Canizales v Microsoft Corporation and ors

HEARING DATES: 05/24/1999; 05/25/1999; 05/26/1999; 05/27/1999; 05/28/1999; 05/31/1999; 06/01/1999; 06/02/1999; 06/03/1999; 06/04/1999; 08/20/1999; 11/22/1999; 11/25/1999; 11/29/1999; 11/30/1999; 12/01/1999; 12/02/1999; 12/06/1999; 12/07/1999; 12/08/1999; 12/09/1999; 12/10/1999; 12/15/1999; 12/16/1999; 02/14/2000; 02/15/2000; 02/16/2000; 02/17/2000; 02/18/2000; 03/08/2000; 03/16/2000 DATE OF JUDGMENT: 09/01/2000

APPLICANT Mr S C Rothman SC

SOLICITORS Phillips Fox, SYDNEY/ KPMG Legal, SYDNEY

FIRST AND SECOND RESPONDENTS Mr P M Kite SC with Mr J J E Fernon of counsel LEGAL REPRESENTATIVES: SOLICITORS Freehill Hollingdale & Page SYDNEY

THIRD RESPONDENT Mr J L Trew QC with Mr B J A Sheilds of counsel

SOLICITORS Baker & McKenzie SYDNEY

JUDGMENT:

• 24 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

MICHAEL CANIZALES v. MICROSOFT CORPORATION, MICROSOFT AUSTRALIA PTY LTD AND NINEMSN PTY LTD.

Summons for relief under s106 of the Industrial Relations Act 1996.

1 This action has been brought under s106 of the Industrial Relations Act 1996 ('the Act') and concerns issues going to the alleged unfairness of a contract or arrangement under which the applicant was employed by, or performed work in relation to, one or other of the respondents and, in particular, the circumstances in and terms upon which that contract or arrangement was terminated. The proceedings were commenced on 14 April 1998, made the subject of 15 directions/procedural hearings, conciliated unsuccessfully in November 1998, and culminated in a hearing commencing on 24 May, 1999 on counsel's estimate of 10 days. A further four days were utilised in November, 1999 but again the estimate was awry and required another nine days in December 1999, a week in February 2000 and two days in March, 2000, at the conclusion of which judgment was reserved, subject to leave being granted to the applicant to make further submissions in writing on limited matter. The pursuit of that course caused final submissions to be filed on 2 June 2000. 2 As will be seen from the facts of the matter, it appears to constitute a current zenith in cases of this type, the applicant seriously advancing a claim ultimately for more than $14 million dollars in compensation for loss. That this is possible is a reflection not so much on the jurisdiction of the Commission in Court Session, which has subsequently been constricted although seemingly to a limited extent (s109A and the judgment of the Full Bench in Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1) but rather on an employment ethos within Microsoft which confers upon many staff the opportunity to share in the increasing value of the company by participation in share option schemes. That the share options are in the end of utterly fantastic value, such that an employee is capable of receiving what on any view is a ridiculously large sum for work done, appears not to influence the scope here for a remedy. Indeed, no part of the defence of the respondents depended on the idea that the possibility of appropriate orders was not open, if the facts to support them were made out. This case recalls to mind the observations of Barwick CJ in Stevenson v Barham (1977) 136 CLR 190 at 192 - applied by the Industrial Commission of New South Wales in Court Session (Fisher P, Cahill and Watson JJ) in Autobake Pty Ltd v Budd & Anor (1986) 19 IR 18 at 29. Barwick CJ said, in relation to s88F, a predecessor of s106: The legislature has apparently left it to the good sense of the Industrial Commission not to use its extensive discretion to interfere with bargains freely made by a person who was under no restraint or inequality or whose labour is not being oppressively exploited.

It is difficult on the facts of this case to see how the applicant is a person who could be said to have been bargaining under some restraint or inequality or who was being oppressively exploited. It appears that the past earnings of the applicant, apart from those claimed in this case and taking into account share options already exercised, are of the order of more than $10 million. For income at that level to be earned between the ages of approximately 21 years to 31 years hardly suggests unfairness but the jurisdiction of the Court Session is now developed to a point where that view of Barwick CJ appears to have been over-reached by the provisions of s.106(2) of the Act, which refer to a contract becoming unfair subsequently to its making because of the conduct of the parties, and the authorities which bind me. See for example the discussion of jurisdiction in the judgment of the majority in Reich v Client Server Professionals of Australia Pty Limited (Administrator Appointed) ; 15 August 2000, IRC5336 of 1999 [2000] NSWIRComm 143 (paras 25-27 thereof). It seems to follow necessarily that a contract may be exceedingly generous in an objective sense, such that an employee may earn over ten years more than most will earn in a lifetime (or, what would take more than 66 years to earn at the rate of $150,000 per annum) yet the contract may be unfair in the statutory sense because of the manner of its termination. 3 Accordingly, while one might be tempted to think that this Court ought not be concerned with ensuring an applicant can achieve, by the Court's orders, money benefits of a lavish kind, the jurisdiction is required to be exercised in an appropriate case; to fail to do so would be an error even the excessive quanta referred to in this case seem unable to justify. Background 4 The applicant was employed in 1989 in the USA by the first respondent, Microsoft Corporation (hereafter referred to as 'Microsoft'). In 1995 he was transferred to Sydney, in circumstances which will be enlarged upon in due course, and eventually appears to have become employed by the second respondent, Microsoft Pty Ltd (referred to hereafter, when it be necessary to distinguish it, as 'Microsoft Pty'), a New South Wales subsidiary of the first respondent. Counsel in the proceedings agree that nothing turns on the question whether the employment was with the first or the second respondent during the period in Sydney. I shall refer to that employment as being with Microsoft. Subsequent to the applicant's arrival here, Microsoft entered into a joint venture agreement with Publishing and Broadcasting Limited which led to the formation of a jointly-owned corporation, the third respondent ninemsn Pty Ltd ('ninemsn'). In 1997, again in circumstances which will be dealt with in considerable detail, the applicant was seconded to work firstly in the joint venture and then for ninemsn. 5 In broad terms the action concerns the contention that the termination of employment by the first and/or second respondent of the applicant on 15 May 1998 occurred in circumstances which invoked the Commission's jurisdiction to declare the contract or arrangement unfair in the sense defined in s105 and to make consequential orders. 6 The nature of the orders sought embraces matters of a reasonable and fair notice period, a severance package equal to that which is contained in a plan operated by the first respondent but denied to the applicant because of his refusal to execute a deed of release following termination, and finally and more substantially, an order that the applicant be given the benefit of share options which had been granted to him in July 1995 and were to vest (that is, be able to be exercised), as to four-twelfths of the grant, in July 1999, provided he remain in employment with Microsoft. The benefit of that portion of the 1995 grant was valued by the applicant as being of the order of $14 million (Aust. $) as at February 2000. 7 Microsoft has defended the proceedings on the merits and contends that there is no warrant for any order for the benefit of the applicant. 8 ninemsn has also defended the case on its merits but submits that, as the applicant's case was finally advanced, there is a lack of jurisdiction to make any order against it. The Orders Sought 9 The orders sought finally in the proceedings by the applicant are as follows: 1. That the contract or arrangement between the Applicant and the First, Second and Third Respondent whereby the Applicant worked for the First and/or Second Respondent in the Third Respondent, was unfair, harsh or unconscionable. 2. The arrangement or collateral arrangement between the Applicant and the First and/or Second Respondent being the option plans and severance plans of the First and/or Second Respondent were, in the circumstances, unfair, harsh or unconscionable. 3. The First, Second and Third Respondents jointly and severally pay the Applicant an amount in compensation for the period 15 May 1998 to 31 July 1999 being wages and car allowance for that period on compensation for: (a) the lack of reasonable notice provisions in the contract or arrangement; (b) the truncating of the period of transitional assignment; and/or (c) the lack of provision in the contract or arrangement for a fair, equitable, just and appropriate process for termination and the lack of protection against unfair, harsh or unjust dismissal. 4. That the option plans be varied so as to provide that share options granted to the Applicant in 1994 and 1995 and which were, according to the original plan, to vest between 15 May 1998 and 31 July 1999 inclusive vest forthwith and be capable of being exercised by the Applicant within ninety (90) days of the vesting. 5. In the alternative to paragraph 3 herein, against the 1st, second and third respondents, an order that: (a) the Applicant be compensated by the payment of twelve (12) months salary in lieu of reasonable notice; and (b) that the severance plans be varied to provide for payment of severance to the Applicant in accordance with the formula there set out being four (4) weeks' salary plus two weeks' (2) salary for every six (6) months' service to a maximum of twenty-six (26) weeks' of base salary. 6. Interest on the monies payable under Orders 3 or 5. 7. Costs. The Facts 10 What follows consists of a convenient summary of the facts which I find in the matter. In some measure they are uncontentious; where it is otherwise, or where issues of credit arise, I shall deal with the evidence more expansively. In the course of summarising the evidence I will express conclusions thereon at convenient points. It will be observed that the content of e-mails does not follow the usual grammar and spelling rules; they are set out in this judgment in original form. The Share Option Plans - Background 11 Participation in a Microsoft share option plan involves certain usual steps. Microsoft first confers on an employee a 'grant' of options over a specified number of shares, groups of which will become available to the employee, that is 'vest', on nominated dates. The date of the initial grant is important in that it is the share price on that day which is used to fix the price to be paid for the shares (the "strike price") when the options are exercised. Should the market price have increased in the interim, between grant and vesting, the employee has the opportunity to buy the shares at the (lower) strike price, thereby accruing the differential between that price and the then market price. The history of the Microsoft share price shows that, with some periods of relative stability, the price has trended steeply upwards. 12 In addition to the number of options actually conferred in a particular grant, the employee may obtain the benefit of any 'splits'. That is, should Microsoft decide that, having regard for its needs, the number of shares on issue should be increased, this might be achieved by "splitting" existing stock so that the number of shares held might be substantially increased, perhaps doubled. Although the share price at the date of the split would be reduced, perhaps halved, still the employee with share options would be able to obtain an equivalent benefit with a prospect of even greater future gain. It was suggested in argument that the tendency has been for the share price to return fairly quickly to its pre-split level, thereby seemingly to defeat one purpose of the split, but nevertheless bestowing an increased value on a grantee. 13 In this matter there were two share option plans in operation. The first afforded what are called 'regular' grants which, for the applicant, meant that he was given grants of options the first vesting of which occurred 12 months after the grant date and amounted to one- eighth of the total number of options the subject of the grant and continued to vest, at the rate of one-eighth of that number, each six months thereafter. Thus, each grant took five years to work through; one year qualifying and four years receiving the staged accrual. Using the July 1994 grant as an example, he was granted 4,500 options which vested as to one-eighth on 21 July 1995 and thereafter on 21 January and 21 July each year, the final vest timed to occur on 21 January 1999. The effect of share splits is illustrated by the fact the 4,500 options granted in July 1994 had, by the final vest date, increased in number to 28,000 options (although the last two one-eighth portions did not vest because of the termination of employment). 14 The applicant had participated in regular option grants of that kind on the dates and in the number of stock options now listed (expressed as post-split numbers): 29.6.89 54,000 regular grant 31.7.90 34,560 regular grant 5.7.91 28,800 regular grant 7.7.92 22,400 regular grant 30.7.93 32,000 regular grant 21.7.94 28,000 regular grant 31.7.95 138,240 Junior Jumbo grant

15 These options vested in the same way as described above so that, as one-eighth of each grant became available, he was accruing each January and July up to four one-eighth portions of different grants. This 'maximum' rate of accrual of regular grants received by the applicant occurred between July 1993 and January 1996. Thereafter the number of simultaneous accruals began to taper off because, in or around July 1995, he elected to accept Microsoft's offer to participate in a different stock option plan known as the Junior Jumbo Stock Option Plan. 16 Microsoft had by 1995 become concerned that its very senior executives were susceptible to being head-hunted by newly-created competitors. Accordingly, it developed a stock option scheme conferring what were called Jumbo grants, a principal objective of which was to ensure such executives would remain with Microsoft and be well-rewarded for doing so by the grants. The details of the Jumbo plan are not relevant, save perhaps the fact that there was no provision for acceleration of vesting in the event of termination due to redundancy. 17 Acceleration of vesting is a vital aspect of this case to which I shall return. It means either the treating of service for this purpose as having reached the vest date or, alternatively (it seems not to matter which), the advancing in a notional sense of the vest date, so that the departing employee reaches a point at which the options become available. Under the relevant Microsoft severance plan that point is six months prior to the vest date. 18 Later Microsoft found that the risk of executive loss to competitors touched staff in the next lower tier/s in its staff structure. This led to the creation of the Junior Jumbo plan, which was not as generous as the Jumbo grants but would be more generous than the basic plan for regular grants, at least when viewed overall and either prospectively or retrospectively. However, a doubt arises about its relative generosity, particularly where redundancy occurs during the vest period. Junior Jumbo provided for a greater number of share options to be granted, but with fewer vest dates and over a longer period of time (five and a half years as against five years), when compared with regular grants. 19 The applicant played a significant role, as Director of International HR and Rewards, in the creation of the Junior Jumbo concept in 1995 and this gave him a particular familiarity with its features. His evidence was that, just prior to its introduction, he had raised with his responsible superior, Mike Murray, then the Microsoft Vice President of Human Relations, a concern he felt that if an employee were made redundant the Junior Jumbo plan, with its longer period of vesting, would not be fair and that service should be taken as having been completed up to the date of the next vesting. He contended Mr Murray recognised this but, because of pressure to get the letters of offer out, relied on the observation that Microsoft would do the right thing by its senior executives in event of a redundancy. 20 The terms of the plan in operation at the time of the applicant's termination are contained in the 1991 Stock Option Plan. The purposes are specified as "to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to such individuals, and to promote the success of the Company's business". The plan provides for two options, the form of grant now relevant being a "nonqualified stock option" under the U.S. revenue laws; nothing in this case turns on this nomenclature. 21 Clause 5 (d) of the plan provides: Nothing in the Plan or any Option granted hereunder shall confer upon any Optionee any right with respect to continuation of employment with the Company, nor shall it interfere in any way with the Optionee's right or the Company's right to terminate the employment relationship at any time, with or without cause. 22 As to price of the shares upon exercise of an option, clause 8 provides it shall be as determined by the Board (of directors of Microsoft or a committee appointed under the rules by the Board). Although the plan permits the Board to fix the price to be "less than, equal to, or greater than the fair market value", defined as "the closing price per share" on the NASDAQ Exchange on the date of the grant, the evidence is that closing price is adopted generally as the strike price. 23 Provision is also made in the plan for the proportional adjustment of the share price upon any increase or decrease in the number of issued shares resulting from, relevantly, stock splits. 24 As to the effect of termination of employment, clause 9 (b), provides: Termination of Status as Employee . In the event of termination of an Optionee's Continuous Status as an Employee, such Optionee may exercise stock options to the extent exercisable on the date of termination. Such exercise must occur within three (3) months (or such shorter time as may be specified in the grant), after the date of such termination (but in no event later than the date of expiration of the term of such Option as set forth in the Option Agreement.) To the extent that the Optionee was not entitled to exercise the Option at the date of such termination, or does not exercise such Option within the time specified herein, the Option shall terminate. 25 Accordingly, there is, within the share option plan, no provision for any benefit on redundancy, for which one has to go to the Microsoft Severance Plan. 26 The applicant's 1995 stock option grants were conceived as part of what was called the Jumbo Grant Program. On 30 August 1995 the applicant was informed by Mr Murray that he had been selected for it; the memo read:

I'm pleased to inform you that you have been selected to participate in the Jumbo Grant Program, which is designed to recognize long term contributions of selected key senior level employees. The purpose of this memo is to provide you with the details of this program. Since nomination for the Jumbo Grant Program is highly selective, I trust you will keep the contents of this letter confidential.

The Jumbo Grant Program allows selected senior level employees to receive one large grant in lieu of multiple annual grants. The Jumbo Grant Program has the following key benefits: · replaces the equivalent of three annual grants; · includes a 20% premium built into the grant amount; · has a shorter cumulative vesting cycle - a single jumbo grant vests over 5 ½ years while three annual grants were over 6 ½ years; · provides a significant increase in income potential due to the larger number of shares granted; and · provides the ability to capitalise on future stock splits.

Additionally, there is risk associated with the volatility of the stock market and its impact on the stock price. Participation in the Jumbo Grant Program also requires an extended period of time for the first vesting date (2 ½ years for a jumbo grant vs 12 months for an annual grant) and requires a wait period of three years for further participation in either the Jumbo Grant Program or the Annual Grant Program.

