Duffy v Lake Macquarie City Council

APPLICANT Ms K T Nomchong of counsel

SOLICITOR Mullane & Lindsay, NEWCASTLE. LEGAL REPRESENTATIVES: RESPONDENT Mr B D Hodgkinson of counsel

AGENT Local Government Association of NSW SYDNEY.

• 24 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Application under s106 of the Industrial Relations Act 1996

Background 1 The applicant, Cheryl-Anne Duffy, has brought proceedings under s106 of the Industrial Relations Act 1996 ('the Act') in relation to the circumstances involved in her employment and termination by the respondent, Lake Macquarie City Council ('the Council'). Ms Duffy has the degree of Bachelor of Information Technology (Information Systems) and had commenced a Masters Degree in Information Technology early in 1997. At that time she had been employed by the Queensland Police Service as an Information Technology Manager, filling in for an incumbent who was on extended leave. At the conclusion of that period she was transferred to the Queensland Department of Emergency Services and commenced to look for alternative employment. In about May 1997 she observed on the Internet an advertisement for the position of Information Technology Manager at the Council. She applied, was interviewed by telephone and then brought to Newcastle for a face-to-face interview with a panel of three persons. She was successful, offered employment and accepted the position. 2 The job was advertised as a fixed three-year term performance-based contract. At the face-to-face interview, Mr Green claimed in his evidence that he offered a draft copy of the contract to Ms Duffy who declined to receive one. He further claimed that on 23 July 1997 he faxed a copy of the contract to Ms Duffy at her Queensland office. She contends that she did not receive it. There was no independent proof in evidence of it having been successfully transmitted. Ms Duffy claimed that she only received a copy of the contract approximately three weeks after starting. 3 This is a significant issue in that the terms of the contract which bear upon the matter of its termination prior to the effluxion of the three year term are as follows: 3.0 TERM

3.1 Subject to clause 4 and subclause 8, this contract shall operate for a period of three years commencing on 4 August 1997 and terminating on 4 August 2000.

8.1.6 The General manager (or other delegated officer) may terminate the contract for any reason other than those specified in Clause 8.1 provided the General Manager (or other delegated officer) shall give notice calculated at the rate of three months for each year of service remaining under the contract from the date of notice or, in the absence of notice, the payment in lieu thereof as though the notice period had been worked. Provided that, in the case of termination of the contract on account of redundancy, the period of notice and/or payment in lieu prescribed by this sub-clause shall include but shall not be less than the notice and severance pay applicable under the Lake Macquarie City Council Enterprise Agreement in respect of termination for that reason.

4 The job had been offered to Ms Duffy at the lower salary point on the relevant local government award scale. She indicated that she would be willing to accept the job on that basis but on the condition that if she successfully performed in the position for 12 months she would be moved to the top of that scale. The draft contract supplied to her did not provide for this movement after 12 months. Accordingly, Ms Duffy raised the matter with Mr Saunders and the draft was amended to incorporate that matter. Significantly, no attempt was made to alter the effect of cl.8.1.6 which raised the obvious possibility that services could be terminated upon the payment of the sum referred to in that provision, at any point in the three year term.

5 On 9 September, 1994, she was advised that her services were terminated with immediate effect. No reason was given. She was not offered redeployment, a matter which she considered she would be entitled to. She was given three months' pay in lieu of notice, the Council relying on cl.8.1.6 of her contract.

The Claim 6 Apart from the declarations of unfairness necessary by virtue of s106 to ground the making of money orders, and variations of the contract or arrangement to bring it, allegedly into a state of fairness, the summons for relief seeks an order for the payment of money, qualified at $111,805, plus costs. That sum is made up of $78,087 loss of income interest of $14,218, compensation for hurt, humiliation and distress of $10,000 and $9,500 compensation for financial and other counselling. The variations sought are: (i) The insertion of a term in the contract of employment to require termination thereof not to be harsh, unjust or unreasonable; payment in full of the three years contractual term upon termination for any reason, at the 'package' rate of remuneration'; (ii) The insertion of a term in the arrangement that it shall not be terminated in circumstances other than serious and wilful misconduct, and that in the event of termination for any reason, payment of the whole term, less what was paid, be made.

