(l) there was no indication that his alleged poor performance was going to lead to his replacement as the project accountant, as Ms Grey, the resource manager, would have been involved in this.
93 Poor work performance played no role in the decision to terminate his employment, according to the applicant, but if it did the applicant was not properly put on notice that his job was in jeopardy. Instead, he was terminated because of the email he sent to the second respondent and other Scheme participants on 2 July, 2003. Nor, according to the applicant, was the decision to terminate his employment a collegiate decision of senior management as the second respondent had maintained in his evidence. Rather it was the second respondent's decision alone as director and chief executive officer of the first respondent. This latter contention receives support, said the applicant from persons who gave evidence in the proceedings who were held out as responsible for reviewing his employment and responsible for making the decision to terminate him. These persons included Mr Goldstein, Ms Grey and Mr Cameron. Mr Goldstein denied being involved in the decision. He said that Mr Cameron told him that the reason for the applicant's termination was that, "Zia had lost confidence (in the applicant". Ms Grey's evidence was that she did not participate in any deliberations and didn't know that the applicant's employment had been terminated until after the event. Mr Cameron's affidavit was not relied upon by the respondents in the proceedings. Any suggestion on the part of the second respondent that he was the voice of restraint in the decision to terminate the applicant's services is at odds with his own affidavit and what Mr Goldstein said he was told by Mr Cameron as to the reason for the applicant's termination.
94 In response, the second respondent labelled the applicant's claim of unfairness with regard to the circumstances of his termination as an "unfair dismissal claim in disguise". The second respondent also asserted that the applicant had read and understood the terms of his employment contract and had not sought at any time to vary the notice provisions. Nor was there any evidence of an imbalance of bargaining power since the applicant did not at any stage seek to renegotiate the contract when he was offered salary increases. It was also contended that it was part of the applicant's role to market the firm and generate new business. In addition he was hired with the express commitment to generate business in Asia in the short term. The applicant was described by the second respondent as an, "average performer", who failed to generate new clients and new business. Finally, it was contended that the applicant changed his 24 April 2002 performance appraisal without permission.
95 I propose to deal first with the second respondent's contentions. First, the contention that the applicant's claim of unfairness was really an "unfair dismissal claim in disguise" was not further developed in submissions. Without the benefit of further argument on this issue I am unable to deal with it. I would observe however that in my view the contention has little substance. The amended summons does not allege that the applicant's dismissal per se was unfair. Instead the applicant expressly relied on the terms or operation of his contract of employment in support of his claim that the contract was unfair. This brings the claim properly within s 106 of the Act: Beahan v Bush Boake Allen Australia Limited (1999) 47 NSWLR 648; (1999) 93 IR 1 at 38 and 42.
96 Secondly, the applicant contended that his contract of employment operated unfairly at the point of termination of employment, in relation to the circumstances prevailing at that time. It was not contended by the applicant, as I apprehended the claim, that the contract of employment was unfair at its inception or that there was an imbalance of bargaining power with regard to a failure on the part of the applicant to negotiate a longer notice period.
97 Thirdly if an accurate representation of the applicant's job, as understood between the parties, was that he market the firm and generate new business in Asia in the short term then any rights the respondents may have had for terminating his employment on these grounds may well have lapsed or been waived long before his dismissal. This contention will be addressed in more detail shortly. It is sufficient to observe at this stage that the documentary evidence does not tend to support the contention that the applicant's termination of employment was in any way influenced by any failure on his part to generate business locally or in Asia in the short term, or to market the firm.
98 Fourthly, even if the applicant's work performance could be characterised as "average" it would not constitute grounds for summary termination, without regard being had to matters pertaining to procedural fairness.