The jumbo grant formula for a level 14 employee is as follows: Maximum annual grant x 3 (number of annual grant equivalent) x 1.2 (multiplier that represents a 20% premium in shares over the current annual grant amount)

The vesting period of the jumbo grant is 5 ½ years with the following vesting schedule: Proportions of Shares Vested Vesting Schedule Vesting Date 3/12ths of shares 2 ½ years January 31, 1998 4/12ths of shares 4 years July 31, 1999 5/12ths of shares 5 ½ years January 31, 2001

You have the option to participate in the Jumbo Grant Program or to remain in the Annual Grant Program. Please note that the jumbo grant is offered in lieu of the annual shares awarded to you at the time of your performance review. The grant date for this year's Annual Grant Program and Jumbo Grant Program is July 31, 1995 and the per share option price is $90.50, which represents the lowest closing fair market value during the month of July. If you have additional questions about the program, please contract your HR Director or Sharon Maghie (sharonb), Director, HR Operations. Please record your decision in the one of the boxes below, and return the signed letter to your HR Director or Sharon Maghie by September 15, 1995. Yes, I'd like to receive a Jumbo grant in lieu of the annual grant shares awarded for the August 1995 review period. No, I'd like to remain in the Annual Grant Program for the August 1995 review period.

. . . . . . . . . . . . . . . . . . . . . . Your signature Enclosure

This represented a Junior Jumbo grant, which the applicant opted to accept. 27 An important question arising in relation to both the regular and Junior Jumbo grants concerns their purpose. Was it, in either or both cases, to reward past service or to constitute an essential part of the ongoing remuneration, itself fixed at a level which was not at the peak of salaries paid in the industry, but at the higher end of the range? Or was it intended to be no more than a "golden handcuff''? 28 Mr Rothman suggested that the value of share options granted by Microsoft was such as to make senior executives independently wealthy; that they constituted, over time, 95% of the remuneration package of the applicant. However accurate that may be, it does not answer the first question, whether they were what I will call forward or backward looking. The evidence affecting this matter is:

(a) The introduction to the regular grants scheme; "to attract and retain the best available personnel…", which appears to me expressly to intend a reward for, in part, joining Microsoft. This is consistent with the applicant's experience of receiving a regular grant of options within his first month with Microsoft, at the relatively young age of about 22 years.

(b) The introduction to the jumbo grants offer: "to recognise long term contributions of key senior level employees", which is ambiguous, and

(c) The evidence of Mr Murray was that Bill Gates "had a long term concern that his executives would be susceptible to either leaving the company because they found a better opportunity some place else, or leaving . . . . because they had become rich and decided to retire. So he asked us to . . . create a very long term retention scheme". This led to the Jumbo grants scheme; a year later they "created a smaller program, with less of a time line, five and a half years" - the Junior Jumbo scheme. 29 Mr Murray also explained the purpose of a grant of regular options as providing an incentive to the employee:

to work hard, to work smart, to get good things done and thereby lifting the success of the company, the stock price of the company, and eventually some degree of wealth would be generated for that employee, thereby encouraging that employee to stay with the company, because they would continue to receive these grants on an annual basis . . . . . One of the purposes was a retention incentive for staff.

30 Mr Murray distinguished the jumbo grants as having a longer retention period. He said it was critical that it serve as a retention tool. The longer wait period for vesting was to encourage employees to stay and contribute to Microsoft's success. It was intentional that there was no provision in either jumbo plan for accelerated stock vesting for periods not employed and contributing to the success of Microsoft. 31 It seems to me strictly unnecessary to determine whether Jumbo options were actually intended to constitute a reward, whether in whole or in part, for present, future or past service, although I incline to the view they were essentially forward-looking. In that respect, they were different from regular grants, which became available to the applicant, and apparently to many if not all other regular grant participants, soon after being hired. Given the language in the option plan documents, together with the clear picture created by Mr Murray's evidence as to purpose, the conclusion is unavoidable that the Junior Jumbo grants were conceived with one view in mind: to retain and reward senior staff over a lengthy future period of 7.5 years. The determination of who would participate depended on whether one was seen as of retention value. This no doubt reflected one's past performance, but the principal motivation was retention, not reward for past service. The plan was designed without provision for redundancy, and there is no evidence that particular attention was paid to the consequence for an employee of redundancy. Indeed, it appears from the applicant's evidence, uncontested by Mr Murray, that the idea of redundancy was to be avoided at inception in order that the Junior Jumbo plan could be approved: redundancy was not mentioned in the Jumbo plan and, if proposed for its offspring, the latter would have been rejected by Microsoft. 32 Therefore, the situation in this case is distinguishable from the approach taken in Westfield Limited and Anor v Helprin (Cahill VP, Hungerford and Schmidt JJ (1998) 82 IR 411, where the Full Bench found the share option plan in question paid significant regard to past service.

There was an obvious hiatus in the Junior Jumbo plan in the event of a redundancy occurring at particular times in the vest period, of which this case is but an illustration. If an employee is made redundant, the deprivation of the rights to regular grants, by opting for the jumbo scheme, puts the employee at a significant disadvantage compared to where he would have been had he stayed on the regular grant scheme. That is, the Jumbo grant scheme is deficient in that it only operates if service is not discontinued. Unless an employee being offered the choice between a Junior Jumbo grant and regular grants was sublimely optimistic about the future with Microsoft, it is likely the question of acceleration of vesting would arise at the time an employee was offered a jumbo grant. The applicant was in a special situation, in that he assisted in the development of the plan. It is very probable that , as he claimed and as I accept , he would have raised with Mr Murray this gap in the plan at its inception. Mr Murray is unable to recall this but doubts he would have responded with an automatic acceleration to the next vest. I accept that Mr Murray could have said words to the effect, as the applicant claimed, that he need not worry, Microsoft "looked after its senior staff in a redundancy". 33 If there be a problem viewing the plan in this way, it is that raised by Mr Rothman, namely that the Junior Jumbo Plan did not bestow a 'huge bonus' on its participants, as compared to the regular grants, unless one remained to the end. The comparison was capable of being positively unfavourable in the event of an early departure.

The Microsoft Severance Plan 34 The current plan was adopted 15 July 1997, being an amended form of the plan dated 1 June 1993. It describes its purpose as being to "provide severance pay and other severance benefits, at the discretion of the Company's Chief Executive Officer ("CEO"), Chief Operating Officer ("COO") or Vice President, Human Resources and Administration ("VP, HR&A"), (William H. Gates III, Robert Herbold and Mike Murray respectively) "to regular employees of the Company whose positions have been eliminated due to a reduction in force or reorganisation, or to regular employees of the Company who can no longer perform essential job functions due to disability, or to regular employees of the Company in other circumstances where the CEO, COO or VP, HR&A deems the provision of these severance benefits to be appropriate." The three positions identified above are referred to in the Plan as "Authorized Officers". Each Authorized Officer is given a power of delegation of any or all of the authorities and duties conferred by the Plan to any other employee of the Company if such delegation is made in writing. Section 2, Benefits, prescribes: The following decisions of an Authorized Officer (or his or her delegate) shall be employer business decisions made on behalf of the Company as an officer or employee of the Company, not fiduciary decisions made as a fiduciary of the Plan: decisions regarding whether an employee will (I) be offered severance benefits and, if so, whether the employee will be offered Severance Package #1 or Severance Package #2, (ii) be required to perform services through a particular date as a condition of participating in the Plan, (iii) receive outplacement assistance, (iv) be required to repay any portion of the severance pay upon rehire, (v) be denied severance benefits because the employee was hired by an entity in which the Company either directly or indirectly has at least a 10% ownership interest, or (vi) have severance benefits cancelled because the employee violated his or her Employee Non-Disclosure Agreement or other agreement with the Company, or because the employee took other actions adverse to the Company, or because the employee was offered by the Company a position comparable to the employee's last position with the Company.

35 Delegations by each of those Authorized Officers were effected in April 1998 to Cecily Hall, then holding the position of Company Senior Domestics Benefits Manager and to Paula Mueller, then currently holding the position of the Company's Severance Analyst. 36 The Plan provides that a regular employee of the Company (which the applicant was for this purpose) "shall begin participating in this Plan on the date that all of the following requirements are satisfied: (1) An Authorized Officer decides in his or her discretion, on a case-by-case basis, that the employee shall be eligible to participate in the Plan and receive benefits, and the employee has received a written confirmation of that decision from an Authorized Officer; (2) The employee signs the Microsoft Corporation Severance Agreement and Release ("SAR"). The SAR releases the Company from all employment related claims; and (3) The employee remains employed with the Company through the particular date, if any, that is specified and communicated to the employee by an Authorized Officer in his or her discretion. An Authorized Officer may choose not to require that an employee work through a specific date in order to be eligible for Plan benefits.

37 As to benefits, the Authorized Officer is to "decide in his or her discretion on a case-by-case basis the severance benefits under this Plan that will be offered to a participant". There are two severance packages provided by the Plan, both provide for a lump sum cash payment following termination of employment but only severance package #1 provides a period of time prior to the date of termination to search for another position at the Company. This search is generally referred to in the evidence as "job search" and involves the idea that the employee afforded that right will be given six weeks paid employment with the assistance of a Microsoft employee dedicated to task to search for a vacancy within approximately 25,000 employees of Microsoft. 38 Under both packages if termination results the Plan provides a severance payment according to the ranking of the employee and the salary structure of the company. Level 12 or below receive one week's base salary for every six months of regular service to the Company with a maximum payment of 26 weeks base salary. Participants at Level 13 and above receive two weeks base salary for every six months service up to a maximum total of 26 weeks base salary. 39 The right to job search may be cashed out as six weeks' base salary rather than undertaking the job search at the discretion of the employee. The Plan also deals with the matter of stock option vesting as part of the redundancy package. The provision in severance package #1 is as follows: Stock Option Vesting . In addition to having the right to exercise any stock options that are vested as of the termination date, all participants receiving Severance Package #1 (except those participants who obtain another position at the Company during the job search period, or who are offered and decline a comparable position at the Company, as defined in the preceding "Severance Pay" section) will also have the right to exercise any stock options previously granted that would have vested within the six (6) month period following the end of the month in which falls the earlier of (i) the participant's date of termination of employment with the Company, or (ii) the participant's job elimination date. For purposes of this Plan, a participant's "job elimination date" is the last day the participant is required to perform his or her customary employment-related duties and responsibilities to the Company. A participant's job search period commenced on the first day following his or her job elimination date. Notwithstanding the foregoing, any participant who is provided with additional stock option vesting pursuant to the Company's stock option plans and policies by reason of total and permanent disability, shall not be eligible to also receive the stock option vesting described in this paragraph. Except to the extent the Company's stock option plans and policies provide otherwise, all stock options must be exercised within three months after termination (but in no event later than the expiration date of a stock option as set forth in the grant agreement).

40 Severance Package #2 differs only in the respect that it excludes the provisions with respect to job search. In any event, the applicant was treated as being under Package #1. 41 The last provision of relevance is the provision that the Plan 'shall be construed in accordance with the applicable federal law and, to the extent otherwise applicable, the laws of the State of Washington'. Unless I were minded to attempt some variation of the plan itself, a course I am not attracted to, this point is of no moment. The Applicant's Transfer to Australia 42 By 1992 the applicant had progressed within Microsoft to the position of Senior Human Relations Manager, working in the USA. In late 1993 he was transferred to Sydney, Australia to take up the role of Human Relations Director in the newly-created Asian Pacific Regional Office of Microsoft. This position was offered to him by Daniel Petre who, as Regional Director, was responsible for the setting up of the Sydney office. Mr Petre had come to know the applicant in the USA when he had been allocated as the H.R. resource in the division managed by Mr Petre, Workgroup. Some months after coming to Sydney, Mr Petre recalled that the applicant had said he would like to permanently move to Australia. 43 On 1 April 1994 the applicant returned to the USA to the position of Director, International H.R. for Microsoft, reporting to Mr Murray. On 28 April 1995 he was appointed HR Director, Rewards and International HR, in which he assisted in the creation of the Junior Jumbo Option Plan. 44 On 26 March 1996 the applicant was awarded a Microsoft Achievement Award, which entitled him to eight weeks' paid vacation subject to conditions, one of which was that he could take it only while he remained with Microsoft in the USA. There was also a provision that permitted the award to be cashed out. 45 Mr Petre had resigned his position as Regional Director in January 1995 and then, until September 1996, assisted in the establishment of two online businesses, MSN (an acronym for Microsoft Network) and Sydney Sidewalk (also known as CityScape). The applicant had formerly expressed to him a desire to move out of HR work into a business development role; Mr Petre, then a Vice-President of Microsoft, recommended the applicant for the role of Business Development Manager-CityScape, which he accepted and returned to Australia to take up in June 1996. 46 This appointment was offered by letter in what was apparently fairly standard terms, at least for the USA, which included three features of present relevance. The first was a non-disclosure agreement said to be a condition of the offer and, secondly, a termination clause giving either party the right to terminate the employment, other than for misconduct or serious breach, by giving one month's notice. This clause also provided that should the applicant decide to return to the USA, the relocation costs would be his responsibility entirely. It is noteworthy that the termination provision was said , ultimately in the evidence of Mark Newton, the Microsoft Pty. HR Manager, not to be a standard term for employment contracts with that (Australian) company. Nevertheless, the applicant signed the acceptance provision therein. As to the absence of a repatriation right, the applicant said this was usual with indefinite or permanent moves. The third aspect to mention is the acknowledgment of the MSAA award the applicant had achieved and an agreement "to honor this Award. All terms and conditions of the Award remain in place". 47 In discussing this offer with Mr Petre, the applicant expressed a preference for a Microsoft salary grade 13, but then accepted the lower grade 12 and by e-mail said: "yep agree. I'll just take the hit and look at it as a big investment…still really think relo (sic-relocation) package of 13 is fair though", which was a reference to director-level relocation costs. This was agreed. The Joint Venture and ninemsn 48 In March 1997 Mr Petre resigned from Microsoft and joined the staff of Publishing and Broadcasting Ltd., ("PBL"), the latter having commenced talks with Microsoft about setting up a joint venture using MSN as a vehicle. He approached Mr Canizales about the possibility of his leaving Microsoft to do the human resources functions at the joint venture. The applicant said he would do this if he was able to have the finance role also. The applicant and Mr Petre disagree to an extent about the discussions concerning the undertaking of the additional function of finance. However, it is clear from the evidence of those discussions that the applicant was still eager to move out of HR work and was seeking an opportunity to look to other roles once the business had been stabilised. It is equally clear to me that Mr Petre did not see the mixture of human relations and finance as being preferable and he was concerned that a new Chief Executive, then to be appointed, would require the two roles to report separately (that is, by two different individuals). Mr Petre also disagreed with the proposition that he definitely agreed to the applicant's moving into other roles later but said he would, in effect, do what he could to assist the applicant in that way. I prefer Mr Petre's evidence about these matters; it seems to me to have a very much higher degree of probability and also to sit more comfortably with the evidence of Mr Vamos, the incoming chief executive, who subsequently took precisely that view. However, I do not consider the differences between the witnesses in this respect to be of any significance in the wider picture. The applicant has not established on any reasonable basis that there was more promised to him, in promotion terms, than what he achieved in the transition to Australia. 49 Other discussions occurred between the applicant and his immediate superior in the USA, Mr McGinnis. Alan McGinnis commenced with Microsoft in 1993 in an international marketing role and in October of that year he was seconded to Microsoft Pty as Group Manager of the newly- created Advanced Technology Group. This group was to be managed by Mr Petre, who was resigning as a Vice-President of Microsoft and returning to Australia. In 1996 Mr McGinnis was the Director in Australia of MSN, formed to develop internet services. In July 1996, he returned to the USA as Director of International MSN. Subsequently he was telephoned by Mr Petre, then working at PBL, to discuss the idea of Microsoft and PBL entering a joint venture, which in due course occurred and led to the incorporation of ninemsn. However, in the interim much work was to be done in the formation of the joint venture, a process in which Mr McGinnis was heavily involved. Because of his experience working with the applicant in Microsoft Pty., Mr Petre's suggestion that he might be interested, and an awareness that the applicant was discussing with other Microsoft executives a move from his position with CityScape, Mr McGinnis made the offer set out in a letter dated 10 July 1997, for a 24-month transitional assignment in Sydney, an offer "conditioned upon your commitment to work with the joint venture in the transitional assignment for 24 months, with the expectation that you will fully transition to employment with the joint venture". 50 In the course of the discussions leading to the offer to work in the joint venture, Mr McGinnis said to the applicant "we will use you as the MS guy on the ground to help me close the deal with PBL. You will be an employee of MS in MSN Australia as Business Development Manager MSN". 51 This observation foretold of an apparently not anticipated but obvious reality, that the applicant was to assume a role which would put him in between the joint venturers on any issue that might be in dispute. He was a Microsoft employee but with an expectation he would later transition to ninemsn; whose side was he to take in a dispute? These seeds of difficulty later sprouted when a serious issue arose between the joint venturers over the allocation of expenses and caused Mr Petre to question the applicant's allegiance, although in circumstances I would find are not to the applicant's discredit. He was in a no-win position if the events were to occur as they did. 52 On 1 April 1997 the applicant sent an e-mail message to Laura Jennings, a Vice President of MSN in USA. He purports to summarise his conversations with Mr Petre about the prospect of his working in the joint venture and records that Mr Petre is "keen to make sure . . . you feel okay with terms, etc. that we are talking about . . . ". He continued (LOI referring to an intended Letter of Intent between PBL and Microsoft) : · If LOI happens, I'd move to MSN's payroll right away and work with Daniel on driving HR/Operations side of Business planning · The salary we're talking about is A$120,000 which is 35% of Australian level 13 range · Title would be Director, Special Projects for now (change to Operations later after announcements, etc) · Reporting to Laura officially (Daniel really-until we announce to local staff then reporting to Daniel) · Car Allowance would be level 13 car allowance · I'd remain on secondment to PBL for at least 52 weeks from date of receiving my permanent residency (critical that I remain on US benefits for this period since I'm not eligible for medicare on these currently) · After that, we'd determine where I should go. Once this time is up I'd move to whatever benefits package JV has. · If I move permanently to PBL at that time (or after) I'd be eligible for same redundancy package as other MSFT staff that go to venture. · My job duties would consist of all the organizational development activities, staffing activities, HR, redundancy planning, compensation strategies, etc. as well as all the infrastructure issues (project managing the Paddington facility, etc. etc. to closure). · I'll remain eligible to take my MSAA (sabbatical) sometime in next two years (obviously I'd put off till at least next Jan/Feb when everything is settled down). Daniel and I negotiated me still being eligible for this even though I'm not in US (which is an exception) so I could come here and kick start Sidewalk. I don't want to lose it some how nor have to return to US to take it.