7 The declarations sought are: (i) That the contract of employment was unfair, harsh or unconscionable or contrary to the public interest;

(ii) To void or vary the contract of employment in whole or in part from its commencement or some later time;

(iii) That there existed between the parties an arrangement to provide employment until at least 4 August, 2000 (that is, the three year term);

(iv) That the circumstances relied on by the Council to terminate the applicant did not amount to serious and wilful misconduct by the applicant.

8 It suffices for present purposes to say that there is no issue in the proceedings that such relief may not be obtained under s106, providing the relief is substantiated. There is a real contest between the parties as to that substantiation.

The Evidence 9 The following records my findings on the evidence, save for those areas of conflict which will be identified and resolved. 10 Paragraphs 2 to 5 hereof record certain general facts. It is necessary to flesh them out somewhat.

11 The applicant impressed me as an intelligent and energetic person who viewed her termination as a serious and stressful imposition on her and upon her family, her career progress and potential. Apart from some momentary loss of control of her emotions in giving evidence, she exhibited a willingness to give her evidence directly, although sometimes a little too forcefully. However, a tendency to argue one's cause in the face of cross-examination is not necessarily an indication of a lack of veracity. I found her to be a credible witness.

12 The applicant, in May 1997, was 31 years of age, married with two children. She was born and raised in Albury, New South Wales, where she and her husband had purchased a home. They moved to Queensland in January 1995 when she accepted employment with the Queensland Police Service as Regional Information Management Officer in Toowoomba. In June 1995 she and her husband purchased a house in Toowoomba at a cost of $122,500. Although her affidavit did not disclose it, the Albury house was retained; I do not accept this indicates any intention to mislead or deceive.

13 The May 1997 advertisement seen by the applicant on the Internet ("A" to Ex. 1) contained the following provision: The position will be offered to the successful applicant on a fixed term three (3) year performance based contract. This contract supplements the employment conditions of Council's Enterprise Agreement. Conditions of employment will be in accordance with the Lake Macquarie City Council Enterprise Agreement 1995. Salary will range from $52,033 to $61,316 per annum, dependent upon qualifications and experience. Private use of a Council vehicle under a leaseback scheme is available.

14 After making her application, the applicant was interviewed by telephone, then flown to Newcastle to be interviewed by a panel consisting of the Director of Corporate Services, Mr Saunders, (to whom the applicant's position would report), Mr Jeffrey Green, the Human Resources Manager, and Mr W Barlow, from Stowe Computing.

15 The applicant's evidence was that job security was a primary concern. She said Mr Saunders said of the performance-based contract to be offered words to the effect: "The contract is performance based to ensure certain fixed criteria are met. As long as you perform you will be offered another contract at the end of the three year period. The contract is a formality so long as you perform."

16 Mr Saunders, in evidence in the applicant's case, confirmed this, saying: The position is a contract position for a three year period. It is intended that the successful applicant will simply have their contract renewed at the end of the three year period provided they perform satisfactorily during the contract period.

17 The applicant claimed that she was not offered a copy of the contract at this interview, because none was available. Mr Green claimed he offered her a draft copy which she declined to receive, suggesting that he forward the final version later. Mr Green also testified that he had sent a facsimile copy of the contract on the day Mr Sanders offered the position to the applicant. She denied receiving it. There was no record of the transmission able to be supplied in evidence. In fact, the final version was supplied to her about three weeks after she had commenced employment in August, 1997. As it eventuated, I think not much turns on this conflict about the availability of a draft form of contract at the interview. The terms of the version eventually made available to the applicant contained the provisions in cl.8.1.6 upon which the Council now relies but which then provoked no response from the applicant. While she was concerned about the prospect of salary advancement after 12 months, a matter which the contract supplied failed to provide, she made no complaint re cl.8.1.6. That position seems explicable given her understanding that, if she performed, she would be offered a renewal after three years. The clause would have an effect, even in that context, were she to fail to perform adequately, a result she did not countenance.

