referring to the fact that the insurance and workers' compensation workgroups of the respondent firm had been transferred to Hunt & Hunt, that Hunt & Hunt had offered her a position on equivalent terms and conditions and that the applicant, not having chosen to accept the employment offer, would cease employment with the respondent but would not be paid any redundancy benefits.

21 Thereafter, the applicant contacted a Human Resources person at Abbott Tout, at about 5:00pm that day. She attended a meeting at Abbott Tout on Monday 15 December at about 10:30am and was offered employment as a senior associate and commenced work that day.

22 The applicant's remuneration at Abbott Tout was $120,000 per annum together with superannuation of $11,002. It also included an entitlement to participate in a bonus.

23 Cross-examination of the applicant revealed that at no stage had she advised anyone from the respondent that she had had any discussions with Abbott Tout. It was put to her in cross-examination on several occasions that the applicant had, in effect, arranged employment with Abbott Tout and had always intended to become employed by Abbott Tout when the respondent transferred its insurance and workers' compensation practice areas to Hunt & Hunt but had said nothing of this for the sole purpose of gaining a redundancy payment. On each occasion the applicant denied having done so.

Was the contract/ conduct of the respondent "unfair"?

24 It was the applicant's case that she had, in fact, been made redundant by the respondent and that in fairness the respondent should have made a redundancy payment to her. Its failure to do so constituted relevant unfairness for the purpose of s 106 of the Act.

25 It was the respondent's case that there was no relevant unfairness because the respondent had arranged alternative employment for the applicant with Hunt & Hunt which was on comparable terms and conditions to that enjoyed by her with the respondent and which preserved existing entitlements to accrued leave. In these circumstances it was said by the respondent that, as a matter of fairness, no redundancy payment was due to the applicant. Furthermore, in reality, the applicant had been negotiating for some time with Abbott Tout and had secured comparable alternative employment. The respondent submitted that the Court should infer that the applicant had no interest in taking up the Hunt & Hunt offer because she had determined to become employed with Abbott Tout and her failure to become employed by that firm prior to 15 December 2003 was motivated by a desire to obtain a redundancy payment from the respondent. In this regard, the respondent relied on a memorandum dated 15 December 2003 from a person within Abbott Tout, which was addressed to the applicant, indicating that her new security card had been issued. This and other documentation created by Abbott Tout on the same day was indicative, so it was asserted, that the commencement of the applicant's employment had been arranged prior to 15 December 2003.

26 It is necessary to deal at the outset with the respondent's contentions. If either of them is resolved in favour of the respondent then this would cast serious doubt on the applicant's entitlement to relief under s 106.

27 When determining matters of unfairness under s 106 and application of its provisions, it is clear that any value judgement exercised must be made on an objective basis having regard to, and reflecting, contemporary community values and standards. I have discussed my understanding of these matters in Schwartz v Central Sydney Area Health Service & Anor [2002] NSWIRComm 79 at paragraphs [71- 73] and [81- 82].

"[71] It is a trite observation that a pre-condition for the exercise of any power under s 106 is a finding that the relevant contract is unfair. A helpful discussion as to the approach of the predecessor tribunals to this Court to the determination of whether a contract etc is unfair is contained within the joint judgment of Fisher CJ and Hungerford J in the Industrial Court of New South Wales Full Court in Baker v National Distribution Services Ltd (1993) 50 IR 254. At 271 their Honours said: "The test of unfairness within the meaning of s 88F of the Industrial Arbitration Act, and hence s 275 of the present Act, has received much attention by the Court and by the previous Industrial Commission over very many years, but, in our review of the cases, the approach stated by Sheldon J in Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 over 26 years ago has endured; his Honour commented (at 374) that unfairness of a contract or arrangement was to be determined according to "the common sense approach characteristic of the ordinary juryman ….It is a plain matter of morals not law." His Honour cautioned, however, (at 374,375) that the section's "massive power makes it imperative that it should be exercised with proper restraint … it should not permit itself to become a refuge for those who are merely disgruntled with a bargain entered into on even terms. … the discretion should be exercised to protect victims of wrong dealing not to prescribe anodynes." Those words by his Honour echoed what had been said earlier by Beattie J in Agius v Arrow Freightways Pty Ltd [1965] AR (NSW) 77 at 89 that it was a matter of deciding "in each particular case by the application of the tribunal's common sense and sense of justice whether a particular transaction is unfair, harsh and unconscionable". The nature of the unfairness attracted by s 88F was considered later by the Industrial Commission in Court Session (Perrignon and Dey JJ, Cahill J dissenting) in A & M Thompson Pty Ltd v Total Australia Limited [1980] 2 NSWLR 1 at 13 as follows: "It has been said that fairness is determined by the commonsense approach of a juryman and that it is a moral and not a legal issue ( Davies' case). Whether this be so or not, it does seem that in distinguishing between what is fair and what is not fair the Judge must apply standards which appear to him to provide a proper balance or division of advantage and disadvantage between the parties who have made the contract or arrangement. In doing so he would always have to bear in mind the conduct of the parties, their capability to appreciate the bargain they had made and their comparative bargaining positions when entering into the contract or arrangement." (at 271-2).