Let me know if this sounds OK to everyone & then if we do LOI. 53 Ms Jennings responded with this message: This sounds fine to me. We should have LOI signed by end of week. Thanks for hanging in there until then. 54 On 5 April 1997 the applicant sent an e-mail message to Frank Schott, the Product Unit Manager for CityScape, in which he sought to discuss his future in the context of the possibility of working for MSN which was at that stage was likely but not definite. He makes the point that if the MSN job does not work out he would vacate his current role of Business Manager by 15 April but proposes that he should finish his role as IMG Project Manager for Paddington, which involved supervision of the construction and fit-out of office space, and then take a sabbatical. He said: It will also provide me job protection (or worst case redundancy) . . . . Since I'll be filling a real headcount I'll be eligible for job search and/or redundancy after we're through.

With this time plus vacation owing, I'd be out until roughly end of July. Then we could truly eliminate the position I am in - this is a must if you are going to grant someone redundancy (eg you couldn't make one biz manager redundant and hire another but you can make a sales person redundant and hire a marketing person). Since clearly David wouldn't re-hire a project manager we'd easily pass this critical test.

Once 'made redundant' if I haven't located a job in six weeks, I'd be terminated and take MS Australia severance (which is identical to US)

So I'll get 6 weeks to find job. If I don't find anything I'll vest out and leave. I think this is a fair trade for being willing to leave my post after 8 years with the company. If we can't work out something similar then I'll have to stick it out with David until January when I vest my next options or until I locate another position as it wouldn't make sense for me to simply resign.

How does this sound to you? 55 These observations make clear that, in April 1997, the applicant was anticipating he would be redundant no later than January 1998, if the position referred to at the outset of this e-mail did not eventuate. However, the position with the joint venture did become available and any prospect of that earlier redundancy thereby evaporated. In this context the development of the joint venture position as a transitional assignment is significant and possibly critical in that Ms. Denise White, then Director of Human Resources for New Ventures for Microsoft, took the view the transitional two-year assignment was itself a redundancy package, or, from Microsoft's viewpoint, a form of notice. 56 The letter of offer dated 10 July 1997 but signed by both Mr McGinnis and the applicant on 9 September 1997 was in the following terms (my underlining): Dear Mike,

As you are aware, due to changes in Microsoft's business direction and structure, Microsoft is transitioning its Interactive Media group function to the newly formed and independent joint venture. Microsoft would like you to continue working in this line of business during the transition to the new entity, and we are pleased to offer you a twenty-four (24) month transitional assignment commencing on 1 August 1997 during which you would serve at the joint venture, but remain a Microsoft employee. At the end of the 24 months, you will have the option of becoming an employee of the new joint venture . If you accept you will be ineligible for a position with Microsoft for 36 months, unless the Joint Venture should collapse or there is change in equity. Should you choose not to accept the transition assignment with the Joint Venture you will be on secondment to our PBL Joint Venture reporting to me through January 1998. This period may be extended by mutual agreement although it's expected your job will be eliminated.

The offer of this 24-month transitional assignment is conditioned upon your commitment to work with the joint venture in the transitional assignment for 24 months, with the expectation that you will fully transition to employment with the joint venture. During this transitional assignment, you will remain a Microsoft employee and will retain pay, benefits, and stock option vesting associated with that Microsoft employee status. During the transitional assignment you will not be eligible for the regular Microsoft review cycle or for additional Microsoft stock option grants; however, if you accept the transitional assignment, you will receive an increase in base compensation and an increased bonus opportunity for the duration of the assignment in consideration of the nature of work and in lieu of the August review.

After 24 months in the transitional assignment you may choose to fully transition to employment with the joint venture . This would entail you resigning from Microsoft, and your Microsoft pay, benefits and stock option vesting (if any) would of course cease as of your resignation. Your position, compensation and benefits with the joint venture would be as offered by that separate company.

Based on the parameters noted above, the terms of the 24-month transitional assignment being offered to you are as follows:

Microsoft is pleased to offer you the position of Director of Human Resources. As discussed, this position will be based in Sydney, Australia. We trust you will treat the details of this offer with utmost confidentiality.

Should you accept this offer, on 1 August 1997 your package will include: · A salary of $150,000 per annum, paid in 12 equal monthly installments into your bank on the 15th of each month. We ask you to maintain the confidentiality of this salary. · A car allowance of $20,000 per annum, paid in monthly installments at the time of your monthly pay. The allowance is to cover running and tax costs on the vehicle, and no other payments will be made for car expenses. You are responsible for justifying the business usage of your car for tax purposes, and for payment of tax at the end of each financial year. · In addition, Microsoft will pay for purchase of petrol and oil used in your business car, by way of a BP Car. · Microsoft will contribute an amount equivalent to 6% of your gross salary into the Microsoft Superannuation Fund, which includes any Occupational Superannuation granted under relevant industrial awards or legislation. If an employee wishes to contribute a minimum of 2% (pre-tax), then Microsoft will contribute a further 2%. All contributions are fully vested from the date of employment. Microsoft reserves the right to vary the Company contribution component into the Superannuation Fund at any time. · The ability to participate in the venture's compensation program which includes an opportunity for an annual merit increase and bonus based on performance; · You will continue to be eligible for all other Microsoft employee benefits, including ESPP, and other benefit programs; and · Microsoft will contribute up to $110.00 per month towards the service fee and business calls. This service must be obtained via Vodac and registered in the name of Microsoft Pty Ltd; · For purposes of Medical, Dental and Life Insurance, you will be covered by Microsoft's "Choice Abroad" Program through May 1998. After that time you will be covered by either Microsoft Pty's health and life insurance plan or the PBL/MSFT Joint Venture plans. · You will remain eligible for the pre arranged time off equivalent to the MSAA award. This award will be recognized once you transition as an employee of the joint venture and your Microsoft stock vesting ceases.

Our offer is subject to you producing documentary evidence of Australian residency, such as an Australian passport, Australian birth certificate, or foreign passport with the correct work status visa in it. We cannot employ you unless you are able to produce either of these. Please bring this documentation with you on your first day.

In the event of termination of this employment, it is agreed that a minimum of one month's notice will be given by either party, except in the event of misconduct or serious breach of the employment contract, in which case Microsoft reserves the right to terminate this agreement without notice .

Please sign the copy of this acceptance letter and return it to me. You may keep the original of this letter for your records. Your decision on this offer is due no later than September 15, 1997. We feel you will make a substantial impact upon the future direction and success of the new joint venture and we look forward to your remaining. Should you have any questions, please give me a call. 57 Does the letter indicate, as Mr Rothman primarily submitted, an intention to offer a fixed term contract? The crucial language is that contained in the second and third sentences of the letter: Microsoft would like you to continue working in this line of business during the transition to the new entity, and we are pleased to offer you a twenty-four (24) month transitional assignment commencing on 1 August 1997 during which you would serve at the joint venture, but remain a Microsoft employee. At the end of the 24 months, you will have the option of becoming an employee of the new joint venture. 58 Taken on their face, and alone, these words to my mind could convey no other intention than that the applicant was being asked to accept a fixed term of 24 months continued employment, but with an expectation that he would be "transitioned" to the joint venture thereafter. The second and third paragraphs of the letter lend support to this view. However, the words form only part of an offer letter which included the notice provision contained in the second last paragraph thereof, which I consider to be destructive of the idea that the offer was offering a binding and immutable term of 24 months. 59 The evidence of Mr Newton was that he inserted the paragraph providing for one month's notice because he viewed it as a standard clause by Microsoft Australia, used in all such letters of offer. However, he later accepted that the provision was exclusive, among those offered transitional assignments in this joint venture, to the applicant's final offer letter. The draft which he had been provided by Mr McGinnis had no such provision. Nevertheless, the final version of the letter was that which was forwarded by Mr McGinnis and received and acknowledged by the applicant with his signature accepting the offer on 9 September 1997. As I have earlier noted the applicant's position was that if he read the notice provision at the time he signed the letter, there being some urgency at the time, he did not or would not have treated it as of any significance. This view is somewhat surprising given that the form of letter appointing him to his Australian position as Business Development Manager, CityScape contained a similar provision for a minimum a one month's notice of termination. This provision operated approximately one year earlier than Mr McGinnis' offer. However, this was not the only earlier time that the one month's provision had applied to the applicant. The letter of 4 April 1997 from Mr McGinnis offering the applicant the position of Director, HR & Operations for the MS/PBL joint venture contained an identical termination provision. 60 After referring to the assurances he identified in the opening paragraphs of the offer letter he was asked by Mr Kite: Q. Did you think that those assurances as you saw them were qualified in any way by the second last paragraph of the letter? A. No, I did not. Q. Why not? A. The assurances as I saw them were part of a commercial negotiation which preceded this letter. The second to last paragraph was not discussed in that commercial negotiation with me. Further, in my experience with Microsoft Australia we had never, to my knowledge, attempted to enforce a clause like this because we were advised by our legal advisers that it was illegal if attempted to be enforced without regard to fairness or other portions of the contract. That is to say if it was found to be fair and reasonable in a situation of a paragraph like this could be enforced but not if other factors existed which made it unfair. It was mainly used or exclusively used as employee notice provision verses an employer notice provision. Q. So you considered that paragraph before you signed the letter? A. I did not give a great deal of consideration to this paragraph before I signed the letter. It was not part of the principal negotiation. Q. This letter was to record the terms of the agreement on which you would go forward, was it not? A. Yes, that is true. Q. And this paragraph you say was not inconsistent with the agreement as you understood it? A. I don't believe I said that. Q. Did you regard it as inconsistent? A. I regard it as not discussed in our commercial negotiation. Q. Did you want to discuss it? A. I did not feel it was necessary to discuss this paragraph before signing. Q. Was that because that paragraph was consistent with your discussions and negotiations? A. No, it's because I saw it as inconsequential given the spirit of the negotiations and my understanding practice of Microsoft with regard to the paragraph and with regard to legal advice on paragraphs such as these that I received on previous discussions with lawyers from Microsoft. Q. So you acted on your understanding of the legal effect of this? A. I acted on my understanding of the commercial negotiations, on my understanding of Microsoft practice and my understanding of the legal effects of this. 61 I am not prepared to find that the applicant regarded the provision as of absolutely no significance although I accept he believed it was unlikely to have any retarding effect on his capacity to commence appropriate proceedings in the event of Microsoft utilising the provision. In my opinion, the proper view of it is that the letter in its final terms operated to defeat the proposition that the offer was one for a fixed term, the termination of which might give rise to an entitlement in the applicant to have the balance of the term paid out. That however does not deal with the consequences of the letter making provision for notice of one month in circumstances which, in the context of this Court's approach under s106, would be prone to being found to be an unfair term, in the absence of other contrary and overpowering considerations. 62 In coming to the view that the offer letter did not offer a contract for a fixed term I have considered the limited authority available on contracts of such type. For example, Professor Brooks in Contract of Employment (4th Edition CCH Australia Ltd 1992) deals with the subject of the duration of a contract without direct reference to such contracts. The relevant passage (at p.48) commences with these words: When a contract of employment is concluded and the parties agree as to its duration then no legal problems arise; the intention of the parties will be given effect. It is the employment contract of indefinite duration which once presented problems. 63 Macken, McCarry and Sappideen in the Law of Employment (The Law Book Company Ltd 1990) deal with the subject of fixed term contracts in the context of the termination of employment arising by effluxion of time. The subject is dealt with this way (at p.153): Where a contract provides for employment for a fixed term or until a specified task is completed then the contract will automatically end when the term expires or the specified task is completed, unless, of course, it is lawfully terminated in some other way in the meantime.

That final observation raises the question of the means by which a contract for a fixed term might be lawfully terminated before the fixed term ends, and two judgments of the English Court of Appeal are cited in relation thereto. Those cases deal with the interpretation of the English Redundancies Payments Act 1975 and the Industrial Relations Act 1971, each of which makes provision for the non-applicability of benefits in relation to contracts for a fixed term of two years or more. In BBC v Ioannou [1975] 2 All ER 999 the employee had worked under contract for a period of three years determinable by three months notice. This was renewed in 1970 by a two year extension to August 1972. In February 1972 the employee accepted a further year's contract from August 1972 to August 1973 "unless previously determined by either party giving to the other not less than three months prior notice in writing". It was held by the Court of Appeal (Lord Denning M.R., Stephenson and Geoffrey Lane L.JJ.) that the contract being determinable by notice was not a contract for a fixed term. It is noteworthy that no cases were referred to in the judgment nor were any cited in argument.

In Dixon and Anor v British Broadcasting Corporation the Court of Appeal (Lord Denning M.R., Shaw and Brandon L.JJ.) [1979] All ER 112 were called upon to revisit a similar question in relation to an employee who had worked for 20 months under a temporary contract of employment for an indefinite period determinable by one week's notice in writing on either side. After 20 months the BBC decided it would not need the employee's services much longer but instead of giving him notice offered him a new written contract of employment for a short term of two months subject to the proviso "unless previously determined by one week's prior notice in writing on either side". This was later extended for about one further month subject to the same proviso about notice. The contract expired on 1 May 1996 and was not renewed. The issue, which arose under the terms of the Trade Union and Labour Relations Act 1974 concerned the question whether the employee had been "dismissed" within the meaning of a provision of that Act because he had been employed under a "contract . . . . for a fixed term" and the term had expired without being renewed which would give rise to the claim for compensation for unfair dismissal. Lord Denning referred to the decision in BBC v Ioannou saying: The other ground of decision was that of a 'fixed term' is one that cannot be unfixed by notice. To be a 'fixed term' the parties must be bound by the term stated in the agreement, and unable to determine it by notice on either side. Assuming, therefore, that Mr Ioannou's contract was for six years, it was not a 'fixed term' because it could be determined by three months' notice. That second ground had not been taken in the courts below. It was taken by this court itself. Now after further consideration, I desire to say at once that that second ground was mistaken. It was a wrong ground. We did not in that case refer to para 5(2)(b). If we had done so, we should have held that a 'fixed term' is sufficiently satisfied if the contract is for a specific stated period, even though it is determinable by notice within that period. Take this present case of Mr Dixon. His last two contracts were for two months and another for four weeks, each containing a provision for a week's notice. Were those contracts for a 'fixed term'? Looking at the general purpose and intention of the statute, each contract must have been employment for a 'fixed term' within the meaning of the statute. Otherwise you get an absurd position. If a man was employed for four weeks (and there was no clause in his contract making it determinable by a week's notice) he can claim for dismissal when the four weeks come to an end.