18 Having noticed the deficiency re salary, she raised that matter with Mr Saunders, who arranged an alteration to the contract to accommodate the issue.

19 The other area in which substantial conflict in the evidence arose involves that of Mr Saunders in juxtaposition to Mr Green. Mr Saunders positively asserted that he had assured the applicant her contract would be renewed subject to satisfactory performance. Mr Green denied that any such representation was made. Mr Saunders' understanding was that a contract employee such as the applicant would convert to coverage by the award or enterprise agreement at the end of the contract whereas Mr Green suggested the intention was that such would be the case but only for existing employees who converted to contract for the initial three year period. It is apparent that Mr Green's recollection that no representation was made sits uncomfortably with the contrary proposition advanced by the applicant and positively supported by Mr Saunders. I consider that I must prefer the evidence of Mr Saunders in this regard. It, too, is more consistent with the high probability of a person seeking secure employment, which I accept the applicant was, taking a great interest in the term of the contract. There is no basis in my view of Mr Saunders for doubting the truth of his evidence. I prefer his evidence to the negative recollection of Mr Green.

20 On her commencing employment with Council in August 1997 the applicant's husband and children remained in Toowoomba to enable the latter to complete their school term. They then moved to the Newcastle district, living in rented premises. Mr Duffy, who had resigned from permanent work as a gardener in Brisbane, could obtain only casual work in the area. The family later purchased a house at Booragul at a cost of $220,000, with bank finance obtained by application supported with a letter dated 20 February 1998 written by Mr Saunders, which referred to the prospective salary increase and that "no factors have come to light that will potentially exclude Ms Duffy from receiving this pay rise . . . ".

21 In March 1998, the applicant was called to a meeting with Mr Saunders and Darryl McKinnon, the Council's Internal Auditor. The following allegations were put to her: (a) that the Council's vehicle had been used by Ms Duffy's husband during business hours in contravention of the Council's policy.

(b) that the applicant had directed staff to pick up her children after school; and

(c) that the applicant had attempted to use her position in order to influence Mr Ray Reddel in the Parks and Gardens Department to offer her husband a position.

22 The applicant admitted that she had permitted the car use, as alleged in paragraph (a) above, on one occasion only and undertook that it would not occur again. She explained the second allegation as her son having missed the school bus, she directed him to wait at a Council facility from which she would collect him. Another Council employee offered to collect him and take him home, as it was on his way. She denied having instructed the employee to collect her child. As to the third allegation, she denied it.

23 Mr McKinnon left the meeting with the understanding Mr Saunders, as the applicant's line supervisor, would complete the interview by issuing a formal reprimand and recording the matter on the applicant's file. This did not occur. Mr Saunders' evidence on that point was: Q. You told Ms Duffy, and I think you told her it should not happen again, it was not acceptable, and it was not to be repeated? A. That is correct.

Q. Whilst Mr McKinnon was there you told Ms Duffy in front of him you would put a note in her file that this meeting had taken place? A. If I said that I would have done it.

Q. You did tell Ms Duffy you were going to put a note on her file? A. If I told Ms Duffy that I would have done that. I was very meticulous about doing that sort of thing. My recollection is I don't believe the issue was sufficiently serious to warrant a written note on the file.

24 It is convenient now to record Mr Saunders' views about the applicant, as deposed to in his affidavit evidence and adhered to orally: I certainly always made it clear to her that provided she performed satisfactorily, her contract would automatically be renewed. That is the belief I had as a result of my discussions with Mr Green and attending the quarterly managers meeting.

During the whole of the period when I was Ms Duffy's immediate supervisor, I never had any concerns about her performance. She was an excellent and diligent manager.

If she chose to make an application to Randwick City Council I would welcome an application from her today. It will be apparent that, at the date of making his affidavit, Mr Saunders had moved to employment with Randwick City Council.

