Fitzgerald & Anor v CBL Insurance Ltd [2014] VSC 493

The remedy that is granted is, as with all equity's remedies, one that will seek to undo, so far as is in practice possible, the departure, that the litigation has shown to exist, from equity's standards of conscientious behaviour. The way this is achieved, when a remedy of rectification is granted, is by rewriting the contract so that it no longer departs from the common intention of the parties. The rewriting is done in a quite literal sense - the proper form of order identifies the precise words of the contract that are to be struck out, the precise words that are to be inserted, and where those words are to be inserted: Seton's Judgments and Orders, 7th ed (1912) vol 2, p 1638-43. ... In that way the executed contractual document is no longer able to be a potential source of error and confusion, by appearing to state legal relations that in truth are not as the document says.

That this is the type of remedy that is granted has an effect on the sort of "common intention" that is relevant for rectification. The common intention of the parties has to relate to what the mutual rights and obligations of the parties will be, and has to be sufficiently well-defined and clear to be able to be stated in words that can be incorporated in a contract.

The rewriting should not do anything more than rewrite the contract to the minimum extent that is necessary for it to no longer fail to express the common subjective intention the parties had when the contract was entered...

Subjective intentions of people are almost always formed within a universe of discourse. Matters that are outside the scope of that universe of discourse are not part of the common subjective intention of the parties in entering it...

Crafting a remedy in rectification involves close attention to the words of the document. However, in the prior step of making a finding about a common intention, for the purpose of a rectification order, it is important that the court not confine itself to a narrow focus on particular words of the document. It is the document as a whole that is rectified, and the point of the exercise is that, once rectified, the document will not be contrary to the common intention of the parties to the document. Thus if a particular change to some words will result in some other words of the document operating in a different way, rectification will be justified only if that different operation of those other words is shown to be in accordance with the common intention of the parties.[78]

Rectification of Schedule 1 to include the omitted employees

1. In their prayer for relief, the Trustees sought orders that the policy be rectified by the inclusion of the 'Omitted Persons as Transferring Employees in Schedule 1'.[79] During the course of the trial the Trustees clarified and narrowed the scope of their claim for rectification of the Schedule 1 list of Transferring Employees. When opening their case, Senior Counsel for the Trustees said that the names of four transferring employees in respect of whom claims are made were omitted from the list. By the time closing submissions were made, however, the names of only two employees were sought to be added to Schedule 1: Daryl Piercy and Jen Ngann. The claim made for those employees is $36,669.70, being $20,244.62 for Mr Piercy and $16,425.08 for Ms Ngann.
2. The policy was executed by Mr Harris and Mr Thomas on behalf of CBL and by Mr Shaw and Mr Humphris as Trustees. Neither Mr Thomas nor Mr Shaw gave evidence at the trial.
3. The Trustees submitted that CBL knew that the policy was intended to protect the entitlements of all former employees of the Nylex business whose employment was transferred to Huon. CBL was informed by Huon's broker at the outset that the employee entitlements of 'approximately 700 employees' would be involved. Mr Serong reiterated this in his draft letter of 11 October 2005, which was forwarded to CBL, when he said '[t]he bond is to cover all employees of Nylex Industrial Products working at the businesses of Empire and Nylex Frankston as at the date of sale or absent from the workplace for a period of approved leave or on Workcover.' As I have indicated above, I am satisfied that CBL knew, from the outset, that the policy was to operate alongside the contracts for the sale of the businesses to Huon and to cover or protect the entitlements of the employees who transferred across in the event that Huon became insolvent.
4. The evidence at trial was that the policy was executed twice on 16 December 2005. The initial version that was executed did not include the Mills Elastomers employees and incorrectly stated the insured amount as $6,500,000 instead of $7 million. At the request of the solicitors for Huon, Mills Oakley, the document was then corrected, re-engrossed and executed by Mr Harris and Mr Thomas.
5. The evidence given by Mr Harris establishes that when he signed both the initial version, and the corrected version of the policy, there was no list of Transferring Employees attached. In his witness statement he said that he had not seen any Schedule 1 or a list of Transferring Employees who would be covered under the policy. He saw the list of employees for the first time when CBL received the policy as signed by the Trustees from Huon's solicitors, which attached a list of Transferring Employees. Mr Harris was not concerned with which particular Huon employees were named on the list. That was a matter for Nylex, Huon and the unions to determine. Under cross-examination, Mr Harris was asked about the listing of employees and what he expected was going to be put in the schedule. He accepted that he 'believed the list would be accurate' and 'didn't believe that there would be any employees omitted' from the list of Transferring Employees.
6. CBL submits that Mr Harris's evidence is not sufficient to make out a claim that the list should be rectified. It says that Mr Harris' belief about the accuracy of the list is irrelevant and that what matters is whether CBL intended the policy to cover all Transferring Employees regardless of whether they are listed in Schedule 1.
7. In my view, when Mr Harris's evidence is viewed in the context of the re-execution of the policy and the reasons for doing so, including the complete omission of the Mills Elastomers employees, one gains the clear impression that CBL did not intend that any Transferring Employee of three businesses would be omitted. While Mr Harris believed that all former employees of the Nylex businesses whose employment was transferred to Huon would be listed in Schedule 1, he was not concerned to see that listing prior to execution and did not raise any issue when he was notified that the Mills Elastomer employees needed to be added in and the sum insured be increased. Further, by his conduct on 16 December 2005, he effectively communicated to Huon's solicitors, and to the solicitors for the Trustee that he intended that the list should reflect the agreement they had reached and was amenable to accommodating the inclusion of those Transferring Employees who had been inadvertently omitted.
8. Accordingly, evidence having been adduced that Mr Piercey and Ms Ngann were relevantly Transferring Employees at the time the policy was executed, I will order that Schedule 1 to the policy be rectified by adding their names to the listing for the Empire Rubber and Mills Elastomers businesses respectively.
9. Further and in the alternative, the Trustees advanced an argument that the policy provides cover in respect of a class of persons, namely those captured by the definitions of 'Transferring Employees' and 'Locations' and the two omitted employees fall within that class. They contended that s 20 of the Insurance Contracts Act 1984 (Cth) provides that CBL is not relieved of liability in respect of those persons simply because each was not named in the policy. Section 20 provides:

An insurer under a contract of insurance is not relieved of liability under the contract by reason only that the names of the persons who may benefit under the contract are not specified in the policy document.

1. In Hunt v Watkins,[80] Handley JA (with whom Meagher AJ agreed) expressed the view that s 20 'would be relevant if a policy purported to cover other persons within some general description such as partners, employees, or sub contractors' and added that in such circumstances 'the fact that the names of the additional insured were not 'specified' in the policy would not avail the insurers.'[81]
2. In the circumstances, I agree that s 20 would provide an additional basis for the inclusion of Mr Piercey and Ms Ngann in Schedule 1.

Rectification of the definition of Insured Loss

1. In their prayer for relief, the Trustees sought orders that the policy be rectified by the insertion of the words '(or accrued to)' after 'owed to', so that the definition of 'Insured Loss' reads:

Insured Loss means any Deficiency in Employee Entitlements owed to (or accrued to) the Transferring Employees by Huon Corporation as at the date of commencement of Huon's External Administration ...[82]

1. The alteration to the definition of 'Insured Loss' was sought by way of response to CBL's contention about the meaning of the word 'owed'. That is, if the court were to find that 'owed' did impose a temporal limitation on the cover available under the policy, the Trustees sought rectification of the policy 'so that it accords with the common intention of those who negotiated it so that it covers the entitlements of those made redundant on or after the appointment of the administrator.'[83] Given the views I have formed on the construction issue, it is not strictly necessary to decide this aspect of the rectification issue, but I do so lest the matter go further.
2. In the present case, while Mr Thomas was involved in the drafting exercise, CBL was content for the unions, Nylex and Huon to negotiate the wording of the indemnity. In his email to Mr Stanfield of 17 October 2005, Mr Thomas stated that he had redone the definition of Insured Loss and suggested that it was up to the Unions, Nylex, Huon and Mr Schulz, to agree to the final terms of the definition. Once the policy wording was agreed, Mr Thomas said he wanted to 'run it past CBL's Melbourne lawyers for comment.'
3. The policy was executed by CBL on the one hand and Mr Humphris and Mr Shaw as Trustees on the other. The Trustees themselves were not involved in the negotiation of the policy. They are party to the agreement contained in the policy but in their stated capacity as trustees for the Transferring Employees. Accordingly, when one comes to consider the rectification arguments, in the context of the relevant legal principles requiring there to have been a common intention that was not properly recorded in the document, how does one ascertain that intention in the case of the Trustees? CBL said it was plain that the signatories to the policy, CBL and the Trustees, could not have carried any common intention. The Trustees simply pointed to the evidence given by those involved in negotiating the policy. Mr Harris acknowledged under cross-examination that the employees were the beneficiaries of the policy and they 'had representatives acting for them by way of the unions' and that the Trustees 'were merely trustees of the policy' and they 'were not involved in the negotiation of the document'.
4. In the present case, it is clear that the policy was one that was entered into by the Trustees in their capacity 'as trustees for the Transferring Employees'. In my view, in those circumstances, one must, in effect, 'look through' the Trustees to the beneficiaries and ascertain what was the intention manifested by those negotiating on behalf of the Transferring Employees for whom the benefits under the policy were negotiated.
5. Evidence about the negotiation or drafting of the policy was given on behalf of the Trustees by Mr Serong (Nylex), Mr Casey (Nylex), Mr Oliver (AMWU) and Mr Pakula (NUW). (Mr Levin, the solicitor for Nylex was called by CBL His evidence was that he 'did not have any involvement with negotiating the bond or its wording', nor did he advise Nylex on its effect.) The thrust of the evidence called by the Trustees, on behalf of the Transferring Employees, is summarised below.
6. Mr Casey said that he met with employees at the Frankston and Dandenong sites and addressed them about the sale. The message that he conveyed to the employees was that 'they would be no worse off following the sale'. Mr Casey said that he was not involved in negotiating the terms of the policy and that was left to the various legal people. As he understood it, the key idea was that the employees would be 'no worse off'. He said he never intended that the policy required employees to be made redundant on day one of any administration to ensure that they were paid their entitlements. Had he been told that the policy did not include redundancies, he would not have communicated to the employees that they were no worse off because, in that situation, the employees 'would have been worse off.'
7. Mr Serong's evidence was that throughout the negotiation period he could not recall there being any discussion about the policy being limited to providing coverage only in the event that all employees were terminated on the date of the relevant insolvency event. During the negotiations, Mr Serong set out a number of comments and suggestions for the draft policy from the perspective of Nylex which he said were aimed at bringing 'the terms of the proposed policy closer to what would eventually be acceptable to Huon, Nylex and CBL as well as to the unions.' He said his understanding was that 'the policy covered amounts provable by an employee in a winding up, less whatever they had been paid from other sources'. Further, his intention was 'to ensure the policy would respond to claims made by employees of the Businesses that were provable in the event Huon was wound up.'
8. Mr Oliver gave evidence that the policy of insurance was intended to cover employee entitlements in the event of some form of insolvency by Huon, no matter the particular date on which an employee was made redundant. He said that no-one ever said to him that the policy only provided cover for employees made redundant on the day an administrator was appointed. Had the policy cover been limited in such a way, he said the 'AMWU would not have supported the sale, or made its joint application to the AIRC'.
9. Mr Pakula's evidence was to similar effect. He said that no-one ever said to him that 'employee entitlements, such as redundancy and leave, were only protected if the employees were made redundant immediately on the appointment of an external administrator.' If he had been told that the policy coverage was limited in that way, then the NUW 'would not have recommended that members vote in favour of the variations or accept offers of employment by Huon.' This was because, in his view, 'the NUW could not have told employees they would be no worse off by taking employment with Huon.'
10. On behalf of CBL, the only evidence about subjective intention was that given by Mr Harris. Mr Harris was the initial point of contact with Mr Stanfield. He said that the transaction was one that fell within his field of specialty. He was involved in the 'initial decision to go ahead with the transaction' but then asked Mr Thomas to start dealing with Mr Stanfield about implementing the policy and drafting its wording on CBL's behalf. He said that matters such as the effect of Australian insolvency law were left to Mr Thomas. Mr Harris acknowledged that he had never sought, and did not recall ever receiving any advice 'upon the Australian law dealing with the entitlements of employees who are made redundant'.
11. Under cross-examination, Mr Harris said that CBL was 'very definite on what was to be covered and what was not to be covered' under the policy. He said:

We were told that the only liabilities that we were taking on was the long service leave, holiday pay and sickness pay for the transferring employees and the redundancies for the people that were planned to be made redundant, and if any of those payments had not been made and were still outstanding as a debt at the time the company went into insolvency, if it did, then we would be responsible for them.[84]

Mr Harris was, however, unable to point to any correspondence, email or other communication where CBL had been told that or indeed where CBL had raised any issue about whether the policy only includes entitlements of employees made redundant on or before 30 June 2006.

1. In re-examination, Mr Harris was taken to some handwritten comments that he had made on the first draft of the policy (then styled a 'Financial Bond') and directed to Mr Thomas. Alongside a recital stating that 'CBL has agreed with the Beneficiary at the request of the Purchaser to guarantee those payment obligations of the Purchaser described in clause [10.1(i)]' Mr Harris wrote the following comment:

? indemnify them from loss caused by a shortfall in those payment obligations as a direct consequence of the Insolvency as defined of the Purchaser ?[85]

The definition of 'Insolvency' at that point was simply as 'defined under the provisions of the applicable Australian Insolvency law' Mr Harris wrote the following comment alongside that definition:

As long as we are not talking about technical insolvency ie coy must be in liq or admin or receivership etc.[86]

Mr Harris said that these were 'comments' he made to Mr Thomas, not 'instructions'.[87]

1. I do not interpret or understand these comments made by Mr Harris as manifesting evidence of an intention of the kind now asserted on behalf of CBL, to the effect that the policy would only cover entitlements of employees made redundant on or before 30 June 2006.
2. CBL did not raise any temporal limitation on the cover as an issue when the policy was being negotiated. I have already canvassed above, in the context of 'surrounding circumstances' evidence relevant to construction, much of the correspondence and communications that took place between those involved in negotiating the terms of the policy, including the conditional letters of intent provided by CBL. It will be recalled that early in the negotiations CBL (through Mr Harris) acknowledged that it was necessary to 'make sure any bond wording fits the circumstances contained within the [sale of business] contract', which required the Purchaser to obtain insurance guaranteeing the protection of 'all monetary entitlements of Transferring Employees retrenched by the Purchaser after Completion'. Further, in the email from Mr Thomas to Mr Stanfield dated 20 October 2005, no reference was made to any limitation based on employees being made redundant before the insolvency event. It is telling that CBL did not advance that position by way of response to any of the notices of demand served by the Trustees' solicitors. Indeed, it was not until CBL filed its amended defence in April 2013, that CBL contended the policy did not cover entitlements for employees made redundant after 30 June 2006.
3. If, contrary to my view, the ordinary meaning of the indemnity provided under the policy does not cover losses suffered by those Transferring Employees who were made redundant after 30 June 2006, I am satisfied that the policy as executed does not reflect the parties' agreement and does not accord with the continuing common intention of the parties involved in negotiating the policy. Accordingly, I would order rectification of the policy.
4. CBL contends that even if the words '(or accrued to)' are added to the definition of 'Insured Loss', the change would be of little utility in terms of capturing redundancy entitlements because a redundancy entitlement does not accrue over time and is not apportionable.[88] Rather, so CBL argues, the entitlement accrues only when the event triggering the entitlement occurs: namely, when the employee is made redundant within the meaning of the industrial instrument covering that employee.[89] It says the court should not embark on a futile exercise and it should not accede to the Trustees' request for the change.
5. In my view, the inclusion of the words '(or accrued to)' after 'owed to' would accord with the construction I have reached. In McEvoy, Finkelstein J pointed out that 'in a winding up, leave entitlements (including those which at law continue to accrue) must be treated as having fallen due upon the commencement of the winding up.'[90] Even if it be the case that, strictly speaking, the redundancy entitlement does not accrue over time, the addition of the word 'accrued' nevertheless assists to convey the notion that the Employee Entitlements that are covered are those protected entitlements under s 596AA(2), referable to the services rendered by the employee to the employer over time and often by reference to the period of service, which are treated as having fallen due upon the commencement of the winding up.

1. For the foregoing reasons, I would answer the questions concerning rectification raised by the parties as follows.

Question (7): Was there a continuing common intention that the policy would cover all employees of Nylex who transferred their employment to Huon?

Question (8): Was there a continuing common intention that the policy would cover Employee Entitlements 'accrued to' as well as 'owed to' Transferring Employees as at the date of Huon's External Administration or the deemed commencement of the winding up under Pt 5.6 of the Corporations Act?

Answer: Yes. There was a continuing common intention that in the event that Huon became insolvent, the policy would cover the protected entitlements of all employees of Nylex who transferred their employment to Huon. The indemnity under the policy responded to the loss 'arising directly and naturally suffered by a Transferring Employee as a result of' Huon becoming insolvent. In the event that Huon was wound up after being placed in administration, the relevant entitlements are those which must be treated as having fallen due upon the (deemed) commencement of the winding up.

Question (9): If yes to Questions (7) and/or (8), is rectification to be granted?

Answer: Rectification is granted in respect of the issue raised in Question 7.

In relation to Question 8, I have found that the ordinary meaning of the indemnity provided under the policy covers the Deficiency in Employee Entitlements of those Transferring Employees whose positions were made redundant after 30 June 2006 as a result of Huon becoming insolvent. In particular, I find that the word 'owed', on its proper construction conveys that meaning. As a result, a grant of rectification in respect of the issue raised in Question 8 is not necessary. If, however, that were not the case, I would have ordered the rectification sought.

1. In their Further Amended Statement of Claim dated 31 May 2013, the Trustees claimed an Insured Loss of $4,624,087.70. The calculation of this sum, being the alleged deficiency in Employee Entitlements as at 30 June 2006, was set out in the Trustees' Further and Better Particulars dated 16 August 2012. The evidence that CBL filed in advance of the trial commencing responded to the Trustees' case as set out in those particulars.
2. On 6 September 2013, before the trial commenced, the Trustees served what was said to be an 'incomplete' table summarising the claim made on behalf of the Transferring Employees under the policy.[91] When the trial commenced on 23 September 2013, the table was still 'incomplete'. The Trustees amended it on several occasions during the course of the trial. In each iteration, they revised the number of Transferring Employees on whose behalf the Trustees were making a claim and the amount of the Insured Loss claimed. On 26 September 2013, when it became clear that the Trustees were no longer relying upon their 16 August 2012 particulars, I ordered the Trustees to make an application for leave to do so. By summons dated 27 September 2013, the Trustees sought leave to amend, and they served their proposed final particulars later that evening. Leave was granted on 2 October 2013. Further and Better Particulars of the quantum of the Trustees' finalised claim were filed dated 4 October 2013. In those revised particulars, the Trustees specified the amount of the Insured Loss that was claimed as being $4,389,789.20.
3. In their closing submissions, the amount of the Insured Loss claimed by the Trustees by way of indemnity under the policy remained at $4,389,789.20. This figure was mentioned for the first time on 24 September 2013, by Mr Fitzgerald when giving evidence in chief. Under cross-examination he said that the amount came from a spreadsheet that he had seen that morning.[92] I understand that the final version of that spreadsheet now forms part of the Trustees' October 2013 particulars and lists the (now) 336 Transferring Employees the subject of the claim.
4. The spreadsheet included in the Trustees' October 2013 particulars collated and summarised pertinent details for each Transferring Employee such as:

1. the amounts calculated for redundancy, sick leave, payment in lieu of notice, annual leave, long service leave; and

1. The spreadsheet was shaded in different colours to indicate matters such as facts that had been admitted, areas where admissions had been sought, and in the case of some contract employees, areas where there were particular issues in dispute. The spreadsheet was accompanied by calculation sheets for each of the 336 Transferring Employees for whom claims were made. The Trustees solicitors also provided a document containing an explanation of the calculation method used for redundancy, sick leave and payment in lieu of notice.
2. The Trustees contend that, broadly speaking, there are two steps involved in calculating the quantum of the claim made on behalf of the Transferring Employees. First, it is necessary to identify the facts relevant to each Transferring Employee the subject of the claim. In this regard, they rely upon source documents such as the business records of Huon that were proved through the witness statements of Ms Mortlock, Mr Chetcuti and Ms Gregson. The following basic facts are relevant to each Transferring Employee's claim:

Employee Master Listing documents for all 3 business units

Head Count Spreadsheet titled "EE Count as at 31 June 2006"

Employee Master Listing documents for all 3 business units

Employee Master Listing documents specify the hourly rates for Mills Elastomers and Empire Rubber employees

Frankston Rubber Nylex Weekly Paid document specifies the hourly rates for those employees

The leave liability reports specify the amount for all 3 business units

2006 [25 June 2006 was the last pay day before Huon Corporation was placed in administration]

employees [The PTD reports show the hours worked and hours of leave taken, including the type of leave in relation to each Nylex Frankston employee]

1. The evidence was that the employees of the three businesses fall into two main classes:

(a) 'weekly' employees at each of the three Huon businesses, who were paid weekly and whose terms of employment were governed exclusively by a certified agreement (an enterprise bargaining agreement) and/or an award; and

(b) 'monthly' employees at each of the three Huon businesses, who were paid monthly and whose terms of employment were governed by a common law contract.

1. As to the method of calculation of the relevant entitlement, the vast majority of the claims (as made under the October 2013 particulars) are for redundancy and sick leave entitlements. The Trustees say that the method of calculation of each of those entitlements for the 'weekly' Transferring Employees is that set out in the applicable certified agreement. For the 'monthly' Transferring Employees on individual employment contracts, it is that set out in his or her individual employment contract.
2. The Trustees submit that once the facts relevant to each Transferring Employee's claim and the methodology for making the calculation are proved, no further evidence of the quantum of the claim is required. Further, they submitted:[93]

While expert evidence might be given of what an expert did when carrying out a mathematical calculation, the evidence is no more than evidence directed to assisting or educating the tribunal or a summary of voluminous calculations. It is not evidence of a fact that must be proved. Where a mathematical calculation is to be performed, if the calculation is done correctly and the records from which it derives are proved, the result of the calculation is true as an analytical mathematical proposition. In the pure mathematical calculations to be performed under the enterprise bargaining agreements there are no assumptions that must be made (and proved) nor any opinions brought to bear.

1. Accordingly, the Trustees effectively seek to prove the claim for Insured Loss on the basis of the underlying facts set out in the business records and other documents that were tendered. Relevantly, in their October 2013 particulars relating to quantum, the Trustees have set out the essential facts about each employee and the source documents from which those facts are derived. The Trustees have also identified the methodology of their calculation of the employee entitlements under the applicable certified agreement for which claims are made. A separate worksheet is prepared in respect of each employee and that information is then summarised in a spreadsheet. For the most part, the Trustees' case was put on the basis that under s 558, the employment of each of the Transferring Employees was deemed to have been terminated as at 30 June 2006. Accordingly, they contended, the Transferring Employees were entitled to payment of their entitlements as calculated under the provisions of the certified agreements or individual contracts as at that date.

