John Bastian v Noel Ashely Brent & ors practising under the business name PriceWaterhouseCoopers & Ors. - [2001] NSWIRComm 316 - NSWIRComm 1993 case summary — Zoe

NSWNSWIRComm

John Bastian v Noel Ashely Brent & ors practising under the business name PriceWaterhouseCoopers & Ors.

[2001] NSWIRComm 316

Industrial Relations Commission (NSW)|1993-03-31|Before: Haylen J, Sheldon J, Peterson J, Mr J, Mr P

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Court

Industrial Relations Commission (NSW)

Decision date

1993-03-31

Before

Haylen J, Sheldon J, Peterson J, Mr J, Mr P

Catchwords

09/20/2001
09/21/2001
09/27/2001
09/28/2001 EXTEMPORE JUDGMENT DATE : 12/03/2001

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Original judgment source is linked above.

Catchwords

09/20/200109/21/200109/27/200109/28/2001 EXTEMPORE JUDGMENT DATE : 12/03/2001

Judgment (173 paragraphs)

[1]

Industrial Relations Commission of New South Wales in Court Session

[2]

CITATION : John Bastian v Noel Ashely Brent & ors practising under the business name PriceWaterhouseCoopers & Ors. [2001] NSWIRComm 316 PARTIES : John Bastian v Noel Ashley Brent & Ors practising under the business name PriceWaterhouseCoopers & Ors FILE NUMBER: IRC 2078 of 2000 CORAM: Haylen J Unfair contract - s 106 - international operation of group of companies - relationship between number of companies in group - transfer of employment - whether new contract or secondment - whether resignation from employment in Australia - representations as to continued employment - conditions of transfer to position in Singapore - jurisdiction - proper law of the contract - whether work with Singapore company sufficiently connected with New South Wales - objects and operation of joint venture company - termination of employment in Singapore - whether termination for cause - whether termination a redundancy - position not filled following termination - company performing below projections - identity of Australian employer - role of service company administering payroll - unfairness in manner in which contract entered - unfairness in provision of inadequate notice of termination - contract becomes unfair in its operation - mitigation - payment of discretionary bonus - loss on motor vehicle sold in Singapore - whether loss on motor vehicle compensable loss - contract and arrangement unfair - orders proposed for payment representing 10 months' salary on full package CATCHWORDS :

[17]

(a) the applicant was first engaged as a consultant by PriceWaterhouse Administration Pty Ltd in February 1993 and worked for the partnership in Sydney; (b) in July 1993, the applicant accepted an offer of employment in a position on the staff of PriceWaterhouse in the Sydney office. He was to join the Corporate Finance Section as an Associate Director with increments in addition to his base salary calculated on the net revenue for the "Australian Firm". The offer was on the letterhead of PriceWaterhouse and was signed by Ian Armstrong, Partner; (c) Mrs Thomas, the Head of Human Resources for the first respondent, gave evidence that the applicant was employed by PriceWaterhouse Administration Pty Ltd and that, after the merger with Coopers and Lybrand on 1 July 1998, the applicant was "transferred" to PriceWaterhouseCoopers Services Pty Ltd as were other staff; (d) the transfer of the applicant to PriceWaterhouseCoopers Ltd in July 1998 occurred a year after the applicant had taken up a position with the second respondent in Singapore; (e) Mr Watson, a partner in the first respondent since 1985, gave evidence that PriceWaterhouse Administration Pty Ltd was a service company for the partnership. The wages for employees of the partnership were paid by the service company. The applicant worked for the partners and was hired by them. The applicant generated income for the partners but he was not sure if any of this income went to the service company. All profits earned went to the partnership. The partners directed the work to be performed by the applicant and, if necessary, the discipline or termination of his employment would be decided by the partners. The partners decided if he would receive any bonus payments. (f) more generally, Mr Poulter gave evidence of the operation of the global network of PriceWaterhouse. He stated that there were a series of partnerships in territories, with territories agreeing to co-operate in many areas, e.g marketing. The territories "empower" a global management to appoint people to regions or global positions, for example, to develop new markets.