25 The meeting of 26 March 1998 and the incidents there raised would seem trivial enough to have not resurfaced in the absence of more such behaviour or allegations, yet they seem to have played a role, quite beyond their significance, in the applicant's eventual dismissal. I shall come to that later.

26 The applicant's real problems developed thereafter. On 4 May 1998 the Council appointed a new General Manager, Mr Ken Holt. Over his first three weeks, Mr Holt put together a plan to restructure the Council, in particular by reducing the number of managerial staff. The Council had at that time 27 managers forming its "Manex" group, of which the applicant was one. The restructure did away with her position of Information Technology Manager and replaced it with the position of Manager, Corporate Information, which was intended to absorb the applicant's role and to add principally the Council's Records Management function. The restructure would reduce the number of managers from 27 to 15.

27 A meeting of the Manex group was held on 2 June 1998 at which Mr Holt announced the reduction in positions from 27 to 15. He advised that the restructuring process would be consultative and that he would receive submissions from managers on the subject of the restructure.

28 There was no dispute about those matters having been said by Mr Holt at the meeting but the applicant also claimed he said that no manager would be dismissed as a result of the restructure; redeployment would be the first option and after that retraining; it was too early in the process to talk in any detail about the restructure.

29 The applicant, having recently settled on the purchase of her home at Booragul, was committed to mortgage repayments and became concerned about job security. She spoke to Mr Green seeking to confirm that redeployment would apply if anyone missed out in the restructure. She deposed that he said: I can't see why you're not entitled to be treated like all the other managers, and to be redeployed if you miss out. Anyway to be perfectly frank, the Contract is not worth the paper it's written on because it exists under the Award and Enterprise Agreement, you're entitled to everything in them.

30 Mr Green disputed that conversation, denying that it took place. He took the position that she did not ask about redeployment at all. Mr Green's version of the conversation was as follows: Ms Duffy: In the event that I am unsuccessful in obtaining the new position, would I be paid out as per the terms and conditions of my contract.

Mr Green: Well if you are concerned and you want to ensure that the contract conditions prevail request an interpretation in writing and I will confirm it for you.

31 This was followed by a memorandum to Mr Green from the applicant on that date, 11 August 1998 in these terms: Re: Contract of Employment

I have recently read my Contract of Employment (dated 30 September 1997). Whereas I previously thought that I understood the document quite clearly, I now believe that some confusion exists in one particular section. Therefore, I would greatly appreciate it if you could explain the meaning of (i.e. the intention that applied when drafting) section 8.1.6. This section refers to the notice and/or compensation required in the event of redundancy. I am not sure if the document implies that, in the event of redundancy, Lake Macquarie City Council wishes give notice (or payment) at the rate of three months for every year of the contract that remains IN ADDITION TO normal redundancy conditions accorded by the Lake Macquarie City Council enterprise Agreement or whether it states that the conditions accorded by the Enterprise Agreement will REPLACE the three months notice (or equivalent payment). I would appreciate your assistance in clarifying this matter.

32 On 20 August 1998 Mr Green responded in the following terms: In response to your memo of 11 August I wish (to) explain the intent of Clause 8.1.6 of your contract.

This clause provides for termination of the contract for any reason other than that specified in the contract and includes redundancy. The intent of the clause was that, in the case of a redundancy, that either the 3 months notice for each year remaining under the contract would apply or the Enterprise Agreement provisions. Whichever of these is most beneficial, at the time, to the employee would apply.

As an example as it presently stands the contract is more beneficial than the Enterprise Agreement so the contract would apply ie. 3 months notice for every year of service remaining under the contract.

33 On 30 July 1998 the applicant satisfied the performance review requirements and was progressed to the top of the salary scale in accordance with her contractual terms.

34 The position of Manager, Corporate Information, was advertised internally with applications closing on 17 August 1998. The applicant applied for the position but was not interviewed by the selection panel. That panel comprised Mr Holt, Mr Farrell, the Group General Manager, Strategy, Mr. Hale, the Group Manager, Operations and Ms Houlihan, the Personnel Officer. The applicant's evidence was that she was advised by Mr Holt on or about 19 August that the position was to be advertised externally and that she had been unsuccessful in her application because she lacked experience in records management.

