iVaughn Stephens v Konecranes Pty Ltd

Applicant: Mr Ian Neil of counsel Solicitor: Mr Michael Jaloussis W.G. McNally & Co LEGAL REPRESENTATIVES: Respondent: Mr David Robinson of counsel Solicitor: Mr Simon Horton Magney & Rhodes

JUDGMENT:

• 28 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: KAVANAGH J

IRC4380 OF 1998 VAUGHN STEPHENS v KONECRANES PTY LTD Application under s 106 of the Industrial Relations Act 1996

1 This is an application under the provisions of s106 of the Industrial Relations Act 1996 for orders declaring void in whole or in part the contract of employment between the applicant and the respondent alleging the contract in its terms and/or in its performance was harsh, unfair, unconscionable and contrary to the public interest. The application is for associated monetary orders that are just in the circumstances. 2 Mr Ian Neil, of counsel, appeared for the applicant and Mr Michael Jaloussis, solicitor instructing him, on one occasion appeared in the interests of the applicant. Mr David Robinson, of counsel, appeared for the respondent. 3 The summons for relief relies upon the following grounds: 5. The contract of employment whereby the Applicant performed work, was and is unfair, harsh, unconscionable and contrary to the public interest in that:-

(a) It permitted the Respondent to terminate the employment of the Applicant without making adequate amounts of money available by way of payment in lieu of notice, and payment for redundancy. (b) It allowed the Respondent upon the termination of the Applicant's employment to recall, call up, purchase or cancel at the Respondent's discretion, all bonds, warrants, shares and stocks, subscriptions and options, to the financial disbenefit of the Applicant and to the financial benefit of the Respondent. (c) It allowed the Respondent to impose upon the Applicant restraints upon his ability to be employed or to enter into business in competition with the Respondent. (d) It allowed the Respondent to treat the Applicant in an oppressive manner and in contumelious disregard to the Applicant's rights. (e) It was otherwise unfair, harsh, unconscionable and contrary to the public interest upon such other grounds as may be advised on notice in due course. (f) It was otherwise unfair, harsh, unconscionable and contrary to the public interest upon such grounds and for such reasons that this honourable Court may find. 4 The applicant applies for orders the contract be varied to insert a clause that upon termination the applicant be paid: (1) a 12 months redundancy payment; (2) a 12 months payment in lieu of notice; and (3) an order allowing the applicant to retain full possession of bonds and warrants granted to the applicant by the respondent. 5 A Notice of Motion was filed by the respondent for orders that the summons be dismissed on the following grounds:

1. The summons for relief seeks orders which are inconsistent with the Federal Metal Industry Award (1984) ("the Award") which covers the field on the issues which the respondent (Applicant in the proceedings) seeks to vary by par 4 of the summons for relief.

2. By reason of the Federal Award covering the field, the Industrial Relations Commission of New South Wales has no power to implement the operation of s 106 of the Industrial Relations Act by reason of s109 of the Australian Constitution. 6 As to the Notice of Motion, the court ordered notices be issued pursuant to s78B of the Judiciary Act 1903 (Cth) and that those notices be served on the Commonwealth Attorney-General and the States and Territories Attorneys-General. Both parties have advised the court, and some communications were tendered, indicating the Attorneys-General did not wish to intervene in the proceedings. 7 As to the timing of the hearing of the Notice of Motion it was held in Bell and Berg v Macquarie Bank Ltd & Anor (1999) 87 IR 126 (at 127) by the Full Bench of the Industrial Relations Commission of NSW when examining a similar issue as to the jurisdiction of the Commission: The issue presented was concerned essentially with the timing of the debate concerning jurisdiction. His Honour commenced consideration of this issue by reference to a submission made on behalf of the respondents that "the usual course should be followed, namely that the question of jurisdiction should be argued as a threshold matter", senior counsel relying in particular on observations made by the Full Industrial Court (Fisher CJ, Hungerford and Peterson JJ) in Nagle (t/a W.D. & J.L. Nagle & Sons) v Tilburg (1993) 51 IR 8. Those observations referred to the approach adopted by the New South Wales Court of Appeal in Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443; 39 IR 169. The Full Court then made this statement (at 11): We would draw from those authorities the proposition that whilst it is desirable for a case to be determined at an early stage it is only open to do so at the appropriate stage of the proceedings , that is, where the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, it seems to us, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such a determination to be made. In General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 Barwick CJ held that the jurisdiction to terminate an action summarily for want of a cause of action in the plaintiff was to be sparingly employed and ought not to be used save where the lack of the cause of action was clearly demonstrated." (emphasis added) 8 The court then determined, in accordance with the relevant authorities, that the Notice of Motion be heard at an appropriate time in the proceedings when the evidence was such that findings as to the relevant facts could be made so the question of jurisdiction of the court could be properly determined. The Notice of Motion was therefore set aside for consideration at an appropriate stage in the proceedings. 9 The applicant gave evidence and was cross examined. The respondent called one witness. Both parties relied upon documentary evidence.