99 Finally, I do not accept that the applicant changed his 24 April 2002 performance appraisal without permission. Such a conclusion is inconsistent with the tenor and content of his email to Ms Scarf on the same date when he attached the revised performance appraisal and requested her to place it on the file. There was no attempt by the applicant to conceal the fact that he had revised the performance appraisal. Ms Scarf was the second respondent's personal assistant. The revisions were clearly meant to come to the notice of the second respondent. In addition, as the applicant has pointed out, neither he nor the second respondent was cross-examined on the document. It was first produced during the second respondent's re-examination. In these circumstances the applicant was effectively denied the opportunity to give an explanation for the revisions. This latter set of circumstances would preclude any adverse findings being made against him, on the issue.
100 The underlying reasons for the applicant's engagement by the first respondent were in issue during the proceedings. The applicant said there was no discussion about him having a role in South East Asia at least for the first two to three years. This statement seems difficult to reconcile with other evidence. In late 1998 for example the first respondent paid for the applicant to travel to Indonesia to do a presentation on its behalf. The applicant said that part of the reason for the trip was to train the first respondent's people in the region. In 2001 the second respondent asked him to devise a business plan in collaboration with Mr McFeat for the purpose of expanding its business in the region. The fast track documents of 2001 and 2002 outlined the business plan. According to the second respondent the applicant was recruited on the basis that he would work in Sydney and at the same time generate work in Indonesia. The second respondent also said that it was necessary for the applicant to generate revenue from his business contacts in Indonesia and Malaysia in the short term. He said the applicant assured him that this would not pose a problem given his broad range of contacts in both the private and public sectors in the region. With regard to the fast track documents, the second respondent said that in the early stages of formulating the business plan it became apparent that the applicant lacked the capacity to follow through and develop any business.
101 On the other hand the evidence revealed that after the applicant commenced work for the first respondent he was engaged full-time at least for the first two years on the Y2K and GST projects. Thereafter he was engaged full-time working as a senior consultant for Pacific Power. This work load would have left him little time or opportunity perhaps to actively pursue business leads in South East Asia for the first respondent. In addition his contract of employment made no specific mention, nor did his offer of employment, of a requirement that he generate business in Indonesia and elsewhere in Asia.
102 Given the state of the evidence on the issue I am unable to reach a firm conclusion as to the precise reasons for the applicant's employment. What may be concluded however is that if the second respondent's version contained the more accurate account, then this matter did not assume any great significance on the part of the respondents. The applicant's full-time work continued on Australian-based projects without further complaint as to any failure on his part to generate business on behalf of the first respondent in South East Asia.
103 It is also significant that throughout the period of his employment the applicant was consistently commended for his work-performance. In the financial year ending June 1999 the applicant received a bonus payment and a salary increase. The following year he received another bonus payment and salary increase and was promoted to the position of consulting director. On both occasions he was commended for his "excellent achievement" (June 1999) and his "outstanding efforts" and "strong contribution to the firm" (June 2000). He was also told that he had established himself as a "key member of the firm". In June 2001 the second respondent wrote to the applicant acknowledging his "excellent" efforts in relation to client work in Canberra. On 23 May 2002 the applicant was informed in a memorandum from the second respondent that he had delivered a, "solid performance . . . in maintaining chargeability at PPI". He was considered a key member of the first respondent and therefore eligible to purchase units in the Scheme. Following the restoration of his salary to its former level or remuneration on 1 March 2003 the applicant was told that only the "strong performers" had had their salaries restored as at 1 March 2003, but that others had to continue on reduced salaries, "until they are able to align their billings or sales more closely with their targets".
104 The second respondent sought to rely on various performance appraisal documents in support of the allegation that the applicant's work performance was poor. In my view none of the documents provided sufficient support for such a finding. The performance appraisal document date 18 May 2002 (which the applicant later revised and sent to Ms Scarf for placement on the file) did not suggest that, overall, the applicant's performance was poor. Rather it showed that his actual achievements with regard to matters such as revenue generation and chargeability fell below the nominated targets. With regard to the comment in the "comment box", the applicant alleged that it had a "squiggled line" through it, drawn by the second respondent, and the second respondent alleged that it had been underlined. In my view not a lot turns on this. Shortly after the performance appraisal dated 18 May 2002, for example, a second appraisal of the applicant's work for the same period was generated on 17 June 2002. It was conducted by Gareth Eade, the applicant's supervisor at that time. On its face the document was favourable. It stated by way of an overall comment that the applicant was delivering "a solid performance", at Pacific Power, as project manager.