35 There was some conflict between Mr Holt's evidence and that of the applicant concerning the meeting between them on 19 August. Mr Holt said in evidence that there were in fact two meetings on that day, which the applicant disputed, she claiming there was only one. In any event, for the moment, there was one meeting at which the matters I have described in the previous paragraph were discussed. However, the applicant contended also that she sought confirmation of redeployment if she was unsuccessful and sought a further meeting with all members of the interview panel. As to the first proposition she said that Mr Holt replied that she was being premature as she still had an excellent chance of getting the position.

36 On the other hand, Mr Holt claimed that the applicant was distressed and crying. He also claimed that she refused redeployment and demanded a payout. He denied that she sought a further meeting with the selection panel. However, it is clear that subsequently a meeting was held with all or most of the members of the selection panel at which the applicant was enabled to raise her concerns concerning her alleged unsuitability for the new position with those members. That meeting occurred on or about 28 August 1998. While Mr Holt contended that only Mr Farrell was present with him (at his request because of the applicant's alleged emotional state at the previous meeting), Mr Farrell's evidence was that all members of the selection panel were present, although he had some doubt about Ms Houlihan's presence. Mr Farrell also confirmed in evidence that he recalled the meeting as having been arranged as a result of the applicant's request to meet the selection panel.

37 I consider Mr Holt's recollection of these meetings is faulty. At the point of the meeting between the applicant and Mr Holt on or about 19 August she had already sought advice from a solicitor, Mr Gerard Hatton, and obtained advice that cast doubt over her entitlement to be paid out for the balance of her term should the Council wish to terminate her services. The source of that doubt was cl.8.1.6 of the contract and what was seen as an apparent ambiguity between the notion of a fixed term contract and that provision. In those circumstances, it would be most unlikely that a payout of the balance of the term would be pursued by the applicant over redeployment. Her family had only recently been, in effect, up-rooted from Brisbane to pursue the applicant's employment at the Council. Again, this suggests to me a higher probability that the applicant was pursuing, as she contended, redeployment rather than a payout.

38 I am further fortified in this view by Mr Farrell's evidence where he recalled that the applicant was reassured by Mr Holt that she still could gain the new position and that the applicant was not seeking a payout. This, however, refers to the second meeting rather than the first meeting to which the applicant and Mr Holt were referring. I am also troubled by Mr Holt's recollection of a second meeting on or about 19 August which was not accepted by the applicant as having occurred nor referred to in Mr Holt's primary evidence on the basis that he did not consider it relevant. These matters cause me to take the view that in relation to the position adopted by the applicant at these meetings her evidence should be accepted, namely, that she was seeking redeployment, not a payout, in the event that she was unsuccessful in obtaining the new position, which she was continuing to pursue.

39 Late in August 1998 the new position was advertised externally and the applicant submitted an application on 28 August.

40 On 7 September 1998 the applicant was not feeling well and decided to go home. She sought to inform Mr Farrell who was not available and she then, she said in evidence, saw Mr Green and asked him to convey a message about her going home sick. Mr Green denies this. She was absent from work on 7, 8 and 9 September 1998. On 8 September a file note was created by Mr McKinnon dealing with the March 1998 incidents which had been the subject of the discussion between Mr Saunders, the applicant and himself. It inaccurately records her as having admitted involvement in the two issues other than assisting her husband to obtain employment. It also records his understanding that a note was to be placed on the file. It appears this file note was written on 8 September at the direction of Mr Farrell. The applicant was not advised of this in any way.

41 On 7 September 1998 Mr McKinnon recorded in his diary the fact that the applicant had an ergonomic computer mouse on trial at her home. This had been purchased by the applicant through Harvey Norman at Bennetts Green, utilising her Council credit card. This was conveyed to Mr Farrell, even though Mr McKinnon had earlier informed the applicant that the issue concerning this was resolved. The nub of this issue concerned her having paid the full Harvey Norman price for the item without obtaining the benefit of the sales tax credit which would otherwise have been available to Council. The sum involved was miniscule.