The Facts 10 The respondent is the Australian arm of an international corporation which sells and maintains large cranes used for industrial purposes mostly in construction and heavy industry operations. 11 Mr Stephens, the applicant, joined the respondent after he qualified as an electrical technician having served his apprenticeship with the State Rail Authority of New South Wales. He joined the company as a technician in its Brisbane operations on 22 May 1989. His responsibilities gradually involved him in a supervisory role but also involved working on the technical side installing, commissioning and maintaining the cranes supplied by the company throughout Queensland and Papua New Guinea. He developed for the company its maintenance base within South East Queensland. He performed these duties from 1989 to 1991. 12 In 1991, the applicant was appointed by way of a promotion to the position of Marketing Manager - Maintenance Service. He became responsible for the operations of the company in Newcastle and northern New South Wales. He was responsible for sales, supervision and administrative functions as well as crane installation and commissioning activities. He expanded the territorial sales volume in this area by 50%. He succeeded in increasing the profit margin to the company. The number of persons working under him increased to four personnel: most were appointed to assist in serving the increased customer base. 13 In 1993 the applicant was further promoted to the position of New South Wales Maintenance Controller. He assumed responsibility for the maintenance, crane installation and commissioning activities for the Newcastle as well as Sydney and Wollongong regions. He sold and project-managed a particular operation which returned a 38% gross profit margin to the company. In 1994 his duties were expanded and he gained further responsibility as Training Manager for the Asian-Pacific region. These duties were added to his Maintenance Controller duties. He now initiated and conducted Crane Sales training programmes throughout the entire Asian-Pacific region especially directed to technical supervision. He implemented recruitment and appraisal procedures and designed manuals all aimed at ensuring high quality personnel selection and the on going training of company technicians to meet the standardised quality controls for service that he had introduced as company policy. 14 In 1996 he was appointed Marketing Manager - Maintenance Services for Australia. As to that appointment he received a letter from Mr Ken Wood, then Managing Director of Konecranes dated 23 January 1997: I am pleased to confirm your appointment as Marketing Manager - Maintenance Services, effective from 1 January 1997. Please find below details of the salary package offer. Salary of $80,000 PA. A car allowance of $900 per calendar month together with a fuel card for a company leased vehicle. In addition the company will pay two maintenance services on the vehicle where it will be charged to your credit card to a total not exceeding $600.

I have every confidence you will be competent in your new position that should improve the efficiency and profitability of maintenance services.