[72] It is my understanding that in determining whether there is unfair conduct for the purpose of proceedings brought under s 106 and especially under sub s(2), the Court is required to exercise a value judgment reflecting contemporary community values. The contemporary values may be derived from the commonsense approach characteristic of the ordinary, reasonable, hypothetical "standard" member of the community. Such a person will be neither an employer nor an employee, must be careful to weigh up the competing interests of the applicant as an employee and the respondent as an employer and those interests must be accommodated and viewed objectively and balanced within the context of the factual matrix which applies to them. Such a process will accommodate the reasonable requirements and understanding of an applicant as an employee and the reasonable requirements and understanding of a respondent as an employer in the context of the needs of the employer to undertake its activities in an efficient, effective and competent manner.

[73] Of course the identification of contemporary community values is not without its own difficulties. Some insight as to the difficulties involved may be gained from the discussion by Professor John Braithwaite in the article entitled "Symposium on Community Values in Law" published in vol.17 of the Sydney Law Review at 351. Professor Braithwaite draws on a body of literature to make a distinction between community attitudes and community values, the former not necessarily assisting a court in determining a matter, the latter having much greater relevance. An obvious example of an attitudinal matter is the debate concerning abortion. The corollary and underlying value against which such debate is conducted is "respect for human life, health, freedom of choice"."

"[81] I have already referred to the process which is involved in determining whether a contract or arrangement etc or conduct is unfair. In the context of this process it is important to observe that there will be many cases where there is no absolute defining boundary which delineates what is fair from what is unfair. Often a range of conduct or activities may be said to fall within the limits of what is assessed to be fair, and, by corollary not unfair. This is because of the lack of absolute and scientifically determined criteria which differentiate the concepts of what is unfair.

[82] The assessment which is to be made judged by the standard of the ordinary, reasonable, hypothetical "standard" member of the community is not capable of precise analysis and delineation. There will be a variety of opinions held by such a person. The exercise of a value judgment in these circumstances is obviously made more difficult, but it is a difficulty which is not confined to judges of this Court. By way of analogy, evaluations of what is "reasonable" are made daily by judges in all courts determining claims based on breach of duty of care in negligence, and those brought under certain provisions of the Trade Practices legislation."

28 The difficulty which faces the respondent in these proceedings is that the only evidence given was that of the applicant herself, apart from the documentation which was tendered into evidence. Of the matters in contention, the most significant is the question as to whether the applicant acted appropriately in refusing to accept the Hunt & Hunt offer. In approaching this matter, the Court is required to view all of the circumstances objectively and to reflect community standards and values. However, in judging the conduct of a person the Court is, in my opinion, entitled to have regard to the applicant's belief as well as the applicant's knowledge and, in particular, whether those beliefs were genuinely and reasonably held. For example, the applicant had serious concerns about the treatment afforded by Hunt & Hunt to female partners. In assessing her perception it is not necessary, in my opinion, to determine whether or not that perception was, as a matter of fact, true. What is necessary is to determine whether or not the applicant acted appropriately and responsibly in responding to such information as she had gained over a period of time about this matter. If, to take an easy example, the applicant had acted capriciously, on a whim and without any real basis at all in characterising that firm in that way, then these are matters which the Court would be entitled to take into account in determining this particular aspect of this issue. The evidence of the applicant is that she formed this opinion about the firm on the basis of certain information given to her and upon the notoriety revolving around a particular court case.

