78 It is pertinent to deal at this point, with the submission put for the respondents, that the Court would take account, in the exercise of its discretion, the amount of the claim advanced. That is a submission which I reject. It suggests that there is some upper limit beyond which the Court would not grant relief to an applicant who had otherwise made out a case. Such an approach is inconsistent with the statutory framework, no such limit having been imposed by the Parliament. It also suggests that an applicant disadvantaged to a greater extent, in monetary terms, is less entitled to relief under the section if a case is made out, than an applicant who had in monetary terms suffered a lesser unfairness. The proposition has to be so stated, for it to be appreciated that it must be rejected. If it were correct, it would seemingly encourage wrongdoing.
79 Such an approach would also be quite contrary to the longstanding approach of the Court and its predecessors to s106 and its predecessors, including s88F of the Industrial Arbitration Act 1940. In Agius v Arrow Freightways Pty Ltd [1965] AR (NSW) 77 at 88, it was observed by Beattie J that this latter provision was 'plainly designed to protect citizens from unfair and harsh dealing'. If such dealing is established, the Court must craft relief which is appropriate to the unfairness found, without adopting any arbitrary limitations. In my view, to adopt any other approach might well amount to a constructive refusal to exercise jurisdiction.
80 I turn then to Ms Brown's relationship with Mr Green. Having regard to the evidence as to the circumstances in which the parties' relationship with each other came to an end and the way in which the respondents approached their case, it is necessary to deal with this matter at the outset.
81 The evidence led for the respondents suggested that the termination of both the employment and the partnership grew from Mr Green's disapproval of Ms Brown's relationship with Mr Avidan. This position was indeed maintained, even in the submissions advanced for the respondents at the conclusion of the hearing.
82 It is convenient to deal with the question of the truthfulness of the evidence given by Mr Green and by Ms Drewe at this point. Ms Brown was undoubtedly an employee with both strengths and weaknesses, who enjoyed success at Image, partly as the result of the work of other employees, with whom she worked in a team. She had no hesitation in agreeing with such propositions. Mr Green's evidence in chief, however, was not designed merely to put Ms Brown's evidence as to her own work into its correct perspective, but rather designed to downplay Ms Brown's role at Image and to throw her work performance into a most unflattering light.
83 Two examples suffice to demonstrate the point. On the one hand, Mr Green's evidence was that Ms Brown's duties required her to perform work away from Image's premises, for various reasons, yet on the other he said that she was 'energetic, but she did spend a lot of her time away from Image's premises (whether to travel overseas, to visit clients or to attend publicity functions)' . While the latter evidence was couched in somewhat critical terms, it became obvious from other evidence that her absences from Image's premises on such occasions was in order to attend to her many duties for Image and the partnership.
84 More potentially damaging was Mr Green's evidence that Ms Brown was not a fashion designer, only contributing to the 'design process' at Image and assisting other fashion designers Image employed. This evidence was plainly false and not adhered to in cross examination. It was also completely inconsistent with the evidence of other witnesses, such as Ms Brown, Ms Sernack, Ms Wight, Ms Davis, Ms Cimenbicer and I reject it.
85 Other witnesses disagreed with various aspects of the evidence given in chief by Mr Green, who in many respects did not adhere to his evidence in cross examination. Furthermore, the evidence which Mr Green gave in cross examination on some matters was given in such a way as to provide a proper basis for a concern that there was a real need for caution to be exercised as to his truthfulness. There was also entirely contradictory evidence given by Mr Green on the one hand and by witnesses such as Ms Cimenbicer and Mr Patrick on the other, on a number of important matters. Having seen and heard this evidence being given and having given these matters careful consideration, I have concluded that Mr Green's evidence was not reliable and in so far as it conflicted with that of any other witness, I am unable to accept his evidence in preference to theirs. In particular, I prefer the evidence of Ms Brown, Mr Patrick and Ms Cimenbicer, over that of Mr Green, in the case of conflict.
86 The evidence given by Ms Drewe suffered from similar deficiencies. Her evidence was also inconsistent with the view that Ms Brown was a successful designer and a valued employee of Image. Her evidence in chief was for example, that Ms Brown 'was disruptive and often offensive to other staff', 'often late for work or absent from the office for many hours during the day, such that other employees' work was held up while still waiting for her return or arrival', 'lacked a basic understanding of accounts, costing, budgeting, and business operations', 'could not draw and lacked a technical knowledge of fabrics, such that she was not able to design garments without assistance'; 'relied very heavily on Image's production and design staff to assess whether these ideas were practical' and 'was very lax in completing required paperwork.'