[18]

8 By 1996, Mr Bastian was in discussions with Mr Poulter about the development of a regional Asian based project finance team reflecting the type of work already performed by PriceWaterhouse in the UK, the USA and Sydney. Mr Poulter was also in discussions with partners of PriceWaterhouse, including the Australian partner Mr Watson, concerning this prospect. In due course, arrangements were made for Mr Bastian to attend a meeting in Singapore in June 1996, an involvement approved by Mr Watson, who also approved of the payment of Mr Bastian's airfare for the purpose of the meeting. The meeting in Singapore was conducted over approximately two days and Mr Poulter had prepared a project finance proposal for discussion. In that discussion Mr Poulter stated that a team should be established in Singapore to be the centre for advice on infrastructure for the region and would operate as part of a global PriceWaterhouse team. Mr Poulter also spoke about how clients could be obtained through the global PriceWaterhouse project finance capability - there would be conference speaking, international advertising and a clear presence in the global project financing brochure with the US, Europe and Australia. During this discussion, Mr Bastian recalls that Mr Poulter said that the team needed to be led by somebody capable of making executive decisions who should be a partner on secondment from one of the member firms for three years. As will become clear later, Mr Poulter had no recollection of speaking of secondment at this meeting and, in fact, said that he had a quite different view of the role: his proposal, however, did speak of secondees from PriceWaterhouse firms as being a possible source of expertise. There was a discussion as to how the team, operating as part of the PriceWaterhouse global finance network, would be established with Mr Poulter opting for a joint venture involving most of the firms with interests in Asia. If that option was followed it required a determination about who would be the shareholders in the joint venture. At the conclusion of the meeting, it was agreed that Mr Bastian would email recommendations for a report to Poulter which needed to be finalised before the Asian CFRD heads met in September 1996.

[43]

29 It is of some interest that before Mr Watson had finalised the written offer made to Mr Bastian, he had received an email from Mr Poulter. The email, dated 27 May 1997, shows Mr Poulter's frustration at the haggling that was taking place over Mr Bastian's proposed package. The email was sent to Mr Watson, Mr Dall and Mr Browne of the Australian firm and noted that they were all at the end of their "tether" with this subject. Mr Poulter noted that they had agreed as a firm nine months ago that they needed a PW person to lead the team in Singapore and had also agreed that John Bastian was the only one available because the other prospective candidate would not be released from the US. It was noted that both Watson and Dall felt that Mr Bastian was not of sufficient calibre to give him a reward package similar to the Australian partners in Asia, but that Mr Bastian was not satisfied with what was being offered. It was also noted that after several weeks of discussion, the firm had nevertheless only just made one offer to Bastian the previous week. Mr Poulter said that they could reach the view that Mr Bastian's aspirations were not realistic, they could not bridge the gap between them and that they should call the whole thing off. He believed that would be the wrong approach because "However much it might get up our noses, John's aspirations are not unreasonable. We are effectively saying to him as a firm you are through in Australia - see what you can do in Singapore. Against that background, he legitimately expects some risk element in his package". Mr Poulter noted that his aspirations were some way below the market level for a good person and about half what would be paid for a "star". The comparison with Australian partners in Singapore was only partly relevant and that was because partners were in the game for long term equity in the firm, which was not being offered to Mr Bastian. Further, if Bastian was not sent to Singapore there was no one else to put in his place. There was no other internal candidate and an external candidate would be more expensive and would cost 33 per cent in head hunter's fees. They could not have such a person in place before October or January at the worst. The following was then stated:

[77]

56 Mr Bastian's recollection was that, in this January meeting, Mr Poulter had said to him that, as he was moving to Athens, then, clearly, the Singapore contract would not be renewed but there would be a new contract for Athens. Mr Poulter denies such a conversation. Both Bastian and Poulter agreed that Poulter send an email to Bastian with a copy to Hagger recording the points that they had covered in their discussion. Copies of this email were annexed to affidavits sworn by both Mr Bastian and Mr Poulter. In that email, Mr Poulter confirmed that Mr Bastian would stay resident in Singapore until 30 June 1999. The contract in Singapore would not be extended after that time but the Olympic job would require him to work 50 per cent of his time in Athens. There was then a discussion about how he would spend that time, either pursuing other work in Greece or developing other Olympic work. The document confirms Mr Poulter informing Mr Bastian that, in his view, Mr Bastian did not have partnership prospects. He proffered the view they should not dwell on partnership prospects for the immediate future, but that decisions on how "we manage your career need to take that into account". There were to be discussions with other members of the firm as to the economic basis on which the Singapore joint venture could make money out of the fees accruing from the Olympic job and how he would make a profit on his personal costs and, in the meantime, Mr Poulter would enter into discussions with others in the firm as to what sort of contract "we could have for you in Greece that was fair to you and your family and economic for the firm". It records an agreement for the immediate future: Mr Bastian would go to Greece on 1 February to begin work on the job and to carry out "some reconnaissance into possible skills and accommodation"; he was to be sent information by fax on cost of living and possible salary levels to help him with his decision. It discussed the possible option of him and his wife relocating to Greece but the children boarding in Australia. The email then spoke of the risk that, if no agreement could be reached after 30 June on contractual arrangements, Mr Bastian would need to think about other employment. Both agreed that was hoped to be avoided. Mr Poulter said that they agreed that Mr Bastian would speak to "Andrew" (Hagger) about what he should do before phasing into the Athens project from 1 February. They wanted his time to be used efficiently for the benefit of the business, although it was recognised that business development in Asia probably did not make a lot of sense at the moment unless it was carefully focussed. He was told that his main focus must be on "getting up and running on an economic basis on the Athens project". The email concluded on the following note:

[82]

59 On more than five occasions between February and April 1999, Mr Bastian spoke to the London contact nominated by Mr Poulter. Mr Bastian was attempting to settle the terms of his move to Athens but was fobbed off with excuses that people were having difficulty getting to Mr Poulter or waiting for feedback from him. In February, he was given two local HR contacts in Athens. Also in February, the Athens firm had organised for assistance for Mr Bastian's wife when she came to Athens to look at a number of schools and houses and generally to show her around. Mr Bastian and his wife flew to Athens in February 1999 for approximately ten days to look at schools and housing for the family. 60 The costs associated with this travel were initially paid for by the second respondent who sought reimbursement from the Athens firm. Bastian was later informed that the Athens firm would not reimburse these costs. Poulter then told him that approval for interim expenditure on hotels and relocation agents was to be approved by Poulter or the London contact because Poulter did not think it was reasonable to charge these matters to the 2004 job or expect the Greek firm to meet the costs directly. This information was contained in an email to Mr Bastian and also raised a number of other points: Poulter pointed out that Bastian would not have to negotiate twice about the Athens terms because Poulter would be responsible for "agreeing things"; he assumed that Bastian would come on to the London payroll under any new contract or that London would take the costs risk associated with the employment; after this week of inspections of housing and schools, he hoped Bastian would make a decision in principle quite soon about whether his family would move with him and, if so, for how long because this was a key issue for structuring his arrangements and working out the economics for the firm. Mr Bastian was given advice about Greek property rentals and why he should avoid being shown properties beyond the range advised by the Greek firm. It was also agreed that the arrangements should be wrapped up within four weeks "for the good of all concerned". Mr Poulter told him he was trying to get into a position so that the firm could decide what to offer him and he could decide what to do.

[84]

62 At around this time, Mr Bastian continued to work on the Athens project and his family started to finalise their personal affairs in preparation for their departure from Singapore to take up their new life in Athens. On 27 April, however, Mr Bastian received a telephone call from Poulter's secretary saying that Mr Poulter wanted to speak to him in relation to his transfer to Athens. Several arrangements were made to receive that call but it was progressively postponed until about 11.00 pm that night when Mr Bastian telephoned Poulter who told him he would call him back shortly. When Poulter did call back Mr Bastian recalls that he said words to the following effect: I wish to advise you that your contract of employment with PriceWaterhouse Project Advisory Pty Ltd will terminate on July 2, 1999 and will not be renewed and you will not be transferring to Athens and with the knowledge of the Australia firm I cannot offer you another position in Australia, Europe or elsewhere. I will now email a letter to you. 63 Mr Poulter's evidence was that, during April, he had a growing concern about the progress being made by Mr Bastian and the way he was managing the team. On several occasions during April he spoke with senior members of the Athens firm and also with Mr Hagger. He also discussed options and had a discussion with Hagger in which he said that Mr Bastian was not doing well on the Athens project. He told Hagger that he had come to the conclusion that it was a mistake considering assigning Bastian into a senior role in the project notwithstanding his Olympic experience and that, unfortunately, it was not economically viable to involve him in any capacity other than in a senior capacity if it meant relocating or a lot of travel. He had come to the view that he needed to remove Bastian from the project and sought Hagger's view. According to Poulter, Hagger said that he agreed that removing Bastian from the job was the only practicable option and that, unfortunately, when his contract expired it seemed that there would be nothing left for him. In his affidavit evidence, Mr Hagger does not mention this conversation. Importantly, there is no explanation of why Mr Hagger was being consulted about Mr Bastian's appointment to Athens. Mr Hagger was an Australian partner, seconded to Jakarta for three years and involved in the Singapore joint venture.