I will be grateful if you would sign the attached copy and return to me. 15 On 30 January 1997 this appointment as Marketing Manager - Maintenance Services was announced to the company personnel. The applicant was made responsible directly for service operations in Victoria, Tasmania, Western Australia and more responsible for the modernisation of the company's service delivery. This appointment was part of a new corporate plan of the company with the aim of strengthening the Services available to branch managers in the company network and to achieve a "Konecranes Australian common approach with regard to the services we market to our clients." The announcement noted the: Designated manager will be responsible for day to day activities, working in conjunction with the relevant branch manager with specific emphasis to be placed on the use and improvement of contract base. 16 Mr Wood, the Managing Director furnished this memorandum to all employees with the following comment: I would ask all staff and managers in the organisation to give Vaughn Stephens and Asco Torkki there (sic) support as we endeavour in 1997 to establish a platform for sustained profitability. 17 The applicant, therefore, through various promotions had held senior and responsible positions within the company for some years. The description of his work duties revealed he concentrated his endeavours into the field of marketing and training especially related to maintenance services. 18 On or about April 1998 Mr Edward Yakos was appointed from America to succeed Mr Woods as Managing Director of the respondent. He immediately determined to reorganise the respondent's business operations in Australia. He saw himself as a "marketing man" and determined to assume the marketing responsibilities and duties held by the applicant for himself. 19 Along with assuming those responsibilities for marketing endeavours Mr Yakos then reviewed the applicant's role and determined there was no place for the applicant in his newly structured organisation. He determined the applicant's position should be made redundant and he should be dismissed. There was no consultation with the applicant as to this decision. 20 Mr Yakos held the view the applicant lacked the required education to perform the marketing task. There is a great irony in this statement. As the evidence reveals, the applicant had sought to gain further qualifications in marketing but his endeavours had foundered due to the demands of his employment including much travel both intrastate and interstate. Mr Yakos alleged further the applicant had never been appointed second-in-charge of the company although under Mr Wood's rule it seems the applicant thought he had assumed that responsibility. It was Mr Yakos's view that the applicant's appointment related only to Maintenance Services and the applicant had no role in the Crane Division; that the applicant had no management, administrative or marketing responsibility whatsoever for the Crane Division of the respondent. 21 From the evidence while the applicant's role may have been concentrated in the marketing and maintenance area I find the applicant certainly had general management administration and marketing responsibility within the company. There was a suggestion Mr Wood had encouraged the applicant in his ambition to become the company's Managing Director. 22 It is Mr Yakos' evidence as to the applicant's termination that he said words to the following effect on the termination of the applicant: Vaughan, we do not have a position here for you in Australia with your mix of skills and qualifications. I have mentioned to you before that you do not have any formal tertiary qualifications or managerial training and that puts a limit on the type of position you would be able to fulfil within the organisation. The only positions available will involve a major demotion in status and pay, though we have not considered that option further because senior managers outside of Sydney have told me they do not want you in their region because they see you as officious and untrustworthy. I have canvassed the option of an overseas position with you with KCI. However, due to your skills mix there are no opportunities open for you, particularly given the current economic downturn in Asia.

23 The applicant also agrees on several occasions prior to 25 June 1998, the day he was terminated, he had spoken to Mr Yakos about his role and career path but submits he was still not prepared for the termination. No counselling or outsourcing help was offered to the applicant on termination. 24 Mr Yakos presented to the court as the holder of a Bachelor of Science degree in Electrical Engineering and a Master of Business Administration (from Milwaukee, Wisconsin, USA). He presented with 12 years experience in marketing and administration. The applicant presented with nine years experience in these areas. 25 The court finds it extraordinary that the applicant should be told that all of his endeavours on behalf of the company, clearly endorsed by the previous Managing Director, Mr Wood, should be dismissed out of hand simply because he did not have a tertiary education. The applicant's years of experience in the field, his apprenticeship training, his mechanical engineering experience on the job, were all dismissed out of hand by Mr Yakos. Mr Yakos demonstrated to this court, and clearly to the applicant, an insensitivity that was without any touch of consideration for the applicant, a man who had moved his family around the country for the company and given his all for some nine years. 26 The applicant was terminated during a period when there was a downturn in the economic climate. 27 The respondent submits on termination it calculated the applicant's termination payment in accordance with the provisions of the Federal Metal Industrial Award. There is dispute as to how this calculation was made. His payments were: Annual Leave $8,307.68 Leave loading $1,453.84 Long Service Leave $12,128.69 Redundancy $19,384.60 Tax $7,960.81