29 It was submitted on behalf of the respondent that the applicant was not entitled to rely on any perception about such a matter without having taken appropriate steps to investigate it for herself. Although the specific point was not made on behalf of the respondent, perhaps it might have been argued that, as a lawyer, she should have acted appropriately by making further inquiries of the persons to whom she had spoken, of searching out any relevant court proceedings and by discussing the matter with appropriate Hunt & Hunt personnel. It is obvious that in appropriate circumstances a person may be assessed as having acted inappropriately in failing to make relevant inquiries of a matter such as this. However, given all of the circumstances which applied to the applicant, I am not able to characterise her assessment of Hunt & Hunt as having been made inappropriately, given in particular the limited time between the making of a definite offer of employment and the time within which that offer had to be accepted.

30 Furthermore, this was but one aspect of the matters which concerned the applicant. I do not regard any of the reasons put forward by the applicant for her having rejected the Hunt & Hunt offer as representing, either individually or in the aggregate, an inappropriate response to that offer. The applicant was entitled to have regard to her career prospects, was entitled to have regard to her clientele and practice in the context of those career prospects, was entitled to express some concern about the fact that the respondent's insurance division was to be quarantined for a relatively long period of time within the Hunt & Hunt practice, and was entitled to come to the conclusion that she did not wish to avail herself of the opportunity of employment with Hunt & Hunt.

31 Whilst there may be some temptation to infer that it would be unlikely that Abbott Tout would assess the applicant's position so quickly on the morning of 15 December 2003 finalising the contract of employment within such a short time that day in the absence of any pre-existing understanding or arrangement that the applicant would become employed with that firm, there is, in my opinion, simply no evidence which would allow such an inference to be drawn against the applicant in the context of these proceedings. Nor is there any evidence which would allow an inference to be properly drawn to the effect that the applicant simply "sat on her hands", as alleged by the respondent, in order to create circumstances where she would be entitled to a redundancy payment. 32 For all of these reasons I conclude that the applicant was, in effect, made redundant by the respondent on 12 December 2003 and that it was unfair for the respondent to have failed to pay her any monies by way of redundancy payment. Such a failure renders the applicant's contract of employment with the respondent unfair for the purpose of s 106 of the Act.

33 In these circumstances it is, in my opinion, appropriate to vary the applicant's contract of employment so as to make provision for a redundancy payment to her. I should interpolate at this stage that there was evidence that the respondent had a redundancy policy but there was an agreement between the parties that, as a matter of fact, that redundancy policy was kept within the respondent's "Human Capital" department and its existence and contents were not widely disseminated, if at all, amongst employees.

Compensation and Mitigation 34 In these circumstances it follows that, prima facie, the applicant is entitled to "just compensation' pursuant to s 106(5) of the Act. However, by s 106(6) the Court is required to take into account the question of mitigation. It is this area which created a great deal of controversy within the proceedings. The factual basis for this controversy is the employment of the applicant by Abbott Tout on 15 December 2003 on an annual salary of $131,000 together with entitlement to bonus, compared with the annual salary of $145,000 which was paid by the respondent to the applicant at the time of the cessation of her employment. The respondent submitted that the only loss suffered by the applicant was at an annualised rate of $14,000 per annum. In these circumstances it was said that the applicant had not suffered any loss and, being bound to mitigate her loss, was not entitled to any payment accordingly. For completeness I note that the applicant had not received any bonus while employed at Abbott Tout.

35 The question of mitigation under s 106 in the context of redundancy has been the subject of a consideration by Full Benches of this Court and it is necessary to refer briefly to the relevant authorities. Before doing so, however, I observe that s 106(6) was inserted into the Act with effect on 24 June 2002. Prior to that date it had been assumed that the principle of mitigation applied to the determination of appropriate relief under s 106.

36 The application of the principle of mitigation is considered in some detail by a Full Bench of this Court in Westfield Holdings v Adams (2002) 114 IR 241, a judgment of Wright J, President; Walton J, Vice-President; and Boland J, commencing relevantly at paragraph [131]. The decision is well-known and I shall not refer to it in any detail or, indeed, attempt to summarise its effect for the purpose of these proceedings because this task has been undertaken by subsequent Full Benches of this Court. I should note, however, that I agree with submissions made by Mr Reitano of counsel, appearing for the respondent, that the judgment as reproduced at paragraph [147] at page 276 of volume 114 IR contains an error. The word "not" should be deleted from the sentence commencing: "For example…".