42 Also noted in his diary for 7 September 1998, is the fact Mr McKinnon drew to Mr Farrell's attention the Telstra BigPond charges of $35.00 per month which was being paid for by the applicant with the use of her Council credit card. This related to internet access on the applicant's home computer. These charges had been known to Mr McKinnon to have been appearing on her account for months. It also a matter of no substance.

43 On 9 September 1998 Mr Farrell telephoned the applicant, who was still at home sick, and advised that her contract had been terminated. He offered no reason for that action having been taken. He advised that all Council property would be collected from her on the following day.

44 Mr Green and Mr McKinnon went to the applicant's home the following day to collect Council property. The applicant was given a notice of termination and a cheque for six months base salary.

45 The applicant had no ability to obtain employment in the Newcastle area subsequent to her termination. She, through her private company, obtained contracting work subsequent to her termination producing an income of approximately $500 per week. This caused her to have to return to Brisbane, again leaving her husband and children in Newcastle so that they could complete the school year in a relatively stable context.

46 The applicant was dismissed by Council in circumstances where she was an applicant for a position which, it appears, she would have had a real prospect of obtaining. There was no issue whatsoever raised as to her competence in her pre-existing position. The evidence in that matter is entirely supportive of her abilities. To adapt to control of records in the context of the utilisation of information technology would present her, one would think, with little difficulty. Yet she was peremptorily terminated in a context where trivial issues were being re-hashed and misrecorded against her interest, or being raised with senior management for the first time without any opportunity being afforded to her to respond. The latter two matters concerning the computer mouse and the Telstra BigPond account do not appear to have been sustainable as issues of any substance at all. Termination in those circumstances, were they the sole matters involved, would obviously be unfair. The conduct of the Council in dealing with the applicant in this way would, in my view, necessarily involve conduct which is appropriately unfair for the purposes of s106 of the Act.

47 There remains however the proposition advanced by Mr Holt that he lost confidence in the applicant in the circumstances described in the excerpts from his evidence. The only explanation of the reason for the applicant's termination comes from Mr Holt's evidence. He deposed: 16. Shortly after applications closed for the position, I met with Cheryl-Anne Duffy. I think this meeting occurred on 19 August 1998. I said: "As you know, we combined Records Management with Information Technology in the new position known as Manager Corporate Information. In your application, you made no mention of Records Management despite this being a core component of the role." Cheryl-Anne said: "That is because I have no experience in Records Management and you know that." I said: "I expected you to address how you would overcome your lack of experience in Records Management. I also expected you to suggest how you could call upon your experience in Information Technology to improve the way records are managed in this organistion." I said: "I intend to readvertise the position of Manager Corporate Information both internally and externally. I recommend that you submit a fresh application addressing all aspects of the job."

17. At this point Cheryl-Anne Duffy became obviously distressed. She began crying and said: "I don't know why you are doing this to me" I tried to comfort Cheryl-Anne Duffy by saying: "I think you are reading more into this than you should. You have not been called as a candidate. I am simply offering you an opportunity to submit a more appropriate application for a senior position of this nature. Cheryl-Anne said: "If you are advertising the job externally you obviously don't want me. Redeployment is totally unacceptable. I will not accept another position. Either you give me this job or I demand a payout. That is how it works in my industry." Cheryl-Anne was crying, shaking her head and speaking in an emotionally charged way, so I said: "Would you like to take a moment and compose yourself?" Cheryl-Anne said: "No let's just get on with it." I said: "You were the one who argued very strongly that the I.T. job should be advertised externally." Cheryl-Anne said: "This is very unfair. What have I done to deserve this? Just pay me out and get it over with. I said: "You are not hearing my words. Up until now, all you needed to do was prepare a proper application instead of the token you submitted last time. This is a manager's job on a generous package so this is not an unreasonable expectation. Instead of accepting this advice, you have completely dropped your bundle. To do this in the middle of the recruitment process for a manager's job is like shooting yourself in the foot. Before you say anything else, take some time to compose yourself, consider your position, and think it through." The meeting concluded.