Total payment: $36,600.16 28 At the time of his dismissal the applicant earned a base salary of $80,000 and his car allowance was increased to $1000 a month (covering expenditures). The respondent paid him a severance payment which was called a "redundancy" payment of $19,384.60. This was equivalent to a remuneration for a little more than two months. The respondent calculated this payment adopting the view it was appropriate to restrict the applicant to the payment fixed at a general minimum standard for redundancy as defined in the Metal Industry Award 1984. The calculation of the termination payment was made on his base salary alone. The respondent in a working document submitted the calculation made to reach the figure of $19,384.60 was not based on a redundancy payment but incorporated a redundancy payment of 8 weeks and a payment for notice in lieu of 4 weeks. That is not what the document given to the applicant with the payment outlined. On that document, the payment was simply entitled "redundancy". 29 The applicant submits the payment was unfair. The applicant submits he was given no payment as to notice nor any counselling or outsourcing assistance and there was, in such conduct by the respondent, an unfairness in the termination of his contract of employment as defined under s106 of the IR Act. 30 The Notice of Motion The respondent submits by way of Notice of Motion the Industrial Relations Commission of NSW, sitting in Court Session, must dismiss the claim filed under s106 of the Act because the Federal Metal Industrial Award dictates the working conditions of this worker and such conditions have all been complied with. They further submit while the Commission in Court Session may have power to consider whether this is an unfair, harsh and unjust contract, any orders arising from such a consideration under a State law would be inconsistent with the Federal Award (read "law") and therefore unconstitutional. 31 An inconsistency may only arise under s109 of The Constitution if there is an inconsistency between "a law of a State" and a "law of the Commonwealth". Plainly enough s106 of the Industrial Relations Act 1996 (NSW) is a "law of a State". 32 The Federal Metal Industrial Award becomes Federal Law by virtue of the Workplace Relations Act 1996 (Cth). In Colvin v Bradley Bros Pty Ltd (1943) 68 CLR 151, Williams J said of a Federal Award (at 163): The award is not of course a law of the Commonwealth, ... but once the award is made its provisions become part of the law of the Commonwealth by virtue of the Commonwealth Conciliation and Arbitration Act 1904-34. Colvin concerned an inconsistency between an order made under a State Act and a Federal Award. The State Order was made pursuant to the Factories and Shops Act , 1962 a law of New South Wales. The Award was made pursuant to the Conciliation and Arbitration Act , a law of the Commonwealth. The State Order prohibited the employment of females on milling machines. The Federal Award allowed such work unless a declaration as to the unsuitability of that work had been made by a Board of Reference. No such declaration had been made. An inconsistency therefore arose between the State Order and the Federal Award.

33 Section 152 of the Workplace Relations Act 1996, a law of the Commonwealth, is relevant. It states: (1) Subject to this section, if a State law or a State award is inconsistent with, or deals with a matter dealt with in, an award, the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid.

Section 152(1) therefore provides in terms that the provisions of an award under the Workplace Relations Act, 1996 such as the Metal Industry Award, prevail to the extent of an inconsistency with a State law, such as an order made under s106 of the Industrial Relations Act .

34 Consistent with the approach in Colvin, Mason, Brennan and Deane JJ said in Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union (1983) 152 CLR 632 ("the MTIA Case") (at 648) that: Because it has been thought that an award made pursuant to the Conciliation and Arbitration Act 1904 (Cth), as amended, ("the Act") is not a law of the Commonwealth within the meaning of s109, inconsistency between an award and a State law must be reduced to inconsistency between the State law and the provisions in the Act authorizing the making of the award so as to constitute it an exhaustive and exclusive regulation of the relevant subject matter (T.A. Robinson & Sons Pty Ltd v Haylor (34). In this respect s65 of the Act ... is of paramount importance for it is the expression of the statutory intention that the arbitrator's exercise of power is to operate to the exclusion of any State law.

[Section 152 of the Workplace Relations Act is relevantly identical to s65 of the Act referred to in the passage above].