Shaw and Brandon L.JJ gave separate judgments to like effect. 64 It is apparent that each of these decisions turn upon the particular language of the English statutes there considered. The ultimate view taken in Dixon v BBC takes into account the purpose of the relevant legislation in giving effect to its meaning. That approach is of little assistance in the present matter. Somewhat curiously, it seems to me that if either of the two cases are of any assistance in examining the proposition of the fixed term contract advanced in the present case it is BBC v Ioannou which seems to have turned, erroneously as it eventuated, upon general considerations, namely that a contract cannot be one for a fixed term if terminable before the term expires. That view seems to me to be the view one should take in the present context. Namely, that the offer of a 24-month assignment made by Microsoft to the applicant with an attendant term permitting one month's written notice did not create a fixed term of 24-months employment. Subsequent "Assurances" 65 In the applicant's case reliance is placed on what is said to be a number of assurances given to the applicant concerning his future prospects. The first was in early November 1997 when prior to going on leave the applicant had a discussion with Mr Petre where he claims to have said "I want to make sure one more time that I am safe. Nothing is going to be re-org or nothing is going to be moved out of my group." to which Mr Petre, he said, replied "Stop being paranoid. You don't need to justify your job. Go and get rested and get well. Nothing is going to happen to your job." 66 Mr Petre's view of the conversation is that the applicant said "I want to make sure that I am safe." to which he replied "Stop being paranoid. Just go and get some rest and relaxation". 67 It seems to me the result of these two versions of the conversation is, in the context of a matter such as this, essentially the same. The applicant's concern, however expressed, was treated by Mr Petre, perhaps in a conversational, tongue-in-cheek, way as being paranoia. But the recognition of the applicant's concern in that way illustrates the degree of seriousness of his request and even accepting Mr Petre's reply as having been the fact, it could only encourage the view in the applicant that his position was safe. I do not consider it possible to read Mr Petre's reply as leaving some caveat over the applicant's future. 68 The next event relied on by the applicant concerns a telephone call from him to Mr Petre on 10 December 1997, made while he was attending the auction of a house which he wished to bid on. The applicant said that his words were "Daniel, I am about to bid on a house at Double Bay but I will need to assume that I am going to be definitely employed at least until August 1999 since I can't afford this amount of debt otherwise". He said Mr Petre replied "I see no issues which would prevent you from getting the options. I can give you that confirmation. Go ahead and bid on the house." He said Mr Petre also said (which Mr Petre denies): Hypothetically, even if the new GM hated you or they want to get rid of you there is nothing they would, they can't do anything to screw you out of those options." 69 Mr Petre's version of the conversation is that the applicant sought to know whether his job would be guaranteed until July 1999. Mr Petre said he could not guarantee his employment and continued "from ninemsn's point of view, if your performance is good and if you are committed to resolve the problems, I see no problem. I cannot, however, guarantee your options with Microsoft. Its up to you and Microsoft to sort it out". 70 However, in cross-examination Mr Petre expressed his understanding of the arrangement with Microsoft as being that for so long as the employees were on the transitional assignment, they would continue to be employed by Microsoft. 71 Mr Petre also gave the following evidence in cross-examination by Mr Rothman: Q. Did either or any of Mr McGinnis, Ms Jennings, Ms White or Mr Newton ever do anything inconsistent, in your opinion, with the view that so long as there was a job at ninemsn the transitional employees would continue to be employed by Microsoft? A. In my opinion they didn't do anything inconsistent.

Q. I want you now to assume that Microsoft was obliged to continue, at least for the transitional period, the employment of transitional employees, so long as there was a job for them to do at ninemsn. That is the assumption I want you to make. Do you understand that assumption? A. Yes.

Q. That assumption would mean, would it not, that a statement that somebody's job was secure at ninemsn would necessarily mean that their job was secure at Microsoft? A. In my opinion that logic ties together - I guess. 72 Again, I consider that taking Mr Petre's view of the conversation, subject to his reservation of a commitment to resolve "the problem" which refers to relationship difficulties the applicant had been having with senior people within ninemsn, the applicant was not being encouraged to think that his tenure was insecure. In this respect, it is also important to refer to the evidence of Ms White where she agreed with the proposition that ". . . . as long as there was a position in the joint venture they would be employed by Microsoft?" - "they" referring to transitional employees. 73 The third assurance referred to by the applicant was given by Mr McGinnis, in a conversation which Mr McGinnis was unable to recall, but which the applicant attested occurred in a restaurant in Seattle on 16 January 1998 when he informed Mr McGinnis that he had just purchased a new home and wished to continue to July 1999. He said Mr McGinnis said "we are happy with your performance and with the performance of ninemsn. I see no issues from MS side which would impact you".

Again there is no element of insecurity being injected into the applicant's position by Microsoft. These events stand in stark contrast to the ultimate treatment of the applicant, to which I now turn. Events Leading to Termination 74 Prior to 20 November 1997, the applicant employed a new Finance Officer and also a Human Relations Manager, both of whom would look after, under him, the two aspects of the operation for which he had directorial control within ninemsn. By early 1998, both of these appointments were operating well. 75 At the end of November 1997 the applicant took leave, to which reference has already been made. Upon his return, he received, on 5 January 1998, an e-mail message from Mr Petre which included the following: As I will be away when you come back I wanted to make sure that you are now "better" and that we are in sync re moving fwd. I hope the break has let you relax and leave behind some of the bad times involved with getting the JV to the line. As I said earlier its now key for you to focus on a positive move fwd. You need to re-establish a relationship with the other ninemsn directors based on mutual respect and not one where you have some secret relationship with MS. The basis of your work has to be that conducted within the JV. Given the latest round of MS reorgs (to be announced Jan 15) I am not sure what level of connection any of us will have anyway.

Please do come back in a collaborative frame of mind and please leave behind the more aggressive positioning. I know you are a great talent. Prove it to the rest of ninemsn.

Some housekeeping · · · 4) GM Search

This is probably the most critical. I want us to be at final candidate by late Jan so we can do letter of offer by end Jan (incl trips to the US for interviews), Pls work to this deadline. Also in terms of interviewing we should discuss the process and plan (or send mail as I will bt on mail while away). So that's it. Welcome back!!! 76 Shortly before 9 February 1998 Mr Petre discussed with Laura Jennings the view he had formed that there was not likely to be a continuing position for a director of HR in Finance given the circumstances including the way in which the appointees under the applicant were working well. He did then discuss with Ms Jennings the fact that if the role goes away, the applicant would not have one and there would be a major issue concerning his July 1999 options. This led to an exchange of e-mails between Mr Petre, Ms Jennings and Ms White, commencing with Ms Jennings to Ms White cc Mr Petre as follows:

As you know, MikeCan just came back to MSPBL from a month-long "cooling off" period. Daniel is thinking that Mike will be sloping down in terms of his value-add at MSPBL by about late March, and that would be a good time to have him move on. I agree. We're both concerned, however, that unless this is handled properly, Mikecan may not leave as gracefully as we'd like. I've said that, although Mike is technically still a MS employee, I think it will be difficult for him to find a job here again. Daniel has not even breathed a word to Mike about this yet. We agreed that you need to work with the two of us to make sure we handle this as carefully and diplomatically as possible. Can you please advise as to our options and recommended strategy? Thanks

After that Ms White responded as follows: I need a little time to look at his offer letters over the last two years and think about this more in depth. Your impressions and concerns are right on target. I'll send you both mail with options, concerns and a strategy in moving forward.

Mr Petre responded as follows: To restate my position on this. I have given Mike a month off to "cool off" as lauraj says. While I have immense respect for Mike's abilities I think a couple of things are going on; 1) I don't think he has resolved himself around the fact that he is a senior mgr in the JV and thus has no special relationship with MS or PBL. Given his past exp at MS I think this is a difficult transition for him. 2) he is very difficult to work - more so for the other senior mgrs than me. Given the people we have hired as senior mgrs are the long termers here this is problematic. 3) His value add has been very high up to now. We now have a very good HR person (Johanna) and a great Financial Controller (Linda). I just don't think Mike adss value on top of these people. 4) I suspect any GM/MD we hire to run the JV will want HR (johanna) and Finance (Linda) to report to them directly. So having said this I do want to say that mike has been a great asset for the JV for the period from last march when discussions started and he did help resolve some major issues. Getting rid of him is more about there no longer being a job for him with a hint of him being hard to work with. I do think that the moment we mention that he may need to be let go he will turn feral. I suspect he would get really nasty really quickly. Thus I want to work out a way where we minimise any damage to MS and the JV. I am sure he is focused on securing more of his up coming "jumbo" grant allocations as the key reason he is staying at the JV and while I do not suggest that MS in any way arbitrarily lets him have them all, there may well be a chunk of them that will make life easy for all of us. In conversation he often talked about July 99 as a time when he would look to do other things. If we retrench him in March/April does he get July 98?? What if he got July 98 and Jan 99?? I am only searching for a way to move fwd, recognise his past contribution but also minimise legal and other issues for us all. Comments? 77 Ms White responded: I appreciate the in depth outline of contributions and changes in the business and climate that affects his job. I want to also investigate the possibility of this being a job elimination (its not super clear but could be an avenue) which would allow Mike some benefits and also a very graceful way to exit the JV/company.

Given the concerns about how he might react once he hears the news, we should make sure we have our approach in place before any conversation takes place. Is the redundancy in the function pretty obvious where he will be expecting something along this line? Also, are there any issues with other managers that are time sensitive or highly volatile? I want to make sure I have ample time to look at all the issues. 78 Finally, Mr Petre sent the following e-mail: he must be seeing that he is really not adding value given the major work being done by Linda and Johanna and he kind of gave me this indication without letting his guard down. To be clear, we would not replace him. The CEO would have finance, HR, ITG report directly to him/her - Mike's job would go away.

On the issue of interaction with other directors - I can manage this but I worry that it we appoint a CEO they will have a tougher time managing this issue with mike.

I agree that we need our ducks in a row before anyone breathes a word of it. 79 I observe that the reference to "ducks in a row" in Mr Petre's final e-mail was cross-examined upon in the context of lining up ducks in a shooting gallery. Mr Petre denied the phrase was intended to have that meaning but was more concerned with getting things in order. Ms White understood the reference in that way and likened it to her use of the phrase "make sure we have our approach in place" in her immediately preceding e-mail. Both witnesses professed to be of anti-gun sentiment. I accept that the references were not intended to convey the sense of a target being lined up. 80 I also observe at this point that paragraph 4 in Mr Petre's first e-mail in the sequence says "I suspect any GM/MD we hire to run the JV will want HR (Johanna) and Finance (Linda) to report to them directly", referring to the two staff members appointed by and then reporting to the applicant. In para. 49 of his affidavit of 18 November 1998 Mr Petre said that when recruiting Mr Vamos he asked "would you want the finance and administrative and human resources role split" to which Mr Vamos replied "yes, that's the way I've done it in the past and the way I would prefer it." Mr Vamos testified that he raised that matter with Mr Petre in or around early March 1998 as something he positively desired. The pair had first met about this matter in December 1997. Its not clear from Mr Petre's evidence what time frame he had in mind about this question but the above extract from his e-mail, which was dated February 10 1998, suggests that he would not at that stage have discussed the matter with Mr Vamos. 81 Ms White then commenced work upon a strategy which she summarised in evidence as follows: · My recommendation was first of all for us to look through the reasons, number 1, was this a performance problem, was there a change in business that meant the JV no longer required his skills and was his job changing, was Mike a Pty employee, what other opportunities would be available at Pty, were there opportunities at Corporate that should be offered to Mike. · My recommendation for strategy was that we look for multiple opportunities for Mike, both at Pty and at Corporate that we provided Mike with a chance to look at other opportunities, make a decision whether those were acceptable to him and to continue his employment with Microsoft even though the secondment at ninemsn was ending. If they are unacceptable, then he should have a standard redundancy package to meet the Australian requirements around the notice period. 82 Thereafter followed a series of e-mail exchanges involving Mr Petre, Ms White and Ms Jennings which touch upon the elimination of the applicant's position. The exchanges frequently refer to the applicant's motivation to secure his July 1999 options. On 3 March the following e-mail chain commenced with this e-mail from Ms Jennings to Ms White copy to Mr Petre: Can you help us with Steve's package below? He will be coming on board to run the 9msn JV. Thanks. We don't want to use Mikecan on this for obvious reasons. Daniel and I spoke a bit about the Mikecan situation in our call this evening re:candidates. We're really going to need your help on this one as well. One option is eliminating his job in oz to address the real business need there, and then pulling him back into Microsoft US since he is still a MS employee. I assume there are no suitable jobs in MS PTY? If we could pull that off, he's likely to be less problematic and have a higher chance of finding another role here than in australia. The danger is that he'll not handle the elimination of his position in australia very gracefully, even though there's no question that the position has outlived its useful life and should be eliminated. This will be very tricky.

Ms White responded as follows: I will follow up a couple of models for Steve's package with Daniel tomorrow. I'll clipped out the relevant info and asked for help from Jeff Staiman who has assisted me with 4 other ventures and exec comp on those. Regarding Mike, do we know if he is interested in staying with MS and coming back to the US? There are probably no suitable positions at MSPTY. We are not obligated in bringing him back to the US but we can approach that based on what is best for all concerned. Tim was setting up time for Daniel and I to talk as opposed to joining your call this evening.

Mr Petre then sent the following message to Ms White and Ms Jennings: I want to call Steve tomorrow with an offer. We have a conf call tomorrow so can I get some email prior to we can (sic make some decisions by phone.

Re Mike I think his main motivation will be to secure his grants until July 99. I suspect he will do anything to get these (including suing us for wrongful dismissal etc etc etc).

We need to plan how we get him to move out. His status is that he is an employee of ninemsn and of MS (I guess). Options seem to be;

1. I sack him from his role at ninemsn then he falls back to MS (??), then MS offers him a role back at corporate. He takes anything to vest until June or he sues us for sacking him (laws in OZ re sacking are very employee friendly!!!).

2. Retrench him. The reality is that we do not need this role going forward for a company this size. He has provided a lot of assistance but with capable people in HR and Finance now they can report directly to the CEO. Does he then again go back to MS corp for a role an vest until June 99.

I know its easy for me to say but I think the easiest thing for us all given the very high probability that he will make life ugly is to move him out of his role (role will no longer exist), have him finish a project (I have asked him to work through the establishment of a new ITG mnt proces - its broken) and then he leaves around May-June with a retrenchment package that includes options up to July 99. I know this may seem over the top but I would caution us to look at the costs on the other side of this. If he leaves "unhappy" we know that he has enough data on how MS moves people around/etc to make it very ugly for both ninemsn and MS. 83 The reference in this e-mail to the ITG MNT process is a reference to the technology group in relation to which real tasks were available for the applicant to perform, as Mr Petre suggested. This was the first occasion Ms White knew of this. She could not recall whether she informed Mr Newton of this information. 84 On 5 March 1998 the applicant requested a performance review of Mr Petre who determined how he was going and to seek feedback. Mr Petre found this somewhat strange because ninemsn had no such processes in place but nevertheless on 7 March 1998 he responded but not until he had e-mailed Ms White this message: I received Mike's mail late yesterday. The fact that he is asking for a mid-term review indicates to me that he smells a rat and is looking for me to document that all is ok. I have responded quite hard (and factually) as you will see. Stay tuned. My car may be bombed Monday!!!

The review culminated in this passage: Generally Mike's early work in helping establish the JV and its operation was outstanding. He worked incredibly hard to gets things moving and he met with a miriad of hurdles which he overcame.

Since we have moved to a more operational model performance has not been as smooth. Specifically the ITG area and relations with peer and lower level staff remains a key issue moving forward. ITG has been outlined above so I will not spend time on it here.

I continue to receive complaints from other Directors (not just 1 or 2) about Mike's behaviour and attitude to them. This is becoming a major issue. I had hope that the pressure break arranged in December would allow this issue to be resolved but I am finding this is not the case. Other directors feel Mike is dismissive of their roles and generally portrays himself above them.

Further I have received many complaints from staff in lower levels of ninemsn. Again the common thread is that Mike is rude, dismissive and generally very hard to get along with.

The general attitude from many staff seems to be that Mike is too hard to deal with and they avoid wanting to interact with him. This is not sustainable a position for ninemsn.