87 I reject this evidence as representing either a fair or accurate picture of Ms Brown. It was inconsistent with Ms Brown's evidence and that of other applicant witnesses such as Ms Sernack, Ms Harricks, Ms Cimenbicer and Ms Wight. These witnesses gave evidence, for example, as to Ms Brown's hard work and long hours at night and on weekends, performing the design work it was denied that she had responsibility for and interacting with staff in a way contrary to Ms Drewe's evidence. In many respects Ms Drewe's evidence was also inconsistent with Mr Green's evidence, particularly that given in cross examination and with the history of Ms Brown's continued promotion and reward for good performance by Image during her employment and the success Image enjoyed while she was employed, especially in relation to the Howard Showers label. Ms Drewe also resiled from some of her evidence in cross examination. Her evidence was plainly designed to damage Ms Brown and like the evidence of Mr Green, must also be approached with caution. I have concluded that where her evidence conflicts with that of other witnesses, it cannot be preferred.
88 Mr Green's evidence was that Discovery is a major manufacturer, wholesaler and retailer of women's clothing throughout Australia and New Zealand and with more extensive operations than those of Image. Mr Green said 'In particular, Discovery is a competitor of Image in the market place and the Charlie Brown label is a competitor of Howard Showers.' Ms Drewe gave evidence to similar effect. I reject that evidence.
89 In this respect, I accept the evidence of witnesses such as Ms Brown, Ms Sernack, Ms Cimenbicer, Mr Patrick, Ms Wight and Ms Demetriou. Ms Sernack's evidence was particularly compelling, given the consultancy work which she had been engaged to provide for Image and her undeniable expertise in this field. I particularly reject Mr Green's disparagement of Ms Sernack's evidence.
90 Ms Sernack's evidence was that some manufacturers in the clothing industry, in her experience, regard all other manufacturers as competitors, even when in reality there was no competition between them. The evidence in this case demonstrated that Mr Green and Image fell into such a category. Ms Brown took up employment with Discovery in October 1994, after her dismissal by Image in July and the dissolution of the partnership in September. I find that prior to the later launch of the Charlie Brown label by Discovery, Image and Discovery, while both operating in the women's wear market, were not in competition with each other in that marketplace, given the labels which they were then producing. This was the case even when Discovery launched the Lili label in early 1994. The labels were directed at different market segments, reflected not only in the age and size of the customers at which the respective labels were directed, but also in the design and quality of the garments, their pricing, their marketing and promotion, the retailers who sold the labels and how such retailers sold them in their stores
91 I also note that Ms Sernack even doubted the real extent of any competition between the Howard Showers and Charlie Brown labels, given the direction taken by Howard Showers after Ms Brown's departure and the way in which the Charlie Brown label developed. This view was consistent with the fact that Image retained Mr Patrick's services as a publicist for Howard Showers until 1997, long after the Charlie Brown label was launched by Discovery.
92 There was no evidence of any other relevant competition between these companies, or between Mr Green and Mr Avidan, prior to the launch of the Charlie Brown label. The highest at which any prior competition could be put, was that given that Image and Discovery were both producing women's wear labels, real potential for competition existed, which had the prospect of becoming a reality when the Charlie Brown label was launched by Discovery.
93 Mr Green's evidence was that Ms Brown told him in early 1994 that she had started dating Mr Avidan. He warned her about Mr Avidan's reputation and told her that 'I'd prefer it if you didn't go out with him at all. But if you are going to, please don't forget that you are an employee of Image and that you have obligations to the Partnership.'
94 Around that time Mr Green was informed, by Mr Patrick, that Discovery was planning to enter 'the market for younger women's clothes, creating a label specifically for the younger market.' Mr Green's evidence was that he was concerned about this and discussed his concern with Ms Brown, as being a threat to Image. Mr Green said he was also concerned because he believed that Ms Brown had referred Mr Patrick to a competitor.