1. CBL's response was two-fold. First, it submitted that in assessing the Trustees' claims under both heads of loss, the court must proceed on the basis of the established principles setting out what a plaintiff must prove in order to make out his or her claimed loss. Relevantly, CBL says a plaintiff cannot recover substantial damages or claimed losses unless it proves both the fact and the amount of loss or damage. CBL submitted that if a plaintiff produces all relevant and available material on loss and damage, the court can reckon with the uncertainties in calculating the loss. If the plaintiff does not do so, the court should not speculate on matters which the plaintiff could and should have proved in evidence.[94] It submits that, in the present case, there is no evidence before the court 'proving' the fact or the amount of the insured loss as claimed in the Trustees' October 2013 particulars. That is, no evidence was adduced about the tables and schedules making up those particulars, how the tables were compiled and how the figures were derived. Nor was any evidence given on behalf of the Trustees to explain instances where the liquidators had calculated redundancy and sick leave entitlements on a different basis to that recorded in the individual contracts of the monthly employees.
2. CBL referred to the evidence identifying that the August 2012 particulars were compiled by Mr Ahmed Bise of Grant Thornton (formerly BDO), the accounting firm associated with Mr Fitzgerald and Mr Humphris,[95] and the October 2013 particulars were compiled by the Trustees' 'legal team'.[96] Mr Bise did not give evidence at the trial. CBL argues that in circumstances where the Trustees chose not to call any of those people to give evidence, with the result that their calculations and assumptions were not tested in cross-examination, the court should treat the October 2013 particulars as particulars of matters that have not been proved or tested. Further, CBL said that in the absence of proper evidence of the Trustees' insured loss claim, the court should not speculate in an attempt to assess the claim. In the absence of proof, the court should dismiss the claim.
3. Secondly, CBL submitted that ASIC v Rich[97] does not stand for the proposition for which the Trustees contend. In the relevant passage in his judgment in ASIC v Rich relied upon by the Trustees, Austin J stated as follows:

It seems to me that some of the work of a forensic accountant is to be treated as admissible in the same fashion as scientific facts. Suppose the report of a forensic accountant contains a complex financial calculation. The result of the calculation is not an opinion because, if the calculation is done correctly and the financial records from which it has been derived are proven, it is true as an analytic mathematical proposition without reliance on any inferences or questions of judgment. The expert's work is mathematical and analytical rather than based on scientific observation, but in both cases there is a factual conclusion, admissible as evidence of fact, derived from the application of specialised knowledge.[98]

1. CBL says that viewed at its highest, the passage from ASIC v Rich supports a proposition that evidence of a calculation is not necessarily a matter of expert opinion and it can be proved as a fact: the calculation is admissible as 'evidence of fact'. But that proposition does not displace the evidentiary burden that the plaintiff always carries, namely to prove the fact and the amount of damage. Here, CBL submitted, the Trustees have not proved either.
2. During the course of the trial, CBL identified in letters from its solicitors dated 24 September 2013 and 27 September 2013 that the issues that it took with the Trustees' calculations of quantum in respect of both the 'weekly' and 'monthly' employees. Further, CBL says that, due to the distinct provisions contained in the certified agreements, awards and common law contracts, it is necessary to deal with the 'weekly' and 'monthly' employees separately in respect of sick leave and redundancy. Annual leave and long service leave entitlements are the same for the 'weekly' and 'monthly' employees.[99]

Issues of principle raised in relation to the determination of quantum

1. Against that background, there are three main 'issues of principle' that arise in relation to the determination of the quantum of the Trustees' claim. The first concerns what CBL alleges are 'overpayments' made to Transferring Employees by the liquidator (or by GEERS). The second concerns whether the employees of Empire Rubber and Mills Elastomers were entitled to receive payments of their entitlements under the applicable certified agreements (as opposed to the awards). The third is whether the employees were entitled to payments in lieu of notice.

1. CBL contends that the policy, on its proper construction, indemnified a series of individual deficiencies or shortfalls in Employee Entitlements and not a single unitary loss. That is, the policy applied in respect of each individual Transferring Employee for whom the Trustees could establish a 'Deficiency in Employee Entitlements' (after the relevant credits had been applied). Further, CBL says, it follows that the 'Insured Loss' is the sum of the individual Insured Losses represented by each proven shortfall in the payment of the individual Employee Entitlements. The change is position between the Trustees' August 2012 particulars and their October 2013 particulars, as explained by Mr Fitzgerald (referred to below), effectively acknowledges the correctness of that construction.
2. CBL says that the Trustees' August 2012 particulars identified that the liquidators had typically 'overpaid' on various aspects of the employees' entitlements in the sense that the Trustees had identified 'discrepancies' between the liquidators' calculations of the amounts that were actually paid and that calculated by the Trustees in their August 2012 particulars as owing for the purposes of the policy. These discrepancies were noted by the Trustees in the calculation sheets that formed part of their particulars. In their August 2012 particulars, the Trustees accounted for these discrepancies in amounts paid to employees for particular entitlements and offset those amounts against deficiencies for other entitlements (credits across the row), and where there was an overall overpayment to an employee the Trustees treated that amount as a credit in calculating the final amount of the claim (credits down the column).[100] Mr Fitzgerald accepted in cross-examination that there were 'differences' between the liquidators' calculations and the Trustees' calculations.[101]
3. In their October 2013 particulars, the Trustees no longer apply credits 'across the row' and 'down the column'. In so doing, they effectively disregard the discrepancies they had earlier identified. In cross-examination, Mr Fitzgerald said that the Trustees were no longer allowing for credits across the row and down the column because previously the claim was a 'group claim' whereas the claim actually brought at trial was in respect of each individual employee.[102]
4. In responding to the Trustees' case as presented in their August 2012 particulars, CBL developed four scenarios which it said reflected possible outcomes on the recoverable deficiency in entitlements of each employee under the policy, taking into account the provisions of the awards and certified agreements and the fate of the businesses. These scenarios were described in the witness statement of Mr Robert Oxley, an employee solicitor with the firm acting for the defendant, as follows:

Scenario 1 - employee entitlements owed as at 30 June 2006 (that is the service of an employee must have been terminated on or before 30 June 2006).

Scenario 2 - employee entitlements accrued as at 30 June 2006 for employees that remained employed at that date but whose service was later terminated (that is annual leave and long service leave only - no redundancy entitlement).

Scenario 3 - employee entitlements owed on termination (which occurred after 30 June 2006):

(i) under an award (for Empire Rubber and Mills Elastomers only) referable to the period up to 30 June 2006;

(ii) under a certified agreement (for Nylex Frankston only) referable to the period up to 30 June 2006; and

(iii) pursuant to the terms of common law employment contracts (where such contracts have been provided) for the 'monthly' employees across all sites, referable to the period up to 30 June 2006.

Scenario 4 - employee entitlements owed on redundancy under a certified agreement (for all sites) referable to the period up to 30 June 2006 in respect of employees whose service was later terminated, on the assumption that the circumstance for triggering the payment of the certified agreement benefit had been met.

Of these, Scenario 4 is closest to the Trustees' view as to how quantum is to be derived, although the final figures arrived at by CBL and the Trustees under that scenario differ. This is due to what CBL alleged were effectively 'overpayments' made by the liquidators or payments made available under GEERS.

1. In disputing the quantum of the loss claimed by the Trustees, CBL relies upon the discrepancies the Trustees had earlier identified. CBL contends that they constitute 'overpayments', and says that, to the extent that there was an overpayment, that the proper entitlement may have been fully met and that there was also a surplus that could have been used to pay other employees' entitlements.[103] This approach gave rise to what CBL called the 'across the line' overpayments which were them summed 'down the line' to arrive at total overpayments.
2. CBL contends that when any Deficiency in Employee Entitlements is calculated under the policy, the definition of that term requires that the shortfall be the total of the Employee Entitlements:

less any amount paid or payable to or on behalf of a Transferring Employee by an External Administrator in respect of Employee Entitlements from any source including amounts available in the External Administration to be so applied and any amounts available to be so applied under the GEERS Scheme.

1. If the payments made by the liquidator or GEERS had led to some degree of overpayment, then CBL contends the insurer was not to be penalised because available funds may have been misapplied, and in circumstances where they could have been applied properly, those amounts should be brought to account in ascertaining the Insured Loss under the policy. That is, CBL effectively contends that any overpayments should be offset against outstanding deficiencies or be deducted from the total claimed deficiency as 'monies available in the external administration'.
2. To this end, once the Trustees filed their October 2013 particulars by way of substitution for their August 2012 particulars, CBL, through Mr Oxley, set about re-calculating the alleged overpayments. Mr Oxley prepared a supplementary witness statement responding to the Trustees' reformulated particulars of claim. For the purpose of doing so, Mr Oxley extended his calculations across all 453 employees who were the subject of the Trustees' original claim (Annexure H) and presented three tables (Annexure G, being CBL's Final Tables which were based on CBL's scenarios 2, 3 and 4 respectively) setting out CBL's tabulated calculations on quantum as prepared by him for the 336 employees who are the subject of the claim brought by the Trustees.[104] By way of example, to demonstrate the relative disparity between the competing claims, the Annexure G tabulation sheets summarises the overall position for CBL's Scenario 4 as follows:

Total overpayments made to 336 employees now claimed (i.e. monies available)

Total overpayments made to 117 employees no longer claimed (i.e. monies available)

1. The position that the Trustees now adopt is to acknowledge that in their August 2012 particulars they 'identified discrepancies between their calculations of entitlements and the liquidator's calculations'[105] but to submit nevertheless that those identified discrepancies do not establish 'overpayments'. Further they say CBL has placed no material before the court that would demonstrate that any employee has been 'overpaid'. In this regard, the Trustees point to the fact that payments have been made by the liquidators by way of distributions and from GEERS. No evidence was given by the liquidators nor was there any evidence from CBL to the effect that it had made enquiries of the liquidators and they accepted that errors were made. The Trustees also submitted that no evidence was adduced by CBL to suggest that GEERS made payments based on misconceptions nor did CBL take any steps to notify employees that they might have debts to the Commonwealth arising from putative overpayments.
2. The Trustees noted that all of the evidence that CBL adduced on this issue was put forward by Mr Oxley. They submit that Mr Oxley is not an insolvency practitioner and that, relevantly, he did not know significant details about the way in which the liquidation had been conducted. In essence, the Trustees contend that Mr Oxley's evidence does not prove that there was relevantly any 'overpayment' made by the liquidators or GEERS, or that there was any money which was available in the External Administration to be applied to meet any claimed Deficiencies in Employee Entitlements.
3. Many, but not all, of the discrepancies identified by the Trustees in the August 2012 particulars are attributable to the liquidators using pay rates in force after 1 July 2006.[106] The 'payroll ending date' for 2006, or the last pay day for employees of the businesses before Huon was placed in administration, appears to be either 25 or 26 June 2006.[107] The evidence was that some 289 of the employees for whom a claim was made in those particulars received a pay rise of about 4% on 1 July 2006. The evidence given on behalf of the Trustees was that because the liquidators in the winding up were concerned with the entitlements of the employees as and when made redundant, they were obliged to calculate them using the pay rates in force as at the date of actual termination. Accordingly, the liquidators calculated the entitlements in accordance with the 'weekly pay' which included the pay rise. For the purposes of the policy, however, the Trustees say that the employee entitlements are to be calculated as at the deemed date, being 30 June 2006, and on this date the employees had not received a pay rise.
4. Mr Fitzgerald was cross-examined about this and he gave the following explanation in the context of explaining the approach adopted in compiling the August 2012 particulars:

A lot of the overpayments related to the pre or post 30 June calculation, because it was - in the detail there was a 4 per cent pay rise given to most employees post 30 June. The claims were then calculated back at 30 June at the reduced pay rates, which led to a complication in that people had a claim at 30 June for a particular amount of money. When they are paid by the liquidator or through GEERS in October or later, the claim was paid at a higher rate, so their 30 June claim in raw dollars was actually less than what they were subsequently paid which led to a lot of credits in the claims...[108]

1. The Trustees continued to apply this method of calculating the claims 'back at 30 June 2006 at the reduced pay rates' in the context of the amounts claimed for redundancy, sick leave and payment in lieu of notice entitlements in the October 2013 particulars. In real terms, what this means is that in calculating the claimed Deficiency in Employee Entitlements, the Trustees do not simply rely upon the liquidators' determination of the total of the Employee Entitlements as evidencing, for the purposes of the policy, the entitlements of the Transferring Employees as at 30 June 2006. They do, however, rely upon the liquidators' determination as evidencing the amounts paid to or on behalf of a Transferring Employee by the liquidators or under GEERS. This can be demonstrated by using Mr Steven Fussell, a Nylex Frankston Rubber employee who was made redundant on 1 September 2006 when the site closed, as an example.
2. In the case of Mr Fussell, the table in his 3rd dividend letter stated as follows:

1. The Trustees submit that the letter shows that Mr Fussell's 'entitlements' to annual leave, long service leave and pay in lieu of notice were satisfied in full by payments from GEERS. Accordingly, the only claims now made by the Trustees on his behalf in this proceeding are for redundancy (in the sum of $9,324.22[109]) and sick leave (in the sum of $2,261.35[110]) totalling $11,585.57. Using the information contained in both the 3rd dividend letter and the October 2013 particulars, the claim made on behalf of Mr Fussell may be summarised as follows:

Trustees' Oct 2013 calculation[111]

1. Presented in this way, it will be seen that the shortfall amount claimed by the Trustees on behalf of Mr Fussell is less than that determined by the liquidators, because the Trustees have used the pay rate current at 'payroll ending date' for 2006 rather than the rate in force at the time his position was made redundant. Thus, in making the claim under the policy for Mr Fussell, the Trustees do not, strictly speaking, rely 'on a determination made by an External Administrator for the purposes of an External Administration specifying the Employee Entitlements due to a Transferring Employee and any Deficiency in Employee Entitlements'. For those particular entitlements in respect of which a claim is made, the Trustees rely upon their own calculation of his entitlement as at 30 June 2006, albeit one apparently performed on essentially the same basis as the liquidators' calculation, save for the pay rate used. But where no claim is made for an entitlement, such as for long service leave in the case of Mr Fussell, the Trustee treats the liquidators' (or GEERS) payment as satisfying or acquitting whatever amount was owed. That is so, it would appear, even though that entitlement was likely paid at a higher pay rate than would apply for the purposes of the policy. For the purposes of determining the shortfall as at the deemed commencement of the winding up, however, the Trustees do rely upon, and bring to account, the amounts that were actually 'paid' by the liquidators by way of dividend and under the GEERS Scheme.
2. For completeness, I summarise below the position that CBL contends for in the case of Mr Fussell on the basis of scenario 3 (i.e., sick leave capped at 6 weeks and 60% thereafter and redundancy (due to site closure) capped at 78 weeks plus $2000 ex gratia payment)[112] and scenario 4 (calculated in accordance with the certified agreement).[113] I note that CBL's calculations for Mr Fussell are the same on each of those scenarios because CBL accepts that the site closure at Frankston enlivened the provisions of the certified agreement.

1. In its reconciliation, CBL has (correctly) brought the actual payments made by the liquidators by way of distribution and under GEERS to account. When, however, CBL's reconciliation is compared with the liquidators' calculation of entitlements for Mr Fussell as set out in the table in his 3rd dividend letter (above), it will be seen that CBL has calculated different amounts for each of the annual leave, payment in lieu of notice, redundancy[115], long service leave and sick leave entitlements. For e.g., in the case of payment in lieu of notice, the liquidators calculated Mr Fussell's entitlement as being $3,477 and paid him a GEERS amount of $3,477, but CBL has not allowed him any sum by way of an entitlement to payment in lieu of notice. However, in its reconciliation, in calculating the shortfall in employee entitlements CBL has brought to account all of the GEERS sums paid.
2. Earlier in my reasons, in dealing with the construction questions that arise, I have set out my views concerning the proper construction of the policy and the calculation of the shortfall or deficiency for the purposes of the policy. In my view, for the purposes of the policy, there is only relevantly a 'shortfall' or 'deficiency' for a Transferring Employee if the amounts paid to or on behalf of that Transferring Employee by the liquidator (by way of dividend or under GEERS) are less than the total of the Employee Entitlements (as specified in subsections 596AA(2) and (3)) as at 30 June 2006. That is, in ascertaining the shortfall, all of the employee's protected employee entitlements must be calculated and brought to account.
3. If, as here, the Trustees for good reason do not seek to rely upon the liquidators' calculation of 'Total Employee Entitlements as at 30 June 2006' and instead perform the calculation for themselves afresh for the purposes of the policy, they must calculate all entitlements of the employee, not just redundancy and sick leave and payment in lieu of notice, and then bring to account the amounts paid by the liquidator (by way of dividend or under GEERS). If a shortfall is demonstrated, then a claim may be made under the policy. If the calculation does not produce a shortfall, but rather suggests that the amounts paid by the liquidator (by way of dividend or under GEERS) exceed the total of the Employee Entitlements calculated for the purposes of the policy, then no claim can be made under the policy. A discrepancy of this kind does not, however, entail the consequence that there has been an 'overpayment' for the purposes of the liquidation.
4. This is so for several reasons. First, in the present case there is no evidence that the liquidators made any error in their calculations that resulted in any overpayment being made for the purposes of the liquidation. I am not satisfied that any of the material adduced by CBL demonstrates that the liquidators' calculations of amounts paid to employees by way of distribution or from GEERS was in excess of his or her entitlement for the purposes of the liquidation. The evidence adduced by CBL may, in some cases, demonstrate that for the purposes of the policy no shortfall, or a reduced shortfall, is made out. Further, for the purposes of the policy, the shortfall is to be calculated for each employee. Even if there were demonstrated overpayments of the entitlements of a particular employee, they will be brought to account in calculating the shortfall for that employee. If there is no shortfall for that employee, then no claim lies under the policy. The sum of the shortfalls so established will represent the Insured Loss. In my view, it does not follow that any alleged 'across the line' overpayments for one employee can be used to offset what might otherwise be a shortfall for other employees.

'Restructure' and reading of the relevant awards and certified agreements - relevant principles

1. CBL submitted that where an employee is covered by an award and is employed at a site in respect of which a certified agreement applies (such as each of the Transferring Employees in this case except for those who were on common law contracts), that employee's 'entitlements' are to be determined by looking at the provisions of both the award and the relevant certified agreement. To the extent that there is an inconsistency in entitlements, the terms of the certified agreement prevail.
2. CBL points out that in the present case, the award sets out a broad set of circumstances in which redundancy payments are to be made in accordance with the scale set out in the award (up to a maximum of 16 weeks' pay). The certified agreements, on the other hand, contain enhanced redundancy pay provisions (up to a maximum of 78 weeks' pay) that would be triggered in a narrower set of circumstances. It says those (narrower) provisions had historically been negotiated between the unions representing the various employees and the Nylex companies that employed them.
3. Through evidence given by Mr Oxley, CBL effectively maintains that entitlements under the certified agreements (that applied to all three sites) are payable only where the 'employee's work functions become redundant' as a direct result of 'the introduction of new equipment of processes, restructure, site closure or significant partial closure, or site relocation'.[116] CBL further contends that none of those events applied to any of the Empire Rubber or Mills Elastomers employees where the businesses were sold as going concerns on 15 January 2007 (Mills Elastomers) and 31 May 2007 (Empire Rubber).
4. In the case of the employees made redundant at the Nylex Frankston as a direct result of the closure of that site, CBL accepts that they are entitled to redundancy pay on the scale set out in the relevant Nylex certified agreement.[117] In the case of the Mills Elastomers and Empire Rubber employees, CBL acknowledges, in the context of Mr Oxley's 'Scenario 3', that 'the jobs or positions of (most of) the particular employees ceased (in contrast to their work functions)' and does not contest that:

(a) the redundancy provisions of the relevant awards apply (and not the redundancy provisions of the Nylex certified agreements); and

(b) those employees at the Mills Elastomers and Empire Rubber sites are entitled to redundancy pay on the scale set out in the awards.[118]

1. The Trustees, on the other hand, raise four matters by way of reply. First, they contend that upon termination of the employment of the Transferring Employees, they were automatically entitled to the enhanced redundancy entitlements set out in the various certified agreements. As noted earlier, the Trustees' approach was based on the deemed termination of the employment contracts on 30 June 2006 under s 558 of the Corporations Act. They contended that a dismissal in those circumstances falls within the ordinary meaning of redundancy stated by Bray CJ in R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Cooperative Limited, as follows:

...a job becomes redundant when the employer no longer desires to have it performed by anyone. A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him, but because the employer no longer wishes the job the employee has been doing to be done by anyone.[119]

1. The Trustees said that is because, as Scott J explained in Re Grant Electrical Industries Pty Ltd (in liq):

...once the decision was made by the company that it could no longer carry on business and that a Liquidator had to be appointed then there was no longer a demand for the company's product, thus creating a situation where the employees were no longer required. It followed that the decision to put the company into liquidation by the appointment of a Liquidator came within the definition of "redundancy" within the agreement. The effect of the appointment of the Liquidator was to terminate the contract of employment between the company and its employees, but in my view the decision by the company to appoint a Liquidator necessarily preceded that termination.[120]

1. Secondly, the Trustees say that, as a matter of fact, employees at the Empire Rubber and Mills Elastomers sites were made redundant on either 25 July 2006, 31 July 2006, 1 September 2006, 31 January 2007, 15 February 2007 or 31 May 2007. They say that CBL's proposition, however, is based on the sale of the businesses on 15 January 2007 (Mills Elastomers) and 31 May 2007 (Empire Rubber).[121] But the reality is that only 90 employees of Empire Rubber were made redundant on 31 May 2007 when the business was sold.[122] There were no employees of Mills Elastomers that were made redundant on or about 15 January 2007.[123] By then the head count reductions had already occurred.[124]
2. Thirdly, the Trustees contend that CBL's contention is based on an erroneous construction of the certified agreements. By way of example, cl 15 of the Empire Rubber AMWU/ETU Certified Agreement 2003 provides as follows.

The Company and the Unions recognise the serious consequences that the loss of employment and membership can have on individual employees and on the workforce as a whole and to this aim it is agreed that the parties will consider every avenue available to avoid retrenchments including where practicable the introduction of a shorter working week.

In the event that retrenchments are unavoidable, the following process for the selection of employees to be retrenched will be used:

15.2.1.1 The Company reserves the right to reject any application for redundancy, based on their need to retain necessary skills and experience levels;

15.2.1.2 In the event that there are insufficient volunteers, given consideration of the Company's need to retain skills and experience levels, the Company will consult with the Union to overcome the problem arising from insufficient appropriate volunteers.

15.3.1 In the event that work functions become redundant as a direct result of the introduction of new equipment or processes, restructure, site closure, significant, partial site closure or site relocation, and employees are not able to be transferred within the company, it is agreed that the Union and employees will receive at least four (4) weeks' notice.

15.3.2 In the event of the Company needing to retrench due to external effects such as reduced customer demand, the Company will endeavour to advise and discuss the circumstances with the Union, together with the employees affected, as far in advance as possible.