I have know Mike for many years and have always found him to be an outstanding employee in many ways. His dedication, level of professionalism and general skill level have been of the highest order. Yet I find that watching Mike in operational mode in ninemsn I notice a great deal of issues. Perhaps Mike has not yet settled into his new role or perhaps the scars of the JV negotiation and close process linger. Either way for both the health of ninemsn and for Mike we need to resolve a path forward before the new CEO comes on board. Mike and I will meet to discuss this in mid march. 85 This e-mail caused the applicant to become very concerned about his relationship with Mr Petre and his future employment. Mr Petre and Mr Canizales were somewhat at odds otherwise in respect of their discussions in this meeting. There is no doubt on the evidence that the achievement by the applicant of his July 1999 options was crucial to him. Mr Petre did accept that the applicant expressed the view he was willing to do almost anything to get the July 1999 options. 86 The next step in the sequence is that Mr Petre met with Mr Vamos who expressed the view that the finance and human resources function should report directly to the managing director. Mr Vamos understood Mr Petre's response to be that it was a matter for Mr Vamos how the organisation would evolve. 87 On 9 March Mr Petre, according to the applicant, said to him "The strategy committee have decided to make your position redundant so it is good for you leave now". Mr Petre accepted that he had not made a decision in relation to the position until that date but his evidence was that while accepting he said the strategy review had decided to make the position redundant, he did not say "it is good for you to leave now" but rather that he thought moving on to special projects and then moving out was the right thing.

Mr Petre recalls the applicant saying "I'm willing to go now if you wish me to but only if I get my July 1999 options" and that the applicant regarded it only as fair that he got them. There is a recognition by Mr Petre that he expressed the view to the applicant that he would be treated fairly but there is a divergence again between them as to the language utilised in that respect. Mr Petre said that the applicant wanted confirmation that a role would exist until January 1999, saying: I want a role that guarantees employment to January 1999. 88 Following the meeting Mr Petre e-mailed Laura Jennings copy to Denise White as follows: I met with Mike today and discussed the performance feedback issues and the issue of his role going away as a function of the strategy review.

He was very accepting of my points and while arguing some did appreciate that ninemsn has to do things that are right for the business as long as he is treated fairly.

He did make the point that the majority of his effort was in the months prior to the JV and the first few months of the JV's existence. As I have said to you guys I felt mike did a fantastic job over that period. He feels that in being retrenched in the short term means that he is not fairly being compensated for his efforts. He believes that his 2 yr agreement should be honoured and that he can show many examples where, in comparison, he will be treated unfairly unless he gets some compensation. While not agreeing with him in the mtg there is some logic about this.

In terms of moving forward I said that I would want him to complete a couple of projects and then we would retrench him from ninemsn.

There are two projects that I think he needs to complete. They do not require him to have any contact with the directors as they are more planning type roles. The first is the restructure of ITG. This has been a mess for ninemsn (as outlined in my review) and needs attention. The plan must incorporate the server centre, production systems and normal ITG stuff. I only say this because it is actually a pretty big task.

The other thing that he is doing is the establishment of the A&B system. This is also something that has been started and needs to move through full planning and then implementation. He should take if thru planning and then hand off.

Other than these tasks it is not clear what exact work he needs to do so I would suggest a strategy where we immediately move him to this special role (thus removing the layer of mnt) and have him work on the projects. At the completion of these tasks he would be retrenched. Advice here is that for a senior level role we need to offer between 6-12 months retrenchment. I find that a bit high so would suggest a 6 month type of package.

The problem of course is that he believes that unless he is able to get his July 31, 99 grant he is being treated unfairly. I suspect he has already received some legal advice but he did make the point that he wants to make this whole process easy for ninemsn, MS and for himself. He also made the point that he will not agree a release unless he is treated fairly.

He works on A&B and ITG on a dramatically reduced package starting very soon (allow for handover of HR and F&A stuff etc). So assume a start of the new role of April 1. In reality this work will probably take at least 3-4 months. Allowing for accured holidays etc. It would mean that his last working day would be around August 1-15. Maybe a little later but not likely. With a normal 6 month retrenchment payout he would leave as of (say) August 15.

Problem with this is that I suspect we will then have a major legal battle. He did not threaten this but his choice of phrasing made me wonder. I know you have received some legal advice on this but I do want to revisit any model that lets this go away easily for all parties.

Is there a way that he can do the projects as outlined above, then go on zero salary but still employed status at ninemsn long enough to get over any reqd date to get his July 99 vesting (Jan, feb 99). In this way we do not get any specials for him and in reality all we have had to live with is having him on zero salary away from the JV for a few months (5). I know this is not perfect but if the choice is between this option and having all three of us tied up in some huge battle then I believe maybe its the way to go. 89 Mr Petre was clear that he was not prepared to manufacture a job for the applicant but as the memo dealt with in the preceding paragraph makes clear, the "plan" identified therein had the applicant doing legitimate work up until about August 1998. He said to the applicant: You did a great job and I will speak with Denise White and Laura Jennings and make a case for you to be treated fairly. 90 On 14 March the applicant engaged in an e-mail exchange with Alan McGinnis who by this time had "retired" from Microsoft to become an investor. 91 Ms White's evidence concerning the approach to the applicant's termination is that she was informed by Mr Petre that the applicant had done a great job but that this was no longer the case and "he is going to sue us unless we provide him with his Junior Jumbo stock options. Is there anything we can do to prevent this." Ms White said that Microsoft was looking at giving the applicant the standard redundancy package, that Mr Petre should not make any commitments to the applicant at that stage. 92 On 16 March 1998 Ms White e-mailed Mr Petre and Ms Jennings as follows: Thanks for your help on this. I will be in Melb on Tuesday on the Billg roadshow (I am doing a speech after him in the morning). I will be back in the office wed. I will get Ann to work with Tim to find a time for us to chat wed our time which is tue your time. 93 On 17 March the applicant e-mailed Mr Petre to indicate that he was flying to Los Angeles to see his doctor. The e-mail continued: Did you want to meet in the AM before I go? Or do you want to just send me mail with what MS is offering. I've kind of been assuming they'll not be reasonable (jaded I guess :-)) so I've got my attorney ready to respond first thing Thursday AM if that's the case . . . I can work with him via phone so we don't slow the process up at all with my absence. He'll have something to you Thurs at 12 if necessary, etc. 94 Mr Petre responded "I have yet to hear from MS. Will contact as I hear" to which the applicant then replied: "What do you think we should do should we send demand letters now or do you think they'll be reasonable and I should just sit tight? It's highly unusual to have so much time between getting notice and getting an offer. . . is anyone up there working on this.

Re work stuff, ITG and A&B are ready for next steps . . . am I right to assume you'd prefer me not to be involved at this point . . . let me know and I can at least get Tom going on stuff for you so it's not held up. 95 Mr Petre's reply was: I have spoken at length to Denise and she is working on this with Lauraj. I think the best thing is to wait until I can get the full ninemsn piece together and the MS guys have their position clear. No point I pushing and I am not quite sure what sort of demands would make sense anyway.

I'll let you know the moment I hear anything. 96 The applicant took the view, based on his understanding the way Microsoft operates, that he should permit Mr Petre, who he knew and trusted, to deal with Ms White and Ms Jennings. 97 On 18 March Mr Petre e-mailed Ms White this message: You have seen the mail. I need some responses. Tomorrow is Friday and I am out all day. Then we are into next week. The longer this goes the more feral mike becomes. can you pls email me some directions on the MS side so I can do something on this on monday morning.

Ms White replied, with a copy to Ms Jennings: I understand - really - how difficult this is and I realize how persistent Mike is in wanting/needing closure. I've cc Laura so she can have an update as to where we are. You brought up legal questions regarding Australian law and assessment of our obligations and risks. Legal is currently doing that review. I meet with the attorney tomorrow at 11.15 to get a better understanding of that assessment and their recommendations in moving forward. MS (Laura and myself) are not supportive of accelerating his next vesting and particularly not going to Bill with that request. What I'm still working on is understanding the health care implications and his ability to continue HC on a self pay though our plan (its Cobra in the US). Mike emailed an HR director asking for bonus calcs so he has built a case of what he thinks is fair and equitable so we now need to adequately plan our approach. I want to ensure we are looking at areas to address with Mike so that we are not blindisded. I will have more info after my meeting with Legal. Please call me at work 425 936-5058 or home over the weekend at 425-828-4418 so we can walk through the issues. This is a complicated situation that is requiring the experts to evaluate and make recommendations. We have the RIF package which I know Mike feels is inadequate so the need to evaluate the approach is important.

Mr Petre's response was: I will try to call over the weekend. Either way following you mtg can you pls email me the MS plan for moving fwd. From the JV perspective we would retrnch him with probably 406 months pay (very generous but not worht a fight). This would come into effect in a couple of months (once he finishes the ITG and A&B plan). I can communicate this to him on Monday but then he will just jump on to what the MS plan is so its better that I hold until you have your plan ready. Will your plan be in place by say Mon or Tues our time next week?? It would be good if we could sync up around then so we can close this out, 98 During the balance of March the e-mail exchange between Mr Petre and Ms White continued. On 23 March Mr Petre e-mailed to Ms White a draft e-mail he wanted to send to the applicant which Ms White asked him to delay whilst she sought "a reading from Legal since they are the experts". Mr Petre responded "it would be good if I get something tomorrow so I can send out. From the ninemsn perspective I want to be able to move him out of current resp asap (ie within days)." 99 On 26 March 1998 Mr Petre sent to the applicant an e-mail, which conforms with his draft save for the addition of the "PTY" immediately after the word Microsoft wherever it appeared in the draft. This amendment Mr Petre recalled being suggested by Ms White, although she had no recollection of it. The e-mail read: I want to update you on the process moving forward following our conversation about your future at Ninemsn. As discussed, a result of the strategy review is that there is not an ongoing requirement for the role of HR/F&A director as a combined role in Ninemsn. I have been in discussion with Microsoft, given that you are currently on secondment to Ninemsn from Microsoft PTY. Microsoft PTY is continuing to work diligently on arrangements with respect to your redundancy. For now I want to proceed as follows:

1. It probably makes sense for you and for Ninemsn that you take some further time off until Microsoft PTY and Ninemsn are clear on the redundancy arrangements. Accordingly I suggest you take off the weeks of March 30 and April 3 with the expectation by the end of the week of April 3 we will have worked out the future arrangements. Microsoft PTY needs more time to make sure it can address all the issues and provide a package that is fair and reasonable for both you and Microsoft PTY.

2. I will be assigning the few remaining HR and F&A duties you have continued to perform to Brett Chenoweth, as outlined in the strategy review. This will bring together all of our Business Affairs and Business Operations and create efficiencies for Ninemsn. I will want to move on this in the next couple of days so I would appreciate your preparing some handover mail and information for Brett.

3. The ITG restructure project will need work but it can wait until we finalize your arrangements. For now we should leave as is with the expectation that you will finalize this project as your last piece of work for Ninemsn. It will be key for you to stay in contact with Tom until you return to work and have the opportunity to close out this project.

4. I will announce the movement of your HR and F&A responsibilities and your ITG special project work on email in the next day or so. I will of course ensure that the email projects a very positive view of your contributions and effort to date. 100 One consequence of that amendment to "Microsoft PTY" concerns the concept of job search within the Microsoft context. Job search is a right provided under the Microsoft Severance Plan which permits an employee whose position is to become redundant and to whom this aspect of a policy is extended, to undertake a search for a suitable position within the vacant positions available across Microsoft. Given that the world-wide employment numbers of Microsoft are of the order of 250,000 it is not unreasonable perhaps to infer that this might well produce a favourable result. The provision of six weeks for the purpose also encourages the view that there are likely to be vacancies which will require investigation. If, however, the search is limited to Microsoft Pty the field is drastically reduced and as it eventuated here one only position may have been suitable for the applicant, on his view of it, although not on Mr Newton's. 101 It might be thought to be of little significance given the absence of issue between the parties concerning the true employer of the applicant at that time. However, the effect of the limitation to Microsoft Pty seems to me to have been that it distracted from the role which Microsoft was or should have been playing and concentrated the focus upon the Australian rather than the international environment. It may be, although it is not clear on the evidence, that this amendment to the draft e-mail caused the primary contact for the applicant, for all purposes thereafter, to become Mr Newton, the Director of Human Resources, South Pacific region for the second respondent. Ms White's evidence was that thereafter she had no involvement in the termination or the terms of the time frame. 102 There are two other aspects to the job search actually undertaken which are significant. Mr Newton undertook the job search on behalf of the applicant, which is the way it is done in Microsoft Pty, whereas the Severance Plan provides that the employee affected "will be offered the opportunity to search internally for another job with the Company for a period of six (6) weeks. During this search period, the participant will continue to be employed by the Company, but will not be performing work for the Company (other than searching for another job at the Company)". The second is that the suitability of any vacancies for occupation by the applicant was not a matter about which he was afforded any opportunity to investigate, consider and determine for himself. 103 A countervailing consideration is that the applicant had come to Australia in 1997 with the intention of adopting permanent residency status. However, it is clear from the e-mail exchanges between Mr Petre, Ms White and Ms Jennings that Microsoft was aware that the applicant was prepared to do anything to achieve his July 1999 options. His evidence at trial was that whilst he had achieved a permanent residency status that did not indicate necessarily that he had determined to be an Australian resident forever after but merely indefinitely. These questions received no attention prior to the decision to make the applicant redundant. 104 This issue also needs to be considered in a context where Mr Petre had informed Ms White and Ms Jennings that there was useful work which was available within ninemsn for the applicant to perform up until about August 1998. No explanation has been forthcoming as to why that proposal was not taken up by Microsoft. Had it done so the relevant point at which job search would become an issue is not March, April or May 1998 but August 1998. There can be no question that the approach of Microsoft to this matter deprived the applicant of a reasonable opportunity to undertake both available work and an appropriate form of job search. I consider it no answer to suggest that the applicant sat on his hands during the course of this period without making any suggestions to Microsoft. The duty to act fairly in this context was upon Microsoft and in this respect I consider it to have failed to meet its obligations in that regard. This goes, in my view, to the question of fairness of the circumstances of the performance of the contract and in particular its termination. 105 On 2 April 1998 a letter of demand was served upon Microsoft by Phillips Fox on behalf of the applicant. The letter commences with the following paragraph: We act for Mr Canizales. Our client has been informed of his termination for reason of redundancy at the end of July 1998, without discussion or similar procedural fairness. In that respect we refer to an email to our client of 27 March from Mr Petre, and other documents. He has been offered no compensation arising from that redundancy, and has been prevented from performing meaningful duties for several weeks. 106 The reference to an e-mail of 27 March from Mr Petre is accepted to be a reference to that of 26 March which I have already set out. There is no express reference to a redundancy at the end of July 1998 contained therein although the understanding possibly relates to discussions between Mr Petre and the applicant concerning the extension of his activities upon the ITG project.

107 Between 10 March and 15 May 1998 the applicant made a number of requests of Microsoft staff in relation to their plans for him but received no response. On 13 March he discussed the matter with Mr Petre and asked "should I talk to my lawyers". The applicant and Mr Petre then depart again as to what was said thereafter, the applicant claiming Mr Petre said "leave it to me to work out with Microsoft" and Mr Petre, while recalling that he told the applicant that he thought the worst thing that he could do would be to engage a lawyer at that stage, said his own position was that he was not a party to the dealings between the applicant and Microsoft. 108 On 3 April 1998 Mr Newton received through Ms White a copy of the 26 March 1998 e-mail from Mr Petre to the applicant (see par.99 above). Although the e-mail foretells of events to occur, Mr Newton said this of it: This was the first time I became aware that Mr Petre had terminated Mr Canizales' assignment to ninemsn.

He responded to Ms White and Mr Petre to say, as the applicant was still an employer of Microsoft Pty, he would take over the handling of the process including conducting a job search. He said that he was subsequently told by Mr Petre "I have work at ninemsn for Mike until 15 May, completing some ITG projects and then his secondment is over". On 7 April 1998 he received from Mr Petre an e-mail with the following message: To follow up on my earlier email your role at ninemsn will be completed by May 15. This provides you enough time to complete the ITG project and to hand off the results to both Tom and Steve. Therefore as of the close of business on May 15, 1998 your secondment to ninemsn from Microsoft will be completed. Per your offer letter this email constitutes the one month notification of termination of the secondment.

Given post this date you will be a Microsoft employee with no ties to ninemsn I would ask that any questions you have regarding your employment be directed to Mark Newton at Microsoft Australia.

The applicant responded with an e-mail which included the following: I don't know how you can give me notice when you made gave me notice of my pending redundancy from MS & ninemsn (with Denise & Laura fully involved) over a month ago. As you know that date was for end of July.

My attorney has sent a letter clarifying our request for settlement to Becky Lenaburg and we're filing appropriate court papers late today. Obviously our action is with MS & ninemsn since that's who I've been working for. Accordingly both companies are named.