95 Ms Brown's evidence was that she had also informed Mr Green of the launch of the Lili label and that he was unconcerned. This was consistent with the market segment at which the Lili label was directed. Mr Patrick's evidence was that he informed Mr Green that the new discovery label would not compete with Howard Showers and that Mr Green accepted this, thanking Mr Patrick for informing him. Mr Green thereafter continued to retain Mr Patrick, even after Ms Brown's dismissal and the launch of the Charlie Brown label by Discovery. I accept the evidence of Ms Brown and Mr Patrick as to these matters. Mr Green's conduct was consistent with him having no real concern about Mr Patrick promoting Lili, because Lili and the other Discovery labels did not compete in the market with any Image label. That he was content for Mr Patrick to promote both the Howard Showers and Charlie Brown labels for a number of years, also puts the competition between those labels into its real light. Mr Green's treatment of Mr Patrick over his involvement with Discovery stood in marked contrast to his treatment of Ms Brown.
96 Mr Green's evidence was that between February and June 1994 he had a number of conversations with Ms Brown about his concern as to her relationship with Mr Avidan, telling her that 'Under no circumstances are you to travel overseas with him' and 'He will observe your ability to buy samples for the Howard Showers range and will borrow your skills for his own label.' Mr Green said Ms Brown dismissed these fears with the comment, 'He only makes polyester frocks.' Ms Brown's evidence was that Mr Green did not object to her meeting Mr Avidan overseas until June, during the consultancy period, despite her having earlier told him that she had seen Mr Avidan overseas. Again, I prefer Ms Brown's evidence about these matters.
97 By March, Mr Green was discussing his concerns with Ms Drewe. His evidence was that those concerns were twofold. The first was for Ms Brown's personal well-being and the second, a potential conflict of interest. Ms Drewe's evidence was that Mr Green raised his concerns with her, stating that he did not trust Mr Avidan. She also had a number of discussions with Ms Brown about her relationship with Mr Avidan. Ms Brown made a number of comments to her as to what was occurring with the Lili label. That such discussions were occurring is consistent with the evidence that Ms Brown and Mr Avidan made no secret of their relationship.
98 In April, Ms Drewe raised the possibility with Mr Green that Ms Brown was assisting Mr Avidan with the Lili label. In cross examination, Ms Drewe accepted that her knowledge of Ms Brown's relationship with Mr Avidan derived from that Ms Brown had told her. Mr Green dismissed this concern, taking the view that Ms Brown 'would not actively assist Mr Avidan in a manner contrary to the interests of Image or the Partnership'. On the evidence, there was a sound basis for Mr Green to hold that view, given Ms Brown's interest in the success of Image, Howard Showers and the partnership. It was a view consistent with Ms Brown's conduct and the evidence of other witnesses as to that conduct.
99 Ms Brown's evidence was that her relationship with the respondents began deteriorating about this time, with a refusal by Image to replace her personal assistant, who had resigned. At this time, Mr Green and Ms Drewe often observed Ms Brown travelling home from work with Mr Avidan or he waiting to collect her in the Image carpark. In May or June, Mr Green raised with Ms Drewe the possibility that Mr Avidan was only interested in Ms Brown 'so that he can develop brands for his own business.'
100 Logically, given that Mr Avidan and Discovery, like Ms Brown, Mr Green and Image, were involved in the women's wear clothing industry, a concern that another manufacturer might be interested in luring Ms Brown away from her employment with Image would be understandable, given her success in that industry for Image. The evidence as to the way in which Mr Green, Ms Drewe and Image treated Ms Brown however, together with how in these proceedings they sought to describe Ms Brown's performance at Image and her contribution to its success, suggested that in reality they had no concern about the possibility that Ms Brown would leave Image and no hesitation in dismissing her summarily after she had produced the second Howard Showers summer range in July 1994.
101 On the other hand, the evidence demonstrated that for her part, Ms Brown had no difficulty in differentiating between her personal and business interests. She was very proud of the success of Image and particularly Howard Showers, was conscious of the position she had worked to achieve at Image and in the partnership and well knew that her income reflected the profits of Image and of the partnership, the business of which was expanding. She had an obvious basis for being concerned to ensure that their success continued and worked hard to achieve that end.
102 Ms Brown also had a desire to have Image launch a Charlie Brown label when market conditions were right for that move. The launch of a Charlie Brown label had already been the subject of discussion at Image in 1994, which had then retained Ms Sernack to advise it. The idea had been rejected by Mr Green. I find that Ms Brown's ambition in that respect was not to launch such a label independent of Image, nor was she at that stage interested in launching her own business. Ms Brown's continuing pursuit of an equity position with Image, albeit to Mr Green's annoyance, plainly demonstrated her continuing interest and desire to continue her relationship with Image.