15.3.3 Employees will receive four (4) weeks' pay (5 weeks if over 45 years of age) in lieu of notice payment.

15.3.4 Payment in lieu of notice made in accordance with this clause shall be in addition to the service-related payments contained in clause 12.6 [sic] of this agreement.

The Company agrees to pay the annual leave loading on all pro-rata leave entitlements.

The Company agrees to pay Long Service Leave on a pro-rata basis for employees who have completed five (5) years of more service.

Note: 1. Payment will be calculated on a pro-rata basis for each completed month of service.

1. Weekly pay is defined as ordinary time weekly earnings.

Payment of unused accrued award/statutory sick leave to a maximum of six (06) week's entitlement, thereafter 60% of leave accruement will be paid.

15.8.1 Service related payments other than statutory entitlements are subject to a maximum limit of seventy-eight (78) weeks' pay.

15.8.2 The calculation of the maximum limit of service related payments (that is seventy eight weeks' pay) should not include Long Service Leave, Annual Leave, Sick Leave and payments in lieu of notice to which a redundant employee is entitled under this agreement.

The Company recognises its responsibility under the Accident Compensation Act in relation to employees who have current WorkCover claims and are in receipt of benefits. The Company undertakes that if such an employee is included in the retrenchment list and is notified that he/she is to be retrenched they will receive the full provisions of this retrenchment agreement.

Each employee will receive his or her full entitlements under the Fund.

The company undertakes to provide the following areas of assistance to employees who are working out their period of notice.

15.11.1 Assistance will be given wherever possible to find alternative employment for retrenched employees.

15.11.2 Up to one (1) days paid time off will be allowed employees each week on production of proof to attend interviews for alternative employment.

15.11.3 All retrenched employees will be supplied with a certificate of service stating the reason for termination.

15.11.4 Right of Re-employment. Any retrenched employee shall have preference of re-employment within twelve (12) months provided that they apply for a vacant position.

1. CBL's argument relies on cl 15.3.1, which deals with the notice requirement and the payments to be made in lieu of notice.[125] CBL maintains that the notion of 'work functions become redundant' embodied in cl 15.3.1 governs the notion of redundancy for the purposes of cl 15 of the certified agreement. The Trustees dispute this construction and contend that cl 15.3.1 applies only to 'notice' payments. They point out that cl 15.3.4 expressly distinguishes payments in lieu of notice that are required to be made in accordance with cl 15.3 from service-related payments to be made under cl 15.6, thus confirming that those service-related payments are not governed by cl 15.3.1. They also rely on the distinction between the nature and purpose of a notice period and a severance payment highlighted by von Doussa J in Fryar v Systems Services Pty Ltd[126] as explaining the differences in treatment in the certified agreements between notice periods and service-related payments. In that case, his Honour said:

A period of notice is to give an employee the opportunity to adjust to the change in circumstances which is to occur and to seek other employment (citation omitted). The period may be worked out ... and it often is, as it is recognised that the employee's prospects of obtaining other employment may be better if the search is undertaken while the employee remains in employment...

A severance [sic] payment, however, is intended to provide a payment as compensation for the loss of non-transferable credits and entitlements that have been built up through length of service such as sick leave and long service leave, and for inconvenience and hardship imposed by the termination of employment through no fault of the employee: Termination, Change and Redundancy case (1984) 8 IR 34 at 62, 73.[127]

1. Fourthly, the Trustees say that in any event, where employees were made redundant having not been made offers of employment by the purchaser of the business, that brings those redundancies within the 'restructure' limb of the sub-clause.[128] They contend that to establish that there was a 'restructure' it is necessary to consider only the following facts:
   • the liquidators' report of 29 November 2007 shows there were ongoing operating losses in the Empire Rubber business and that operational costs were reduced through 'head count reductions' in August 2006 and December 2006;
   • the business was sold to Motherson Elastomers in July 2007 in circumstances where the purchaser did not purchase the contracts of employment;
   • Motherson Elastomers offered employment only to 100 employees; and
   • according to the liquidators, had the business not been sold, the alternative was the closure of the business and the loss of all employee positions.
2. The Trustees contend that those facts demonstrate that the Empire Rubber business was 'restructured' through a sale process and further head count reductions so as to ensure the business survived and to increase its competitiveness or profitability.[129] Accordingly, they argue that those circumstances bring the sale within the 'restructure' limb of the clause.

1. At this point it is convenient to set out the factual matters recorded by the administrators/liquidators in their reports concerning the status and movement of employees of the three businesses.
2. In their 2006 report, the administrators stated:

2.1 Appointment of Administrators

Huon's director, Mr John Schulz, resolved to appoint Administrators to Huon after he determined that funding was not available to pay for the urgent restructuring of the business operations, including necessary redundancies that were required at Empire Rubber, FRN and Mills.

At 4pm on 30 June 2006, Messrs Anthony Sims, Scott Pascoe and Ken Sellers of SimsPartners were appointed Administrators to Huon pursuant to Part 5.3A of the Act.

...

4.1 Status of the business divisions of Huon

...

Empire Rubber

➢ After consultation with Management, the Administrators took the decision to reduce employee numbers in response to the substantial decline in revenue and consequent trading losses being incurred. ...

➢ On 25 July 2006 employee numbers were reduced from 365 to 279 (86 employees were made redundant). Since then, resignations have reduced employee numbers at Empire Rubber to 266.

➢ ...

➢ The business is continuing the trade whilst a buyer is sought.

➢ Employee numbers have reduced since the Administrators' appointment from 42 to 27. Staff at Mills were offered voluntary redundancy, notwithstanding that the Administrators did not have available funds to meet redundancy costs. As a result of this voluntary redundancy program 15 staff accepted voluntary redundancy and ceased their employment with Mills on 30 July 2006.

➢ ...

➢ The business is continuing the trade whilst a buyer is sought for the business as a going concern.

➢ The business continued trading until the end of August 2006 as part of a run-off agreement between the Administrators and FRN's major customer, General Motors Holden (GMH).

➢ With the exception of two managers, who were retained to assist the Administrators with certain completion aspects of the run-off agreement, all FRN staff were made redundant on 1 September 2006. Certain contract staff were utilised to assist in the completion of the run-off agreement which was formally completed on 22 September 2006. At this time the two managers were made redundant.

4.2 Sale of the business divisions

The Administrators have retained international consulting firm, Booz Allen Hamilton ('BAH') to assist them with the sale process for the Empire and Mills businesses. ...

...

Empire Rubber

... It is the Administrators' preference to achieve a sale of this business as a whole in order to ensure the maximum numbers of employees transfer to a purchaser. The Administrators are working with BAH and prospective purchasers to achieve this.

FRN

Given the closure of the FRN business, the Administrators are of the view that there is little chance that FRN will be sold as a going concern. ...

Mills

Subsequent to the restructuring of the labour force, Mills is cash flow positive and profitable. ...

The Administrators are confident that the Mills business will be sold as a going concern.

1. In their report at 'Note 10-Employee entitlements', the administrators summarised employee entitlements under both the 'going concern' and 'forced sale (closure)' scenarios.[130] The key assumptions used in estimating the financial position of Huon on each of these scenarios were set out at Part 5.1 of their report, as follows:

As noted above, the going concern scenario assumes that the Mills and Empire Rubber businesses are able to be sold. Key assumptions in this scenario are as follows:

➢ That an additional 40 redundancies are required to be made at Empire Rubber bringing that employee count down from 266 to 226.

➢ That those remaining 226 employees at Empire Rubber are transferred to a new purchaser along with their aggregate entitlements for unpaid leave which are approximately $2.7 million.

➢ That the current 28 employees at Mills Elastomers transfer to a new purchaser along with their respective entitlements for unpaid leave of approximately $483,000.

➢ That the purchasers for each of Empire Rubber and Mills Elastomers businesses pay going concern values for inventory on hand at the completion date. Further details are set out on page 34.

➢ No particular going concern business values for plant and equipment and goodwill have been assumed due to the commercial confidentiality which surrounds current sale negotiations.

➢ Unpaid superannuation of all Huon employees is estimated to be met in full from the assets of Huon.

The forced sale scenario assumes that neither of the Empire Rubber or Mills businesses is able to be sold.

1. In Note 10 the 'going concern' scenario is presented in a table as set out below.[131] The scenario 'assumes that 254 employees across Empire Rubber and Mills Elastomers transfer to a new business owner' and that their entitlements would also transfer to a new owner.

1.2 Brief background to Huon Corporation

...

The Liquidators sold the business of Mills as a going concern on 15 January 2007 with 28 employees and their entitlements transferring to the new owners, Associated Controls.

The business of Empire was sold as a going concern by the Liquidators on 31 May 2007 with 100 employees and their entitlements transferring to the new owners, Motherson Elastomers.

...

2. Empire Rubber

2.1 Trading results

...

We make the following comments and observations regarding the above results:

➢ ...

➢ Faced with declines in Automotive sales volumes, steps were taken during our tenure as Administrators/Liquidators to cut operational costs through head count reductions. These took effect in August 2006 and December 2006. Over the 11 month trading period the head count of employees at Empire Rubber was reduced from approximately 365 to approximately 220 employees. In the absence of these employee head count reductions losses, operations losses would have been substantially higher than those that were incurred.

➢ ...

2.2 Sale process

The sale of the Empire Rubber business to Motherson Elastomers Pty Limited ("Motherson') completed on 1 June 2007.

...

Key elements of the sale transaction between Huon and Motherson were:

➢ ...

➢ Continuing employment was offered by Motherson to 100 Huon employees. These particular employees and all of their entitlements have transferred to Motherson. Accordingly, they are no longer owed money by Huon.

➢ In addition to these employee transfers we understand that a further number of former employees of Empire Rubber have been retained by Motherson as casuals. These particular individuals who have taken up casual employment remain owed money by Huon because their entitlements have not been assumed by Motherson.

➢ ...

3. FRN

3.1 Business closure in August 2006

...

The Administrators negotiated an extension with GMH that resulted in FRN continuing to trade until the end of August 2006.

4. Mills Elastomers

...

4.2 Employee movements

The employee head count for this business was reduced from approximately 43 to 28 in July 2006 following our appointment as Administrators.

With the exception of one employee, all remaining staff and their employee entitlements were transferred to the purchaser of Mills Elastomers when this business was sold on 15 January 2007.

...

4.4 Completion of the sale of the business

On 15 January 2007, Associated Controls completed their purchase of the Mills Elastomers business. The majority of remaining staff at Mills transferred from Huon to Associated Controls as at the sale date. As with the Motherson sale, these Mills employees and all of their entitlements have transferred to associated Controls. Accordingly, they are no longer creditors of Huon.

1. In their 2007 report, the liquidators also summarised the position concerning payments made under GEERS. In summary, they noted that following the GEERS payments made to the 120 Empire Rubber employees made redundant in June 2007, all former Huon employees should by now have received 100% of their RDOs, leave (annual and long service) entitlements, notice pay and up to 16 weeks of redundancy pay through the GEERS programme. They added that during the week ending 14 December 2007 they expected to pay employee creditors a dividend on the amounts currently owed to them for unpaid sick leave and unpaid redundancy pay.[132]
2. In their 2008 report, the liquidators stated:

1.2 Brief background to Huon Corporation

...

The business of FRN in Frankston was wound down around August 2006 following the completion of that business unit's main contract with Holden. All employee contracts were terminated by virtue of the closure of the plant. The Frankston premises were later sold to a property developer.

The Liquidators sold the business of Mills Elastomers as a going concern on 15 January 2007 with 28 employees and their entitlements transferring to new owners, Associated Controls. Those new owners also purchased the premises of Mills Elastomers at Dandenong.

The business and the premises of Empire Rubber were sold as a going concern by the Liquidators on 31 May 2007 to Motherson Elastomers. 100 employees and their entitlements transferred to the new owners.

1. The current position of 'employee creditors' as at 30 June 2008 was discussed at Part 7.1 of their report. It showed that the total amounts paid to employees via GEERS and dividends from Huon was $13.4 million, and $5.8 million remained owing. The liquidators stated:
   • ➢ Since our last report employee creditors were paid a dividend of $2.9 million in December 2007 followed by a further dividend of $1.6 million in March 2008. The dividend paid in March 2008 was comprised of two payments as detailed below:
     • The ex-employees received approximately $1 million for outstanding redundancy amounts owing
     • DEEWR received approximately $0.6 million for funding provided to employees for redundancies in November 2006

Outlook for additional payments to employee creditors

➢ The ex-employees of Huon have now received on aggregate 70% of the entitlements owed to them as a result of the termination of their employment with Huon.

➢ Any further distributions are dependent predominantly on the outcome of the claim against the insurer CBL and any other claims by Huon.

➢ ...

1. In the 2009 report, the liquidators continued to show the current position of employee creditors as having a balance owing 'after DEEWR payments and Huon dividends' of $5.8 million, and there was an amount of $3.7 million currently owed to DEEWR for 'funding of employee claims'. That reflected the position that the amounts paid to the former employees to the businesses were advances made under GEERS. The liquidators noted that there are 'a large number of ex-employees who had greater than 5 years of service and it is these ex-employees who remain creditors of Huon.' These were individuals whom the liquidators said 'had greater than 16 weeks owing for redundancy when their employment was terminated and following their GEERS payments together with additional dividends from Huon, they continue to still be owed money by Huon.'[133]

1. The Trustees argue that the certified agreements incorporate the ordinary meaning or notion of redundancy. They effectively contend that with the appointment of the liquidators, the employer signalled that it no longer desires the jobs performed by the employees to be performed by anyone, with the result that their jobs became 'redundant' for the purposes of the certified agreements. The Trustees submit that when one reads the service related payment provisions in cl 15.6, 'all that you have is a scale', and that it follows that if 'you have done service, you get paid.'[134] In other words, if there is a termination of employment on a redundancy scenario of the kind described by Bray CJ in the Adelaide Milk Supply Co-op case,[135] then the employee is entitled to the service related pay.
2. CBL on the other hand contends that the notion of redundancy embodied in the certified agreements is a narrower concept, being that described in the 'Notice' provision contained in cl 15.3. That concept is confined to the event where 'work functions become redundant as a direct result of the introduction of new equipment or processes, restructure, site closure, significant partial closure or site relocation and employees are not able to be transferred within the company'.
3. In Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union of Western Australia,[136] Brinsden J said that the meaning of a provision of an industrial agreement is to be obtained by considering the terms of the agreement as a whole.[137] In the same case, Kennedy J explained that the process of interpretation of a provision of an award or agreement should not be one that is 'too legalistic'. His Honour stated:

Allowance must be made for the fact that the award or industrial agreement may have been drafted by industrial rather than necessarily by skilled draftsman so that there should not be "too literal adherence" placed on the strict technical meaning of words, but that the matter should be viewed broadly to give the agreement a meaning consistent with the intention of the draftsman. Subject to this, the rules to be applied in interpreting an industrial agreement are those applied in the interpretation of statutes, deeds or other documents.[138]

1. That approach accords with the view expressed by the High Court in Amcor Ltd v Construction, Forestry, Mining and Energy Union[139] to the effect that the task of construction of an industrial agreement involves ascertaining what a reasonable person would have understood the agreement to mean and the language used in the agreement should be understood in the light of its industrial context and purpose.[140] As Gleeson CJ and McHugh J observed, however, '[i]n the industrial context, redundancy of position is not a concept of clearly defined and inflexible meaning',[141] nor is it 'a legal or industrial term of art'.[142]
2. In the present case, each of the certified agreements contains a chapter headed 'Redundancy Provisions', but those provisions do not include any definition of 'redundancy' or the companion expression 'retrenchment'. The 'intent of the agreement' as it concerns redundancy is stated to be a recognition by the company and the unions of the 'serious consequences' that loss of employment and membership can have on individual employees and the workforce as a whole, and an agreement that the parties will consider every avenue available to avoid retrenchments. The provisions refer to both 'redundancy' and 'retrenchments'. As expressed, the concept of 'retrenchment' (and 'retrenchment selection') appears to relate to the act of terminating the services of the employee in circumstances where their job or position has become 'redundant'.
3. The 'Notice' provision, contained in cl 15.3 of the agreement, refers to two events:

(1) the event that 'work functions become redundant as a direct result of the introduction of new equipment or processes, restructure, site closure, significant partial closure or site relocation and employees are not able to be transferred within the company'; and

(2) the event 'of a company needing to retrench due to external effects such as reduced customer demand'.

1. In the former case it is 'agreed that the Union and employees will receive at least four (4) weeks' notice' and in the latter, 'the company will endeavour to advise and discuss the circumstances with the Union, together with employees affected, as far in advance as possible'. Provision is also made for payment in lieu of notice of four or five weeks' pay depending on age. Payment in lieu of notice is expressed to be additional to the service-related payments specified (cl 15.3.4) and the service-related payments expressly do not include Long Service Leave, Annual Leave, Sick Leave and payments in lieu of notice to which a redundant employee is entitled (cl 15.8.2).
2. In determining what is meant by the concept of redundancy for the purposes of the agreement, I propose to apply the ordinary rules of construction of contracts discussed earlier, but also to heed the cautionary note expressed by Kennedy J in Robe River of not placing 'too literal adherence' on the strict technical meaning of words.
3. Perusal of the certified agreements reveals each of them also includes a chapter headed (variously) 'Relationship to Previous Agreement' or 'Introduction of Change and Consultation', whereby the parties 'agree to extend and improve the process of consultation established by the previous agreements by applying the following provisions.' Relevantly, cl 14.2.1 of the Empire Rubber AMWU/ETU Certified Agreement 2003 provides as follows:

14.2.1.1.1 Where the employer is planning to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects of employees, whether or not a decision has been made, the employer shall notify the employees who may be affected by the proposed changes and their union.

14.2.1.1.2 "Significant effects" include termination of employment, major changes in the composition, operation or size of the employer's workforce or in the skills required, the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work locations and the restructuring of jobs. Provided that where the Award makes provisions for alterations of any of the matters referred to herein an alteration shall be deemed not to have significant effect.

14.2.2.1 The employer shall discuss with the employees affected and their union, inter alia, the introduction of the changes referred to in paragraph [14.2.1.1.1] hereof, the effects the changes are likely to have on employees, measures to avert or mitigate the adverse effects of such changes on employees and shall give prompt consideration to matters raised by the employees and/or their union in relation to the changes.

Where an employer has made a decision that the employer no longer wishes the job the employee has been doing by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, the employer shall hold discussions with the employees directly affected and with their union.

14.2.3.2 The discussions shall take place as soon as is practicable after the employer has made a definite decision, which will invoke the provisions of paragraph [14.2.3.1] hereof and shall cover, inter alia, any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned.

14.2.3.3 For the purposes of the discussion the employer shall, as soon as practicable after making a decision but before any terminations, provide in writing to the employees concerned and their union, all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which, or the time when the terminations are likely to be carried out. Provided that any employer shall not be required to disclose confidential information, the disclosure of which would be inimical to the employer's interest.

The employer shall, upon receipt of a request from an employee whose employment has been terminated, provide to an employee a written statement specifying the period of his or her employment and the classification of or the type of work performed by the employee.[143]

1. The notion of redundancy described in cl 14.2.3 of an employer having made a decision that it no longer wishes the job the employee has been doing done by anyone reflects the ordinary meaning of redundancy as expressed by Bray CJ in the Adelaide Milk Supply Co-op case.[144] That is a wider concept than the particular types of redundancy described in the notice provision in cl 15.3. Indeed, the concept of redundancy described in cl 14.2.3 is expressed in virtually the same terms as the definition of redundancy that is included in each of the awards.[145]
2. Accordingly, when the redundancy provisions in cl 15 are looked at in the context of the certified agreement as a whole, in my view, it is clear that the relevant concept of redundancy for the purposes of ascertaining the entitlements of the retrenched employee is the ordinary meaning of redundancy. This construction is confirmed when regard is had to the stated intent of the agreement and the recognition of the serious consequences that attend the loss of employment, and the introduction of the improved consultation processes and procedures in cl 14. In my view, such a construction of the provision reflects what a reasonable person would have understood the language used in the agreement to mean, viewed in the light of its industrial context and purpose.
3. Accordingly, I find that the redundancy provisions of each of the certified agreements were enlivened when Huon was placed in liquidation. I accept the Trustees' primary submission that, with the appointment of the liquidators, the employer signalled that it no longer desires the jobs performed by the employees to be performed by anyone, with the result that their jobs became 'redundant' for the purposes of the certified agreement. In the case of those Transferring Employees covered by the certified agreements, I am satisfied that upon termination of their employment, those employees became entitled automatically to the redundancy entitlements set out in the certified agreements.
4. But even if, contrary to my view, the narrower concept of redundancy described in cl 15.3 applied, as contended for by CBL, it is very likely that the jobs of the Transferring Employees would also be found to have become became 'redundant' for the purposes of the certified agreements.
5. In the case of the Nylex Frankston weekly employees whose employment was terminated as a direct result of the closure of the Nylex Frankston site on 1 September 2006, their jobs became 'redundant' for the purposes of the relevant certified agreement. I therefore find each of them is entitled to redundancy pay on the scale set out in the agreement.
6. In the case of the employees of Empire Rubber and Mills Elastomers, the Trustees rely upon statements made by the administrators/liquidators in their successive Reports to Creditors as establishing the factual foundation for their contention that the Transferring Employees jobs became 'redundant' for the purposes of the relevant certified agreement. The relevant passages relied upon have been extracted and reproduced above.
7. It seems clear that the sale of the Empire Rubber and Mills Elastomers businesses took place following a concerted programme of activity designed by the administrators/liquidators to make them attractive for sale as a going concern. To facilitate this, from early in the administration they identified the need to undertake head count reductions if the businesses were to be sold as a going concern. With the smaller workforce, the competitiveness and profitability of the Empire Rubber and Mills Elastomers businesses would likely increase. The administrators envisaged that this head count reduction process would continue through to the point of sale of the businesses. In their Report to Creditors they described the going concern scenario as a 'restructuring'. The alternate scenario they identified was a forced sale or closure of the Empire Rubber and Mills Elastomers businesses and the loss of all employee positions. Eventually each of these businesses was sold as a going concern.
8. In the case of Empire Rubber, there were ongoing operating losses in the Empire Rubber business and operational costs were reduced through further 'head count reductions' in August 2006 and December 2006. The sale to Motherson Elastomers took place in July 2007. At the commencement of the administration there were 365 employees in the Empire Rubber business. Redundancies and resignations effected during the administration reduced this number by 86 and 13 respectively so that at 22 August 2006 there were 266 Empire Rubber employees.[146] With further head count reductions effected by the administrators/liquidators during late 2006 and early 2007 number, the number of employees was further reduced to approximately 220. Of these, Motherson Elastomers offered employment to only 100 Empire Rubber employees. These employees and all of their entitlements were transferred to Motherson Elastomers, so that 'they are no longer owed money by Huon.'[147]
9. The Trustees included in the Supplementary Court Book:
   • a listing of the names of the Empire Rubber employees to whom Motherson Elastomers sent a request for expression of interest for ongoing employment, and a corresponding list of employees who responded in the affirmative;
   • a listing of those Empire Rubber employees who accepted the offers made by Motherson Elastomers; and
   • a listing of those Empire Rubber employees whose position became redundant.
10. In the case of Mills Elastomers, at the commencement of the administration there were 43 employees in the business. Redundancies and resignations effected in July 2006 during the administration reduced this number by 14 and 1 respectively so that, as the administrators noted, at 22 August 2006 there were 28 employees 'after restructuring'.[148] The liquidators reported that with the exception of one employee, all remaining staff and their employee entitlements were transferred to the purchaser when the business was sold on 15 January 2007.[149]
11. Counsel for the Trustees has confirmed that no claim is made in this proceeding for any employee who transferred on to a purchasing business following the demise of Huon.[150]
12. The expression 'restructure' is not defined in any of the certified agreements. The ordinary meaning of the expression is 'to change the organisation or structure'[151], or 'give a new structure to'[152], or to 're-build' or 're-arrange'. In the relevant sense of the word as used in business or manufacturing, it means to 'change the pattern of employment, distribution, etc, especially when this results in job losses.'[153]
13. Some helpful indication of the meaning of the expression in the employment context can be gleaned from the observations of Wilcox CJ in Howarth v Babin.[154] In that case, in the context of considering a claim for compensation for unlawful termination, his Honour observed as follows:

Subject to any specific constraint imposed by the law, it is the right of all employers, at any time, to restructure their businesses in such manner as they might think desirable in order to increase their competitiveness or profitability. The entitlement is not limited to employers who must do this in order to survive. And the restructure of a business may involve the downgrading of a position. If an employee occupying a position that is to be downgraded is unsuitable for the new position, or unwilling to move to it, there may be a valid reason for the employer to terminate that employee's employment, on proper notice or with payment in lieu of notice.[155]

1. In the present case, I am satisfied that in the context in which they occurred, the sale of the businesses and the head count reductions associated with and preceding the sale, were part of a restructuring of the businesses. Accordingly, I am satisfied that the redundancy provisions of the certified agreements were enlivened, with the result that for those employees who were made redundant having not been made offers of employment by the purchaser of the business, their redundancies would fall within the 'restructure' limb of the sub-clause.