[91]

69 Mr Hagger gave evidence of a further meeting with Bastian on 20 May in Singapore. He made a record of that meeting and forwarded it to Tony Poulter, Grace Thomas and Allan Watson in Australia as well as Nicky Tan in Asia. At that meeting, Mr Hagger said that there had been a discussion with Poulter and himself and the ex-gratia payment proposed in previous correspondence had been further evaluated but would not be increased. He records that Mr Bastian asked: "What is the question you have asked when soliciting what is fair? Have you asked what is reasonable for a retrenchment from the Australia firm in circumstances where a secondee is stranded in a foreign country?". Hagger told him that "our position" was that he was not being retrenched and that he was not an Australian employee, that he was simply on a two year contract ending on 2 July 1999 and that he had under performed, and it was their entitlement not to renew his contract. Hagger apparently told him that his route back to the firm in Australia "had been shut (at least non-guaranteed) to him two years ago". While there had been an expectation that an Athens contract would materialise and was previously under negotiation, Bastian's under performance in the early part of the Athens engagement had led to the situation where it was decided he should be removed from the team and that no contract would be forthcoming. 70 Hagger then discussed the separation agreement that was proposed which tied the payment of benefits to an agreement of confidentiality, non-solicitation and an agreement not to seek any further payments or amounts in any claims against all of PriceWaterhouse. He was told he would be given an ex gratia payment, the provision of their out placement services and the provision of two discounted economy air fares to Australia between May and July. Bastian told him that he felt it was blackmail: he said he was being asked to acknowledge that he was not under duress when he clearly was. Hagger said that it was the standard practice in Singapore to withhold the May salary, being the current period, once it had been known that the contract would be terminated. Hagger told him that he had no recollection of any promise that he would be paid salary for this period, at which point Bastian became quite angry because he had already drawn cheques on the basis of the salary being paid. Bastian spoke of being humiliated.

[140]

123 The following matters are relevant to a determination of whether or not the claimed representations were made to Mr Bastian. Mr Poulter was anxious to fill the role in Singapore - he had invited Mr Bastian to take up the position and had obviously told others of his appointment. Mr Poulter accepted the fact that he would not have appointed Bastian to Singapore if he did not think he had reasonable prospects of succeeding in the position: this view was formed despite the negative comments of Mr Watson. He had met Bastian several times and was satisfied he was the best man for the job. There is substance in the applicant's submission that Watson was likely to have made the alleged representations since he mentioned the need to avoid creating a precedent. Mr Bastian probably had no way of knowing of this matter other than being told by Watson, although Poulter could have mentioned it. It is significant that the hurdle of "no right of return" was overcome after Bastian was spoken to by Poulter and Watson. The overall evidence concerning Singapore and Athens leaves the impression that Mr Bastian was a tireless and persistent negotiator on his own behalf, understandably a feature of his nature which did not endear him to his superiors. It is likely that, having failed to secure more money for the transfer to Singapore, Mr Bastian at least satisfied himself that there would be a position for him somewhere globally, or in Australia at the end of his time in Singapore. Poulter also accepted that, being in charge of the European Project Finance Team at the time of these alleged representations, meant that he was well placed to obtain a position for Bastian in Europe. There may be significance in the fact that, in 1998, Poulter told Bastian that if he proved himself before leaving Singapore, Poulter would certainly expect to find him a position of appropriate responsibility in the network and would do his very best to do so. It is not surprising or unlikely that Poulter would encourage Bastian in these ways as he had become, since the mid 1990s, Bastian's mentor within the firm and the two of them spoke frequently about Bastian's career and his prospects within the firm. There is another matter which tempers my assessment of Mr Poulter's denials of these representations. On two occasions during cross-examination, Mr Poulter said that it was within the bounds of truth to use different words to say different things on different occasions, and that what is the truth varies with the circumstances. This was the approach he had taken, internally, in business. These comments arose in circumstances where he was shown examples of his own published words which Bastian had included in his affidavits and which Poulter had denied or had tried to diminish. I understood Mr Poulter to be saying, in part at least, that there were circumstances in business where he would not necessarily disclose his real views because he thought it better that something positive be said. These discussions with Mr Bastian may have been just such occasions. In this context, it is also significant that Mr Hagger gave evidence that the only person who came to the second respondent from a PriceWaterhouse firm and who had no right of return was Mr Bastian. Indeed, Mr Hagger himself came to the joint venture after Mr Bastian, on secondment as a partner in the Australian firm. No reason for this discrimination was exposed except for the desire to avoid creating a precedent. It is consistent with this desire that Mr Bastian was assured that his future was safe and that, in fact, he would not be treated differently to the other staff who transferred to Singapore. The alleged representations are also consistent with the draft proposal for the joint venture and its final form which was overseen by Mr Poulter and which proposed the senior staff to be "seconded" from PriceWaterhouse firms. Indeed, a number of PriceWaterhouse publications stated that Mr Bastian was in Singapore on secondment from the Sydney office of the Australian firm. Mr Watson said that, in May 1997, Mr Bastian informed him that he was "transferring to the joint venture" effectively in a partner's role. Mr Watson was quick to correct him about the fact that he was not a partner - Bastian was not corrected about "transferring" to Singapore. That conversation had an air of continuity about it which Mr Watson did not challenge. In addition, it was Mr Watson's evidence that he told Bastian that if he performed well in Singapore, Poulter would find him a position "somewhere" in two years' time. 124 At this early stage, in my view, the Australian firm was intimately connected with both the concept of the joint venture, its promotion and acceptance. It became closely involved in its operation. Both Mr Bastian and Mr Poulter had identified a significant untapped market: if the potential was realised, there were significant profits to be made by the Australian firm as a shareholder in the joint venture. The Memorandum of Understanding, signed on behalf of the Australian firm, locked the foundation shareholders into the project for a minimum of three years - they could not withdraw within that period. As demonstrated by the documents tendered, the initial shareholders were in this project for the long term, primarily because of what had been perceived as a lucrative, untapped, potential market.