105 In submissions the respondents described the applicant's work performance as "average". This assessment would not, without more, as I have already stated, have justified the summary termination of the applicant's employment. It is also of significance that the applicant's letter of termination of the contract was silent as to the reasons for his dismissal. Evidence adduced orally during the course of the proceedings on the issue did not suggest, apart from the evidence of the second respondent, that the applicant's contract of employment was terminated because of poor work performance. Ms Grey, who was the resource manager at that time, said that she did not participate in a decision to terminate the applicant's contract and she would have expected to have been involved in any such decision. Mr Goldstein also said that he had had no involvement in the decision. He said Mr Cameron, who did not give evidence, told him that the second respondent had lost confidence in the applicant. Mr Goldstein rang the applicant at the behest of the second respondent and told the applicant that his contract was terminated. He said he said to the applicant:
I apologise for calling you while you are on leave. I am calling to advise you that Zia has lost confidence in you and does not want you to return to work. Unfortunately you will be terminated as of today with four weeks notice.
106 The evidence on this issue in my view is insufficient to sustain findings that the applicant was a poor work performer and that his contract of employment was terminated for cause, that is, because of his poor work performance. In submissions the second respondent's assessment of the applicant's work performance extended only to describing it as "average". Even that assessment should be viewed with some caution for the reasons expressed above.
Breach of Confidentiality
107 Another issue said to arise out of the circumstances of the termination of the applicant's contract, was whether the applicant's email to the second respondent of 2 July 2003 was in breach of a duty of confidence because of his actions in copying and sending it to other Scheme participants.
108 The second respondent contended in this regard that the contract of employment contained confidentiality provisions as well as implied duties to act in good faith, mutual trust, confidence and fidelity. The email of 29 April, 2003 was relied upon by the second respondent to emphasise the importance placed by him in the confidentiality of the Scheme. The context in which that email was sent concerned the first respondent's attempt to refinance Scheme participant's capital contribution loans with Westpac. It followed the earlier email of 24 April 2003, sent by the second respondent, in which participants were advised that no dividends would be issued to shareholders. It was intended under the terms of Scheme that such dividends would be issued as a form of profit sharing and that there would be a tax effective distribution of income to Scheme participants though the Trust. The email of 29 April 2003 expressly assured the applicant that there was no need for concern and that "no one will be out of pocket in any shape". The email emphasised the importance of keeping discussions on the matter in strict confidence. It cautioned that:
[E]ach person is required to treat all discussions in strict confidence. I am appalled this morning to learn from Ian Ritchie that some of you have discussed this issue with him and indicated that the Firm is "defaulting" the Share Participation Loan. This is truly poor form. There will be no second chances for such a breach of confidentiality in this Firm.
109 According to the second respondent the applicant deliberately set out to pressure and embarrass him by sending the email of 2 July 2003 to other Scheme participants. By copying this email, the applicant's actions, according to the second respondent, warranted his summary dismissal.
110 The applicant's email of 2 July, 2003 proceeded an earlier email sent the day before by the second respondent. This earlier email was not marked, private or confidential, and was addressed to all shareholders. It stated:
Dear Shareholders
The Firm is in the process of settlement with Westpac of its Facilitites. This should occur in the next week or so. Part of the settlement with Westpac includes the promised reduction in the Capital Contribution Loans for the Team.
The funds have been arranged to clear out the Firm's facilities with Westpac in total and to enable us to make the agreed reduction on your loans.
We have been communicating with Westpac personnel on a regular basis and are looking forward to the finalisation of this matter.
Further information and documentation regarding this matter will be provided in due course.