35 In the MTIA case, Gibbs CJ, Wilson and Dawson JJ observed of the operation of s65 of the Commonwealth Act (cf s152 of the Workplace Relations Act) (at 642) that: The problem (of inconsistency) therefore is to be approached on the basis that the alleged inconsistency is between the Commonwealth Act which authorizes the making of the Awards and the State law, and the solution is to be found in the application of s109 and the well established doctrine of inconsistency derived therefrom. At the heart of the doctrine is the call to take the law or the award with which the State law is alleged to be inconsistent and to discern precisely the matters which it is the intention of the Parliament, or the Commonwealth arbitrator, as the case may be, are to be exhaustively determined thereby. 36 The first proposition argued by the respondent in the Notice of Motion is the applicant was employed under a Federal Award and that Award, the Metal Industry Award, 1984 "covers the field". The MTIA Award states: All employees . . . engaged in any of the occupations, industries or callings specified herein. 37 The respondent, Konecranes, is a respondent to this Federal Award. The respondent submits therefore the Award covers the field and such field does not distinguish between average wage earners and those on substantial wages. Therefore, it is the respondent's submission, this court must find the applicant was employed under the award and his conditions of employment, including his termination and redundancy, are to be determined by the Federal Award. It would follow there is no jurisdiction for this court to make a determination and consequent orders under s106 of the State Act. 38 In support of this proposition the respondent relies on the authority of Gooley v Westpac (1995) 129 ALR 628 where the court found a worker receiving $100,000 salary was subject to the Bank Officials Federal Award. It is agreed the applicant in the case was in receipt of an annual salary significantly above the wage rates defined in the Award. 39 The respondent also relies upon the judgment of Dixon J in Ex Parte McLean (1930) 43 CLR 472 (at 483). In essence, the respondent submits that the applicant was paid under the Federal Award but above the Award rates of pay. 40 The applicant was paid throughout his employment a leave loading of 17.5%. Clause 25(k) of the Metal Industry Award acknowledges this leave loading. Further, the applicant worked 38 hours per week and such is in accordance with cl 18 of the Award. Such payments are relied upon by the respondent as evidence in the support of the submission the applicant was paid under the award. 41 The respondent alleges the award covers this worker. The respondent relies on Spalding v Can't Tear 'Em Pty Ltd [1999] FCA 1222 (3 September 1999) where Wilcox J, Marshall, Dowsett JJ examined a phrase in an award as to its coverage (at par 4): In respect of each and every person employed by them in the clothing industry.

However, their Honours noted in that judgment there may well be people employed by a clothing manufacturer who were not "employed . . . in the clothing industry." The applicant's evidence was his work became quite different at the time of his appointment to the job of Marketing and Training Manager. He was not involved in the task of maintaining or repairing cranes as the coverage is defined in the said award. 42 The applicant submits while the award does manifest an intention to deal exhaustively and/or exclusively with an area of employment, so far as the description of his duties are concerned, the award does not cover his duties and therefore there can be no exclusion of the operation of s106 of the Industrial Relations Act 1996 in his circumstances. 43 The applicant relies on the view expressed by Marks J in Michael John Burgess & Ors v Mount Thorley Operations Pty Ltd (unreported interlocutory decision, 24 May 1999) where he found that the Federal instrument, despite the fact that it dealt comprehensively with the circumstances and consequences of termination of employment in a wide variety of scenarios, did not thereby manifest an intention to "deal exhaustively or exclusively with this area, so as to exclude any operation of s106 of the Act." The respondent submits the court would not be persuaded by this authority. 44 I do not accept that the applicant from 1 January 1997 was paid under the award. The letter of appointment, the court finds, was a contract of employment. It clearly defines the applicant's position, his salary, that a car allowance was to be paid, superannuation was to be paid and there was contemplated a bonus scheme "to be advised". The leave loading that the respondent relies on as confirmation that the worker was paid under the award, is in fact a standard leave loading throughout New South Wales enjoyed by workers in both award and non-award employment. So are the 38 ordinary hours worked. There has been no document or oral evidence provided to the court that these conditions were relied upon by the employer by way of a reference to an award. Further, there was no evidence as to reference to the award for any overtime hours payments, shift payments or other penalty payments that were accrued benefits earned by this worker if he was paid under the award. This applicant travelled overseas, worked odd hours including evening work and there has been no evidence that he was paid anything beyond the salary as defined in the letter of appointment. 45 The respondent bears the onus of establishing the applicant was engaged in his position as Marketing Manager - Maintenance Service under the provisions of the award. From the evidence the respondent does not seem to have applied award provisions throughout the applicant's employment in this position. The court does not accept this worker, at the termination of his employment, in consideration of the duties he performed, was covered by the provisions of the Award. 46 The court finds, on the applicant's appointment as Manager engaged in Marketing and Training, the applicant worked under a contract of employment. The applicant may well have been originally employed under the said Award when he worked solely using his mechanical skills but from the evidence he was contracted under specific contractual conditions when he moved to Newcastle, although the details of that contract are not before the court. However, the court finds the letter of appointment of 23 January 1997 to the position of Manager, Marketing and Training, was a contract of employment and the applicant was employed from the day he assumed that position under the terms and conditions of this contract of employment. 47 As the applicant was not employed under a Federal Award, it follows there is no issue as to an "inconsistency" to be considered between an award as a Federal Law and the State Law in the application of s106 of the Industrial Relations Act 1996 to the facts before the court. The court determines therefore it has jurisdiction to consider whether the applicant's contract of employment by its terms or in its conduct was unfair, harsh or unconscionable pursuant to s106 of the Act and make any associated orders in the use of its discretion that are just in the circumstances. 48 The court therefore dismisses the Notice of Motion. The court finds it has jurisdiction to determine the application before it. 49 As to whether there was an unfairness in this employment contract or in the performance of the contract at termination, the court is guided by the principles enunciated in Port Macquarie Golf Club Limited v Stead & Anor (1995-96) 64 IR 53. The Full Bench examined s275 of the Industrial Relations Act 1991 which is a similar provision to s106 of the Industrial Relations Act 1996. The court, it says, must make an examination of the particular facts of the case (at 59): Unfairness may arise either from the terms of the contract or arrangement itself, the surrounding circumstances and/or from the manner of performance or operation of the contract or arrangement: Barry v Incitec Limited (1991) 45 IR 143 at 146; Incitec Limited v Industrial Court of New South Wales (1992) 45 IR 155 at 157-158; and Baker v National Distribution Services Ltd (1993) 50 IR 254 at 270-271. 50 In applying the test for unfairness the Full Bench guides the court to take (at 59-60): . . . the commonsense approach characteristic of the ordinary juryman by applying standards providing a proper balance or division of advantage and disadvantage between the parties who have made the contract or arrangement, bearing in mind the conduct of the parties, their capability to appreciate the bargain they had made and their comparative bargaining positions when entering into the contract or arrangement: Davies v General Transport Development Pty Ltd (1967) AR (NSW) 371 at 374: A & M Thompson Pty Ltd v. Total Australia Limited [1980] 2 NSWLR 1 at 13; and Baker at 271-272. 51 The Full Court in Baker v National Distribution Services Limited (1993) 50 IR 254 (at 270) emphasised the importance of: Directing attention to the particular circumstances of the individual contract or arrangement . . .