[145]

128 Another matter of significance in the present context is the role played by Mr Watson in negotiating the salary for Mr Bastian's new position in Singapore. Mr Poulter's clear evidence was that he was telephoned by Mr Watson who, in somewhat robust terms, required that he be responsible for negotiating Mr Bastian's remuneration package for the Singapore position. Mr Watson's role in these negotiations is not easily explained if Mr Bastian was resigning from the Australian firm and taking up a wholly new and separate position in a new PriceWaterhouse entity. Mr Watson says that he had been approached by Mr Dall, the managing partner of PriceWaterhouse Australia, about not wanting to set a precedent with regard to salary levels of Australians being transferred out of Australia. Mr Dall said that the package paid to Bastian should be treated with caution because it could cause considerable difficulty. It could be of no relevance to the Australian firm, however, what PriceWaterhouse firms overseas paid within that firm's structure - the only relevance could be that a person on secondment or transfer, who was still part of the Australian firm, might receive a salary that would cause others who were still part of the Australian firm to raise their expectations or their demands. This involvement of Mr Watson was therefore in the interests of the Australian firm and no one else. (It is also worth noting at this point that, at the end of his term in Singapore, it was Mrs Thomas, head of HR in Australia, who drew up the Separation Agreement, urged that it be pressed on Mr Bastian and, when signed, be returned to Australia to be kept with his employment file). 129 Mr Bastian thereafter negotiated his salary package for the Singapore position with Mr Watson. It was Mr Watson who made the final decision on the terms, conveyed them formally by letter, rejected all of Mr Bastian's attempts to improve them and had Mr Bastian sign his acceptance of the offer. The offer made was on PriceWaterhouse Australia letterhead and was signed by Mr Watson stating his position as partner in the Australian firm.

[147]