Mr Newton replied: No I recommend you don't communicate with Mike at all. We will leave it to our lawyers now. 109 Mr Petre took the position that the date of 15 May 1998 referred to in his memo of 26 March was a date selected by Microsoft. His recollection was that it arose in a three-way telephone conversation between himself, Ms White and Mr Newton but he could not remember who gave it. He accepted that the time might have been extended if a generous approach were to be taken. Mr Newton chose the 15 May 1998 as the date of termination because he was told by Mr Petre that he had work for the applicant to do until that date. He took the view that the applicant chose to end his employment. 110 On 14 April 1998 the applicant commenced these proceedings. 111 On 15 April 1998 Mr Newton wrote to the applicant a letter which included the following:

The position is as follows: · you remain, and have for all relevant purposes remained, an employee of Microsoft Pty Limited. · ninemsn Pty Limited has indicated to Microsoft (and yourself) it will soon no longer require a person to perform in the role you have been performing pursuant to the secondment arrangement between Microsoft and ninemsn. Should this occur then the secondment arrangement will conclude. · ninemsn has indicated that it will require you to provide services until 15 May 1998.

Should the ninemsn secondment conclude, as you are a Microsoft employee it will be encessary for us to consider whether there is a position at Microsoft commensurate with your skills and seniority into which you can be redeployed upon your departure from ninemsn.

Should, after appropriate enquires have been made, it be the case that there is no potential for your redeployment with Microsoft then, in consultation with you, Microsoft will provide you with a separation package consistent with its standard policies and procedures. I will contact you shortly to arrange a meeting with you to progress this matter. In the meantime you are required to continue providing services to ninemsn in accordance with the current arrangements. 112 Mr Newton conducted a job search, it appears commencing from 15 April. The process he follows (and followed), which accords with Microsoft Pty practice but contrasts with that of Microsoft, is to ask his recruitment manager to provide a list of positions open in the organisation at a particular level and above. He then examines the skills and abilities needed in those positions and attempts to do a match between those and his knowledge of the individual, in this case the applicant. The positions which provide a reasonably close match are then offered to the person. In this case the job search ceased on 17 April 1998 with a conversation between Mr Newton and the applicant. 113 Subsequently, Mr Newton e-mailed Beth Baumgardner in the US to ask not what positions are available in the Microsoft Corporation but whether such a search should be done. As a result of the answer, no such search was done. 114 That conversation is significant. I set out Mr Newton's version of the conversation in the left hand column and a summary of the applicant's comments upon its in the right column: MR NEWTON'S VERSION APPLICANT'S COMMENTS Mr Canizales: Mark you shouldn't play HR games with me otherwise I'll play them as well Mr Newton: I'm not interested in playing games but just doing what we've done many times before, that is putting into practice some standard procedures regarding a potential redundancy. Does not recall these as his words. Mr Canizales: As far as I'm concerned, Daniel informed me that I was to be made redundant four weeks ago. There was an officer of the company on this mail who didn't refute the redundancy. The applicant agrees he used words to this effect. He disputes the third sentence. Agrees with the fifth and sixth sentences. Mr Newton: As set out in the letter, Mike, what we now have to do is look at doing a job search for you. He does not recall this.

Mr Canizales: Unless there is a really interesting, cool level 13 or 14 job that you really need me for then I'm not interested in taking anything else. Not (recalled? or said). He said that he may have used the word "cool" as meaning comparable jobs, skills and abilities. Mr Newton: I thought you were a Level 12 employee He agrees this was said. Mr Newton: We don't have any current positions available at level 13 or 14 but there are some other positions that may be suitable. Given that you were a BDM [Business Development Manager] and have probably gained some marketing experience now, we have another BDM job and a MORG [Marketing with Organisations] role available - which I could secure for you if you wish. In relation to the first sentence he says that Mr Newton said words to the effect that "its now time to leave the organisation". He denies that the second sentence was utilised. Mr Canizales: I'm not interested in any of those. It's not my desire to stay at Microsoft unless there's something cool. This was denied. Mr Newton: If you're not interested in a job search and you feel it's really time to leave Microsoft, then it sounds like a redundancy situation has occurred, effect 15 May. I'll therefore go ahead and prepare the severance package. Denies the first sentence. Agrees with the second sentence. Mr Canizales: I don't want the standard Microsoft package but rather a package that takes into consideration the two most recent precedents in NSW law. I'm sure that you'll do your homework and find out what these are. He cannot recall using these words. He cannot recall the exact words of the conversation but agrees with the phrase underlined. Mr Newton: So Mike, how's it been at ninemsn, particularly given that you and Daniel used to be so close? Agrees this was said. Mr Canizales; It's been awful. In fact totally fucked with my favourite boss. I lost Daniel's support about six months ago and I knew that I wouldn't be able to remain there if I didn't have his support. Agrees with the first sentence. Disagrees with the second sentence. He used, he believes, words to this effect. The joint venture position before November 1997 was incredibly stressful - an impossible position. Resulted in considerable degradation and stress of the relationship with Daniel (Petre)

115 There is a large measure of conformity in the applicant's memory with the conversation as put forward by Mr Newton which gives the evidence a degree of credibility. The agreed reference to a "cool" position seems to conflict with the idea that the applicant was prepared to do anything until January 1999 in order to achieve his July 1999 options. It seems to me most probable that the applicant, having served a demand upon Microsoft and being under the impression that he had been given some form of redundancy notice to take effect in July, was taking a course which conformed more with what Mr Newton suggests than otherwise. 116 On 1 May 1998 the applicant and Mr Newton had a further conversation which Mr Newton details as follows, the applicant's comments in relation to it recorded alongside as before: MR NEWTON'S VERSION APPLICANT'S COMMENTS Mr Canizales: Where are we up to Mark? The applicant rephrased the first sentence although to the similar effect. Mr Newton: Well because you do not want to be redeployed into any position of a lower grade and there are no suitable positions at a Level 13 or 14 to which you could be redeployed, then I'm putting the finishing touches on your redundancy package. I'm not interested in meeting with your lawyer, as I don't see it's appropriate given that you are still an employee of Pty. But I'd be happy to meet with you to go through the package. The package should be finalised by next week but I'm away in the US and we should plan to meet the week after. He could not recall the second sentence. He agreed with the third sentence and largely agrees with the balance of the conversation.

117 In the course of preparing a redundancy package for the applicant, Mr Newton gave consideration to whether a case should be made for the applicant for greater than six months accelerated vesting of his stock options. It was necessary, if that acceleration was to be granted, for a case to be prepared and put to Bill Gates for approval. It was the responsibility of Beth Baumgardner to make any such case. In pursuing this question Mr Newton appears to have been unaware of the applicant's extreme concern about the vesting of his 1999 options and did not then know what the option position was for the applicant. In any event, Ms. Baumgardner knew of no reason why any such case should be made in the applicant's interest; no case was made. 118 On 13 May 1998 Mr Newton wrote to the applicant confirming redundancy effective on 15 May. The letter offered a redundancy package of $75,000, his Microsoft Achievement Award entitlements, an acceleration of options to 30 November 1998 and required him to execute a deed of release. Mr Newton said in the course of the letter: You and I have discussed the positions that are currently available in MS and have come to the conclusion that there are no openings commensurate with your skills and level.

The applicant disputed in evidence that they had come to such a conclusion. 119 Mr Newton's evidence was that the six months' accelerated vesting offered to him (which of course is a standard provision in the severance plan) would have allowed him to purchase 3,500 Microsoft shares at the price of US$11.94. Had the applicant exercised those options he would have made a profit calculated for Mr Newton as US$321,988 based on a Fair Market Value for the stock of US$92 per share. These latter figures were subject to market price fluctuation. 120 Mr Newton indicated that the applicant has already received 21,000 of the 28,000 share options that were to be granted to him under the Regular Plan and 34,560 of the 138,240 share options that were to be granted to him under the Junior Jumbo Stock Option Plan. 121 Having received no response from the applicant to his letter sent on 13 May, on 7 August 1998 Mr Newton sent to the applicant a cheque for $24,728.94 representing one month's pay in lieu of notice, untaken annual leave and car allowance. The other aspects of the offer were not paid in the absence of a release. The Relevant Authorities 122 It is appropriate to refer to certain prior decisions of the Commission in Court Session and its predecessor, the Industrial Court of New South Wales, concerning share option plans. In O'Donnell v GIO Australia Ltd and Anor (1996) 64 IR 297 Maidment J, dealing with a summons for relief under the predecessor provision of s106 (s275), had cause to consider the operation of a share option plan. The matter concerned an actuary who had been made redundant, with issues concerning reasonable notice and the operation of the share option plan. In relation to the latter Maidment J said: On 23 December 1992 Mr O'Donnell agreed to participate in the Share Option Plan under which, had he remained in employment with GIO, he would, at any time during the two year period to commence on 23 December 1995, be able to purchase up to 73,000 shares at $2.40 per share. The effect of the termination of Mr O'Donnell was that he was afforded an opportunity to purchase the shares at $2.40 during a period of three months commencing 28 November 1994. The value of the shares during that period was such as to render that option valueless. Mr O'Donnell contends that the provisions of the Share Option Plan were unfair in that, through no fault of his own, he was deprived of the option of buying the shares at any time during the two years from 23 December 1995.

The share options were proffered in 1992, prior to the imposition of the 1993 contract with the new termination provisions. Under the terms of the 1991 contract Mr O'Donnell was entitled to the expectation that he would remain the appointed actuary until 1996 unless his contract was terminated on account of gross misconduct or serious default.

Both the prematurity and the contraction of Mr O'Donnell's share option window which resulted from his termination have rendered that asset valueless. The Share Option Plan was designed to induce enhanced effort from GIO Executives and to reward them for that effort. At the very least it comprised an arrangement which was both collateral and related to the contract of employment. The passage of time enables defects in the Share Option Plan to become apparent when it is considered in conjunction with the 1993 contract of employment. Such defects attach both to the contract of employment and to the share Option Plan. The option entitlement was devalued by the termination of Mr O'Donnell's employment pursuant to unfair contractual terms. In my view that devaluation manifests unfairness in both the contract of employment and the Share Option Plan as neither of them protected Mr O'Donnell from it. At the time of termination of the contract of employment the shares were trading at about $2.30, they are now trading at above $3.00. The prematurity and the contraction of the share option window resulted in Mr O'Donnell being denied any benefit from his participation in the Share Option Plan irrespective of the efforts he expended in the performance of his work. It seems to me that the only sensible way to rectify the position is to make an order which opens the share option window from this day until 23 December 1997. 123 On appeal from that decision (GIO Australia Limited and anor v O'Donnell; (1996) 70 IR 1) Hill, Hungerford and Marks JJ said in relation to the plan (at p.23): We are of the opinion that his Honour was correct in finding that the contract of employment and the share option plan were, in the circumstances of this case, unfair.

Then later (at p.24) the Full Bench said: We note that the plan, in providing for a lapse of options after the expiration of a period of three months from the date of cessation of employment, seemingly draws no distinction between various types of cessations and/or the reason/s therefor. A person summarily dismissed for gross and wilful misconduct has exactly the same entitlements as a person whose employment ceases through no fault of his/her own, for example, in cases of retirement for ill health or termination for redundancy reasons; each may exercise the options, assuming a current option exercise period, only for a period of three months after the employment ceases. We think that the 1993 contract and/or the plan, in the circumstances of this case, should, in fairness, have made provision for advancement of the first date for exercise of the options to the date of cessation of employment, that is from 18 January 1996 to 28 November 1994, and then provided some reasonable period for exercise of the options. We reject the appellants' alternative submission that the appropriate remedy for the unfairness is to award to the respondent a monetary amount and not to vary the plan so as to enliven the options. We are not convinced his Honour fell into error and failed properly to exercise his discretion in deciding to remedy the unfairness by varying the plan so as to enable exercise of the options rather than by awarding a sum of money to the respondent. We have, however, reached the conclusion that his Honour did so fall into error in varying the plan to the extent of fixing an options exercise period which is virtually on all fours with the two year period fixed for an executive who continues in employment. We are of the view that a period of 12 months is reasonable, made up of a notional period of nine months' notice and the period of three months after cessation of employment allowed under cl 8 of the plan. This seems to us to be the logical consequence of the fact that the unfairness of the overall employment arrangement (the contract of employment and the plan) lies in the failures to provide therein for reasonable notice of termination of employment and for the reasonable protection of the rights and entitlements of the respondent in relation to his options in the event of termination of his employment under cl 6(c) of the contract. We are therefore of the opinion that it is just that the plan be varied so as to enable the respondent now to exercise the 73,000 options granted to him on 18 January 1993 during the period of 12 months from the date hereof. 124 In Westfield v Helprin a Full Bench of the Commission in Court Session (ibid par.32) dealt with an appeal from a judgment of Marks J in relation to proceedings raised under the unfair contract provisions of the Industrial Relations Act 1991. In relation to a share option scheme aspect of the case the Full Bench said at p.435: The Option Scheme In our view, the option scheme may be regarded as an "arrangement" collateral to the contract of employment or as part of an "arrangement" of which the contract of employment also forms part. On either view, it comes within the purview of s.275. (See Legal & General Assurance Society Ltd v Stock (1993) 49 IR 465 at 480-481). With due respect to his Honour, however, we differ from his view that the option scheme was not itself unfair, harsh and unconscionable within the meaning of the section. His Honour took the view that the primary purpose of the scheme was to provide an incentive to executives to remain with Westfield and that it was in the nature of a windfall. We think that, in coming to this conclusion, his Honour paid insufficient regard to the evidence given by Mr Lowy in cross-examination that there were three purposes of the scheme - first, to reward employees for their past efforts; secondly, to provide them with additional remuneration in the future; and thirdly, to operate as an incentive to remain in Westfield employment. The second of those aspects was emphasised in correspondence sent from time to time by Mr Frank Lowy to Mr Helprin. On termination, Mr Helprin had served for some three-quarters of the time he was required to be employed before the options could be exercised. In those circumstances, we take the view that his Honour erred in concluding that the option scheme was not harsh, unfair or unconscionable when, on termination without warning and otherwise than for cause. Mr Helprin was entitled to nothing under the option scheme, despite it being intended to provide him with additional remuneration both for past performance and during the period of operation of the scheme. This conclusion is reinforced by his Honour's finding that Mr Helprin's performance was not inadequate, but comparable with that of other leasing executives who were not dismissed by Westfield and who therefore were able to retain their valuable rights under the option scheme, and Westfield's concession that Mr Helprin had not been dismissed for cause.