and (at 272): . . . the conduct of the parties, the relevant bargaining position between the parties in terms of advantage and disadvantage, the surrounding circumstances and the manner or performance or operation of the contract or arrangement on a case-by-case basis. 52 The respondent submits, in the alternative, the court having found the applicant was employed at termination under a contract of employment from 1 January 1997 the contract is silent on such matters as hours of work, annual leave, termination of employment and sick leave and such payments and conditions are therefore to be set under the Federal Award. The contract, if silent the respondent submits, requires by inference application of the Award. Further the respondent submits as such Award benefits, as defined under the Award, were paid to the applicant during his employment and on his termination there should be no order. 53 I found the applicant a most impressive person in the witness box and believe the evidence revealed he had built up, with his long and effective service, considerable managerial skills which should not have been dismissed out of hand simply because of an arbitrary rule applied by Mr Yakos that he had "no formal qualifications." 54 I find there was an unfairness in the conduct of Mr Yakos such as to make the performance of the contract in the termination of the applicant unfair and harsh. When facing an internal restructure Mr Yakos took away the applicant's responsibility and then, simply because he did not have a tertiary qualification, determined that the applicant's skills, education and experience did not fit him into even a consideration for any position in the new organisation. He was given no fair consideration in the context of the employer's re-organisation as was referred to in David Jones Limited v Cukeric (1997) 78 IR 430 (at 462). The respondent failed to conduct with the applicant any meaningful consultation about his redundancy and such conduct in itself indicates an unfairness in the performance of this contract at termination (Gala v State Bank of NSW Ltd (1998) 84 IR 216). 55 The respondent did not specifically tell the applicant that he was to be made redundant as soon as the definite decision had been made. This is accepted by the respondent. However, the respondent submits that the applicant must have appreciated his position was in doubt from the beginning of 1998 and the evidence shows he did so appreciate his position in that he applied for a job elsewhere in this period. 56 Having found an unfairness in the performance of the contract the court must determine in the use of its discretions whether to void or vary the contract and whether an order of compensation is just in the circumstances. 57 As to the Court's discretion, the Full Bench in Port Macquarie Golf Club held (at 60): (8) If a contract or arrangement be found to relevantly offend one or more of the grounds, such as it being unfair, contained in s275(1) then the next question involves the exercise of a discretion, to be performed judicially, as to whether the contract or arrangement should be avoided or varied: Hodges [1985] 11 IR 60 at 62-63; Autobake [1986] 19 I.R. 18 at 20; and Baker at 267. (9) If it be decided to avoid or vary the contract or arrangement under s275(1) then a further discretion arises as to whether an order should be made under s275(3) for the payment of money in connection with the contract or arrangement declared void or varied: Hodges at 63; Autobake at 20; and Baker at 267. 58 In terminating this employee the employer chose to adopt some provisions as to payments by reference to the Metal Industry Award. However, the employer chose not to comply with other provisions. The award requires close consultation with an employee whose position is to become redundant. The applicant was given no counselling as to criticism of his performance nor any real warning as to his fate. He was given no other assistance such as out-placement help. All such matters are required to be addressed under the relevant Award. 59 Some dispute arose as to the type of payment the applicant received on termination but the document at the time of termination shows he was paid an annual leave amount, a leave loading amount, a long service leave amount and a "redundancy" payment - in total, after tax, $36,660.16. From a reading of this document handed to the applicant on termination he was paid a payment of 10 weeks salary as a "redundancy payment". 60 The respondent submits the quantum of payments on termination and the redundancy payment made, were calculated under the award and were generally sensitive to the applicant's length of service and age and were therefore appropriate and just in the circumstances. The court would therefore not determine, in the use of its discretion, to give orders for any monetary payment. The respondent further submits that the payment made was calculated as 8 weeks for redundancy and 2 weeks for notice and both payments were in accordance with the award provision as to notice (see cl 6(d) of the Award). 61 The court finds it a great irony that the respondent, submitting it relied on the award for a measure of minimum termination and redundancy payments, did not feel bound by the other Award conditions to be applied to a redundancy such as counselling and out-placement services (see cl 42 of Award) and early notice. On examination the respondent chose to disregard the Award's requirements even in his redundancy situation. 62 Much of the affidavit evidence leading up to this hearing related to the circumstances of the applicant's departure when he took with him some disks which, after proceedings were initiated by the respondent in the Supreme Court, were returned by the applicant to the company. There was a further issue raised about some stock options held by the applicant which the respondent demanded be returned. 63 However, Mr Yakos' evidence in this area was very fair. He revealed the circumstances in which the applicant obtained the share options. The international company went public and a number of its bonds and warrants were issued to staff of the company throughout the world by way of an allocation. The various associated national companies then allocated a number of options to each employee to a certain level of authority. The applicant was one of the person who was a recipient of the international company's generosity. A document before the court suggested that these bonds were returnable to the company on termination. However the bonds and warrants were granted to the applicant by the Finnish International company, not the Australian company. It was a one-off allocation and it was not any part of the employment contract. It was a benefit to all employees up to a certain level depending upon the number of options allocated to each company and the allocation made downward. When after this evidence was given, Mr Neil, counsel for the applicant, was questioned as to whether this part of the claim, as particularised in paragraph 5 of the summons, was being pursued he answered: Your Honour may not need to in the face of this evidence.