37 The observations of the Full Bench in Westfield Holdings v Adams were approved and adopted by a subsequent Full Bench in Brent v Bastian (2003) 124 IR 223. The Full Bench made observations about the effect of the introduction of s 106(6) into the Act and its impact upon the decision in Westfield v Adams. Although, strictly, those observations were obiter, for the purpose of these proceedings I respectfully adopt them as governing the proper and appropriate approach to the determination of mitigation in the context of redundancy.

38 I reproduce hereunder paragraphs [28] to [35] of the Full Bench decision in Brent v Bastian: " [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." 39 The final Full Bench authority is English v Aradlay Insurance Brokers Pty Ltd [2005] NSWIRComm 253. In dealing with the interrelationship between s 106(6) and the assessment of appropriate compensation under s 106(5), the Full Bench said (at paragraph [35]): "[35] It is plain that the assessment of appropriate compensation under s 106(5), and also under s 106(6), involves an act of judgment on the part of the trial judge where the general law principles as to mitigation of damages are relevant but not decisive as to what award is made. In any event, the authorities as to mitigation make clear that while the duty to act reasonably to mitigate damage does not generally require an employee to take employment of a different or inferior kind, that part of the rules of mitigation known as the rule as to avoided loss, or mitigation in fact , means that where an applicant actually avoids loss by obtaining other employment (or earnings), the earnings will reduce the damages or compensation even though the non-acceptance of the other employment would not have constituted a failure to mitigate: relevant authorities include Collier v Sunday Referee Publishing Company Ltd [1940] 2 KB 647 at 653, Hill v C. A. Parsons & Co. Ltd [1972] Ch 305 at 314 and Yetton v Eastwoods Froy Ltd [1967] 1 W.L.R. 104 at 120 which are usefully discussed in Macken et al, Law of Employment, Fifth edition, 2002, at 312 - 313, Freedland, The Contract of Employment , 1976, at 261ff, Freedland, The Personal Employment Contract , 2003, at 362ff and Treitel, The Law of Contract , Eleventh edition, 2003, at p 980".

40 The Full Bench, at paragraph [38] adopted the approach set out in Brent v Bastian in the following terms: "[38] In Brent & ors v Bastian (2003) 124 IR 223, a Full Bench considered the approach to be taken to redundancy pay and the role of mitigation in relation to money earned after termination of employment. The decision at first instance was decided before amending legislation introduced the provisions of s 106(6) regarding mitigation, and the Full Bench therefore considered the circumstances in which general principles of mitigation might apply to redundancy. In doing so, note was made of the earlier Full Bench decision in Westfield Holdings v Adams (2001) 114 IR 241 where the Court said that, 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. It would not ordinarily be appropriate to reduce redundancy or severance payments when making orders under s 106 because of the efforts or success of the employee in obtaining alternative employment. Importantly in that case the Full Bench confirmed that the principle of mitigation would not normally apply to monies paid on account of redundancy but that the principle was open for consideration in relation to the amount of notice".

41 Having regard to these authorities, it is clear that in assessing appropriate compensation for the purpose of s 106(5), and having regard to the requirement imposed on the Court by s 106(6), it will ordinarily be appropriate to apply the principles of mitigation to any period of notice associated with the termination of the employment, and in particular with respect to any appropriate payment in lieu of notice. But it will ordinarily not be appropriate to apply principles of mitigation to any severance pay which in fairness might be found to be awarded to an applicant by way of monetary compensation under s 106(5) following a redundancy/

42 It is necessary to determine whether there is a contemporary community standard which ought to apply generally in cases where employees are made redundant and their employment is brought to an end accordingly. I was referred to well-known decisions of industrial tribunals in this area, including the Federal Termination, Change and Redundancy Case (1984) 8 IR 34, and the Employment Protection Act Case (1983) 7 IR 273. These decisions relate in particular terms substantially to award employees. No evidence was adduced in the proceedings which was indicative of any general standard within the community. I indicated to the parties during the course of submissions that, in the circumstances, my preference would be to adopt the standard imposed by the New South Wales Legislature to be found in the Employment Protection Regulation 2001. This provides for the payment of 10 weeks pay for an employee under 45 years of age, by way of severance payment, with a length of continuance service of 3 years and more, but less than 4 years. In the absence of any material which might militate towards a different standard, I intend to adopt the scale of severance payments provided for in this regulation for the purpose of determining these proceedings.