Later the Full Bench said: By way of contrast, in this case the option scheme made no provision for exercise of the options by Mr Helprin in any circumstances of termination prior to the exercise date. In our view, given his Honour's conclusions on the facts that there had been no inadequate performance by Mr Helprin, that he had raised the question of his entitlements under the option scheme with Mr Newton on termination and that, despite that question having been referred to Mr Lowy as Mr Newton promised, the question of the exercise of the discretion in Mr Helprin's case was never referred to the directors for their consideration, it must follow that the option arrangement was unfair in not making provision for Mr Helprin to receive some benefit under the option scheme upon the termination of his employment. On termination, Mr Helprin had been employed for almost three-quarters of the qualifying period. We propose to vary the arrangement to require that, on termination, other than for cause, Mr Helprin should be entitled to exercise 73 per cent of the 40,000 options granted to him under the option scheme, proportionately reflecting his period of employment during the operation of the scheme. That approach is consistent with the approach urged for Mr Helprin at first instance and on appeal. The monetary order we propose to make in this regard will reflect that entitlement, and the opportunity to sell the shares on the same day, allowing only for notional stamp duty on acquisition and brokerage on sale. 125 In Halloran v Westpac Banking Corporation (unreported 11 March 1999 - IRC98/1813) Maidment J considered a share option plan which contained a provision for an ex gratia payment policy where an executive the subject of the plan was terminated in circumstances of redundancy. The ex gratia payment provision was described by Maidment J as follows: During mid 1995 Westpac developed a policy of enabling option holders who were retrenched to be provided with an ex gratia payment, which is calculated as follows. If the market price on the redundancy date exceeds the strike price, the difference is multiplied by the number of options which are deemed to have vested at the date of retrenchment. The strike price is the greater of the par value and the market price on the day preceding the invitation to participate. The number of options which are deemed to have vested at the date of retrenchment is calculated by reference to the proportion of the period during which the employee was employed between the grant of the options and the opening of the exercise window on 1 July 1996. In Mr Halloran's circumstances he had worked for 75.3% of that period and thus 75.3% (18,819) of his 25,000 options were deemed to have vested at the date of retrenchment; the market price was then $5.33 per share and the strike price had been $3.73, a difference of $1.60. The calculation provides $28,592 after brokerage and stamp duty. Through administrative failure Mr Halloran was not offered the $28,592 until June 1997 after he had agitated, in April 1997, for a right to exercise the share options. Westpac has maintained an open offer since then to give Mr Halloran the ex gratia payment subject to his signing a deed of release. Mr Halloran has, thus far, declined to accept. He does not criticise, in these proceedings, the terms of the deed of release. 126 His Honour's conclusions make reference to the litigation in O'Donnell v GIO and Westfield v Helprin in relation to the latter of which this was said: In Westfield Limited v Helprin [1997] 82 IR 411 this Court ( Cahill V P, Hungerford & Schmidt JJ), again in appeal proceedings, considered a share option scheme in circumstances in which a participating employee had been dismissed other than for cause on 17 July, 1992. He was thus unable to exercise the options as the window was to open for three months on 24 October, 1993 but only if he was then in employment with Westfield Limited. At first instance an order was made in favour of Mr Helprin for the payment of an amount calculated as though he had been permitted to exercise 60% of his options on 5 September, 1992 at their then market price, an allowance being made for brokerage and stamp duty on acquisition. The appeal bench reached the view that the amount should be calculated as though he has been permitted to exercise 73% of his options on 17 July, 1992 at their then market price, an allowance being made for brokerage and stamp duty on acquisition. Mr Helprin had been in employment with Westfield for 73% of the period between his accepting the options and the date at which the exercise window was to open. Although the Court, in reaching this conclusion, stated "That approach is consistent with the approach urged for Mr Helprin at first instance and on appeal.", it is my understanding that, at least at first instance, that approach was secondary and in the alternative. The ex gratia payment policy adopted by Westpac has, for all intents and purposes, the same effect as would the decision in Helprin if applied to Mr Halloran's case. It would permit Mr Halloran to gain the benefits of the increased value of his options as measured by the market during the period in which he had contributed to the improved performance of Westpac. I consider that to be a fair outcome. It could readily be held that Westpac should proffer not only the ex gratia payment to Mr Halloran but also interest from the time of his retrenchment until the making of the ex gratia offer. That was conceded by Mr Kite however it was not an issue in these proceedings. 127 I refer also to the judgment of Hungerford J in Adams v Westfield Holdings Ltd [2000] NSWIRComm 112 - IRC98/5679, 30 June 2000 concerning s106 claims for orders relating to notices of termination, bonus payment, redundancy payment and share options. The applicant had been in secure employment in a senior position with National Australia Fund Management in Melbourne. He was approached by Westfield to work for it and in due course appropriate terms were agreed between the parties, one of which was that he would be allocated 30,000 share options. The applicant was unaware that the share options were "hand-cuffed" for a period of five years and would lapse in the event of a redundancy. Three years later the applicant was made redundant as the result of which the directors of the respondent exercised their discretion in favour of the applicant being able to exercise 30 per cent, that is 45,000 of his 150,000 options - the remaining 70 per cent or 105,000 were lost (ibid at par.78). Hungerford J continued: Here, of course, the directors exercised discretion in favour of the applicant being able to exercise 30%, that is 45,000 of his 150,000 options - the remaining 70% or 105,000 were lost. However, in a situation of redundancy where termination, like death or illness/disability, is beyond the employee's power or control calls, in my view, for more favourable treatment than an approach merely equating the entitlement to options in the same proportion as the completed service of the option qualifying period. That approach, adopted even in GIO and Helprin where there was an issue about the adequacy of the performance of the employee concerned, unlike in the present case, well exceeded what Mr Hilmer and Mr Gonski here decided to allow the applicant; Mr Hoog Antink would have allowed the applicant access to twice the options allowed by the directors. I think that result to be unfair and in need of correction.

His Honour later said: I propose to allow the applicant to exercise the remaining 105,000 options on a date selected by him not later than 30 months after the date his employment terminated, that is, by 13 February 2001. 128 I observe that, as I understand the position, the judgment of Hungerford J is under appeal. Nevertheless, having considered the views expressed by his Honour and the result in relation to share options I consider the approach I should take in the present matter is more akin to that adopted in Westfield v Helprin and GIO v O'Donnell. While the present matter was one of redundancy, the applicant has confined his claim, I consider appropriately, to the achievement not of the outstanding balance of unvested options but, as to the Junior Jumbo grant, only the second tranche, and other regular grant vests within the period up to July 1999. 129 Mr Kite referred me to a judgment of Glynn J in Rejder v Nationalpak Pty Ltd, unreported 13 December 1999 - IRC98/5119 where her Honour considered the contract of employment which provided in express terms for a notice period of four weeks. The application before her Honour was seeking to provide for 12 months' notice or payment in lieu thereof. The facts were that the applicant had had the opportunity, and the obvious ability, to have negotiated any changes she wanted to the termination provision at that time. She did not do so. 130 In any event, the respondent had extended the period of notice by some two months in answer to the applicant's concern. After finding that the applicant had, during the extended period of notice, negotiated a new managerial position with another employer at an increased salary Glynn J said: I stress that I find nothing untoward in that action. One of the main purposes for a notice period is to allow an employee the advantage of using continuing employment as a springboard for gaining further employment. In the circumstances, I do not find that the term of notice of four weeks provided for in the applicant's contract was unfair. Conclusions 131 What is prominent in the events between the applicant, Mr Newton and Microsoft at this time is that there was no exchange between them concerning the possibility of a job search within Microsoft in the USA or elsewhere other than Australia, although the question was raised by Ms White (see par.83 hereof). The suggestion in the applicant's case that it was unfair that he was not offered a job search with Microsoft has to be considered in a context where it was not requested. If, however, one accepts that he was an employee of Microsoft as opposed to Microsoft Pty, a question the answer to which the parties have agreed is immaterial, then the US-style job search was an entitlement, conferred by the severance plan, which was clearly not offered to the applicant. His status as a permanent resident of Australia I consider irrelevant to that right. Job search was not dependent upon the applicant seeking it, although as a senior human relations operative for more than 10 years there can be no doubt he knew of his rights in this regard. The fact he did not press for it does not seem to me to weigh against him on the issue of unfairness; the failure was Microsoft's, not his. 132 It seems not to matter whether the offer of work in Australia be viewed from the perspective of the applicant or Microsoft; the fact was the applicant was being offered, as he saw it, an opportunity to work sufficiently long to qualify for the next vest of his Junior Jumbo grant, a matter in the forefront of his mind, or as Microsoft staff responsible for the offer saw it, as either a "huge bonus"; the equivalent of a redundancy payment, or twenty-four months notice, (Ms. White) or as minimum period for which the applicant was to make a commitment (Mr McGinnis). A necessary corollary of that commitment, upon execution, was the achievement of the relevant vesting date of July 1999. Thus, from any perspective the applicant was anticipated to be going to remain for the duration of the 24 months. What then went wrong? Whatever it was, it was not a matter of the fault of the applicant; although from time to time the evidence involved reference to the applicant's difficulties at work, no such claim was advanced against him in these proceedings. Doing the best one can with the evidence it seems to me the developing situation was attributable to a mixture of circumstances which were congruent at about the same time and operated to the detriment of the applicant. They were:

Firstly, the changing needs of the ninemsn business with respect to HR requirements. The applicant had performed the particular work for which Mr McGinnis regarded him as especially fitted, namely the start-up HR function. The requirement was becoming more oriented towards ongoing HR work which did not require a managerial person of the applicant's standing and experience. This led to the appointment of an officer beneath him in the staff structure which, in a sense, increased the pressure on his tenure.

Secondly, the opportunity to continue in business development and financial administration was tenuous, particularly with the advent of a new chief executive.

Thirdly, the deterioration in their relationship probably caused Mr Petre to refer to the applicant in terms which were not designed to increase his stocks with Microsoft staff such as Ms. White and Ms Jennings (see Mr Petre's e-mail of 7 March 1998 in par. 85 hereof).

And, fourthly, there was no love lost between the applicant and Ms. White. This was said by Ms. White to have no bearing on the approach taken to the question of the applicant's remaining with Microsoft or ninemsn, particularly as Mr Petre suggested so that he might qualify for his share option grant. However, in the absence of any other satisfactory basis for understanding the ultimate treatment of the applicant by Microsoft, the turbulent aspects of their history make it impossible for me to accept other that when it came to balancing the perceived interests of Microsoft with those of the applicant at the point of impending termination, the applicant was going to come off second best. 133 There are four aspects of Ms White's evidence of particular relevance in these proceedings, which I list in random order. Firstly, Ms White's role in the attainment by the applicant of his final offer of a 24-month transitional assignment in Australia. Secondly, her role in the termination of the applicant's services. Thirdly, the evidence that the applicant had a volatile relationship with her (and the relevance of this evidence in a wider context where it was suggested by Messrs Murray and, indirectly, Mr Schott, that the applicant had periodic difficulty in his work relationships which tended to have a disruptive effect. Fourthly, on issues of credit which were raised by Mr Rothman, particularly having regard to the inconsistencies largely unexplained between two affidavits of Ms White utilised in the proceedings, the first filed on 24 November 1998 and the second sworn on 20 May 1999. 134 I turn to deal with the issue concerning the applicant's difficulties with other members of management and the effect, if any, which those difficulties might have upon these proceedings. It might be observed that, during the course of the evidence, questions relating to the applicant's relationships with others within Microsoft emerged and were persisted with despite the fact that the applicant had not been terminated as a result of fault. It is conceivable that the conduct of an employee might be so disruptive that whilst termination was not effected for that reason it may have a bearing on the outcome in terms of relief. However, this is not such a case. In the end it is not possible to see the suggestions of dysfunctional relationships having any weight in Microsoft's decision to terminate the applicant's employment save in one respect to which I will shortly come. 135 The four persons who gave evidence in the proceedings concerning the applicant's "behaviour" were Ms White, Mr Murray, Mr Petre and to a very limited extent Mr McGinnis. 136 Mr Murray's evidence was that by the time the applicant was leaving to take up his 1996 post in Australia he could no longer support him. The evidence traversed a series of performance appraisals undertaken by Mr Murray of the applicant which advert to some of his perceived failings, the advice he was given to overcome them, his seeming success in that regard, even if partially, and in the end a performance rating for salary purposes which could only be said on each occasion to be meritorious indeed. 137 Mr Petre's criticisms largely related to the difficulties he was having concerning the applicant's behaviour, as an employee of Microsoft, vis a vis his function within the joint venture. This is the problem of inevitable conflict to which I have earlier referred. To give Mr Petre full credit on this point, he did not in evidence give any indication that the apparent failure of their earlier, friendly relationship affected in any way his approach to the applicant's continued employment, as that was presenting as a problem, in the first half of 1998. 138 Mr McGinnis' evidence in this regard has to be understood as one who was both a superior to, but friendly with, the applicant and an admirer of his skills, abilities and application. Mr McGinnis suggested that he had heard reports to the effect that the applicant was "being a bonehead" but that he put it down to the fact that he and the applicant had been working around the clock in the establishment of the joint venture and that he was probably exhausted. He was unaware of the details of these "allegations". 139 The exception I earlier referred to in the context of these matters having any effect upon the termination of the applicant relates to the evidence surrounding Ms White. Before detailing those matters I would make these observations. I accept that in a large and dynamic work environment such as Microsoft, with many thousands of employees scattered around the world, that persons in management positions will have supporters and detractors within the work environment. This is no more than a normal feature of working life. It is, however, a substantial jump from that position, which might be expected to simply continue, to one where the negative features, or views, overwhelm to cause dismissal. 140 Denise White commenced with Microsoft Corporation in August 1990 as the Human Resources Manager for the Central Region of the USA. She later moved to Seattle and became Senior HR Manager for the western region and in 1992 became the HR Director for the Consumer Division. Subsequently she was appointed Director of Human Resources for the Interactive Media Group and for New Ventures for Microsoft. 141 In the present case the applicant's history with Ms White appears not to have been a happy one. Ms White's evidence was that he had exhibited towards her rude and aggressive behaviour, had threatened her in career terms and had caused her to complain to Mr Murray at one stage that either the applicant or she had to go; that the situation could not continue. There seems never to have been any rapprochement between them and yet, when the applicant's circumstances came under final review in May 1998, it was Ms White who, according to the evidence, determined that he should go. Ms White denied in evidence that she was influenced in any way with such matters; she merely paid regard to the needs of Microsoft in the circumstances then developing. It is tempting to consider the applicant to have been unfairly treated by Microsoft in the sense that it permitted his destiny to be decided in that way. However, reality makes it impossible to think that the decision-maker in the context of employment relationships ought always be on neutral terms or have a neutral or balanced view of the person about whom a decision must be made. One can also envisage that an employee who is viewed negatively might reasonably be selected for example over another employee at point of selection between employees for redundancy. 142 There remains the possibility that to avoid any difficulty in this regard Ms White, within the very substantial Microsoft organisation, might well have resorted to other managerial personnel for assistance to ensure an element of neutrality operated. In this case resort was had to the Human Relations Manager for Microsoft Pty, Mr Newton, who himself was not particularly well disposed towards the applicant. 143 I consider these aspects of the case could be viewed as affecting the fairness of the treatment of the applicant but I choose not to so view them. It seems to me that, despite the forceful cross-examination by Mr Rothman, Ms White and Mr Newton did not emerge as witnesses whose evidence should be rejected on the basis of or affected by credit. At no stage did I find in the course of the evidence any temptation to think that one should not accept each of the witnesses in this case as credit worthy. There were obvious difficulties in the evidence of Ms White, whose affidavit material involved certain inconsistencies. These seem to me to reflect either faulty recollection or an untidy approach to the material such that would cause caution in accepting some evidence where in conflict with other evidence, but not to the degree that Ms White should not be believed on her oath. I take the same view as to the evidence of Mr Newton and the applicant. Mr Kite put a series of submissions against the credit of the applicant, under headings of avoidance and prevarication, answers calculated to be favourable, constructed scenarios and propositions inherently believable. In relation to the allegedly inherently unbelievable propositions, one illustration was an exchange of e-mails between the applicant and Mr McGinnis on 14 March 1998. Mr McGinnis had indicated that he and his wife were planning a trip to Australia probably in late May and anticipated seeing the applicant; he asked how the applicant was going. The reply was in the following terms: Daniel made me redundant last Wednesday (and said everyone (david, etc,.) hate my guts blah blah . . . I said, "fine, you'll have to accelerate my Aug 99 options and he said "oh that's very hard to do" & I said "you should have checked with HR before making me redundant cuz my legal advisors tell me I'm entitled to 18 months TOTAL compensation as a payout so he's now trying to sell/explain this to MS . . . meantime I'm on paid leave awaiting their first offer (then off to court I guess) . . . but looks like I'll get over A$5,000,000 according to 2 different legal teams down here. Since the Spa is a client of Corrs, Bakers & Allens, . . can't use them and Freehills & Gilberts & Mallesons are all out to. . ) so sorry MS.

So check me in a bout a week buddy when I'm done settling and I too will finally be free!!!!

Oh, late May . . . . let me check my calendar . . . . YEP I'm FREE!!!! 144 The applicant's evidence in cross-examination about this e-mail was that his reference to 'being free' was intended to be free and of grief conflict, as I understood it in contrast with employment. 145 Mr McGinnis' response is instructive: wow again - what the heck is happening to daniel??? Sounds very strange, and will be very said if thats how your friendship ends. but then, thats about how it has gone with 99% of the people I knew (wont EVEN call them friends) at msft now that im gone - pretty fucking lame.

But then if you are able to walk with an addit $5mill, that would be some consoliation (but not much consolation on the daniel front I suspect - that sucks).