1. For completeness, I shall also deal with the award provisions, lest they be found to have relevance for any of the Transferring Employees.
2. In circumstances where the relevant certified agreement does not apply to a Transferring Employee, regard must also be had to the provisions of the relevant award. Each of the awards contains a clause headed 'Redundancy' that describes the rights and obligations of employers and employees 'in circumstances where an employer no longer requires a job to be done by anyone.'[156] The concept of 'redundancy' is defined, as follows:

Redundancy occurs where an employer had made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and that decision leads to the termination of employment by the employee, except where this is due to the ordinary and customary turnover of labour.[157]

1. In each case, notice of termination is required to be given by the employer and payment in lieu of the prescribed notice 'must be made if the appropriate notice period is not given'.[158] Severance pay is provided for in cl 4.4.2(a). Save where the employer is a 'small employer', an employee whose employment is terminated by reason of redundancy is entitled to severance pay in respect of a period of continuous service. The range extends to a maximum amount of 16 weeks' pay for between 9 years and less than 10 years continuous service, and then reduces to 12 weeks' pay for continuous service of 10 years and over.
2. In the present case, the redundancy payments made to the Transferring Employees by the liquidators by way of distribution and under GEERS have been calculated by reference to the cap on years of service under the relevant award.

1. In the case of the 17 'monthly' employees, whose terms of employment are said to be governed by a common law contract, 12 of them were employed with Empire Rubber and 5 were employed with Nylex Frankston.

1. I shall deal with the position of the Nylex Frankston employees first.
   • **Graeme Bolwell (**Frankston-Development Engineer). Terminated: 1 September 2006
2. In their October 2013 particulars, the Trustees have made a claim on behalf of Mr Bolwell for the sum of $63,775.11 for redundancy ($42,129.86) and sick leave ($21,645.25) entitlements.[159] They have produced a contract for Mr Bolwell dated 13 November 1990. The contract makes no provision for payment of unused sick leave. Accordingly, CBL contends that no amount should be allowed.
3. Redundancy is addressed in cl 11 of Mr Bolwell's contract, as follows:

In the exceptional case of a reduction in personnel becoming necessary, termination payments would be made in accordance with the following:

One month's severance

Two weeks' per completed year of service

Pro rata long service leave (after five (5) years).

Accordingly, CBL contends that under cl 11 of his contract, Mr Bolwell's redundancy entitlement is 66 weeks for 31.75 years of service (2 x 31 = 62 + 4 = 66 weeks).

1. The Trustees, however, rely upon cl 13 of his contract, which provides that should Mr Bolwell become a member of a union which 'is or could be covered by an Award', then 'these conditions of employment may become invalid and a new Conditions of Employment agreement may apply in line with the applicable Award' (emphasis added). Clause 13 makes clear that it is Mr Bolwell's 'responsibility to inform the Company of this membership' if he wishes the Company to take it into account when setting his Conditions of Employment. The Trustees contend that Mr Bolwell became a member of the AMWU. This was evidenced by the provision of photocopy of Mr Bolwell's union card, which showed he was a financial member as at 30 September 2006. The AMWU EBA applied to members of the union working at the Frankston site. The AMWU EBA provided for an employee's entitlements for sick leave and redundancy. The Trustees rely on those facts and on a memo sent to all employees to support the inference that the conditions of employment under Mr Bolwell's contract were varied so as to entitle him to the amounts claimed.
2. An incomplete copy of Mr Bolwell's GEERS form is included in the Court Book.[160] It records him as having started work on '09/09/1974' but does not state when he finished work. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has been sold and he has not been re-employed with the new owners. As page 3 of the form is missing, there is no evidence of the answer Mr Bolwell gave to the question in Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known'.
3. Mr Bolwell did not give evidence at the trial. Based on the 3rd dividend letter, it appears that the liquidators calculated Mr Bolwell's entitlements as at 30 June 2006 on the basis that he was entitled to unused sick leave and enhanced redundancy payments, and he received amounts under GEERS for annual leave, long service leave and payment in lieu of notice.
4. The Trustees' calculation sheet for Mr Bolwell included with the October 2013 particulars does not disclose a termination date for Mr Bolwell. However, the summary table that the respective parties used in closing submissions[161] (summary table) adopts the date of the closure of the Nylex Frankston site on 1 September 2006 as his termination date. His GEERS form is dated 22 October 2006, which is consistent with his termination having occurred at the earlier date. The Trustees have calculated Mr Bolwell's entitlements on the basis that the certified agreement applies. They contend that Mr Bolwell was paid amounts for sick leave and redundancy by the liquidators and GEERS on the basis that the certified agreement applied.
5. The Nylex Frankston Site agreement is a certified agreement that came into force from 11 November 2003. The 'coverage' of the certified agreement was addressed in cl 3. In summary, the certified agreement applied to all of the Nylex Frankston employees who are employed at the 300 Frankston-Dandenong Road site and are 'employed in classifications or occupations covered by the awards in clause 6 and are members of the [sic] one of the unions.' The parties who are bound by the certified agreement are stated in cl 4. The relationship of the certified agreement to the parent award is addressed in cl 6. Clause 6.1 provides that '[w]here there is any inconsistency between this agreement and the Award or the Metal Engineering and Associated Industries Award 1998, this agreement shall take precedence to the extent of any inconsistency.' The Trustees have demonstrated that Mr Bolwell was a member of the union and as such was covered by the Nylex Frankston Site agreement. In those circumstances, it is likely that when Mr Bolwell became a member of the AMWU, his contract terms and conditions were varied in the manner envisaged by cl 13 of his contract, to take into account the enhanced provisions of the certified agreement which would prevail in the event of any inconsistency with the terms of the award. Further, the outcome of the calculations performed by the liquidator suggest that the liquidator and GEERS have paid employee entitlements to Mr Bolwell on the basis that the certified agreement applied. In the circumstances, and given the site closure at Nylex Frankston, I am satisfied that Mr Bolwell is entitled to redundancy and sick leave entitlements calculated on the basis of the certified agreement rather than as set out in his original contract.
6. In the case of Mr Bolwell, the outcome that CBL contends for on Mr Oxley's Scenario 4 (calculated in accordance with the certified agreement) is exactly the same as that which CBL contends will apply if calculated in accordance with his contract (Scenario 3). In each case, CBL says the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements (as calculated by CBL), being Annual Leave ($2,200.01), PILN (referring to payment in lieu of notice) (zero), Redundancy ($87,097.57), Long Service Leave ($20,566.44) and Sick Leave (zero), giving him a notional (total) entitlement of $109,864.02 less payments from the liquidators totalling ($66,017.96) and less GEERS payments totalling ($51,956.08), producing what CBL contends is an 'overpayment' of ($8,110.02) rather than a shortfall or deficiency.[162]
7. In circumstances where I have determined that, contrary to CBL's submissions Mr Bolwell is entitled to both an enhanced redundancy payment and a sick leave payment under the certified agreement, it is necessary to undertake a fresh calculation to ascertain whether, when all of his employee entitlements are considered as at 30 June 2006 using the (lower) pay rate in force at that time, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy.
   • **Terry Cranch (**Frankston-Process Worker). Terminated: 1 September 2006
8. The Trustees have made a claim on behalf of Mr Cranch for the sum of $46,264.31 for redundancy ($37,171.24) and sick leave ($9,093.07) entitlements.[163] They have produced a memorandum of the conditions of employment for Mr Cranch dated 5 October 1988. The conditions of employment for Mr Cranch provide in cl 11 that in the exceptional case of a reduction in personnel becoming necessary, 'a redundancy payment would be applicable and would be based on the agreement in operation with the major union on site.'
9. An incomplete copy of Mr Cranch's GEERS form is included in the Court Book.[164] It records him as having started work on '16/05/1984' but does not state when he finished work. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has been sold and he has not been re-employed with the new owners. As page 3 of the form is missing, there is no evidence of the answer Mr Cranch gave to the question in Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known'.
10. Mr Cranch did not give evidence at the trial. Based on the 3rd dividend letter, it appears that the liquidators calculated Mr Cranch's entitlements as at 30 June 2006 on the basis that he was entitled to unused sick leave, enhanced redundancy payments and payment in lieu of notice.
11. The Trustees' calculation sheet for Mr Cranch included with the October 2013 particulars does not disclose a termination date for his employment. However, the summary table adopts the date of the closure of the Nylex Frankston site on 1 September 2006 as his termination date. His GEERS form is dated 21 October 2006. That date is consistent with him having ceased employment at the earlier date.
12. The Trustees have calculated Mr Cranch's entitlements on the basis that the certified agreement applies. They contend that Mr Cranch was paid amounts for sick leave and redundancy by GEERS and the liquidators on the basis that the certified agreement applied. I am satisfied that the redundancy provisions of the certified agreement apply to Mr Cranch.
13. With the site closure, the redundancy provisions in the relevant certified agreement have been 'triggered'. Consequently, CBL accepts that where an employee's employment was terminated due to site closure, unused accrued sick leave and severance payments are payable in accordance with the agreement. The Trustees have demonstrated that Mr Cranch falls into that category. The only live issues between the parties are whether Mr Cranch did have an entitlement to payment in lieu of notice and the issue of 'overpayments' generally. A payment in lieu of notice in the sum of $6,146 was paid to Mr Cranch under GEERS, satisfying his entitlement as per the certified agreement. For the reasons set out below, I am satisfied that a payment in lieu of notice was owed and payable to him.
14. In the case of Mr Cranch, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($3,667.78), PILN (zero), Redundancy ($93,087.57), Long Service Leave ($14,532.32) and Sick Leave ($18,202.76), giving him a notional (total) entitlement of $129,490.44 less payments from the liquidators totalling ($48,300.42) and less GEERS payments totalling ($44,646.93), producing a shortfall or deficiency of $36,543.09.[165]
15. I am satisfied that Mr Cranch's entitlements are to be calculated under the certified agreement and he is entitled to an enhanced redundancy payment, payment in lieu of notice and a sick leave payment. Accordingly, it is necessary to undertake a fresh calculation to ascertain whether when all of his employee entitlements are considered as at 30 June 2006 using the (lower) pay rate in force at that time, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy.
    • **Trevor Hollier (**Frankston-Manufacturing Manager). Terminated: 26 September 2006
16. The Trustees have made a claim on behalf of Mr Hollier for the sum of $37,000.15 by way of redundancy ($36,371.76) and payment in lieu of notice ($628.39) entitlements.[166] They have produced a copy of Mr Hollier's contract of employment 28 September 2004. Clause 18.5 provides that in the event the employee's position is made redundant or the company ceases operation, the employee is to receive 12 months' base salary inclusive of notice, severance and redundancy. Clause 10 of his contract provides that sick leave will not be paid out on termination of employment.
17. Mr Hollier's GEERS form dated 21 September 2006 describes him as performing duties as a 'Manufacturing Manager' and employed on a full-time permanent basis. He finished work on 26 September 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the words 'Individual Contract' appear in the answer space. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also records that his employer's business has not been sold and he has not been re-employed by a new business owned by his former employer.
18. Mr Hollier did not give evidence at the trial. Based on the 3rd dividend letter, it appears that the liquidators calculated Mr Hollier's entitlements as at 30 June 2006 on the basis that he was entitled to enhanced redundancy and payment in lieu of notice. The argument concerning Mr Hollier's entitlements proceeded on the basis that the liquidators and GEERS had paid amounts to him as if his contract incorporated the provisions of the certified agreement. The Trustees rely on an inference to be drawn from the fact that the liquidator made those calculations for payment in lieu of notice and amounts were paid by GEERS.
19. In the case of Mr Hollier, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($2,136.48), PILN (zero), Redundancy ($112,931.88), Long Service Leave ($1,367.67) and Sick Leave (zero), giving him a notional (total) entitlement of $116,436.03 less payments from the liquidators totalling ($38,311.06) and less GEERS payments totalling ($42,494.92), producing a shortfall or deficiency of $35,630.05.[167]
20. On the evidence before me, there is no demonstrated basis for Mr Hollier to be entitled to receive payments under the certified agreement rather than under the provisions of his contract. His GEERS form confirms that he was employed under an individual contract. Accordingly, I am satisfied that for the purposes of the policy, Mr Hollier's entitlements are to be calculated in accordance with his contract rather than under the certified agreement. Under the contract, the redundancy payment specified is 'inclusive of notice' and sick leave is not paid out on termination. Accordingly, even though CBL's calculations suggest that there will be a shortfall, it is necessary to undertake a fresh calculation of all of his employee entitlements as at 30 June 2006, using the (lower) pay rate to clarify the quantum of the shortfall or Deficiency in Employee Entitlements for the purposes of the policy.
    • Carol Pauw (Frankston-Commercial/Sales). Terminated: 22 September 2006
21. The Trustees have made a claim on behalf of Ms Pauw for the sum of $43,966.48 by way of redundancy ($32,355.03) and sick leave ($11,611.45) entitlements.[168] They have produced a copy of Ms Pauw's contract of employment 20 January 1994. Clause 14 of Ms Pauw's contract provides that in the event of redundancy, a redundancy payment would be applicable and 'would be based on the agreement in operation with the major union on site'. CBL accepts that the redundancy provisions in the certified agreement have been 'triggered' in respect of the Nylex Frankston site. Thus, unused accrued sick leave and severance payments are payable in accordance with the terms of the relevant certified agreement.[169]
22. Ms Pauw's GEERS form dated 19 October 2006 describes her as performing 'Commercial/Sales' duties and employed on a full-time permanent basis. She finished work on 22 September 2006. She was given notice on 22 September 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the space for answering is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also records that her employer's business has not been sold and she has not been re-employed by a new business owned by her former employer.
23. Mr Pauw did not give evidence at the trial Based on the 3rd dividend letter, it appears that the liquidators calculated Ms Pauw's entitlements as at 30 June 2006 on the basis that she was entitled to unused sick leave and enhanced redundancy payments.
24. The live issue between the parties concerns Ms Pauw's claimed entitlement to payment in lieu of notice on redundancy. The 3rd dividend letter shows that the liquidators calculated an amount of $5,832 for payment in lieu of notice and that sum was paid to Ms Pauw by GEERS. The Trustees rely on an inference to be drawn from the fact that the liquidator made those calculations for payment in lieu of notice and amounts were paid by GEERS. Secondly, they say if the payment of that sum was somehow erroneous, because the amounts were paid by GEERS (except in 3 cases) and not by the liquidator, there is no basis for any suggestion that there would otherwise have been monies available in the liquidation to satisfy additional entitlements.
25. CBL contends that for Ms Pauw, the Deficiency in Employee Entitlements is to be calculated by taking the total of her Employee Entitlements, being Annual Leave ($2,824.27), PILN (zero), Redundancy ($79,771.64), Long Service Leave ($6,592.73) and Sick Leave ($23,861.52), giving her a notional (total) entitlement of $113,050.15 less payments from the liquidators totalling ($45,062.83) and less GEERS payments totalling ($32,076.00), producing a shortfall or deficiency of $35,911.32.[170]
26. For the reasons set out below, I am satisfied that a payment in lieu of notice was owed and payable to Ms Pauw. Accordingly, even though CBL's calculations suggest that there will be a shortfall, it will be necessary to re-calculate the suite of Ms Pauw's entitlements under the certified agreement using the (lower) pay rate as at 30 June 2006 to ascertain whether when all of her employee entitlements are considered as at 30 June 2006 using the (lower) pay rate in force at that time, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy.
    • Karen Stredwick (Frankston-position unknown). Terminated: unknown (but GEERS form says 1 September 2006)[171]
27. The Trustees have made a claim on behalf of Ms Stredwick for the sum of $36,746.00 by way of redundancy ($34,457.55) and sick leave ($2,288.45) entitlements.[172] No contract has been provided for Ms Stredwick, but the Micropay records refer to Ms Stredwick as a 'weekly' employee. CBL accepts that the redundancy provisions in the certified agreement have been 'triggered' in respect of the Nylex Frankston site. Thus, unused accrued sick leave and severance payments are payable in accordance with the terms of the relevant certified agreement. The only live issue between the parties appears to relate to whether Ms Stredwick was entitled to payment in lieu of notice.
28. Ms Stredwick's GEERS form dated 11 October 2006 describes her as performing 'Clerical' duties and employed on a full-time permanent basis. She finished work on 1 September 2006. She was given notice on 1 September 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the space for answering is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also records that her employer's business has not been sold and she has not been re-employed by a new business owned by her former employer.
29. Ms Stredwick did not give evidence at the trial. Based on the 3rd dividend letter, it appears that the liquidators calculated Ms Stredwick's entitlements as at 30 June 2006 on the basis that she was entitled to unused sick leave and enhanced redundancy payments and payment in lieu of notice.
30. As noted above, the live issue between the parties concerns Ms Stredwick's claimed entitlement to payment in lieu of notice on redundancy. The 3rd dividend letter shows that the liquidators calculated an amount of $4,053.84 for payment in lieu of notice and that sum was paid to Ms Stredwick by GEERS. The Trustees rely on an inference to be drawn from the fact that the liquidator made those calculations for payment in lieu of notice and amounts were paid by GEERS. Secondly, they say if the payment of that sum was somehow erroneous, because the amounts were paid by GEERS (except in 3 cases) and not by the liquidator, there is no basis for any suggestion that there would otherwise have been monies available in the liquidation to satisfy additional entitlements.
31. CBL contends that for Ms Stredwick, the Deficiency in Employee Entitlements is to be calculated by taking the total of her Employee Entitlements, being Annual Leave ($1,320.09), PILN (zero), Redundancy ($81,059.66), Long Service Leave ($6,326.91) and Sick Leave ($7,425.85), giving her a notional (total) entitlement of $96,132.50 less payments from the liquidators totalling ($41,165.87) and less GEERS payments totalling ($17,532.86), producing a shortfall or deficiency of $37,433.78.[173]
32. Ms Stredwick has been demonstrated to be a weekly rather than a monthly employee. For the reasons set out below, I am satisfied that a payment in lieu of notice was owed and payable to her. Accordingly, even though CBL's calculations suggest that there will be a shortfall, it will be necessary for her suite of entitlements, including payment in lieu of notice, to be re-calculated as at 30 June 2006 under the certified agreement and using the (lower) pay rate. Her relevant termination date is 1 September 2006 (as per her GEERS form).

1. I turn now to deal with the Empire Rubber individual contract or 'monthly' employees.
   • Robert Andrews (Empire Rubber - Key Account Executive). Terminated: 25 July 2006
2. The claim made on behalf of Mr Andrews is for redundancy and sick leave entitlements. A contract was provided for Mr Andrews dated 29 March 2001. Under cl 8 of his contract, Mr Andrews was entitled to redundancy provisions that were applicable across the site, as amended from time to time, through negotiation and agreement. This was a reference to the AMWU EBA. Under cl 5(d) of his contract, Mr Andrews was not entitled to payment of any remuneration or compensation for any unused sick leave upon termination except as provided for in any redundancy provisions that were applicable across the site. He seeks payment of the sum of $9,428.55 comprised of $3,440.66 for redundancy and $5,987.89 for sick leave, on the basis that the certified agreement provisions have been triggered.[174]
3. The GEERS form for Mr Andrews describes him as a 'Key Account Executive' who was employed on a full-time permanent basis. He finished work on 25 July 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the answer space is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has not been sold and he has not been employed by a new business owned by his former employer.
4. Mr Andrews did not give evidence at the trial. Based on the 3rd dividend letter, it would appear that the liquidators calculated Mr Andrews' entitlements as at 30 June 2006 on the basis that the certified agreement applies. The EE Count document prepared by Ms Mortlock records Mr Andrews as being an employee whose salary increments are by way of salary review.
5. As will be apparent from my reasons above, I am satisfied that the redundancy provisions of the certified agreement have been enlivened for those employees who were the subject of head count reductions. Accordingly, for the purposes of the policy, the redundancy and other entitlements of Mr Andrews are to be calculated on the basis that under his contract the provisions of the certified agreement apply.
6. In the case of Mr Andrews, CBL contends that if calculated in accordance with his contract (Scenario 3), the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($4,384.94), PILN (zero), Redundancy ($14,887.32), Long Service Leave (zero) and Sick Leave (zero), giving him a notional (total) entitlement of $19,272.26 less payments from the liquidators totalling ($9,447.03) and less GEERS payments totalling ($45,712.46), producing what CBL contends is an 'overpayment' of $35,887.23 rather than a shortfall or deficiency.[175]
7. However, CBL acknowledges that, if calculated on Scenario 4 (i.e. the certified agreement applies), a small deficiency would result, based on the following figures: Annual Leave ($4,384.94), PILN (zero), Redundancy ($30,772.00), Long Service Leave ($10,037.16) and Sick Leave (11,906.43), giving him a notional (total) entitlement of $57,100.62 less payments from the liquidators totalling $9,447.03 and less GEERS payments totalling $45,712.46, producing a shortfall or deficiency of $1,941.14.[176]
8. As I am satisfied that Mr Andrews' entitlements are to be calculated under the certified agreement, he is entitled to an enhanced redundancy payment, including payment in lieu of notice and a sick leave payment. Accordingly, it is necessary to undertake a fresh calculation to ascertain whether when all of his employee entitlements are considered as at 30 June 2006 and calculated at the (lower) pay rate, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy. If there is not, then no amount is payable for the purposes of the policy.
   • John Beissmann (Empire Rubber - position unknown - GEERS form and EE Count document refers to him performing 'Accounting' work). Terminated: unknown (but GEERS form says 31 May 2007)
9. Mr Beissmann's claim is made in respect of redundancy and sick leave entitlements. A contract was provided for Mr Beissmann dated 13 August 2002 which applied the terms and conditions negotiated under the certified agreement to his individual employment arrangements. Under the 'Redundancy Provisions' in cl 5 he was entitled to 4 weeks' pay per year of service subject to a maximum limit of 78 weeks' pay. Clause 5(f) contained a 'Notice' provision as follows:

In the event that work functions become redundant, the Company will first endeavour to redeploy you to another position within the Company. Where there are no positions available for which you have the necessary skills and qualifications, the Company will endeavour to provide at least four weeks' notice, or advise you as soon as a decision has been made.