103 That Ms Brown was unaware of the real extent and nature of Mr Green's concern about her relationship with Mr Avidan or the risk which it was posing to her continued employment was evident. On the evidence, I am satisfied that Mr Green did not discuss this concern with her in any real way. He gave no explanation for this failure.
104 It follows that in so far as the respondents' case was advanced on a basis that Ms Brown had acted contrary to her obligations to Image and the partnership in pursing a personal relationship with Mr Avidan, it must be rejected. It cannot be inferred from the mere existence of such a relationship that the participants will act in such a way towards their partner as to advantage the partner and disadvantage their employer or business partner. Indeed, there was evidence of other designers pursuing personal relationships in this industry while employed by different clothing manufacturers, some in competition with each other. There is nothing remarkable about such relationships developing in this or other industries.
105 Nor is there anything remarkable in such people discussing the industry in which they are involved, their personal circumstances and problems or in helping each other, as Ms Brown and Mr Avidan admitted they had done. Nothing in their evidence, or indeed in the evidence advanced by the respondents, provided a proper evidentiary basis for the conclusion that prior to her dismissal Ms Brown was advancing the interests of Mr Avidan and Discovery to the detriment of the respondents or contrary to her obligations to Image and the partnership.
106 What was remarkable, however, was the attitude of Mr Green and Ms Drewe, who plainly acted on the basis of an assumption that Ms Brown must have been acting contrary to the interests, not only of Image and the partnership, but her own financial interests, as the result of her relationship with Mr Avidan. This assumption was made when they had no plausible basis for forming such a view and in circumstances where Ms Brown's prior conduct and continued pursuit of her interests with Image and the partnership, were inconsistent with her acting in such a way. It was an assumption which they made and acted on at a time when the sales of Howard Showers had increased dramatically from $7million in 1992 to $14million by June 1994 and the retail shops the partnership had established were proving successful.
107 I turn then to Ms Brown's pursuit of an equity position. That corporate employers take steps to secure the loyalty of senior and valued employees by providing them with a share in the equity of the business concerned is not an uncommon feature of employment in Australia. Such schemes provide an employee with an obvious added incentive in working towards the continued success of that employer. Indeed, there are plenty of cases brought to this Court which concern the fairness of such arrangements; share and share option schemes are but two examples. That Ms Brown was seeking such an interest in Image or Howard Showers is not a matter which reflects adversely on her at all.
108 That Mr Green and Image were entitled to rebut Ms Brown's desires for equity, is also undoubted and does not, of itself, reflect adversely upon the fairness of the contracts and arrangement here in question. Nevertheless, the conduct of the respondents towards the applicants in relation to this aspect of their relationship cannot be ignored in considering the case which was brought.
109 It is relevant that Mr Green did not reject Ms Brown's desire for an equity position out of hand. When earlier raised, at a time when Ms Brown was considering returning to the United States, following the breakdown of her marriage, Mr Green gave Ms Brown a commission on Image's profits, rather than an equity interest. At that time he was anxious to retain her services. Ms Brown later came to be concerned as to how the Image accounts were being prepared, when increased turnover was not being reflected in commission payments on profits. She was, for instance, told that there had been no profits in the year ending June 1993, despite hugely increasing sales. That position was apparently reversed in the 1994 year, an alteration not explored in these proceedings. Nevertheless, it is relevant that prior to the proceedings Image had refused to give Ms Brown access to Image's accounting records to satisfy herself as to her commission entitlements.
110 I accept Ms Brown's evidence that she pursued her interest in equity, having seen other senior employees depart from Image's employment and having become concerned about their treatment and her own job security, in the context of her own hard work for Image and her personal position, as a single mother raising a young child. I also accept that her desire for equity was in part motivated by her difficult relationship with Ms Drewe, especially over the last period of her employment. Ms Brown's persistence led to two developments.
111 The first was Mr Green's agreement to enter the partnership with Ms Brown to operate Howard Showers retail stores, something to which he was initially opposed when first raised, given his past experiences with unsuccessful retailing ventures. Nevertheless, the stores were a success, with Ms Brown undoubtedly working hard in that business, in addition to her other continuing duties with Image and Mr Green making his own contributions, much of those through the provision of various bookkeeping and management input from other Image staff.