43 It is clear that the principles of mitigation may, as a matter of discretion, be applied with respect to any notice component and to the determination of any relevant monetary compensation reflecting payment in lieu of notice. However, the Full Bench authorities to which I have referred are indicative that, in ordinary circumstances, mitigation should not be applied with respect to any severance payment for redundancy. I intend to proceed accordingly.

44 I should however state that the respondent submitted that it would not be appropriate to award any compensation to the applicant by way of notice or severance payments consequent upon any finding of redundancy because of the alternative offer of employment with Hunt & Hunt and the assertion that the applicant had acted inappropriately in declining to take up that offer. Coupled with this submission was reliance on the advanced state of negotiations between the applicant and Abbott Tout and the impression that the applicant had deliberately "sat on her hands" with a view to creating an entitlement to a redundancy.

45 In rejecting this submission I have regard to the finding which I have already made that the applicant did not act inappropriately or, indeed, unfairly when viewed objectively in declining the offer of employment with Hunt & Hunt. Once this is established then, as I have found, the applicant became redundant to the respondent. Once a determination of redundancy has been made then the matter needs to be assessed by reference to the principles established at appellate level, to which I have earlier referred.

46 There are two elements which need to be considered in terms of redundancy. The first is notice, and the second is the severance payment.

47 The applicant had almost four years service. She was paid one month's pay in lieu of notice. She is entitled to the payment of reasonable notice for termination of the contract of employment, and for a further payment with respect to the redundancy. As I pointed out in Caulfield v Broken Hill City Council (1995) 60 IR 221, there is a degree of overlap in the rationale for a requirement of notice of termination of employment per se, and notice which ought to be given in connection with a redundancy payment. Having regard to this degree of overlap, and having regard to all the circumstances of the applicant's employment by the respondent, I would assess a period of 2 months notice as being appropriate for the termination of the contract of employment, and a further one month's notice as being appropriate for the termination by reason of redundancy. The result for the purpose of these proceedings is that this entitles the applicant to payment of a further 2 months notice, subject to the requirement to mitigate her loss by reference to monies earned by her during this period whilst employed by Abbott Tout. For completeness I should state that I find that it is appropriate in all of the circumstances that the principle of mitigation apply to this period of notice.

48 The differential rate for a further period of two months, allowing for the one months payment already made, is $2,333.

49 The applicant having been made redundant, as I have found, I further find that it was unfair of the respondent not to have made payment to her of a severance payment. For reasons which I have already expressed, I propose to apply the scale set out in the Employment Protection Regulation 2001. There was controversy between the parties as to which scale was appropriate. There is a scale for three years or more but less than four years, and a further scale for four years and more but less than five years. The length of continuous service was slightly less than four years. The applicant submitted that she should be entitled to the higher scale because she would have been employed for more than four years having regard to the period of notice. However, the relevant provision of the regulation does not operate this way and, it seems to me, that it is more appropriate to apply the scale strictly. There must be many circumstances where employers and employees complain because the period of employment is slightly more or slightly less than the arbitrary complete year of continuous service fixed by the regulation. I see no reason other than to apply the scale strictly by reference to the length of continuous service. Accordingly, the applicant as a matter of fairness should be paid a further 10 weeks pay, representing an appropriate amount by way of severance payment. For reasons which I have earlier given, no mitigation would apply to this payment. I calculate the appropriate amount as being $27,885.

50 The applicant sought orders for interest and costs. Both parties asked that I defer ruling on costs and I shall do so accordingly. Orders 51 Consequent upon the findings of unfairness which I have made, I make the following orders: 1. The contract of employment between the applicant and the respondent is varied from its commencement to provide that, in the event of the applicant being made redundant, she will be given reasonable notice of termination in addition to any other period of notice and will be paid redundancy pay in accordance with the severance pay provided for in Schedule 1 to the Employment Protection Regulation 2001.

2. The contract of employment is further varied to provide that, in the event of the respondent desiring to terminate the employment of the applicant other than for cause, she will be given reasonable notice of termination or paid appropriate monies in lieu.

3. The respondent is to pay the applicant the sum of $30,218, together with interest thereon calculated in accordance with the Supreme Court Rules from 12 December 2003 to the date of this judgement.

4. The claim made by the applicant for costs is stood over with liberty to apply, which must be exercised within 45 days after the date of this judgement.

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