(Emphasis added)

Under cl 5(g) he was also entitled to payment of unused sick leave to a maximum of 6 weeks' entitlement, and thereafter 60% of leave accruement will be paid. The Trustees seek payment of the sum of $54,556.03, being $38,249.13 for redundancy and $16,316.90 for sick leave, on the basis that the certified agreement provisions have been triggered.[177]

1. Mr Beissmann's GEERS form describes him as performing 'Accounting' work and employed on a full-time permanent basis. He finished work on 31 May 2007. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the word 'Contract' appears in the answer space. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'Sale of Business'. The form also shows that his employer's business has been sold and he has not been re-employed with the new owners.
2. Mr Beissmann did not give evidence at the trial. On the basis of the 3rd dividend letter it appears that the liquidators calculated Mr Beissmann's entitlements as at 30 June 2006 on the basis that the certified agreement applies.
3. The Trustees contend that Mr Beissmann's position was made redundant according to ordinary concepts when his employment was terminated by the appointment of the liquidators. Alternatively, they say, where employees were made redundant having not been made offers of employment by the purchaser of the business, that brings those redundancies within the 'restructure' limb of the sub-clause of the certified agreement. They also point to the fact that both GEERS and the liquidator accepted that Mr Beissmann was entitled to redundancy payments.
4. CBL accepts that the payment of unused sick leave is allowed pursuant to clause 5(g) of Mr Beissmann's contract. CBL submits no redundancy is payable because even though Mr Beissmann has a contractual right to redundancy, he was not made redundant within the ordinary meaning of redundancy as per the criteria in Amcor. That is, CBL contended that the employee's position needs to be made redundant rather than the employee being made redundant.
5. For the reasons set out above, I am satisfied that the redundancy provisions of the certified agreement, and those of Mr Beissmann's contract have been enlivened. Accordingly, for the purposes of the indemnity under the policy, his redundancy entitlements are payable in accordance with his contract and/or the certified agreement and CBL accepts that unused sick leave is payable.
6. In the case of Mr Beissmann, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($22,167.05), PILN (zero), Redundancy (zero), Long Service Leave ($32,917.39) and Sick Leave ($32,204.81), giving him a notional (total) entitlement of $87,289.24 less payments from the liquidators totalling ($57,192.35) and less GEERS payments totalling ($86,026.65), producing what CBL contends is an 'overpayment' of $55,929.76 rather than a shortfall or deficiency.[178]
7. Accordingly, it is necessary to undertake a fresh calculation to ascertain whether when all of Mr Beissmann's employee entitlements are considered as at 30 June 2006 and calculated at the (lower) pay rate, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy. If there is not, then no amount is payable for the purposes of the policy.
   • David Fairburn (Empire Rubber - Product Engineering Manager). Terminated: unknown (but GEERS form says 31 May 2007)
8. Mr Fairburn's claim is for redundancy and sick leave entitlements. He provided a contract dated 20 January 1997 showing that he resided in the United Kingdom at the time of his appointment and was re-located to Bendigo. His most recent contract, dated 13 August 2002, applied the terms and conditions negotiated under the certified agreement to his individual employment arrangements. Under the 'Redundancy Provisions' in cl 5 he was entitled to 4 weeks' pay per year of service subject to a maximum limit of 78 weeks' pay. Clause 5(f) contained a 'Notice' provision in the same terms as Mr Beissmann's cl 5(f). Under cl 5(g) he was also entitled to payment of unused sick leave to a maximum of 6 weeks' entitlement, and thereafter 60% of leave accruement will be paid. The Trustees seek payment of the sum of $76,800.25, being $68,549.62 for redundancy and $8,250.63 for sick leave, on the basis that the certified agreement provisions have been triggered.[179]
9. Mr Fairburn's GEERS form does not describe the work performed by him or state whether he was employed on a full-time permanent basis. It says that he finished work on 31 May 2007. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the word 'Contract' appears in the answer space. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'Sale of Business'. The form also shows that his employer's business has been sold and he has not been re-employed with the new owners.
10. Mr Fairburn did not give evidence at the trial. On the basis of the final dividend letter, it appears that the liquidators calculated Mr Fairburn's entitlements as at 30 June 2006 on the basis that the certified agreement applies. The letter records Mr Fairburn as having received dividend distributions on 24 October 2007, 20 December 2007, 23 April 2008, 13 May 2009, with the final dividend being paid on 13 August 2010.
11. The Trustees contend that Mr Fairburn's position was made redundant according to ordinary concepts when his employment was terminated by the appointment of the liquidators. Alternatively, they say, where employees were made redundant having not been made offers of employment by the purchaser of the business, that brings those redundancies within the 'restructure' limb of the sub-clause of the certified agreement. CBL accepts that the payment of unused sick leave is allowed pursuant to clause 5(g) of Mr Fairburn's contract. CBL submits no redundancy is payable because even though Mr Fairburn has a contractual right to redundancy, he was not made redundant within the ordinary meaning of redundancy. That is, CBL contended that the employee's position needs to be made redundant rather than the employee being made redundant.
12. For the reasons set out above, I am satisfied that the redundancy provisions of Mr Fairburn's contract and/or the certified agreement have been enlivened. Accordingly, for the purposes of the indemnity under the policy, his redundancy entitlements are payable in accordance with his contract and/or the certified agreement and unused sick leave is payable.
13. In the case of Mr Fairburn, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($491.91), PILN (zero), Redundancy (zero), Long Service Leave ($30,261.60) and Sick Leave ($16,849.49), giving him a notional (total) entitlement of $47,603.00 less payments from the liquidators totalling $88,076.33 and less GEERS payments totalling $38,456.19, producing what CBL contends is an 'overpayment' of $78,929.51 rather than a shortfall or deficiency.[180]
14. Accordingly, it is necessary to undertake a fresh calculation to ascertain whether when all of Mr Fairburn's employee entitlements are considered as at 30 June 2006 and calculated at the (lower) pay rate in force at that date, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy. If there is not, then no amount is payable for the purposes of the policy.
    • Mark Gray (Empire Rubber - Planning and Labour Manager). Terminated: 31 May 2007
15. The claim made on behalf of Mr Gray is for redundancy and sick leave entitlements. A contract was provided for Mr Gray dated 19 December 2002 (and signed by Mr Gray on 20 December 2002). Clause 19 of his contract provides that the Company may terminate his employment on the giving of notice in writing (as prescribed by reference to period of continuous service) or the payment of his base salary in lieu of notice. Clause 21 is a 'No Compensation' clause that provides as follows:

On termination of your employment, you will be paid accrued but untaken statutory leave entitlements. In the event of termination, you will not be entitled to any payments or compensation other than as specifically provided for in this agreement.

Sick leave is dealt with in cl 9. Clause 9.2 specifically provides that 'Sick leave will not be paid out on termination of employment.'

1. Mr Gray's GEERS form describes him as performing work or duties as a 'Production Manager' and employed on a full-time permanent basis. He finished work on 31 May 2007. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the word 'Contract' appears in the answer space. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'Sale of Business'. The form also shows that his employer's business has been sold and he has not been re-employed with the new owners.
2. On behalf of Mr Gray, the Trustees seek payment of the sum of $68,908.63, being $59,675.40 for redundancy and $9,2337.23 for sick leave on the basis that the AMWU EBA certified agreement provisions have been triggered.[181]
3. Mr Gray did not give evidence at the trial. The 3rd dividend letter shows that the liquidators calculated Mr Gray's entitlements as at 30 June 2006 on the basis that the certified agreement applies. The EE Count document prepared by Ms Mortlock records Mr Gray as being an employee whose salary increments are by way of salary review.
4. CBL contends that because of the 'no compensation' clause in Mr Gray's contract, no redundancy is payable, and that sick leave is not payable because it is excluded by cl 9. The Trustees dispute the correctness of that position. They rely on the fact that the liquidators calculated entitlements for Mr Gray in respect of redundancy and sick leave on the basis that the certified agreement applies. From those facts, they contend there is an inference to be drawn that additional material was available to the liquidators demonstrating an entitlement to those amounts. They maintain there is no material before the court that establishes the liquidators made mistakes or errors or were misconceived as to the entitlements of employees.
5. If there were material available to support the liquidators' payment of the redundancy and sick leave entitlements to Mr Gray, notwithstanding the provisions of his contract, the Trustees could have adduced that evidence from the liquidators or from Ms Mortlock or from Mr Gray. In circumstances where CBL has challenged the correctness of the liquidators' calculation, and in the absence of any evidence put forward by the Trustees as providing a basis for payment of such entitlements on a basis different to that set out in his contract, what might be regarded as 'prima facie' evidence for the purposes of the policy is displaced by the contractual evidence.
6. In the case of Mr Gray, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($5,990.62), PILN (zero), Redundancy (zero), Long Service Leave ($27,136.94) and Sick Leave (zero), giving him a notional (total) entitlement of $33,127.56 less payments from the liquidators totalling $70,628.37 and less GEERS payments totalling $75,869.67, producing what CBL contends is an 'overpayment' of $113,370.48 rather than a shortfall or deficiency.[182]
7. The position is that Mr Gray's entitlements should be calculated afresh as at 30 June 2006 on the basis that his contract applies, and using the lower pay rate in force at that time. If, as CBL contends, no shortfall is made out, then no amount is payable for the purposes of the policy.
   • Ronald Hayes (Empire Rubber - Quality Engineer). Terminated: 25 July 2006
8. The Trustees' October 2013 particulars record Mr Hayes as being on an individual contract, but no contract has been provided for him. The Trustees have provided several other documents about Mr Hayes' employment (setting out his duties). The Trustees contend that a memo located amongst these documents imports the terms of the AMWU EBA but this is not clear, as none of the references cited appear to refer to Mr Hayes. The Micropay records refer to him as a 'monthly' employee. The EE Count document prepared by Ms Mortlock, however, records that Mr Hayes's salary increments are by the 'IND AMWU'. This would mean that he was covered by the provisions of the AMWU EBA.
9. Mr Hayes' GEERS form describes him as performing work or duties as a 'Process worker/Engineer' and employed on a full-time permanent basis. He finished work on 25 July 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the answer space is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has been sold and he has not been re-employed by a new business owned by his former employer.
10. On behalf of Mr Hayes, the Trustees seek payment of the sum of $47,235.24, being $38,092.95 for redundancy and $8,802.29 for sick leave on the basis that the AMWU EBA certified agreement provisions have been triggered.[183]
11. Mr Hayes did not give evidence at the trial. The 3rd dividend letter shows that the liquidators calculated Mr Hayes's entitlements as at 30 June 2006 on the basis that the certified agreement applies.
12. CBL maintains that, as Mr Hayes is shown as a 'monthly' employee in the Micropay records, his entitlements are required to be calculated in accordance with his contract. In circumstances where no contract has been provided, CBL contends that it is not possible to calculate whether there is any Deficiency in Employee Entitlements for the purposes of the policy.[184]
13. On the state of the evidence before me, I am satisfied that Mr Hayes is a monthly employee whose salary increments are to be determined under the certified agreement. In my view, however, it is unclear whether his monthly contract also incorporates the provisions of the certified agreement for the purpose of calculating his employee entitlements. I note that the liquidators appear to have calculated them on the basis that the certified agreement applies, but that position has been challenged by CBL for the purposes of the policy. The assumptions underlying the liquidators' calculations are not in evidence nor, as Mr Fitzgerald acknowledged, did the Trustees have access to them.[185] If there were material available to support the payment of the redundancy and sick leave entitlements to Mr Hayes on the basis that the provisions of his contract are consistent with or effectively adopt those contained in the certified agreement, then the Trustees could have adduced that evidence from the liquidators or from Ms Mortlock or indeed from Mr Hayes. In the absence of such evidence, I am not satisfied that any Deficiency in Employee entitlements has been proven for Mr Hayes.
    • Peter Legg (Empire Rubber - position unknown but EE Count describes him as 'Indirects'). Terminated: date unknown
14. The Trustees have provided a contract for Mr Legg dated 13 August 2002 which applied the terms and conditions negotiated under the certified agreement to his individual employment arrangements. The redundancy and sick leave provisions are the same as those that applied to Mr Beissmann (as set out above). In the worksheet that forms part of the October 2013 particulars the Trustees claim a total sum of $60,636.32 for Mr Legg, comprised of $46,051.97 for redundancy and $14,584.35 for sick leave, on the basis that the certified agreement provisions have been triggered.[186]
15. Mr Legg's GEERS form describes him as performing work or duties as a 'Process worker' and employed on a full-time permanent basis. He finished work on 13 July 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the answer space is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has been sold and he has not been re-employed by a new business owned by his former employer.
16. Mr Legg did not given evidence at the trial. The 3rd dividend letter shows that the liquidators calculated Mr Legg's entitlements as at 30 June 2006 on the basis that the certified agreement applies.
17. CBL accepts that payment of unused sick leave is allowed pursuant to cl 5(g) of Mr Legg's contract. CBL contends that while Mr Legg has a contractual right to redundancy (cl 5) because he was not made redundant within the ordinary meaning of redundancy, no redundancy is payable. The Trustees say that Mr Legg's job was made redundant according to the ordinary concept of redundancy but they argue that there was in any event a 'restructure' of the Empire Rubber business which meets the Amcor test.
18. For the reasons set out above, I am satisfied that the redundancy provisions of Mr Legg's contract and/or the certified agreement have been enlivened. Accordingly, for the purposes of the indemnity under the policy, his redundancy entitlements are payable in accordance with his contract and/or the certified agreement and unused sick leave is payable.
19. In the case of Mr Legg, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($11,621.72), PILN (zero), Redundancy (zero), Long Service Leave ($32,185.38) and Sick Leave ($29,247.90), giving him a notional (total) entitlement of $73,055.00 less payments from the liquidators totalling $63,242.76 and less GEERS payments totalling $77,736.69, producing what CBL contends is an 'overpayment' of $67,924.45 rather than a shortfall or deficiency.[187]
20. Accordingly, it is necessary to undertake a fresh calculation to ascertain whether when all of Mr Legg's employee entitlements are considered as at 30 June 2006 and calculated at the (lower) pay rate in force at that time, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy. If there is not, then no amount is payable for the purposes of the policy.
    • Keerthi Marasinghe (Empire Rubber - Quality Assurance Chemist). Terminated: 5 July 2006 (GEERS form says 25 July 2006)
21. The claim made by the Trustees on behalf of Dr Marasinghe is for sick leave entitlements only. A contract was provided for Dr Marasinghe dated 11 September 2001, together with a memo dated 13 August 2002 detailing the improvements in terms and conditions as a result of negotiated across the site. Under cl 8 of the original contract, Dr Marasinghe was entitled to redundancy provisions that were applicable across the site, as amended from time to time, through negotiation and agreement. This was a reference to the AMWU EBA. Under cl 5(d) of the original contract, Dr Marasinghe was not entitled to payment of any remuneration or compensation for any unused sick leave upon termination except as provided for in any redundancy provisions that were applicable across the site. Under the improved conditions set out in the 13 August 2002 memo, Dr Marasinghe was entitled to payment of unused sick leave to a maximum of 6 weeks' entitlement, and thereafter 60% of leave accruement will be paid.
22. The Trustees seek payment of the sum of $2,377.51 for sick leave entitlements, on the basis that the certified agreement provisions have been triggered.[188]
23. Dr Marasinghe's GEERS form describes the work duties performed as those of a 'Quality Engineer & Development Chemist', employed on a full-time permanent basis. Dr Marasinghe finished work on 25 July 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the answer space is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that the employer's business has been sold and Dr Marasinghe has not been re-employed by a new business owned by the former employer.
24. Notices to admit facts and to admit documents were served by the Trustees in respect of Dr Marasinghe. CBL responded to these by notices of dispute.
25. Dr Marasinghe did not give evidence at the trial. The 3rd dividend letter shows that the liquidators calculated Dr Marasinghe's entitlements as at 30 June 2006 on the basis that the certified agreement applied and sick leave was payable. The Micropay records show Dr Marasinghe as a 'weekly' employee. On the EE Count document prepared by Ms Mortlock, however, he is recorded as a person whose salary increments are by way of salary review.
26. CBL accepts that payment of the unused sick leave is allowed pursuant to cl 5(g) of Dr Marasinghe's contract.
27. For the reasons set out above, I am satisfied that the redundancy provisions of Dr Marasinghe's contract and/or the certified agreement have been enlivened. Accordingly, for the purposes of the indemnity under the policy, his redundancy entitlements are payable in accordance with his contract and/or the certified agreement and unused sick leave is payable.
28. In the case of Dr Marasinghe, CBL contends that if calculated in accordance with the contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of the Employee Entitlements, being Annual Leave ($2,043.04), PILN (zero), Redundancy (zero), Long Service Leave (zero) and Sick Leave ($4,811.27), giving Dr Marasinghe a notional (total) entitlement of $6,854.30 less payments from the liquidators totalling $4,709.36 and less GEERS payments totalling $32,758.68, producing what CBL contends is an 'overpayment' of $30,613.74 rather than a shortfall or deficiency.[189]
29. Accordingly, it is necessary to undertake a fresh calculation to ascertain whether when all of Dr Marasinghe's employee entitlements are considered as at 30 June 2006 and calculated at the (lower) pay rate in force at that time, less the payments made by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy. If there is not, then no amount is payable for the purposes of the policy.
    • Alan Miller (Empire Rubber - Tooling Engineer). Terminated: 25 July 2006
30. The claim made on behalf of Mr Miller is for sick leave entitlements only. A contract was provided for Mr Miller dated 20 May 2003 (and signed by Mr Miller on 22 May 2003). Clause 19 of his contract provides that the Company may terminate his employment on the giving of notice in writing (as prescribed by reference to period of continuous service) or the payment of his base salary in lieu of notice. Clause 21 is a 'No Compensation' clause that is framed in the same terms as the one in Mr Gray's contract (see above). Sick leave is dealt with in cl 9. Clause 9.2 specifically provides that 'Sick leave will not be paid out on termination of employment.'
31. Mr Miller's GEERS form describes him as performing work or duties as a 'Tooling Manager' and employed on a full-time permanent basis. He finished work on 25 July 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the words 'Contract of Employment' appear in the answer space. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has been sold and he has not been re-employed with the new owners.
32. Mr Miller did not give evidence at the trial. Based on the 3rd dividend letter it seems clear that the liquidators calculated Mr Miller's entitlements as at 30 June 2006 on the basis that sick leave was payable. The EE Count document prepared by Ms Mortlock records Mr Miller as being an employee whose salary increments are by way of salary review. Notices to admit facts and to admit documents were served by the Trustees in respect of Mr Miller. CBL responded to these by notices of dispute.
33. The position here is essentially the same as with Mr Gray (above). The Trustees accept that the provisions of Mr Milller's contract are as set out above. They submit that notwithstanding that the contract provides that no sick leave is payable, the liquidators have nevertheless calculated an amount for a sick leave entitlement. They contend that an inference may be drawn that additional material was available to the liquidators demonstrating an entitlement to the amount specified. As noted above, they say there is no material before the court that establishes the liquidators made mistakes or errors or were misconceived as to the entitlements of employees.
34. If there were material available to support the liquidators' payment of the redundancy and sick leave entitlements to Mr Miller notwithstanding the provisions of his contract, the Trustees could have adduced that evidence from the liquidators or from Ms Mortlock or from Mr Miller. In circumstances where CBL has challenged the correctness of the liquidators' calculation, in the absence of any evidence put forward by the Trustees as providing a basis for payment of such entitlements on a basis different to that set out in his contract, what might be regarded as 'prima facie' evidence for the purposes of the policy is displaced by the contractual evidence.
35. In the case of Mr Miller, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($2,824.85), PILN (zero), Redundancy (zero), Long Service Leave (zero) and Sick Leave (zero), giving him a notional (total) entitlement of $2,824.85 less payments from the liquidators totalling $3,269.12 and less GEERS payments totalling $20,444.40, producing what CBL contends is an 'overpayment' of $20,888.67 rather than a shortfall or deficiency.[190]
36. Mr Miller's entitlements should be calculated afresh as at 30 June 2006 on the basis that his contract applies, and using the lower pay rate in force at that time. If, as CBL contends, no shortfall is made out, then no amount is payable for the purposes of the policy.
    • David Needham (Empire Rubber - Process Worker). Terminated: 25 July 2006
37. The Trustees' October 2013 particulars record Mr Needham as being on an individual contract, but no contract has been provided for him. The Micropay records refer to him as a 'weekly' employee. The EE Count document prepared by Ms Mortlock records that Mr Needham's salary increments are by the 'IND AMWU' which would mean that he was covered by the provisions of the AMWU EBA.
38. Mr Needham's GEERS form describes him as performing work or duties as a 'Process worker' and employed on a full-time permanent basis. He finished work on 25 July 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the answer space is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has been sold and he has not been re-employed by a new business owned by his former employer.
39. On behalf of Mr Needham, the Trustees seek payment of the sum of $65,664.42, being $49,477.07 for redundancy and $16,187.35 for sick leave on the basis that the AMWU EBA certified agreement provisions applied and have been triggered.[191]
40. Mr Needham did not give evidence at the trial. The 3rd dividend letter shows that the liquidators calculated Mr Needham's entitlements as at 30 June 2006 on the basis that the certified agreement applies.
41. The Trustees rely on the EE Count document to contend that the certified agreement applies. They point to the fact that the liquidators calculated entitlements for Mr Needham in accordance with the applicable enterprise bargaining agreements to show that the entitlements for him should be calculated in accordance with the AMWU EBA. CBL maintains that Mr Needham is shown as a 'weekly' employee in the Micropay records and they have calculated his entitlements in accordance with the relevant award.
42. CBL contends that if calculated in accordance with his 'contract' (i.e. relevantly the award), the Deficiency in Employee Entitlements for Mr Needham is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($4,574.07), PILN (zero), Redundancy ($19,615.43), Long Service Leave ($34,338.48) and Sick Leave (zero), giving him a notional (total) entitlement of $58,527.98 less payments from the liquidators totalling $68,470.12 and less GEERS payments totalling $71,604.20, producing what CBL contends is an 'overpayment' of $81,546.33 rather than a shortfall or deficiency.[192]
43. Alternatively, CBL contends that if calculated on Scenario 4 (i.e. the certified agreement applies) then CBL acknowledges a deficiency would result for Mr Needham based on the following figures: Annual Leave ($4,574.07), PILN (zero), Redundancy ($129,500.31), Long Service Leave ($34,338.48) and Sick Leave (32,921.15), giving him a notional (total) entitlement of $201,334.01 less payments from the liquidators totalling $68,470.12 and less GEERS payments totalling $71,604.20, producing what CBL acknowledges is a deficiency of $68,470.12.[193]
44. I am satisfied that the evidence adduced demonstrates that Mr Needham is a weekly employee rather than a monthly or contract employee. As a result, his entitlements are to be calculated in accordance with the certified agreement. For the reasons set out above, I am also satisfied that the redundancy provisions of the certified agreement have been enlivened. Accordingly, it is necessary to undertake a fresh calculation to ascertain whether, when all of Mr Needham's employee entitlements are considered as at 30 June 2006 and calculated at the (lower) pay rate in force at that time, less the payments by the liquidators and GEERS, there is a Deficiency in Employee Entitlements for the purposes of the policy.
    • Craig Waters (Empire Rubber - Process & Quality Leader). Terminated: 25 July 2006
45. The claim made by the Trustees on behalf of Mr Waters is for both redundancy and sick leave entitlements. A contract was provided for Mr Waters dated 19 December 2003 (and signed by Mr Waters on 21 December 2003). Clause 20 of his contract provides that the Company may terminate his employment on the giving of notice in writing (as prescribed by reference to period of continuous service) or the payment of his base salary in lieu of notice. Clause 23 is a 'No Compensation' clause that is framed in the same terms as the one in Mr Gray's contract (see above). Sick leave is dealt with in cl 9. Clause 9.2 specifically provides that 'Sick leave will not be paid out on termination of employment.'
46. I have not been able to locate a GEERS form for Mr Waters but the spreadsheet in the Trustees' October 2013 particulars shows GEERS payments as having been received. The amount of the GEERS payments are recorded in the liquidators' 3rd dividend letter.
47. On behalf of Mr Waters, the Trustees seek payment of the sum of $38,479.93, being $31,791.58 for redundancy and $6,688.35 for sick leave on the basis that the AMWU EBA certified agreement provisions have been triggered.[194]
48. Mr Waters did not give evidence at the trial. On the basis of the 3rd dividend letter it appears that the liquidators calculated Mr Waters' entitlements as at 30 June 2006 on the basis that the certified agreement applies. The EE Count document prepared by Ms Mortlock records Mr Waters as a person whose salary increments are by way of salary review.
49. The position here is essentially the same as with Mr Gray (above). The Trustees accept that the provisions of Mr Waters' contract are as set out above. They submit that notwithstanding that the contract provides that no enhanced redundancy or sick leave is payable, the liquidators have nevertheless calculated an amount for redundancy and sick leave entitlements. They contend that an inference may be drawn that additional material was available to the liquidators demonstrating an entitlement to the amounts specified. As noted above, they say there is no material before the court that establishes the liquidators made mistakes or errors or were misconceived as to the entitlements of employees.
50. If there were material available to support the liquidators' payment of the redundancy and sick leave entitlements to Mr Waters notwithstanding the provisions of his contract, the Trustees could have adduced that evidence from the liquidators or from Ms Mortlock or Mr Waters. In circumstances where CBL has challenged the correctness of the liquidators' calculation, and in the absence of any evidence put forward by the Trustees as providing a basis for payment of such entitlements on a basis different to that set out in his contract, what might be regarded as 'prima facie' evidence for the purposes of the policy is displaced by the contractual evidence.
51. In the case of Mr Waters, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($5,786.83), PILN (zero), Redundancy (zero), Long Service Leave ($20,887.01) and Sick Leave (zero), giving him a notional (total) entitlement of $26,673.84 less payments from the liquidators totalling $39,182.69 and less GEERS payments totalling $50,470.60, producing what CBL contends is an 'overpayment' of $62,979.45 rather than a shortfall or deficiency.[195]
52. Accordingly, Mr Waters' entitlements should be calculated afresh as at 30 June 2006 on the basis that his contract applies, and using the lower pay rate in force at that time. If, as CBL contends, no shortfall is made out, then no amount is payable for the purposes of the policy.
    • Brian Wolters (Empire Rubber - Recycling Manager). Terminated: 31 May 2007
53. The claim made by the Trustees on behalf of Mr Wolters is for redundancy and sick leave entitlements. A contract dated 13 February 2006 was provided. Clause 25 of the contract provides that the Company may terminate his employment by giving notice in writing (as prescribed by reference to period of continuous service) or by making a payment. Clause 28 is a 'No Compensation' clause that is framed in the same terms as the one in Mr Gray's contract (see above). Sick leave is dealt with in cl 10: 'Personal Leave'. Clause 10.5 specifically provides that 'Accrued, but untaken, paid personal leave is not payable upon termination of your employment.'
54. On behalf of Mr Wolters, the Trustees seek payment of the sum of $38,691.18, being $32.461.99 for redundancy and $6,229.18 for sick leave, on the basis that the AMWU EBA certified agreement provisions have been triggered.[196]
55. Mr Wolters' GEERS form does not describe the work performed by him but does state that he was employed on a full-time permanent basis. He finished work on 31 May 2007. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the word 'Contract' appears in the answer space. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'Sale of Business'. The form also shows that his employer's business has been sold and he has not been re-employed with the new owners.
56. Mr Wolters did not give evidence at the trial. On the basis of the 3rd dividend letter it appears that the liquidators calculated Mr Wolters' entitlements as at 30 June 2006 on the basis that the certified agreement applies. The EE Count document prepared by Ms Mortlock records Mr Wolters as being an employee whose salary increments are by way of salary review. In the Micropay records, he is shown variously as a monthly employee and as a weekly employee.
57. The position here with Mr Wolters is essentially the same as with Mr Gray (above). The Trustees accept that the provisions of Mr Wolters' contract are as set out above. They submit that notwithstanding that the contract provides that no enhanced redundancy or sick leave is payable, the liquidators have nevertheless calculated an amount for redundancy and sick leave entitlements. They contend that an inference may be drawn that additional material was available to the liquidators demonstrating an entitlement to the amounts specified. As noted above, they say there is no material before the court that establishes the liquidators made mistakes or errors or were misconceived as to the entitlements of employees.
58. If there were material available to support the liquidators' payment of the redundancy and sick leave entitlements to Mr Wolters notwithstanding the provisions of his contract, the Trustees could have adduced that evidence from the liquidators or from Ms Mortlock or Mr Wolters. In circumstances where CBL has challenged the correctness of the liquidators' calculation, and in the absence of any evidence put forward by the Trustees as providing a basis for payment of such entitlements on a basis different to that set out in his contract, what might be regarded as 'prima facie' evidence for the purposes of the policy is displaced by the contractual evidence.
59. In the case of Mr Wolters, CBL contends that if calculated in accordance with his contract, the Deficiency in Employee Entitlements is to be calculated by taking the total of his Employee Entitlements, being Annual Leave ($6,589.41), PILN (zero), Redundancy (zero), Long Service Leave ($1,992.30) and Sick Leave (zero), giving him a notional (total) entitlement of $8,581.71 less payments from the liquidators totalling $39,668.50 and less GEERS payments totalling $36,850.87, producing what CBL contends is an 'overpayment' of $67,937.66 rather than a shortfall or deficiency.[197]
60. In these circumstances, Mr Wolters' entitlements should be calculated afresh as at 30 June 2006 on the basis that his contract applies, and using the lower pay rate in force at that time. If, as CBL contends, no shortfall is made out, then no amount is payable for the purposes of the policy.
    • Brian Cornell (Empire Rubber - position unknown by the EE Count document records him as being 'Labour Manager - Aus Controls'). Terminated: 25 July 2006
61. The Trustees' October 2013 particulars record Mr Cornell as being on an individual contract, but no contract has been provided for him.
62. Mr Cornell's GEERS form describes him as performing work or duties as a 'Process worker' and employed on a full-time permanent basis. He finished work on 25 July 2006. In Box 13: 'What type of employment instrument were you employed under? If you were employed under an award or agreement, please provide its name, if known', the answer space is left blank. In Box 24: 'What was the reason given for termination? OR Why did you resign?' it is stated 'appointment of voluntary administrators'. The form also shows that his employer's business has not been sold and he has not been re-employed by a new business owned by his former employer.
63. On behalf of Mr Cornell, the Trustees seek payment of the sum of $27,204.46, being for redundancy entitlements on the basis that the NUW EBA certified agreement provisions applied and have been triggered.[198]
64. Mr Cornell did not give evidence at the trial. Based on the 3rd dividend letter it appears that the liquidators calculated Mr Cornell's entitlements as at 30 June 2006 on the basis that the enhanced redundancy payments under the certified agreement apply.
65. The Trustees rely on the EE Count document as at 30 June 2006 prepared by Empire Rubber's HR Manager, Ms Mortlock to contend that the certified agreement applies to Mr Cornell. The EE Count document records that Mr Cornell's salary increments are by 'NUW EBA'. Thus the Trustees point to the fact that the liquidators calculated entitlements for Mr Cornell in accordance with the applicable enterprise bargaining agreements as a basis for contending that his entitlements should be calculated in accordance with the NUW EBA. (Notices to admit facts and to admit documents were served by the Trustees in respect of Mr Cornell. CBL responded by notice of dispute.) There was no examination or cross-examination of Ms Mortlock about the manner in which she classified Mr Cornell for the purposes of preparing the EE Count document.
66. CBL maintains that, as Mr Cornell is shown as a 'monthly' employee in the Micropay records, his entitlements are required to be calculated in accordance with his contract. In circumstances where no contract has been provided, CBL contends that it is not possible to calculate whether there is any Deficiency in Employee Entitlements for the purposes of the policy.[199]
67. On the state of the evidence before me I am satisfied that Mr Cornell is a monthly employee whose salary increments are to be determined under the certified agreement. In my view, however, it is unclear whether his monthly contract also incorporates the provisions of the certified agreement for the purpose of calculating his employee entitlements. I note that the liquidators appear to have calculated them on the basis that the certified agreement applies, but that position has been challenged by CBL for the purposes of the policy. The assumptions underlying the liquidators' calculations are not in evidence nor, as Mr Fitzgerald acknowledged, did the Trustees have access to them.[200] If there were material available to support the payment of the redundancy and sick leave entitlements to Mr Cornell on the basis that the provisions of his contract are consistent with or effectively adopt those contained in the certified agreement, then the Trustees could have adduced that evidence from the liquidators or from Ms Mortlock or from Mr Cornell. In the absence of such evidence I am not satisfied that any Deficiency in Employee Entitlements has been proven for Mr Cornell.