112 The second development was an invitation in 1994 that Ms Brown put a written proposal to Mr Green as to an equity participation in Howard Showers. At this stage, Mr Green had already become concerned that Ms Brown had sought the assistance of an accountant in her negotiations with him over salary in her employment by Image. He viewed this as an interference in his relationship with Ms Brown, consistent with the earlier instructions he had given to his solicitor, Mr Frumar, as to the preparation of the partnership agreement, which he wanted kept simple, not dealing with various matters Mr Frumar raised, because he did not want Ms Brown seeking independent advice. As I have earlier noted Mr Green was by then also concerned about Ms Brown's relationship with Mr Avidan.
113 In cross examination Mr Green said that he invited Ms Brown to give him this proposal, only to 'fob her off'. He had not expected her to obtain assistance to prepare it and was surprised when she did. He preferred the simple type of document Mr Frumar had prepared for the partnership and regarded Ms Brown's proposal as an unreasonable and over the top demand. When Mr Green was presented with the proposal on which Ms Brown had obviously received further advice, he initially threw the proposal back at her, and then told her he had better read it 'since you paid to have it prepared.' Mr Green explained that he threw the document because he was disdainful of the proposal, regarded it as stupid and wanted to insult it.
114 Ms Brown had engaged a solicitor, Mr Roth, to prepare the document. He had been introduced to her by Mr Avidan as someone whose advice Ms Brown could afford. Mr Roth did not act for Discovery. Mr Avidan had also told her something of how Discovery had been structured and had accompanied Ms Brown to a meeting with Mr Roth, where her desire for equity in Image was discussed. Ms Brown's evidence was that the proposal was one which she expected to explore with Mr Green in discussion. She was prepared to negotiate, but that was impossible, given Mr Green's reaction to it.
115 The next day when they met, Mr Green told Ms Brown that 'You can have Howard Showers for $4 million because it is turning over $2.5million in profits. I'll sign a piece of paper here and now if you want to take over the business in two years and pay me $4million'. Ms Brown's reaction was 'This is the last straw, I'm out of here'.
116 It cannot be overlooked that these events took place at a time when Ms Brown had been told that Image had made a significant loss the preceding year, which she had had difficulty accepting given Image's apparent success and when she was being refused access to the company's accounts.
117 The reasons for Mr Green's refusal to entertain Ms Brown's proposal included that he would have to restructure Image to give Ms Brown the type of interest she sought in Howard Showers; that he was not going to give an employee such an interest in a business he had developed over many years and that the proposal, in any event, made unreasonable demands as to Howard Showers' future earnings, which he would have to guarantee.
118 It may be that properly analysed, Ms Brown's proposal was not seeking any such guarantees, but was premised on anticipated growth in turnover of the Howard Showers label. It is, however, unnecessary to explore further its proper construction, given Mr Green's peremptory refusal to discuss what had been put and what then developed as a result.
119 While the language Ms Brown used on the day she said 'I'm out of here', did not necessarily reflect an intention to leave her employment with Image, the parties all acted on that basis. Shortly after their meeting, Ms Drewe instructed Ms Wolfenstein that Ms Brown had left Image's employ and directed her to deposit Ms Brown's outstanding holiday pay into her bank account. The sum of $7,206.23 was accordingly banked, reflecting Image's records as to her outstanding annual leave entitlements. Ms Brown was later asked to repay this when her employment resumed and did so.
120 Ms Brown apologised to Mr Green for her conduct the next day and sought to re-establish her relationship with him. Ms Brown proposed new terms, a consultancy confined to the Howard Showers label on a part-time basis. I accept that she had prepared this proposal with Mr Patrick's assistance and that it reflected a desire on her part to continue a relationship with Image, especially Howard Showers, but also to explore other opportunities to obtain the security she desired, but not in competition with Image. Such a desire was consistent with the continuation of the partnership and also with the evidence of opportunities which Ms Brown believed she might have been able to explore under such an arrangement. It was also consistent with Mr Patrick's evidence.
121 Mr Green rejected this proposal and offered a consultancy on terms which required Ms Brown to perform all of her old work, and also introduced several new terms, including one which was to be of significant advantage to Mr Green, namely a probationary period. The letter provided:
'The period of the consultancy is 6 calender months - commencing 23/6/94. Between 23/6/94 and 23/7/94 an evaluating period will occur. On the 23/7/94 after the evaluating period has been deemed successful both parties will sign the contract.
Charlie will receive all salaries, that were paid to her when she as employed, as a monthly consultancy, paid in arears.