Although Mr Yakos did on behalf of the International Company request the return of the bonds and warrants, it is clear, and he acknowledges same, he had no authority as head of the Australian company to so require their return. There shall be no order as to the applicant's possession of any bonds or warrants. 64 As to the applicant taking property owned by the company the court notes this issue was resolved in the Supreme Court proceedings. 65 As to the respondent's submission the applicant did not mitigate his loss, after the applicant left his employment he sought to establish a business but the company, within its rights, successfully protected itself against commercial competition from him. The applicant then moved his family back to Newcastle and now sells alarms. The applicant gave evidence he had asked a friend for a job within the first four days after termination. Other than that he relied on his own skills to be self-employed. The respondent submits he had an obligation to seek employment. 66 The Court finds the applicant did make an effort to mitigate his loss. The applicant eventually moved his family and returned to Newcastle in order to establish an alternative career. The court finds in the circumstances there is no evidence that attracts the court to exercise its discretion to give the respondent any credit on this account (Harcourt Brace and Co (Australia) Pty Limited v Cory (1997) 81 IR 321 at 337). 67 As to the use of the Court's discretion to order payments of monies that are just in the circumstances, the court notes the words of Hill J in Newton v Goodman Fielder Mills Limited (1997) 81 IR 227 (at 239) where he refers to Barclays Australia Investment Services Ltd v Nordby (unreported, 5 October 1995, CT1205 of 1993) in which the Full Industrial Court observed that the task of determining a monetary amount involves: . . . the exercise of a broad judgment without the assistance of defined and identifiable parameters or heads of loss or damage.