Hang in, hope it doesnt get too ugly, this too shall pass, and its just a fucking job

btw, now looks like we will arive in oz on may 29, and will be there for 10 days. 146 I have no difficulty accepting the position of the applicant to have been that he was prepared to do what was reasonably necessary from his perspective to achieve his July 1999 options. That position was however affected by his understanding that he was to be made redundant. In that eventuality he anticipated certain rights would arise. It does not seem to me to be an issue going to credit that a willingness to remain might be impeached by an understanding conveyed by Microsoft (as he understood it) that he would be redundant. 147 Accordingly, I find it unnecessary to resort to credit questions to resolve the evidentiary issues in the case. Ultimately, it seems to me that the circumstances surrounding the applicant's termination and the related issue of the share option plan may be found to be unfair in the relevant sense in any event. 148 Finally, in relation to these issues of complaint, I find on the evidence that the applicant adopted an attitude and approach to his work including a willingness to commit himself fully to tasks in hand which was prone to produce a degree of friction with other staff members. He exhibited in the giving of his evidence a sharpness of understanding of relevant circumstances and influences which manifested as intolerance with those thought by him not to be as well equipped. I accept, as the applicant himself acknowledged, that these problems were arising during the course of the years for which Mr Murray undertook performance appraisals. However, those problems are unworthy of any weight whatsoever in respect of his treatment at termination. It was not a case of comparing the applicant with another so that a selection between the two might be made or determining whether he had attributes which would suit existing vacancies thereby avoiding redundancy. Management or personality problems were not in issue at all, as the evidence of Mr Newton makes clear. 149 The applicant's position in ninemsn was unquestionably surplus although alternative duties were able to be afforded to him in two respects neither of which, as it eventuated, he was given any opportunity to perform, since he was absent on paid leave up to the date of his termination. He may have been qualified, through ITG experience, for one vacant position in Australia (see par.83 hereof). However, Mr Newton was unaware of that experience and disregarded him as suitable. It is not, therefore, possible to conclude that even within the context of the operations of ninemsn that there was no work of a suitable kind for the applicant to perform although the availability of any such work would not have been ongoing; or that he was redundant to Microsoft Pty. There is simply no evidence of his being actually redundant in the wider Microsoft context. 150 The termination of the applicant in these circumstances smacks of unfairness. He had accepted a two-year assignment in Australia with the benefits which would attach to that assignment including the achievement of his July 1999 options. His obligation as it was presented to him in the offer of the assignment was to commit to two years' working on secondment to ninemsn. The evidence demonstrates that in approximately the last six months of the applicant's employment things were not progressing well for him in the sense that he required leave to restore himself in December 1997 and he both before that leave and subsequent to it appears to have had a stormy relationship with the staff below him in the hierarchy and directors above him. He was counselled from time to time by Mr Petre in that regard and there is no doubt on the evidence that Mr Petre was, towards the end, viewing the applicant with considerably less favour that he had formerly. However, the cessation of the availability of work within ninemsn on 15 May 1998 was not the fact. The decision to terminate him on that date, although arising in the sequence of events which I have outlined above, operated positively to prevent him continuing to work within ninemsn. It ended his secondment and thereby made him once again the responsibility of Microsoft. The determination to end that secondment is not referable to any poverty in the applicant's relationships within ninemsn. As I have earlier observed, this was not a determination for cause but, at least in theory, a redundancy, which is how it must be approached. 151 Apart from the findings I have made in the course of summarising the matter, I make the following particular findings:

(1) that the effect of the transitional assignment for the applicant was that he would be seconded to work within the joint venture and at ninemsn while work remained available there for him. In the event that work ceased to be available his employment with Microsoft remained on foot

(2) that the nomination or acceptance of the date, 15 May 1998, for termination of the applicant was made by Microsoft and not ninemsn

(3) that Mr Petre was willing to allocate continuing work to the applicant after 15 May 1998 until approximately August 1998

(4) that the applicant performed work in an industry under a contract or arrangement with Microsoft, Microsoft Pty and ninemsn

(5) The Share Option Plan and the Severance Plan were either part of the said contract or arrangement or were a related condition or collateral arrangement thereto. 152 Having regard to the matters with which I have dealt, I consider the following points to exemplify the unfairness which I find has been established in the matter:

(1) The failure of Microsoft to afford the applicant a proper job search. This should have borne upon the date selected for termination and the possibility of his continuing with Microsoft in some other role.

(2) The failure to pay due or any regard for the two-year commitment sought of the applicant to work in the joint venture. The offer of the two-year assignment gave rise to a legitimate expectation that the applicant would achieve the vesting of his July 1999 share options.

(3) The inherent difficulty involved in the Junior Jumbo share option scheme which created the possibility that an employee could be induced by the long-term prospective benefit to suffer a short-term loss, as here, should Microsoft terminate service without regard for the need to "look after" senior staff members.

(4) The lack of consideration given to the applicant's future vesting of options. This manifested itself in a 6-month acceleration of vesting without regard for the personal circumstances of the applicant.

(5) The leaving by Microsoft of the dismissal in the hands of Ms White, who was not disposed well towards the applicant, and who misconceived the Junior Jumbo grant as a "huge bonus" when in fact it was little more of an advance, in the applicant's circumstances, on the regular grant scheme which he was to forego; and the role given to Mr Newton who was also unaware of the applicant's circumstances and entitlements.

(6) The unilateral insertion of a one month's notice provision in the offer of a two-year assignment. Microsoft's conduct in giving virtually no notice was a breach of that contract or arrangement and was in the circumstances unfair and unconscionable. It was "unfair conduct that is inconsistent with the contract" (per Wright J, President, Walton J, V-P, Hungerford J) in Reich v Client Server Professionals of Australia Pty Limited (Administrator Appointed) ; 15 August 2000, IRC5336 of 1999 [2000] NSWIRC 143 at par.27.

(7) The failure of Microsoft to take into account, or alternatively, the rejection by Microsoft of, the proposition by Mr Petre that work could be made reasonably available to the applicant until August 1998.

(8) The failure of Microsoft to take into account alternative means of dealing with the applicant's entitlement. There was no consideration of concepts such as "rest and vest"; no consideration of the granting of eight weeks' paid leave according to the applicant's primary entitlement under the MSAA award and no consideration to the granting to him of a leave period taking into account his outstanding annual leave and long service leave rights or the giving of any actual period of notice. If the period of time beyond August 1998 was absorbed by the MSAA award and leave entitlements the applicant would have thereby come within two months of the qualification date for his options to vest upon severance, that date being 1 February 1999. Bearing in mind that the letter of offer of the transitional assignment provided, although as I have found unfairly, for one month's notice without any right to make a payment in lieu of notice, then a period of reasonable notice for a person in the position of the applicant would readily have exceeded, on my assessment, the remaining period of approximately two months. By this process of reasoning, as Mr Rothman submitted, the applicant's qualification for his July 1999 share options may be seen to have been effectively denied by the positive act of Microsoft.

(9) The precipitate termination of the respondent without any explanation therefore being forthcoming from Microsoft creates the position where, as Mr Rothman submitted, an inference may reasonably be drawn that the conduct of Microsoft was designed to ensure that the applicant did not achieve his July 1999 options. I am prepared to draw that inference.

(10) The imposition of a deed of release as a condition of the receipt of the severance plan payment which, with its six months automatic acceleration of vesting, would confer a benefit with respect to the July 1998 vesting of one-eighth of the 1994 regular grant, operated unfairly in the circumstances of this case because it would have denied the applicant access to the substantial remedies re share options which he seeks in these proceedings. 153 I am unable to find on the facts of the matter any unfairness for which ninemsn should be regarded as responsible. The main player in that interest was of course Mr Petre; his evidence overall shows that he was truly a conduit between Microsoft and the applicant in the matter of the applicant's employment. His reluctance to manufacture a position in ninemsn for the applicant can be viewed only as proper. Similarly, I consider the evidence establishes that he made reasonable (and perhaps more than reasonable) attempts to achieve with Microsoft a result in the applicant's favour. The applicant was an employee of Microsoft on secondment to ninemsn only so long as there remained useful work. Once that work ceased to be available the secondment was not ninemsn's problem, but Microsoft's. 154 The applicant does not seek orders against ninemsn with respect to Microsoft's severance plan or stock option plan. The orders sought against ninemsn concern payment of wages in respect of the period after 15 May 1998 until 31 July 1999, although recognising that there is a distinction between the period 15 May to 31 August 1998 and thereafter until 31 July 1999. The claim for payment up to 31 July 1999 depends on the acceptance of the applicant's case that he should have been afforded 12 months' notice of termination. The claim with respect to the period to August 1998 relates to the available work which may have been performed by the applicant within ninemsn had he been permitted to remain. 155 I accept Mr Trew's submission that I should not find in the circumstances of the case any culpability in ninemsn in respect of any element of the claim. If, as I have found, the transitional assignment was dependent upon the subsistence of work within ninemsn, with the secondment to cease with the redundancy of the applicant's position within ninemsn, and providing at least that ninemsn acted reasonably in the provision of work there cannot be any blame attaching on the basis of a disappearance of work. No point was made in the applicant's case critical of the changed organisational structure within ninemsn such as to suggest that it deprived the applicant, unfairly in some way, of work. In my opinion, it must follow that ninemsn bears no culpability and, consequently, no liability for any order for the payment of salary that might relate to the period subsequent to the date nominated by Microsoft for the applicant's termination. 156 The facts in the present matter are of course quite different from those in Rejder v Nationalpak (referred in paragraphs 129-130 above). While the contract here provided for one month's notice, the advent of that provision seems hardly to have been the result of a considered approach by Microsoft but rather Mr Newton's automatic or reflex action having regard to terms within Microsoft Pty. Secondly, the provision of one month's notice operated inconsistently with the whole notion of the transitional assignment in respect of which Microsoft expected the applicant to commit for two years. The fact that the applicant did not make any attempt to eliminate the provision creates partial analogy with Rejder v Nationalpak. Here, however, the notice was not extended; it was foreshortened from one month to one day. I conclude that the circumstances of this case are very much different from those which caused Glynn J to decline to find unfairness in that particular case. I will however deal with the question of mitigation separately. 157 How then should the losses by the applicant be measured? On one view he was given further employment beyond the date (January, 1998) from which he had earlier anticipated the possibility of becoming redundant. However, in my view nothing should turn on the fact that he was, in April 1997, foreseeing the possibility of redundancy, even then without the benefit of the July 1999 options. That anticipation was subsumed by the offer of the 24-month transitional assignment, and, once that commitment was given effect to, the proper point at which relevant unfairness was or is to be measured must be related to the period thereafter. 158 The applicant's case sought to compare his treatment with the more favourable treatment he alleged Microsoft afforded other transitional employees who were made redundant or terminated within Australia. Mr Kite's analysis distinguished a number as being not fairly comparable in status and as to others argued that no such employee received benefits equal to those sought now by the applicant. 159 I consider the comparison with others does not provide a suitable approach either way in this case. What other employees may have received, or negotiated, in their own circumstances will not establish some standard of fairness of any assistance in the absence of a complete understanding of the relevant facts of each case. The fairness of the applicant's position is to be judged objectively in the light of his circumstances. In the absence of some demonstrably better treatment of others, which is the case here, the comparisons have no real weight. 160 The question then arises whether any, and if so, what, order should be made. I am satisfied that the findings of relevant unfairness which I have made justify an order being made in favour of the applicant. It is to be remembered that due to his refusal to execute a deed of release the applicant has received only his statutory entitlements and the money equivalent of the Microsoft Achievement Award (eight weeks' pay). The release would have given him a payment in respect of the severance plan and a consequential six months' acceleration of share options, giving him those which were to vest in July 1998, being one-eighth of the 1994 regular grant. A final one-eighth of the 1994 grant was due to vest in January 1999 together with four-twelfths of the 1995 Junior Jumbo grant in July 1999. 161 Having regard to my expressed views concerning the unfairness of the requirement for a deed of release, I consider that the applicant is entitled to an order with respect to payments due under the severance plan. 162 Mr Rothman submitted that the issue concerning the share options can be remedied by a number of means one of which would be to order that the share options vest forthwith. Another means would be to provide for payment as though service was given up to 31 July 1999 so that the period would be treated as service and the vest would result therefrom. I consider that the applicant has not established a case (other than the payment of the severance payment and a dealing with the options) for the payment of money beyond August 1998. There are two reasons for that view. The first is that the applicant did not press upon Microsoft the rights which he relies upon Microsoft having denied him in these proceedings. For example, he did not urge upon Microsoft the view that he was entitled to a six weeks job search period on an international basis. His reliance upon the fact that Microsoft withdrew from him his Microsoft computer and thereby his access to job availability their system appears to me to be somewhat facile in that context. I do not accept that had he retained his computer that fact would have caused him to engage in a process which he claims he was otherwise denied. The second factor which, coupled with the first, suggests to me that the applicant was not actually seeking employment thereafter but was willing to rely and act upon Microsoft's failure was the fact that he did not seek other employment for approximately eight months. In January 1999 he placed himself in the hands of an employment agency. However, in the interim and prior to leaving Microsoft he, had been engaged in the establishment of a major business, Spa Chakra, which clearly he envisaged providing for his long term future. Rather than mitigating his loss, as I understand the evidence concerning the then position of his developing business, he was actually compounding his loss after termination, in the hope of long term gain. 163 Accordingly, as a matter of discretion I do not consider any consequential order for the payment of money should take into account any period of notice. Were one considering the matter solely at the point of termination my assessment with respect to the applicant would be that a notice period of a minimum of six months would be reasonable. However, for the reasons I have given I do not intend to make any order in that regard. 164 There is, in my opinion, ample justification in this case for an order which achieves for the applicant such share options as would have accrued to him by way of vesting within the period originally intended to operate as the two-year transitional assignment. That would take into account all vestings up to July 1999. I intend to make an order to achieve that result. 165 As to the form of relief Microsoft submitted that the options schemes and plans are governed by the law of Seattle in the United States and that the Commission in Court Session is without power to vary those plans because they are governed by the law of a foreign state: Gosper v Sawyer (1985) 160 CLR 548 at 560-561. It follows from that submission that, if it be correct, the form of relief available would be confined to the making of a money order which was reasonably related to an order of variation. 166 Mr Rothman's reply was that Gosper v Sawyer is to be distinguished on the basis that it was concerned with a trust formed in Victoria for the benefit of Shell which was situated in the State of Victoria and that the issue concerned the Service, Execution and Process Act 1992. Here, the issue is not one of a trust but a question of a plan established by Microsoft as a policy for it and its subsidiaries. It is a term of the arrangement or alternatively a collateral arrangement to the contract of employment whereby work is performed. These submissions were advanced in relation to both the severance plan and options plan. I find these submissions persuasive. 167 Mr Rothman submitted that if the Commission were minded to order the payment of money rather than a grant of the options there would be a need to hear the parties separately in relation to that matter having regard to varying taxation imposts. As to the dollar figure advanced to the Commission by Mr Kite referrable to a valuation of the shares as at May 15 1998, Mr Rothman submitted that the last date from which they would have been exercisable had they vested on 15 May 1998 would have been 15 August 1998. 168 The final submission for the applicant was that the preferred means of dealing with the issue is to vary the arrangement so as to provide the options that would otherwise have been able to be vested up until and including 31 July 1999, ought be available and able to be exercised within three months of the date of judgment. I also consider this course to be preferable. The options do not of themselves confer a direct money benefit, but an opportunity to follow a process with a prospect, however considerable, of gaining a benefit. I do not consider it appropriate to make an order for the payment of money in this respect, if a course may be followed which allows the applicant to take the necessary steps and decisions thereon. That course is available in my view and I will order accordingly. 169 The applicant is entitled to his costs as against Microsoft and Microsoft Pty. Having regard to my conclusions concerning ninemsn, that respondent should have an order for its costs from the applicant. 170 The substantive money component of the orders I intend to make relates to the severance pay which fell due on termination of the applicant on 15 May 1998. These proceedings were commenced on 14 April 1998. I consider the applicant should have an order for interest on the value of the severance payment, but only from 15 May 1998. (See generally Abboud v The State of New South Wales (Department of School Education) (No 2) [2000] NSWIRComm 110 revised - 4/7/00 per Schmidt J (dissenting but not on this point) at par.44 et seq). 171 The declarations and orders I make will reflect in part the orders finally submitted as appropriate by the applicant. I make the following declarations:

(1) That the contract or arrangement between the applicant and the first, second and third respondent whereby the applicant worked for the first and/or second respondent on secondment to the third respondent, was unfair, harsh or unconscionable.

(2) The arrangement or collateral arrangement between the applicant and the first and/or second respondent being the option plans and severance plans of the first and/or second respondent were, in the circumstances, unfair. 172 I would make orders to the following effect:

(1) That the option plans be varied so as to provide that share options granted to the applicant in 1994 and 1995 and which were, according to the terms of their grant to vest between 15 May 1998 and 31 July 1999 inclusive vest forthwith and be capable of being exercised by the applicant within ninety (90) days of the vesting.

(2) That the severance plans be varied to provide for payment of severance to the applicant in accordance with the formula there set out being four (4) weeks' salary plus two weeks' (2) salary for every six (6) months' service to a maximum of twenty-six (26) weeks' of base salary, without need for a release.

(3) That the first and second respondents be liable to pay on a joint and several basis interest on the moneys payable under order 2 at the Supreme Court rate from 15 May 1998.

(4) The applicant should have an order for his costs against the first and second respondents as agreed or as assessed.

(5) The applicant should pay the costs of the third respondent as agreed or as assessed. 173 I direct the parties to confer on the form of order and to file an agreed form within seven days. In the absence of agreement I will hear the parties on the matter of form. Should the parties together prefer a money order taking into account all elements, I would be willing to accede thereto.

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