Regards
Zia
111 On the same day the applicant received the letter of demand from Westpac's solicitors. That letter required payment of $5,000 principal reduction by 4 July 2003. In default, the applicant was informed, Westpac would require full repayment of the loan.
112 The applicant submitted that his email of 2 July 2003 did not breach his duty of confidence by the action of copying its contents to other Scheme participants. This was because the email of 1 July 2003 sent by the second respondent was not marked as a confidential communication, and the identity of the other Scheme participants were well known to each other. In addition the applicant was of the belief that confidentiality requirements with regard to the Scheme only extended to a prohibition on discussion with third parties (excluding taxation and legal advisors). It was also contended that, given the promises made by the second respondent both prior to and upon entering into the Scheme, it was neither unreasonable nor in breach of the applicant's obligations to act as he did, nor did his conduct warrant dismissal.
113 I am satisfied on the evidence that the applicant's actions in copying the contents of the 2 July 2003 email to eight other Scheme participants did not breach any duty of confidence. There was nothing in the terms of the Trust deed, the draft deed, the Prospectus or any other promotional material which referred to a requirement to keep matters pertaining to the Scheme confidential as between Scheme participants. This is hardly surprising given that the Scheme was discussed in detail in open forums among prospective participants in the presence of the second respondent on several occasions prior to its inception. The only requirement as to confidentiality in the Trust deed concerned the Trust Register the contents of which the manager and trustee were prohibited from disclosing under the terms of the Trust deed. The correspondence generated by the respondents following the commencement of the Scheme was sometimes marked as confidential and sometimes not. This inconsistent approach to the issue would not have fostered an understanding among Scheme participants that all discussions and written communications with regard to the Scheme were to be private and confidential as between themselves as well as third parties. A primary concern expressed by the second respondent for the need for confidentiality appeared to involve a perception on his part that if Scheme participants became aware of the number of units each had been offered in the Scheme (some were offered more than others) that may have an adverse effect on motivation. If this were so, the applicant's email did not touch on this issue. Correspondence with regard to the Scheme was usually marked to the attention of Scheme participants generally. Each participant therefore would have been well aware that the subject matter of the particular item of correspondence had been communicated to all participants.
114 The second respondent was clearly of the view that the applicant, by copying the contents of the email he sent on 2 July 2003, had breached a duty of confidence. His evidence was that when he received the email he noticed that it had been copied to other Scheme participants. He rang the applicant and accused him of breaching his duty of confidence for the second time. In the course of the conversation he said to the applicant:
given the serious nature of the breach you are finished with the firm and someone will be in touch to organise termination arrangements.
115 Although the applicant's standard of work performance was a significant issue during the proceedings, ultimately in my view, it formed no part of the second respondent's decision to terminate his employment. The second respondent's evidence of the telephone conversation following receipt of the 2 July 2003 email from the applicant indicated, quite clearly, that the applicant's employment contract was terminated because the second respondent had formed the view that the applicant had breached his duty of confidence. On the evidence there was no proper basis for this view. Nor was there sufficient evidence upon which an inference may be found that the applicant's work performance was of such a standard that it might justify or warrant the termination of his contract. The applicant was advised of the termination while on leave, by telephone. The termination of his contract occurred in circumstances where the applicant received no warning or counselling and where he was denied the benefit of any procedure under which he could have availed himself of the opportunity to discuss legitimate concerns that his employer may have had with regard to his standard of work, or defend himself against any allegations of misconduct, before termination was effected. His contract contained no express provisions which could operate to protect the applicant from summary termination, that is to say the contract failed to provide for fair procedures on termination (or permitted the respondents to adopt unfair procedures in terminating the applicant's employment). No other basis apart from allegations of poor work performance and allegations of a breach of confidence were advanced by the second respondent as warranting the applicant's summary termination. Given all these circumstances I conclude that the applicant's contract of employment was or became unfair because it permitted the respondents to act unfairly when terminating the applicant's employment without affording him procedural fairness, and in terminating his employment on grounds that were not made out.