Hill J said in Newton (at 238) redundant employees have a right to both notice and severance payment. He held, of a termination of employment due to redundancy, that redundancy: . . . has long attracted special consideration and generally speaking, separate and additional benefits.

His Honour was of the view, in the circumstances before him, a severance payment should acknowledge two elements, redundancy and notice. The court is persuaded in the circumstances before it, it is just that the severance payments made to this employee be in accordance with the view of Hill J. The applicant's severance payment should have reflected both fair notice and redundancy considerations. Even if I accept the respondent's submission that two weeks of the severance payment made were for "notice" (and I do not) such a payment as to notice would be found unjust in the circumstances. 68 The court finds in the use of its discretion that is it just in the circumstances that the employment contract be varied to require the respondent to pay the applicant a seven months payment as to "notice". 69 The notice payment, the subject of the order, is to reflect the level of payment of the full salary package earned by the applicant in accordance with the ruling in Cukeric and is to include a payment for pro rata superannuation, long service leave, etc. There is to be credit given to the respondent for payments made as to these rights. 70 The court finds the two months two weeks payment, that is, a 10 weeks calculation, made by the respondent as a "redundancy" payment was a redundancy payment in full and was a just redundancy payment in the circumstances. The respondent shall therefore have no credit for this payment. The taxation deduction to be made from this payment as to Notice is to be at the appropriate rate in accordance with the Commonwealth Taxation laws. Any deduction as to taxation from the redundancy payment should also have been in accordance with those Commonwealth laws. Appropriate adjustments, if applicable, should be made in accordance with the law. 71 As to the claim for interest made by the applicant, Schmidt J in Abboud v The State of New South Wales (Department of School Education)(No 2) [2000] NSWIRComm 110 (published 30 June 2000) held in a consideration as to interest as follows (at par 45): The role of an interest component in monetary orders made under s88F of the Industrial Arbitration Act 1940, a predecessor to s106, was discussed by two members of the Industrial Commission in Court Session in Thomas Nationwide Transport Ltd v Thomas & Anor (1990) 34 IR 378. That approach has since been followed by the Court and its predecessors. (See Westfield v Helprin (1998) 82 IR 411 at 443-4).

Her Honour in Abboud then considered the reasoning of Bauer and Hungerford JJ in Thomas Nationwide Transport Ltd v Thomas & Anor (1990) 34 IR 378 as to what was an appropriate order for interest. She also in consideration as to money orders under s88F adopted the reasoning of Barwick CJ in Brown v Rezitis (1971) 127 CLR 157. Barwick CJ adopted the principle (at 165) that orders should ". . . effect wholly or partially the restitution of the parties to their former position upon the variation or avoidance of the contract or arrangement". Her Honour in Abboud then held (at par 49): Here, the question which now arises is whether the express provision for a minimum of 2 weeks' notice was unfair, where misconduct warranting summary dismissal has not been established, in the circumstances outlined. I take the view that the proper approach in the circumstances of this case is to make an order as to the payment of money 'just in the circumstances of the case', which requires that interest should flow from the date of application and no earlier. While there undoubtedly have and will be cases brought under s106 where the issue is notice and where a proper basis for making an order in relation to interest calculated from a date earlier than the date of application will be established, there was nothing advanced in evidence or submissions in this case, which would provide a proper basis for going beyond that date. 72 The respondent shall pay the applicant's costs as agreed, or in default of agreement, as assessed. 73 Interest is to be paid on the amount ordered from the date of the filing of the summons under s106 of the Act in accordance with s94 of the Supreme Court Act 1970 as amended. The parties are to file detailed orders reflecting these findings within 14 days. The matter is to be relisted on 24 hours notice if no agreement can be reached. **********

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