Cheryl-Anne Duffy came to see me towards the end of August 1998. To the best of my knowledge it was on Friday 28 August. This is the meeting to which the Applicant has referred in paragraphs 50 and 51 of her affidavit. Cheryl-Anne was highly emotional and visibly distressed. I was concerned about Cheryl-Anne's behaviour during the meeting on or about 19 August 1998 so I asked Mr Tony Farrell to attend this meeting as a witness. This conversation with Cheryl-Anne was similar to the previous meeting in that much of what had been said in the previous meeting was repeated except as follows: I said: "You are acting in a highly emotional and distressed manner. I am concerned about your state of mind and may need to restrict your access to the Council's computer system until this matter is settled." Cheryl-Anne said: "How do you propose to do that? You would need to get one of my staff to do it and that would embarrass me in front of all of my staff." I said: "What choice do I have when you have reacted so badly to the position being advertised externally? You know it is customary in the I.T. industry to restrict people's access in circumstances like these." Cheryl-Anne said: "I know it is, but there must be another way to spare me the embarrassment." I said: "I will consider my position and let you know before Monday."

I deny that I said that: "I had no complaint about your performance at all" as is asserted by the Applicant in paragraph 50 of her affidavit.

I checked the Council's computer backup procedures and assessed the potential risk to our system. Cheryl-Anne's unprofessional behaviour was seriously damaging her chances of success in the recruitment for the position of Manager Corporate Information. Despite some risk to our asset, I decided not to restrict Cheryl-Anne's access to the computer and provide her with the opportunity to modify her behaviour. I rang Cheryl-Anne at home on Friday evening to advise her of my decision. I did not wait until Monday because I thought Cheryl-Anne would consider it good news. I wanted to minimize her distress at the earliest opportunity and give her the entire weekend to compose herself and perform appropriately at work on Monday.

Mr Daryl McKinnon, Council's Internal Auditor, came to see me on or about 7 September 1998. Mr McKinnon said in words to the following effect: "I have some matters that I need to discuss with you relating to Cheryl-Anne Duffy". Mr McKinnon said in words to the following effect: "Cheryl-Anne Duffy has acquired some equipment on her corporate credit card but the equipment is not accounted for in the office." He said: "Cheryl-Anne has not adhered to normal purchasing procedures and has not claimed the sales tax exemption to which Council is entitled."

Mr. McKinnon advised me that: "I have other concerns about Cheryl-Anne Duffy. He said: "Cheryl-Anne claimed to be in Sydney on Council business at a time when I saw her at a local shopping centre in Lake Macquarie." Mr. McKinnon said that: "When I asked Cheryl-Anne about her whereabouts that day she said she was in Sydney". Mr McKinnon also told me that: "Cheryl-Anne has used her staff to run personal errands like picking up her children". These matters are detailed in the internal audit notes attached in HK-5.

Cheryl-Anne Duffy's position had become redundant as a result of the introduction of the new organisational structure. Cheryl-Anne had told me the "redeployment is totally unacceptable" and had identified as the only alternative that to be paid out under the provisions of her employment contract. Under the provisions of the Enterprise Agreement, Cheryl-Anne would have received far less severance pay than that provided for under her employment contract. I therefore complied with Cheryl-Anne's request and terminated her employment with payment in accordance with the contract.

Arrangements were made with Cheryl-Anne for the collection of her car and other equipment (KH-6).

The second application made for the position by Ms Duffy again did not address the record management functions of the new role in any way that indicated Ms Duffy was able to properly discharge that part of the expected functions. Additionally her behaviour during the process, to which I have already referred, left me in considerable doubt as to her willingness or capacity to fulfil the new role. In combination I determined that she was not suitable for the new position.