1. The next issue of principle is whether any of the employees were entitled to payments in lieu of notice as at 30 June 2006. CBL raises this issue in respect of both the 'monthly' and 'weekly' employees, contending that, in circumstances where each of the employees were terminated after 30 June 2006, payment in lieu of notice could not have accrued or been owing as at 30 June 2006. When giving evidence, Mr Oxley maintained that a distinction is to be drawn between the 'deemed termination' effected by s 558 of the Corporations Act and the circumstances of the individual employee's 'actual termination'.[201]
2. In the context of the overall claim brought, the Trustees contend that the amount in issue for payments in lieu of notice is trivial. According to the Trustees, if their arguments on this point are unsuccessful, the amount to be brought to account as paid by the liquidator is $1,874.69.[202]
3. The Trustees argue that because s 558 deemed the employment of the Transferring Employees as terminated on 30 June 2006, they are entitled to payments in lieu of notice. No notice was given and they submit that it 'cannot sensibly be said that the statutory deemed termination had no consequences for an employee's entitlements.'[203] The Trustees also rely upon the fact that the liquidators calculated payment in lieu of notice entitlements for the employees and that those entitlements were paid to employees by GEERS, in full in almost all cases. That is, they rely upon the 3rd dividend letters embodying the output of the liquidators' calculations as evidence of the loss, and point to the paucity of evidence adduced by CBL to impugn those calculations. Further, they say, even if there was a discrepancy in the payments of those sums, 'because the amounts were paid by GEERS (except in 3 cases[204]) and not by the liquidator, there is no basis for any suggestion that there would otherwise have been monies available in the liquidation to satisfy additional entitlements.'[205]
4. CBL contends that even if s 558 of the Corporations Act operated, payments in lieu of notice would still be excluded as a payment to be made on the deemed termination date, because the actual termination date for each of the Transferring Employees, and whether or not notice was given, occurred after 30 June 2006. CBL says no such amounts could have accrued until their date of termination (First Oxley Statement, paragraph 31).
5. In my view, it is clear that the redundancy provisions of both the certified agreements and the awards operate on the basis of a stated recognition of the serious consequences that attend the loss of employment. The notice provisions are directed to ameliorating those consequences. As von Doussa J explained in Fryar v Systems Services Pty Ltd[206] (referred to at [221] above) a period of notice is to 'give an employee the opportunity to adjust to the change in circumstances which is to occur and to seek other employment.' If the requisite notice is not given, payments in lieu of notice are required to be made. Further, in my view, the liquidators' calculations and GEERS payments serve to confirm the appropriateness of that course. Accordingly, I reject CBL's argument.

Effect of leave taken after 30 June 2006 on accrued sick leave or annual leave entitlement

1. CBL contends that the Trustees' calculations contained in its October 2013 particulars do not take into account annual leave and/or sick leave taken by employees after 30 June 2006 on a 'first in, first out' basis.
2. CBL's contends that where an employee took leave after 25 June 2006 (the last pay day before the appointment of the administrators), then the amount of leave taken must be debited from that employee's accrued entitlements as at 30 June 2006. The evidence given by Mr Chetcuti under cross-examination was that an employee could only take annual leave entitlements once they had accrued. He agreed that if annual leave was taken by an employee, it was debited as having been used on a 'first in, first out' basis, whereby the employee's oldest annual leave owing was regarded as having been used first.[207] Under cross-examination, Ms Mortlock gave evidence to similar effect, save that she said that employees were entitled to, or were allowed to, take pro rata annual leave in the current year of employment.[208]
3. CBL, through Mr Oxley, explained the approach it had taken in calculating employee entitlements for leave on scenario 4 (i.e., with the certified agreements applying). CBL summarised this in its closing submissions.[209] CBL contends that the process and methodologies used in Mr Oxley's scenario 4 mirrors the methodologies used by the Trustees in calculating their claim as set out in the October 2013 particulars save that the Trustees have not taken into account:

(a) entitlements for annual leave or long service leave for the 336[210] (or 453[211]) claimed employees and amounts received by employees; and

(b) annual leave or sick leave taken by any of the 336 (or 453) claimed employees after 25 June 2006.

1. The claim made by the Trustees as presented in the October 2013 particulars does not make any claim on behalf of any employee for annual leave entitlements. They say that annual leave could only be relevant if 'overpayments' were made and none have been established by CBL. However, I have found that for the purposes of the claim under the policy, the shortfall or deficiency is to be ascertained by reference to the total of the employee's entitlements, rather than by reference to some particular entitlements only. Accordingly, in circumstances where, for example, an employee received a pay rise after 25 or 26 June 2006, annual leave entitlements as at 30 June 2006 are required to be re-calculated for the purposes of the policy using the lower pay rate,[212] and the amounts paid by the liquidators and under GEERS must be brought to account.
2. In the case of both sick leave and annual leave, Mr Oxley acknowledged under cross-examination that his calculations do not take into account at all any leave accrued by that person after 30 June 2006.[213] He also acknowledged that the leave accrued by an employee after the relevant date of appointment is the liability of the liquidator.[214] Thus the Trustees contend, as is the case, that CBL's argument ignores the fact that the employees continued to accrue leave after 30 July 2006.
3. In the case of sick leave entitlements, for which claims were made by the Trustees, the methodology adopted by them in determining sick leave entitlements as at 30 June 2006 was essentially one where they calculated:

(a) sick leave accrued from 30 June to the date of termination; and

(b) sick leave taken after 30 June 2006.[215]

1. The Trustees then deducted sick leave from the claim for an employee only if the leave taken after 30 June exceeds the leave accrued after 30 June, and they deducted sick leave only to the extent to which the leave taken exceeded the leave accrued. This is because payments made to employees following appointment are costs and expenses of the liquidation. The liquidator is only permitted to pay an employee for leave taken after appointment as an expense of the liquidation in circumstances where that person accrued leave post appointment. Those payments are entitled to first priority under s 556(1)(a) of the Corporations Act.
2. The Trustees demonstrated the differences between the calculation for sick leave performed by the liquidators and those performed by the Trustees in their August 2012 particulars and their October 2013 particulars using Mr Fussell as an example (as I have also done above at [204] and following). They say that the difference between the liquidators' calculation (of $5,178.17) and the Trustees' calculation of August 2012 (of $5,140.36) is attributable solely to rounding. The difference between the Trustees' calculation of August 2012 and that set out in the October 2013 particulars (of $4,873.71) is because the Trustees have now deducted from Mr Fussell's entitlement, 15.20 hours of leave taken after 30 June 2006 because he had not accrued any additional sick leave between 1 July 2006 and 1 September 2006 (the date of his redundancy). Further, I note that Mr Fussell's sick leave entitlement as set out in the October 2013 particulars is calculated using the (lower) pay rate that was in force on 30 June 2006 rather than the post 30 June rate used by the liquidators.
3. In my view, the methodology adopted by the Trustees in their October 2013 particulars for the calculation of the employee's sick leave entitlement as at 30 June 2006 accords with the provisions of the relevant certified agreements and recognises the effect of the appointment and the liquidators' liability for expenses incurred in the liquidation.[216] It also conforms with the notion of Insured Loss for the purposes of the policy, in that it seeks to identify the relevant deficiency in employee entitlements that are 'owed' to the employee as at the deemed commencement of the winding up.
4. In the re-calculation of the annual leave entitlements of Transferring Employees as at 30 June 2006 for the purposes of the policy, a similar approach should be taken to that used by the Trustee for ascertaining sick leave.

1. In closing submissions, CBL also raised some issues about quantum that it says the Trustees have not proved. The first was termination dates for some employees whom the Trustees asserted were terminated sometime in January and February 2007. In some cases CBL said that the date set out in the GEERS form conflicted with that in the October 2013 particulars and, in other cases, there was no source provided by the Trustees and no GEERS form had been provided.
2. In those cases where a GEERS form has been provided but the Trustees have adopted a different date in their particulars, the calculations should be re-done for the purposes of the claim under the policy by using the date on the GEERS form.[217] The GEERS form is a document that is required to be signed by the employee, and on that basis it may be treated as an admission made by the employee about their termination date. It is also the document that the Trustees' methodology (summarised above at [181]) described as being the evidentiary basis for ascertaining the termination date.
3. In those cases where no source is listed in the October 2013 particulars for the termination date of the Empire Rubber employees,[218] the termination date may be capable of ascertainment from the business records for the sale. The Trustees referred to and relied upon the sale documents and, in particular, the listing of those Empire Rubber employees whose position became redundant. In the event that no date can be identified with certainty, but it is nevertheless clear that there was a deemed termination of an employee's employment on 30 June 2006 under s 558 of the Corporations Act, the calculations are to be performed for the suite of entitlements at each of the dates on which retrenchments in that business took place.[219] Once those calculations have been performed, using the contract and/or certified agreement, as the case may be, the lowest amount of shortfall arrived at shall stand as the relevant Deficiency in Employee Entitlements for the purposes of the policy.
4. CBL also contends that the Trustees have not proved what annual leave and/or sick leave was taken by each of the 'weekly' Nylex Frankston employees after 30 June 2006. It says that the Trustees have not discovered those records and, therefore, CBL does not know what annual leave or sick leave was taken by any of those employees between 30 June 2006 and 1 September 2006 being the date the Frankston site closed.
5. In response, the Trustees referred to the following records as evidencing the leave position for those employees:

(1) a Micropay 'Leave Summary Report' for Frankston Rubber Nylex employees dated 31 August 2006 which showed their entitlements for annual leave, long service leave and sick leave (in each case projected to 27 August 2006);

(2) TimeWise Systems PTD Hours report for Huon Employee (Perez Gongora, E P) dated 27 June 2006;

(3) TimeWise Systems PTD Hours report for Huon Employees (Pineda, E to Aickin, Doris) dated 27 June 2006;

(4) TimeWise Systems PTD Hours report for Huon Employees (Pineda E to Aickin, Doris) dated 4 July 2006;

(5) TimeWise Systems PTD Hours report for Huon Employee (Thun, P) dated 6 July 2006;

(6) TimeWise Systems PTD Hours report for Huon Employees (Pineda, E to Aickin, Doris) dated 28 August 2006; and

(7) TimeWise Systems PTD Hours report for Huon Employees (Pineda, E to Aickin, Doris) dated 4 September 2006

Re-calculation of employee entitlements as at 30 June 2006 using old pay rate

1. In September 2013, the Trustees reduced the claim made from one brought on behalf of 453 employees to one brought on behalf of 336 employees. In doing so, they claimed amounts outstanding for certain categories of employee entitlements for those employees, namely redundancy and sick leave (and PILN for one employee). Their stated rationale for this is that the remaining categories of employee entitlements had either been fully paid out or had outstanding amounts of less than $500. In my view, however, this approach does not accord with the proper construction of the policy. Further, as this approach focuses only on certain categories of employee entitlements, it does not subject the other entitlements in the suite to scrutiny, in circumstances where those entitlements may well have been paid at a higher pay rate than would apply for the purposes of the policy.
2. As will be apparent, because of the views I have formed, I apprehend that in many, if not most cases, it will be necessary for the payments in lieu of notice (and possibly other entitlements also) to be re-calculated. This can be illustrated by using Ms Carmen Eastman, an Empire Rubber employee, as an example. The claim made by the Trustees for Ms Eastman is for the sum of $588.72 for sick leave entitlements.
3. According to information contained in the worksheet which forms part of the Trustees' October 2013 particulars, Ms Eastman's hourly rate at 30 June 2006 was $17.7806. After 30 June 2006, it increased to $18.4918. Her entitlement to payment in lieu of notice is stated as being 4 weeks' pay. Using a 38 hour week, the Trustees have calculated Ms Eastman's entitlement as being $2,810.76, using the increased pay rate.[220] Ms Eastman's 3rd dividend letter from the liquidators records her payment in lieu of notice entitlement at 30 June 2006 as being $2,810.76 and she was paid that sum by GEERS in November 2007. In those circumstances, the Trustees have not made any claim under the policy for payment in lieu of notice for Ms Eastman.
4. If, however, Ms Eastman's entitlement to payment in lieu of notice were calculated at the (lower) pay rate in force on 30 June 2006, her entitlement would be $2,702.65.[221] In calculating any Deficiency in Employee Entitlements for Ms Eastman, the total of her suite of Employee Entitlements must be used. Accordingly, it follows that when performing that calculation, the figure of $2,702.65 should be used in place of $2,810.76, and the whole of the amount received under GEERS must be brought to account as an offsetting amount. In the case of all other entitlements (such as annual leave, long service leave, redundancy etc.) that are affected by the hourly rate issue, they must be re-calculated accordingly and the entirety of the amounts paid by the liquidators and under GEERS in respect of all entitlements must be brought to account in calculating any shortfall or deficiency for the purposes of the policy.
5. This re-calculation exercise must be performed for each Transferring Employee for whom a claim is made. It would not be an efficient use of the Court's time for me to embark on the task of performing those calculations. During the course of the hearing, I raised with Counsel and solicitors for the parties that any calculation exercise to be performed should be undertaken by an expert appointed to assist the court under s 65M of the Civil Procedure Act 2010 (Vic).[222] In the absence of the parties reaching agreement as to the final figures, that is the course I propose to adopt and direct be undertaken.