48 I have had considerable difficulty in respect of this evidence. Given the inconsistencies in Mr Holt's evidence with that of Mr Farrell, to which I have earlier referred, my inclination would be to prefer the applicant's evidence over that of Mr Holt in relation to these discussions. However, it seems to me to be unnecessary to make any final resolution of that issue. The view I have formed is that the approach of the Council to the applicant, at the point where it was determined to dismiss her, involved unfair conduct which in her personal circumstances was harsh and unconscionable in that, while it may have been in theory permissible under the contract of employment agreed between the parties, the representations made to the applicant at the point of her engagement were inconsistent therewith and would require substantial cause to be diverted from. The failure of Council, in my view, may be seen either on the basis that it relied on trivia to justify its termination or, alternatively, were Mr Holt's position to be adopted with respect to the applicant's behaviour, it failed to take into account the emotional reaction she was experiencing to what was obviously an unexpected and potentially traumatic experience in the context of her career and family circumstances. She was then faced, within 12 months of moving her family from Queensland to Newcastle and shortly after having engaged in the financing of a new home, with the possibility of termination in circumstances which she could not appreciate or understand. Merely sending her home to compose herself, and then dismissing her three days later without further enquiry, I regard as conduct which borders upon being callous. It readily satisfies the requirements of s106.

49 In addition to the unfairness which lies in the manner of the applicant's termination, I consider Council to have acted unfairly in the relevant sense vis a vis the applicant by failing to provide adequate support to her in the circumstances; by its failure to interview her for the position which was to absorb her own and by its effectively treating her as though she were redundant to Council's needs when a determination of that question was, at the least, premature. Viewed overall, the termination, if based on redundancy, was premature and, if for cause, without any foundation.

50 I do not consider the terms of the contract between the applicant and the Council to have been unfair either on their face or in the circumstances of their making. As I have found, the contract was made unfair by the events I have enumerated and the conduct of Council in them. The approach adopted by the Council has left a position where it is impossible to know whether the applicant could have succeeded in obtaining the ongoing managerial position for which she had applied. I consider it quite unsatisfactory to simply adopt, in that context, the terms of the contract as to termination. However, one is faced with the difficulty that, had the applicant been found to be truly redundant by reason of her eventual unsuitability for the new position, and the absence of any alternative position to which she could reasonably be deployed, the application of the contractual terms would be, in those circumstances presumably, acceptable and fair. This is a factor which must affect the assessment of any money amount to be paid in respect of loss.

51 The applicant's claim is in essence for the balance of the payment due in respect of a three year term ($152,776) less the six months' base salary received of $31,679 and the income earned by the applicant from the date of termination to the end of the three year period, being $43,000. That leaves a loss of salary claimed of $78,087. The applicant has also claimed $10,000 as compensation for hurt, humiliation and distress and $9,500 compensation for financial and other counselling. As to these last two matters there is, in my view, no evidentiary support advanced for them. I would refuse those claims. I do consider however that it would be just in the circumstances of this case to require the Council to pay a proportion of the lost salary claimed. Were there no element of restructuring in the case, there would be every reason to require full payment of income lost. However, taking into account the uncertainty of the applicant's position, I would assess the amount payable as $65,000 plus interest. Applying the approach taken in Abboud v State of New South Wales (No 2) [2000] 99 IR 299 at 306-307 per Schmidt J (dissenting, but accepted by Wright P and Walton J at 303; [2000] NSWIRComm 110 paras 44-49 and 25) I consider that, in this case, the appropriate date for the commencement of interest is the date of filing of the summons.

52 I make the following orders: 1. I declare that the contract of employment between the applicant and the respondent was unfair, harsh or unconscionable. 2. I order that the contract of employment be varied ab initio to provide that termination thereof shall not be harsh, unjust or unreasonable. 3. I declare that the termination of the contract by the Council was harsh, unjust and unreasonable. 4. I order that the Council pay to the applicant the sum of $65,000 plus interest at the Supreme Court rate to run from the date of filing of the summons. 5. I order that the Council pay the applicant's costs as agreed or as assessed.

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