Answers to questions about the quantum of the Insured Loss

1. For the foregoing reasons, I would answer the questions about the quantum of the insured loss raised by the parties as follows:

Question (10): Was any Transferring Employee entitled to payment in lieu of notice as at 30 June 2006?

Question (11): Was the accrued sick leave or annual leave entitlement as at 30 June 2006 of any Transferring Employee then employed by Huon to be debited with sick leave or annual leave taken thereafter in calculating his or her Employee Entitlements?

Answer: Yes, in the manner undertaken by the Trustees for sick leave. The same methodology should be adopted for annual leave in calculating the Employee Entitlements.

Question (12): For Empire Rubber and Mills Elastomers 'weekly' Transferring Employees who were employed by Huon as at 30 June 2006, are the Employee Entitlements for each employee to be calculated by reference to the applicable certified agreement for the purpose of ascertaining the Deficiency in Employee Entitlements for each employee under the policy?

Question (13): For 'monthly' employees on common law contracts:

(a) were their Employee Entitlements to be calculated under their individual contracts or under the relevant certified agreements?

Answer: My reasons above deal separately with the position each of the monthly employees. Further calculations are required to be performed before the quantum of any Deficiency in Employee Entitlements can be ascertained. In the absence of agreement, I propose to appoint an expert to assist the court with this task.

Question (14): Did any of the Transferring Employees receive more in respect of his or her Employee Entitlements from the liquidator and/or GEERS than he or she was entitled to receive in Huon's winding up?

Question (15): Where a Transferring Employee received more in respect of his or her Employee Entitlements than he or she was entitled to receive in Huon's winding up, should the amount of the overpayment:

(a) be taken into account as a credit in calculating any Deficiency in Employee Entitlements, and accordingly in calculating any Insured Loss under the policy? and/or

(b) be taken into account as 'amounts available in the External Administration' as provided for in the definition of Deficiency in Employee Entitlements, to reduce the deficiency.

Question (16): Are the Trustees required to prove, and have they proved, the fact and the amount of the Insured Loss that they claim?

Answer: The Trustees have proved that Transferring Employees have suffered loss. Given the views I have expressed about proper construction, however, the quantum of the shortfall or deficiency for the purposes of the policy is required to be re-calculated for each Transferring Employee. Unless the parties reach agreement about the re-calculation exercise, I propose to appoint an expert to assist the court to calculate the amount of the Insured Loss to which the policy responds.

D Interest under s 57 of the Insurance Contracts Act 1984 (Cth)

1. Section 57 of the Insurance Contracts Act provides for the payment of interest by an insurer in circumstances where it was unreasonable for the insurer to have withheld payment under a policy, as follows:

(1) Where an insurer is liable to pay to a person an amount under a contract of insurance or under this Act in relation to a contract of insurance, the insurer is also liable to pay interest on the amount to that person in accordance with this section.

(2) The period in respect of which interest is payable is the period commencing on the day as from which it was unreasonable for the insurer to have withheld payment of the amount and ending on whichever is the earlier of the following days:

(b) the day on which the payment is sent by post to the person to whom it is payable.

(3) The rate at which interest is payable in respect of a day included in the period referred to in subsection (2) is the rate applicable in respect of that day that is prescribed by, or worked out in a manner prescribed by, the regulations.

1. The Trustees contend that 31 January 2007 is the date from which it became unreasonable for CBL not to have paid the Trustees' current claim for $4,389,789.20 based on 336 employees. In their amended particulars of paragraph 17A (dated 27 September 2013), the Trustees claim:

(a) simple interest under the Insurance Contracts Regulations 1985 (Cth) on the amount of their (new) claim of $4,389,789.20, as first notified at trial, to be calculated from 31 January 2007 to 10 October 2011 (or 1713 days). The total interest claimed on this basis is $1,709,552.29; and

(b) simple interest from 11 October 2011 (being the date of issue of this proceeding) pursuant to s 60 of the Supreme Court Act 1986 (Vic) and the Penalty Interest Rate Act 1983 (Vic) until 27 September 2013 (being the date of the amended particulars) (or 718 days) on the claimed amount of $4,389,789.20. The total interest claimed on this basis is $905,439.12. The loss is on-going.

1. The question of when it became 'unreasonable for the insurer to have withheld payment' under the policy is to be determined by reference to the true position as found by the court. Further, it seems clear that what the insurer did internally by way of investigating the claim, and what views it held bona fide or otherwise as to the merits of the claim, are not relevant to the court's enquiry under s 57.
2. It is generally accepted that the correct approach to be taken by the courts on the question of when it became unreasonable for the insurer to have withheld payment, and what is considered to be a reasonable period for the insurer to investigate the claim and determine its position, is that taken by Cole J in Bankstown Football Club Ltd v CIC Insurance Ltd.[223] In that case, his Honour rejected a submission to the effect that an insurer is not acting unreasonably if it declines to make payment of a claim until a bona fide dispute is resolved by a court, stating:

In my view, section 57 is directed to a determination of the point in time at which empirically, it can be stated that it was unreasonable to decline to make a payment. That decision is not to be determined simply by a determination of whether or not there was a bona fide dispute regarding the entitlement to payment. It is rather to be determined by a finding as to whether or not there was liability.

If there was liability found and [sic] the insurer to pay, then the presumption must be that the insurer ought be deemed to know of that obligation as ultimately determined, even though it may bona fide have held a different view at all times prior to determination, at least at first instance level, in relation to the question of liability.

A reasonable period is to be given to the insurer to investigate and determine its position but if it adopts an incorrect position in relation to its obligation to pay under the policy, that, in my view, does not mean that simply because that incorrect position is adopted on a bona fide basis, it becomes reasonable for the insurer to decline to pay the sums otherwise due. That seems to me to be the correct interpretation of section 57(2), particularly in circumstances of section 57(1) of the Act, where an insurer is liable to pay a person an amount under a contract of insurance.[224]

1. In the subsequent appeal to the High Court, there was no challenge to Cole J's construction that under s 57, an insurer is to be afforded a reasonable period to investigate the claim and determine its position.[225]
2. The approach taken by Cole J was followed by Einstein J in Hams v CGU Insurance Ltd[226] and Bongiorno J in HIH Casualty & General Insurance Australia Ltd v Insurance Australia Ltd (No 2).[227] In the latter case, his Honour said:

Once the court has rejected the insurer's defence to a policyholder's claim, that defence becomes irrelevant as does the fact that the insurer had a bona fide belief in its efficacy. To hold otherwise would put a premium on erroneous advice. Taken to its logical extreme, an insurer which relied upon incorrect legal advice or an inadequate report of a loss adjuster to form a belief as to the possibility of its successfully defending a policyholder's claim would be advantaged by having obtained bad legal or loss adjusting advice. The successful policyholder would be correspondingly disadvantaged by the same irrelevant circumstance.[228]

1. Bongiorno J also referred with approval to the approach taken by Ormiston J in VL Credits Pty Ltd v Switzerland General Insurance Co Ltd (No 2)[229] where his Honour allowed the insurer a reasonable time to investigate the claim and determined the date from which interest ran as being from the end of that time. Bongiorno J said:

His Honour appears to have selected a period of three months in a case involving arson as being a reasonable period during which the insurer was entitled to investigate the claim. He awarded interest after that period. His judgment does not suggest that that assessment was made on the basis of evidence as to what the insurer knew and what it did. Rather, it appears to have been selected by his Honour as being a reasonable period taking into account the type of case and the probable issues which had to be investigated.[230]

1. In Diosdado Sayseng v Kellogg Superannuation Pty Ltd,[231] Nicholas J reviewed the authorities and approved Cole J's approach. His Honour said:

In my opinion it should now be accepted that the correct approach to be taken by the court on this question is that taken by Cole, J in Bankstown Football Club. In my assessment, the cases to which I have referred establish that the question of reasonableness is to be judged by reference to the true position in respect of the claim with allowance to be made for the insurer to have a reasonable period of time within which to investigate the claim and to consider its position. The discretionary determination is to be made having regard to the particular circumstances of the case, including the probable issues which require investigation. Under the Act the court is not required to evaluate and pronounce upon the opinion or decision-making process of the insurer. It is not relevant that the insurer acted bona fide in denying the claim, or when the judgment of the court established the insurer's liability to pay it. In short, the award will be calculated on the basis of what the court finds is a reasonable time for completion of the insurer's investigation of the claim. Put another way, in my opinion, the insurer is not automatically liable to pay interest from the day on which it became liable to pay to a person an amount under a contract of insurance. Under s 57(2) liability to pay interest is to be calculated with regard to the day on which it was unreasonable for the insurer to withhold payment of the amount after it had become liable to pay it in response to a claim.[232]

1. CBL emphasised that the award of interest is discretionary and thus invites 'the usual suite of considerations relevant to the court's exercise of any discretion.'[233] Accordingly, it contended that '[t]he fact that an insurer did not pay a claim for which the court ultimately finds that it was liable will not necessarily result in the court being required to order the insurer to pay any amount of interest under s 57.'[234] In this regard, CBL referred to cases such as Harrison v Zurich Australian Insurance Ltd,[235] where Rolfe J found that the insurer was justified in awaiting the giving of evidence at a coronial enquiry or trial before agreeing to indemnify. On the requirement of unreasonableness, Rolfe J stated that something more is required than just the insured has been kept out of moneys to which the insurer has had the benefit. Cohen J made a similar finding in Jiwira Pty Ltd v MMI General Insurance Ltd.[236]
2. The Trustees, on the other hand, contend that interest is payable from the date the insurer denies liability for the claim[237] or purports to avoid the policy.[238] The Trustees submitted that CBL had decided to avoid the policy on 6 June 2006,[239] even before Huon entered administration and before any demand was made. The Trustees were not informed of that decision, however, until sometime after they made a demand under the policy.[240] The evidence Mr Harris gave was that CBL believed that it had been misled into providing the policy, and once it became aware via an article from the Sunday Age newspaper that Huon was in difficulties, it sought to avoid the policy ab initio. At this point, CBL also made arrangements through Gadens, its Melbourne solicitors, to return the premium. As was noted in the factual narrative, CBL forwarded a cheque for the premium to Gadens, but it remained in the solicitors' trust account. The advice that Mr Thomas gave CBL was that he was not sure whether CBL could just cancel the policy and return the premium. He said to Mr Harris it 'was not as easy as you might think'.[241] In fact, CBL never returned the premium, or made any attempt to do so. Under cross-examination it was put to Mr Harris that CBL did not ever run the argument that the policy was void ab initio in these proceedings. He said '[n]o, we didn't. We kept on asking for the figures.'[242]
3. Mr Harris had difficulty explaining any coherent basis for CBL's belief that it had been misled or what the 'misrepresentation' was. He said that CBL 'understood the $6 million to $8 million to be the total gross exposure'[243] yet he had received email correspondence from Mr Stanfield had stated plainly that gross exposure was about $29 million for entitlements and redundancy. He then sought to explain the alleged misrepresentation as being:

We were told that the only liabilities that we were taking on was the long service leave, holiday pay and sickness pay for the transferring employees and the redundancies for the people that were planned to be made redundant, and if any of those payments had not been made and were still outstanding as a debt at the time the company went into insolvency, if it did, then we would be responsible for them.[244]

But there was nothing in the email exchanges or other documents passing between the respective parties to support that position. Under cross-examination, Mr Harris effectively conceded that the policy could not be treated as void as against the Trustees because they had made no representations and he also accepted that the unions themselves might have been misled.[245]

1. It was not until 1 May 2008, when the representatives of CBL met with the Trustees for the first time, that the Trustees became aware CBL regarded the policy as being void ab initio. Details of that meeting, which took place at the offices of Holding Redlich, are set out in the factual narrative. Mr Humphris gave evidence about this meeting. He described the revelation of CBL's position, as follows:

...CBL made a clear statement at that meeting that the policy they viewed as being void ab initio, and from that point they were only interested in - which was the whole purpose of the meeting from the outset - was to see whether or not the matter of differences between CBL and the trustees could be resolved without litigation.[246]

He went on to say that CBL said they would provide the Trustees 'with their defence in respect to their claim that it was a [sic] void'[247] but no defence was provided at that meeting, nor did they give any reasons to support their view that it was void ab initio. Mr Humphris said he believed that it was agreed at the meeting that CBL would actually provide the Trustees with details of their argument within a short time frame. Nothing was, however, forthcoming.

1. The second meeting, which took place between the Trustees and the representatives of CBL on 29 October 2008, is also described in the factual narrative above. Mr Harris maintained that he said words at the meeting to the effect that the information provided by the Trustees was not sufficient to substantiate the claim. Mr Humphris did not, however, recall that statement being made and said that he would have made a note of it if such a statement had been made. Mr Humphris' evidence was that 'Mr Harris never wanted to substantiate the claim'.[248] Mr Fitzgerald also attended that meeting. He said that as he was not doing much of the talking, he wrote down a lot of what was said between the parties.[249] Mr Fitzgerald said he did not recollect Mr Harris at any point asking to see information and he rejected the suggestion that Mr Harris had asked for documentation to substantiate the claim.[250] He said:

...we were waiting for a position to be put by CBL to us as to what they wanted or what they were doing or what their position was, which hadn't happened, and the meeting finished with that same sentiment, we're still waiting with them to come back with something. There was no other request to see any other information.[251]

1. Notwithstanding the evidence given by Mr Humphris and Mr Fitzgerald, Mr Harris maintained the position that he had requested information to substantiate the claim.[252] He claimed to have taken notes, but could not produce them.[253] Mr Hutchison was also present at the meetings but he was not called as a witness.
2. If, as Mr Harris says, CBL was seeking information to substantiate the claim, it is surprising that there is no letter following up that request formally, particularly in circumstances where a demand had been made under the policy. It is also surprising that there is no note or record of any request ever having been made by CBL for information to substantiate the claim. CBL was aware of this issue but elected not to call any evidence from the other representative of CBL who was present at the meeting. In those circumstances, it is open to the court to draw an inference that any evidence Mr Hutchison would have given would not have assisted CBL's case. Accordingly, I am not satisfied that, at the meeting held on 29 October 2008, CBL's representatives requested that the Trustees provide information to substantiate the claim.

From when did it become unreasonable for CBL not to have paid the Trustees' current claim for $4,389,789.20 based on 336 employees?

1. In my view, the claim that the Trustees pursued at trial bears little resemblance to that notified in either of the first, second or third demands, or even that set out in their pleading and August 2012 particulars. Indeed, Mr Fitzgerald effectively acknowledged during cross-examination that the claim set out in their October 2013 particulars was very different to that made earlier. Given the view I have formed about the proper construction of the policy, the earliest point in time at which any meaningful assessment could have been made by the insurer of its liability under the policy was when the final distributions to be made by the liquidators (including the GEERS advances) were known or ascertainable. That point was reached by 30 September 2010. By then the employees had received the 3rd dividend letters stating that nothing further would be received. The liquidators' Reports to Creditors were also available to be called for by CBL under cl 9.2 of the policy if they were not already in the possession of CBL. The difficulty with that date being regarded as the earliest point in time for the insurer's liability to be meaningfully assessed is, however, that the Trustees had not by then identified the 336 (out of 453) Transferring Employees on whose behalf the present claim is made.
2. The evidence shows that even when the Trustees had made a decision to change the composition of the claim and the identity of the Transferring Employees on whose behalf it was made, it took them at least 6 months (from February or March through to about 6 September 2013[254]) to substantiate and refine the claim in the form of amended particulars. This revised claim as presented during the trial was the lowest quantum claimed by the Trustees.[255]
3. If CBL had responded to the Trustees' first and second demands for $7million, and paid according to the limit of the policy, it would not have been entitled to be subrogated under the policy to the rights of the employees. To the extent that there was an overpayment, CBL's only recourse would be to seek to recover the overpayment from the Trustees or the Transferring Employees as monies paid under a mistake.
4. The Trustees' third demand, made on 14 March 2008, was the first claim that was framed as a claim for a 'Deficiency in Employee Entitlements'. The Trustees alleged that there was a deficiency totalling $11,092,217 for which the limit of the policy was claimed. But the third demand did not set out the Deficiency in Employee Entitlements for each Transferring Employee the subject of the claim by reference to the source documents on which their claim was based. That detail was not provided until the August 2012 particulars were delivered. CBL says it was only after it received those particulars that it could perform its own calculations to verify the Trustees' claim.
5. The Trustees maintain that until they commenced this proceeding they did not have a curial burden to discharge. Mr Fitzgerald said:

I understand that, in formulating the claim now the litigation has proceeded, that I must assist in the calculation and obtain the information from the necessary sources, mainly being the liquidator.[256]

1. While it may be correct to say that was when the burden became a 'curial' one, in my view the burden the Trustees, as the Insured, carried of making a claim that was framed in terms of the policy was not dissimilar. Both Mr Humphris and Mr Fitzgerald suggested that their role was simply to put forward the claim on the basis that, as Mr Fitzgerald said, 'the documentation as to what the employees were owed was held by the liquidator.'[257] As Trustees for the Transferring Employees, however, if a claim was to be made on behalf of the Transferring Employees, the Trustees' role was to ensure that the claim put forward was one that relevantly engaged with the terms of the policy. In my view, the first time that was done was when the October 2013 particulars were filed.
2. For similar reasons, I do not regard the Trustees' pleaded claims that the reports of the administrators/liquidators constituted a 'determination' under cl 10(a) as the making of a claim that engages with the policy. In context, the claim that there was a deficiency of $5.8 million for unspecified employees, depending on assumed scenarios about whether the three businesses were sold as going concerns, does not qualify as a claim for a Deficiency in Employee Entitlements due to one or more identifiable Transferring Employees to which CBL as insurer was reasonably required to respond.
3. In order to determine when it became unreasonable for CBL not to have paid the amount of the Trustees' claim, reference should also be made to the conduct of the Trustees. It is now clear that the Trustees made a decision in February or March 2013 to change their case, and the way in which the claim on behalf of the Transferring Employees (and which employees a claim would be made on behalf of) was formulated. That was not communicated to the court or to CBL in clear terms. Rather, the Trustees allowed CBL to proceed to prepare its witness statements in July and August 2013 on the basis of the case that was set out in the August 2012 particulars. It was not until shortly before the trial was scheduled to begin that CBL became aware that fundamental aspects of the Trustees' case were changing. On 6 September 2013, the Trustees served an 'incomplete' table which evolved through several iterations during the course of the trial to become their final particulars and their claim under the policy. Once it became clear that the Trustees case had so changed, I directed them to bring on an application to formalise their change in position.
4. In all the circumstances, given that the claim pursued at trial on which the Trustees have enjoyed a measure of success is significantly different from each of the claims earlier made by the Trustees, and concerned only 336 Transferring Employees from the original group of more than 450, I am not satisfied that it was unreasonable for CBL not to have paid the amount of their various claims. Accordingly, I dismiss the Trustees' claim for interest under s 57 of the Insurance Contracts Act.

1. I also reject the Trustees' recent claim that the policy was a bond and that, accordingly, CBL was obliged to pay on demand. This claim was never pleaded. It was raised for the first time in closing submissions. The precise basis for the claim has not been articulated. It appears to have arisen as a result of evidence given by Mr Harris, who described the policy as a 'bond'. Under cross-examination, he said that a bond is 'something that's generally given to a third party to indemnify a party against loss arising as a default of another party' and that not every policy of insurance would be a bond.[258]
2. In the present case, the policy does not adopt the nomenclature of 'bond'. Rather, the policy is styled as a 'Financial Insurance Policy'. The initial draft on which Mr Harris endorsed some handwritten comments for Mr Thomas to consider was, however, styled as a 'Financial Bond'. Under the policy as executed, the expression 'Policy' is defined to mean 'this policy of insurance'. Further, by its terms, the indemnity is framed in terms of responding to an 'Insured Loss arising directly and naturally suffered by a Transferring Employee' as a result of Huon becoming insolvent within the period of insurance. Accordingly, as a matter of construction, it is clear that the indemnity is not a bond that is payable on demand.
   1. Answers to questions about interest under s 57 of the Insurance Contracts Act 1984 (Cth)
3. For the foregoing reasons, I would answer the questions about interest under s 57 of the Insurance Contracts Act raised by the parties as follows:

Question (17): Is the policy in the nature of a bond such that on the making of the First Demand (12 December 2006), the Second Demand (16 January 2007), or the Third Demand (14 March 2008), CBL was obliged to pay the amount demanded?

Question (18): Did the First Demand, the Second Demand, or the Third Demand:

(a) constitute a proper claim that conformed to and engaged the terms of the policy; and

(b) require CBL to pay the Trustees the amount of $7 million thereby demanded?

Question (19): When, if at all, did the Trustees make a claim under the policy that conformed with and engaged its terms?

Answer: The Trustees made a demand under the policy on 12 December 2006 which was within the Period of Insurance. The earliest point in time at which any meaningful assessment could have been made by the insurer of its liability under the policy was, however, when the final distributions to be made by the liquidators (including the GEERS advances) were known or ascertainable. That point was reached by 30 September 2010. It was not, however, until the Trustees filed their October 2013 particulars that they identified the Transferring Employees on whose behalf the claims now brought were actually made.

Question (20): Was CBL required to pay the Trustees the amounts of the alleged shortfall in the payment of Employee Entitlements reported in the various reports to creditors by Huon's administrators or liquidators, or any amount, by reason of either report being distributed?

Question (21): Before the commencement of the proceeding, were any requests made by CBL for information, particulars or proofs of the Deficiency in Employee Entitlements?

Question (22): In all of the circumstances, from which date was it unreasonable for CBL to have withheld payment of the amount it was liable to pay?

Answer: When regard is had to all of the relevant circumstances, I am not satisfied that CBL acted unreasonably in not making payment of the amounts claimed by the Trustees prior to the commencement of this proceeding.

1. In this proceeding the Trustees' claim two general heads of loss or damage:

(1) the sum of $4,389,789.20 as the Insured Loss under the policy; and

(2) the amounts set out in the amended further and better particulars of paragraph 17A of the further amended statement of claim (dated 27 September 2013) for their professional fees incurred to enforce the policy on behalf of the Transferring Employees.

1. I am satisfied that the Trustees have proved the fact of loss to which the policy responds. The primary claim made for the Insured Loss represents the shortfall for the 336 Transferring Employees identified. In most cases their individual shortfall will require re-calculation. The calculations are not inherently complex ones. I do not propose to undertake the task of re-calculating the quantum of loss but am satisfied that, on the materials before the court, the quantum of loss is able to be calculated.
2. The Civil Procedure Act 2010 (Vic) expressly requires the court, in exercising any of its powers, to give effect to the overarching purpose of facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute in a proceeding.[259] In particular, the court is required to further the overarching purpose by having regard to, amongst other things, 'the efficient conduct of the business of the court'[260] and 'the efficient use of judicial and administrative resources'.[261]
3. Section 65M of the Civil Procedure Act empowers the court to make an order appointing an expert to assist the court, and to inquire into and report on any issue in a proceeding. Such an order may be made 'at any stage of the proceeding.'[262] In making an order appointing a court appointed expert, the court must consider the following matters:

(a) whether the appointment of a court appointed expert would be disproportionate to-

(i) the complexity or importance of the issues in dispute; and

(b) whether the issue falls within a substantially established area of knowledge;

(c) whether it is necessary for the court to have a range of expert opinion;

(d) the likelihood of the appointment expediting or delaying the trial;

1. In my view, the appointment of a court appointed expert would not be disproportionate to either the complexity or importance of the issues in dispute between the parties nor the amount in dispute. The work to be performed is essentially a calculation exercise that will involve the consultation of a number of sources of information. Being essentially a calculation exercise, it is not an issue on which it is necessary for the court to have a range of expert opinion. I also note that the appointment of an expert to undertake this task is likely to expedite, rather than delay, the conclusion of the proceeding.
2. In circumstances where the respective parties have already performed calculations of the kind required as part of their respective cases, it would be open to the parties to reach agreement on the shortfall (if any) arrived at when re-calculated for each Transferring Employee in accordance with the basis set out in my reasons.
3. Accordingly, unless the parties otherwise agree in writing, by a date to be specified, the court will proceed pursuant to s 65M of the Civil Procedure Act to appoint such expert as the parties agree in writing, and in default of agreement, a forensic accountant to be appointed by the President of the Institute of Chartered Accountants. The expert will be required to calculate and report to the court on:

1. the shortfall (if any) for each of the 336 Transferring Employees;[263] and

2. the manner in which the calculation has been arrived at.

The expert will also be required to state the sources of any information used and any assumptions made.

Trustees' claim for time and costs involved in managing the claim

1. Turning to the second category of loss claimed, the Trustees claim an amount for their time and costs involved in managing the claim. The Trustees claim that these costs are recoverable as damages for CBL's breach of the policy by failing to pay the claim within a reasonable time.
2. There are two components to this claim. First, the fees, charges and costs (other than the costs in bringing this proceeding) incurred by the Trustees up to and including 10 October 2011 of $133,518.25 (including GST).[264] The Trustees claim simple interest on this sum from 11 October 2011 pursuant to s 60 of the Supreme Court Act 1986 (Vic) and the Penalty Interest Rate Act 1983 (Vic). Secondly, the Trustees claim such remuneration as is just and reasonable in undertaking their duties and obligations as trustees in seeking to enforce the policy in favour of the beneficiaries. They claim an amount of $217,953.46 (inclusive of GST) for work undertaken up to and including 21 August 2013, and an amount to be quantified in respect of work undertaken after that date. They also claim simple interest on their remuneration claim, on the same basis as for their fees, charges and costs claim above. In each case, the loss is claimed to be on-going.
3. At trial, Mr Humphris gave evidence about these fees and expenses. He annexed to his witness statement an invoice dated 19 December 2006 for the sum of $5,500 (including GST) that he, in his capacity as Trustee, rendered to the liquidators of Huon claiming for time spent on assessing the position and making a claim under the policy on CBL.[265] That invoice was paid by the liquidators.[266] That sum does not form part of the claim now made.
4. Mr Humphris said that he had recorded the time he spent discharging his responsibilities as Trustee. From 19 December 2005 to 21 August 2013, he has spent 318 hours in that role. He seeks to be remunerated for that work at his usual hourly rate prevailing at the time, which he calculates at $170,807.45 (including GST). A work-in-progress report setting out his time spent and work undertaken appears as Annexure 5 to his statement. The narrations appearing in Annexure 5 describing the work undertaken are expressed in very general terms.
5. Mr Humphris also gave evidence about work undertaken by the accounting firms of BDO, and later Grant Thornton, whom he and Mr Shaw engaged to assist them in preparing a claim to be made on the policy and then to assist with the handling of the claim. He identified the fees owing to BDO and Grant Thornton staff, their legal costs and other disbursements. Neither BDO nor Grant Thornton have rendered invoices as yet for those services. The work in progress report detailing these expenses appears as Annexure 7 to his statement. In giving evidence in chief about his Annexure 7, Mr Humphris said '[t]here may be some problems in the context of the reconciliation of those amounts, but I'm not sure as to the quantum.'[267] Under cross-examination he agreed that he had no role in its preparation. He said that he had been told that it was prepared internally at BDO from the work-in-progress information that they have available to them.[268] The narrations appearing in Annexure 7 to describe the work undertaken are also expressed in general terms but with a little more detail in the case of the entries concerning work performed by Mr Ahmed Bise.
6. Mr Humphris was re-called to give further evidence in response to a notice to produce served by CBL. In the course of giving his further evidence under cross-examination, Mr Humphris said that due to a medical issue, in 2010, 2011 and 2012, he handed over the files to Mr Fitzgerald to take responsibility for the carriage of the administration. He said that it was during that period when the work was required to be done in respect of the calculations of employee entitlements, preparation of schedules etc. and that he stepped back from the matter at the time because it was 'best being handled by one person who had the ability to have the continuity.'[269] When he was asked whether Mr Bise was the person who had had the most to deal with the calculation of employee entitlements, Mr Humphris said that Mr Bise was 'instrumental in preparing the initial schedules but under the direction of Mr Fitzgerald.' [270] I note that Mr Humphris' Annexure 5 does include claims for items of work performed by him in 2010, 2011 and 2012.
7. Mr Fitzgerald also gave evidence about the work undertaken by him in relation to the matter since his appointment as Trustee. In his witness statement he said that, as at 21 August 2013, he had spent a total of 70.3 hours of his time in that role. He said that when he was initially appointed he did not charge for his time in 'getting up to speed with the issues and the files relating to the policy' but since May 2012 he has taken a more active role in working on the file particularly in relation to the litigation. He seeks to be remunerated for the work he has performed in his role as Trustee at his usual hourly rate prevailing at the relevant time, which he calculates at $47,146 (including GST). A work-in-progress report detailing his time spent and work undertaken appears as Annexure 4 to his statement.
8. I am not satisfied that the Trustees have made out their claim for the time and costs involved in preparing and managing the claim. The policy does not make any provision for the Trustees to claim their fees and disbursements associated with assembling and presenting a claim under the policy. This aspect of their claim is pleaded as loss associated with a breach of the policy, and is said to flow from that breach. As I understand their argument, is it said that it was a breach of the policy, alternatively it was unreasonable for CBL not to admit liability for and pay their claim prior to 2 February 2012.[271] Accordingly, costs, fees and other expenses have been incurred by the Trustees that would not have been incurred if the insurer had acted reasonably.
9. I have found that it was not unreasonable for CBL to have withheld payment in advance of these proceedings determining the amount it will be found liable to pay. Accordingly, there being no relevant finding of breach, the Trustees accept they have no right to recover their costs and expenses incurred in pursuing the claim.[272] But even if, contrary to my finding, there were a right to damages, I am not satisfied that the Trustees have satisfactorily proven any loss and damage referable to their fees, or the other charges and costs said to have been incurred by them up to the point of issue of proceedings on 11 October 2011. Neither BDO nor Grant Thornton have rendered invoices as yet for those services. All that was produced by way of substantiation of that claim was the work in progress report, which Mr Humphris had not been involved in the preparation of. The narration of the work said to have been performed is inadequate to enable any proper assessment of that work to be made.
10. In the case of the fees sought by the Trustees themselves for the period up to the issue of the proceedings, a similar position applies. The amounts claimed by Mr Humphris are not adequately itemised and substantiated. Further, his later evidence suggests that his role in 2010 and 2011 was reduced and that Mr Fitzgerald was largely running the matter. Mr Fitzgerald has not charged fees for work performed in 2011 yet Mr Humphris has. In those circumstances, I am not satisfied that any sum is made out for their fees for work undertaken as Trustees at that time.

E Answers to questions concerning damages and proof of loss

1. For the foregoing reasons, I would answer the questions concerning damages and proof of loss raised by the parties as follows:

Question (23): Have the Trustees proved the fact and the amount of damages that they claim?

Answer: The Trustees have proved the fact of damage suffered to which the policy responds. In the absence of agreement between the parties, the court will require the assistance of an expert (to be appointed under s 65M of the Civil Procedure Act 2010 (Vic)) to perform the calculation of the shortfall or deficiency for each of the Transferring Employees for whom a claim is made, in accordance with my reasons. The total of the shortfalls or deficiencies so identified will be the quantum of the Insured Loss for the purposes of the policy.

As I am not satisfied that CBL acted unreasonably in not paying the claim(s) made by the Trustee, it follows that there is no basis for the Trustees to claim, by way of damages from CBL, their fees incurred in managing the claim.

458 I will hear the parties on the precise form of the appropriate orders, including on the question of costs.

[1] Under the policy, 'Insolvent' has the meaning set out in the Corporations Act, which was defined to mean 'the Corporations Act 2001 (Cth) as amended from time to time.'

[2] This letter was incorrectly dated 2006.

[3] GEERS is governed by the GEERS Operational Arrangements published by the Department of Education, Employment and Workplace Relations ('DEEWR') from time to time. It has no statutory foundation.

[5] There are two components to this head of the claim:

(1) fees, charges and costs incurred, in the sum of $133,518.25; and

(2) Trustees' remuneration of $217,953.45 to 21 August 2013.

[6] The solicitors for the Trustees said that 105 Transferring Employees were terminated prior to 30 June 2006 however all of their entitlements were paid: see letter from Holding Redlich to Gadens Lawyers dated 16 January 2007.

[7] In late 2005, Mr Oliver and Mr Pakula were, respectively, the Victorian Branch Secretary of the Australian Manufacturing Workers' Union and the State Secretary of the National Union of Workers.

[8] The four locations mentioned were Bendigo, Frankston and Dandenong in Victoria and Moorebank in NSW.

[9] See General Employee Entitlements and Redundancy Scheme: Operational Arrangements (1 November 2005 to 31 October 2006), Subdivision D, Division 6 Part 5.6.

[10] Report to Creditors dated 27 September 2006.

[13] Report to Creditors dated 29 November 2007.

[14] Report to Creditors dated 29 November 2007, 18.

[15] Ibid 12. The report states that '[t]hese particular employees and all of their entitlements have transferred to Motherson. Accordingly they are no longer owed money by Huon.'

[16] Report to Creditors dated 29 November 2007.

[19] Although the meeting was said to be 'without prejudice' both parties openly referred to it. See Transcript of Proceedings, 24 September 2013, 113 where Senior Counsel for the Trustees said that 'There were quite a few discussions that were evidently without prejudice between the parties, but no point has been taken in this litigation and so quite a lot of without prejudice matter has been included in witness statements without any objection.'

[20] Report to Creditors dated 12 September 2008, 17.

[21] Transcript of Proceedings, 24 September 2013, 107.

[22] Report to Creditors dated 29 September 2009, 12.

[23] ASIC Current and Historical Extract of Huon Corporation Pty Ltd.

[24] See, eg, Defence dated 7 June 2013, [13(b)(ii)].

[25] See Transcript of Proceedings, 24 October 2013, 683 where it was clarified that there is no Part 5.6A of the Corporations Act and confirmed that I was to proceed on the basis that it is intended to be a reference to Division 1A of Part 5.6, which deals with 'When winding up is taken to begin'.

[26] The meaning of 'solvency' and 'insolvency' is addressed in s 95A of the Corporations Act, as follows:

(1) A person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable.

[27] Section 9 of the Corporations Act, as in force during 2006, defined an 'externally-administered body corporate' as:

(b) in respect of property of which a receiver, or receiver and manager, has been appointed (whether or not by a court) and is acting; or

(ca) that has executed a deed of company arrangement that has not yet terminated; or

(d) that has entered into a compromise or arrangement with another person the administration of which has not been concluded.

[28] [2014] HCA 7; (2014) 306 ALR 25 ('Woodside Energy'), 33-34 [35] (French CJ, Hayne, Crennan and Kiefel JJ), 37 [53] (Gageler J).

[29] [2004] HCA 35; (2004) 218 CLR 451('Pacific Carriers'), 461-462 [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[30] (2004) 219 CLR 165 ('Alphapharm'), 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

[31] [2008] HCA 3; (2008) 234 CLR 151, 160 [8] (Gleeson CJ), 174 [53] (Gummow, Hayne, Heydon, Crennan and Kiefel JJ) (with Kirby J dissenting).

[32] [2011] HCA 45; (2011) 282 ALR 604, 605 [3]-[5] (Gummow, Heydon and Bell JJ).

[33] [1982] HCA 24; (1982) 149 CLR 337 ('Codelfa'), 352 (Mason J with Stephen and Wilson JJ concurring).

[34] [1982] HCA 24; (1982) 149 CLR 337, 352.

[35] See Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 310 ALR 113, 130-134 [69]-[86] (Leeming JA with whom Ward and Emmett JJA agreed). See also Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164, where the Court of Appeal adopted a cautious approach to the reception of evidence of surrounding circumstances. See, eg, McLure P at [45] where her Honour said that until 'the High Court expressly states its position, I would continue to apply the 'true rule' as explained by the court in Hancock Prospecting Pty Ltd v Wright Prospecting [2012] WASCA 216; (2012) 45 WAR 29 at [9], [74]-[81], which permits regard to be had to some surrounding circumstances for construction purposes without having to satisfy the gateway requirement.'

[37] Ibid. See also Pacific Carriers [2004] HCA 35; (2004) 218 CLR 451, 461-462 [22].

[38] [2014] HCA 7; (2014) 306 ALR 25, 33-34 [35].

[39] Australian Broadcasting Commission v Australasian Performing Rights Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 (Gibbs J).

[40] Woodside Energy [2014] HCA 7; (2014) 306 ALR 25, 33-34 [35], citing Zhu v Treasurer of New South Wales [2004] HCA 56; (2004) 218 CLR 530, 559 [82] (Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ).

[41] Corporations Act.2001 (Cth) s 596AA(1).

[42] 'Leave of absence' is defined in s 9 to mean, unless the contrary intention appears, 'long service leave, extended leave, recreation leave, annual leave, sick leave, or any other form of leave of absence from employment.'

[43] 'Relevant date' in relation to a winding up is defined in s 9 to mean, unless the contrary intention appears, 'the day on which the winding up is taken because of Division 1A of Part 5.6 to have begun.'

[44] [2003] FCA 810; (2003) 130 FCR 503 ('McEvoy').

[47] Oxford English Dictionary, 'owe, v', 3, 'in senses expressing debt'. See also the Macquarie Dictionary (online edition) which defines 'owed' as: 'to be indebted or beholden for; to be under an obligation to pay or repay, or to render: to owe interest on a mortgage'.

[48] [2008] NSWSC 1015; (2008) 68 ACSR 176.

[49] Ibid 194 [75] (citations omitted).

[50] McEvoy [2003] FCA 810; (2003) 130 FCR 503, 513 [20].

[51] Special provision is made in s 558 to cater for the situation where the liquidator employs a person whose services have been terminated by reason of the winding up. While the liquidator employs him or her, that person is taken for the purpose of calculating entitlements to be employed by the company: s 558(2). But where, after the relevant date, an amount in respect of long service leave or extended leave, or a retrenchment amount becomes payable, the amount is a cost of the winding up: s 558(3). In circumstances where he or she attains the length of qualifying service for leave or for the retrenchment payment by reason of that employment with the liquidator, the relevant amount is to be apportioned as set out in s 558(4).

The maximum aggregate liability of CBL under this Policy shall not exceed the Insured Amount but in no case shall the liability of CBL at any time exceed the liability of Huon Corporation to the Transferring Employees in respect of any Deficiency in Employee Entitlements.

[53] Under cl 1.1 of the policy, those terms are defined as follows:

Insured Amount means, at any time, the sum equal to $7,000,000; less any payments which represent Recoveries.

Recoveries means all and any sums whatsoever and howsoever realised or recovered whether by any Transferring Employee, the Insured, any party acting on their behalf or CBL or otherwise available for reducing the amount of the Insured Loss but excluding any payments made to Transferring Employees by the External Administrator of Huon Corporation in respect of any Employee Entitlements and excluding any payments made under the GEERS Scheme.

[54] 164 CLR 539, 570. See also 570-571 where Deane J describes a two stage process where the first stage is 'essentially one of inference of actual intention' and the second stage is one of imputation, which he said applies in cases 'where the parties have not attempted to spell out the terms of their contract but have left most or some of them to be inferred or implied.'

[55] See cll 7.2(a); 11.1; 15.3(c) and 15.3(c)(i) of the policy.

[56] Attorney General of Belise v Belise Telecom Ltd [2009] UKPC 11; [2009] 2 All ER 1127, [21].

CBL's liability under this Policy automatically and absolutely ceases at midnight Australian Eastern Standard Time on the Expiry Date except in respect of a demand made by the Insured in accordance with this Policy and received by CBL not later than midnight Australian Eastern Standard Time on the Expiry Date.

[59] See Edmund Snell and John McGhee, Snell's Equity (Sweet & Maxwell, 31st ed, 2005) [14-02], [14-14].

[60] See Sindel v Georgiou [1984] HCA 58; (1984) 154 CLR 661, 667.

[61] Lewis Construction (Engineering) Pty Ltd v Southern Electric Authority of Queensland (1976) 11 ALR 305, 309-10 (Barwick CJ in dissent).

[62] [1976] Ch 251. In New South Wales, see New South Wales Medical Defence Union Ltd v Transport Industries Insurance Co Ltd (1986) 6 NSWLR 740, 747 and Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329, 336. In Western Australia, see Anfrank Nominees Pty Ltd v Connell (1989) 1 ACSR 365, 367-368 and Frontier Petroleum NL v Anzoil NL (unreported, Supreme Court of Western Australian, Anderson J, 4 June 1997).

[63] [1976] Ch 251, 260.

[64] [2001] VSCA 2; (2001) 3 VR 526 ('Club Cape Schanck Resort').

[65] (1995) 41 NSWLR 329 ('Carlenka').

[66] Club Cape Schanck Resort [2001] VSCA 2; (2001) 3 VR 526, 529-530 [10]-[12] (Tadgell JA), 537-540 [36]-[39] (Phillips JA) and 541 [44] (Chernov JA).

[71] [1965] VicRp 57; [1965] VR 418, 420.

[72] Cf Chartbrook v Persimmon Homes Ltd [2009] UKHL 38; [2009] 1 AC 1101 where the House of Lords held that under the law of England and Wales, the type of intention that is relevant to a claim to rectify a contract on the grounds of common mistake is objective, rather than subjective.

[73] [2007] NSWCA 65; (2007) 69 NSWLR 603 ('Ryledar').

[74] Tobias JA delivered the leading judgment but at [189] he adopted Campbell JA's reasoning and conclusions on this issue, so that paragraphs [176] to [187] of his reasons were to be read 'in conjunction with and subject to that part of Campbell JA's judgment.' Mason P at [1] agreed both with Tobias JA and with the additional reasons of Campbell JA.

[75] Ryledar [2007] NSWCA 65; (2007) 69 NSWLR 603, 657 [267]-[268], 660 [281]. The reference to 'Joscelyne' is to Joscelyne v Nissen [1970] 2 QB 86.

[76] Ryledar [2007] NSWCA 65; (2007) 69 NSWLR 603, 667-668 [316].

[77] [2009] NSWCA 407; (2009) 76 NSWLR 603.

[78] Ibid 710-711 [445]-[450] (Campbell JA).

[79] Paragraph A of the prayer for relief. The 'Omitted Persons' were identified in their particulars to paragraph 8 of the Statement of Claim as being 'Beth Galik (Empire Rubber), Daryl Piercy (Empire Rubber), Helen Jury (Nylex Frankston) and Jen Ngann (Mills Elastomers).'

[80] [2003] NSWCA 155.

[81] Hunt v Watkins [2003] NSWCA 155, [49].

[82] Paragraph GB of the prayer for relief.

[83] Trustees' Outline of Closing Submissions, [94].

[84] Transcript of Proceedings, 25 September 2013, 218.

[85] See Exhibit D4: first draft document of comments made by Mr Harris submitted to Mr Tony Thomas of CBL in 2005. See also Transcript of Proceedings, 25 September 2014, 240-241.

[87] Transcript of Proceedings, 25 September 2014, 241.

[88] CBL's Closing Submissions, [81].

[89] International Harvester Export Co v International Harvester Australia Ltd [1983] VicRp 50; [1983] 1 VR 539; McGrath v Sturesteps [2010] NSWSC 896; (2010) 242 FLR 122, [37].

[90] McEvoy [2003] FCA 810; (2003) 130 FCR 503, 513 [20].

[91] The table of 6 September 2013 was served on CBL's solicitors under cover of a letter from the Trustees' solicitors. The table contained a claim for 321 employees and no longer applied credits across the row and down the column. In the covering letter the Trustees' solicitors said 'We are revisiting all employees' calculations' and 'will provide either an amended version of the spreadsheet or supplementary sheets to the Excel spreadsheet.' See Transcript of Proceedings, 23 September 2014, 47, 77.

[92] Transcript of Proceedings, 24 September 2013, 168.

[93] Trustees' Outline of Closing Submissions, [148] (citations omitted).

[94] JLW (Vic) Pty Ltd v Tsiloglou [1994] VicRp 16; [1994] VR 237, 241, 243 (per Brooking JA); 250 (per Tadgell, and JD Phillips JJA).

[95] Transcript of Proceedings, 18 October 2013, 497, 500.

[97] [2005] NSWSC 149; (2005) 53 ACSR 110.

[99] CBL's Closing Submissions, [124].

[100] See, eg, the claim for Carmen Eastman, who was an Empire Rubber employee.

[101] Transcript of Proceedings, 18 October 2013, 503-504.

[102] Transcript of Proceedings, 24 September 2013, 179-180.

[103] Transcript of Proceedings, 23 September 2013, 54.

[104] See Further Witness Statement of Mr Oxley.

[105] Trustees' Outline of Closing Submissions, [166].

[106] In the Further Witness Statement of Mr Oxley at [11], Mr Oxley says that the increase in hourly rates is only one of nine examples that the Trustees advanced as reasons why overpayments were made. The other 8 reasons mentioned in the August 2012 particulars were rounding, 'cannot explain', long service leave, sick leave, annual leave, 'liquidator error', rostered days off and the use of an incorrect number of weeks.

[107] See Transcript of Proceedings, 24 September 2013, 137-138.

[109] The sum represents the October 2013 particulars calculation of his redundancy entitlement as at 30 June 2006 of $31,209.25 less payments for the redundancy entitlement made by the liquidators to date by way of dividend and under GEERS of $21,885.03.

[110] The sum represents the October 2013 particulars calculation of his sick leave entitlement as at 30 June 2006 of $4,873.71 less payments for sick leave entitlement made by the liquidators to date by way of dividend and under GEERS of $2,612.35.