131 In light of these matters, what can be determined about the relationship between the applicant, the first respondent and the second respondent? In final submissions, the applicant argued that, at least on one level, the arrangement whereby the applicant undertook a transfer to Singapore was an arrangement collateral to his employment in New South Wales. In my view, that is a correct description - there was, at least, an arrangement between the Australian firm and the Singapore firm for Mr Bastian to work in Singapore. Some light on the position is shed by Poulter's email to Mr Watson dated 24 March 1997. In that email, Poulter talks about Mr Bastian's "transfer to Singapore" and how the options for the position were restricted and how the only realistic option was Bastian. At one point Mr Poulter is moved to make the following statement: In short, if we want an internal candidate who has project financing experience we don't have a lot of choice. We should see John as a two year solution and hope that the number two we recruit can grow into the job. He then spoke about what was the appropriate amount to offer and suggested that the amount should give Mr Bastian "more security" than he has at the moment in recognition of the fact that he was going into a new market without many contacts, that he was taking on more direct responsibility than he "'has in Australia" and that "we are asking him to move". Again, Mr Poulter makes reference to the figures being spoken about as possibly being more than "you can easily stomach from an Australian perspective" but acknowledged that Mr Watson may get a better deal from him. This document clearly accepts that Mr Bastian met all the short term needs but was not necessarily being sent to Singapore as a long term prospect. It was specifically raised that whoever was appointed to the second in charge position would hopefully grow in the job and would be able to take it over. The talk about offering more security does not seem to have any substance, if all that was being proposed was the termination of Mr Bastian's Australian contract and the offering of a two year contract with a new entity in Singapore which in all likelihood would never be renewed. That possible alternative proposition is a very cynical exercise which would have rendered the arrangements unfair. In my view, the effect of the 1997 arrangements were not to terminate Mr Bastian's employment in Sydney, but permitted him to work in Singapore with the second respondent.

[148]

132 In addition to the other matters I have referred to concerning the relationships between the first respondent and the applicant, it is worth noting that: (a) when Poulter terminated Bastian's employment he said he had discussed it with personnel in Australia and others; (b) when Hagger was discussing the terms of his termination with Bastian, he sent copies of the notes of these meetings to Watson and Thomas in the Sydney office of the first respondent, and (c) the Separation Agreement, with its provision that there should be a release from further claims against the Singapore company "and its associated local and overseas entities including any members of firms of the worldwide PricewaterhouseCoopers organisation", was drafted by Mrs Thomas. She wanted the Separation Agreement signed and a copy of it for the Sydney file. These events, at the conclusion of the arrangement with Bastian regarding his work in Singapore, underline the continuing link and connection with the Sydney office of the first respondent. They are inconsistent with a 1997 termination of Bastian's employment by the first respondent and are inconsistent with the respondent's case that the Singapore contract was a stand alone employment contract solely with the second respondent and that, after it was entered into by Bastian, the first respondent had no further interest in or dealing with the applicant. 133 What I have said in the preceding paragraphs establishes a very substantial link between the work that was being performed by Mr Bastian, the work of the second respondent and the work of the first respondent that was being performed in New South Wales in the financial advising industry. In addition, the applicant asked that the following matters be taken into account: (a) the contract was negotiated in New South Wales; (b) the contract was negotiated by Mr Watson, a partner in the first respondent; (c) at the time the contract was entered into, all parties resided in New South Wales; (d) at the time the contract was entered into, the second respondent did not exist; (e) the contract was itself signed by Mr Watson as "managing partner, corporate finance" of the first respondent; (f) the first respondent was an equity participant in the joint venture project which was carried on by the entity of the second respondent; (g) the second respondent was the joint venture entity by which various partnerships of PriceWaterhouse worldwide (including the first respondent) could carry on project finance work in Asia; (h) Australia was initially part of the territory covered by the Memorandum of Understanding; (i) as pointed out to Mr Poulter by Mr Watson, the applicant's salary was to be shared between all the joint venture partners, which included the first respondent; (j) the transfer was referred to as an "internal transfer". I accept the relevance of all of these matters

[153]

138 Both Chrysler and Perrott indicate the law of the contract is only a factor and here this is especially so, because it was not specified by the parties but results from analysis and the application of the law. The cases also make it clear that merely because work is performed outside of New South Wales, this does not rob such a contract or collateral arrangement of the necessary connections. Indeed, in Perrott, it was held that the approach of Jacobs JA in O'Connor v Healey (1967) 69 SR (NSW) 111 was consistent with Chrysler and was the appropriate approach. In his judgment, which was adopted by the court, Jacobs JA counselled against too strict an application of the Interpretation Act in dealing with the equivalent of s 12 and the notion of being "in and of New South Wales". Further, in Perrott, the Full Court noted that the place where the work is performed is but one factor in assessing the relevant connection with New South Wales. It was accepted that an arrangement may provide the necessary link with New South Wales but that a transitory or casual visitation to New South Wales to perform work may not satisfy the test of sufficient connection. On the evidence in this case, although the work was performed in Singapore, apart from all the other elements I have already referred to, there were visitations to New South Wales by Mr Bastian to perform work in New South Wales for the first and second respondents. These visitations are a relatively minor factor but, together with the other matters I have mentioned, a sufficient connection with New South Wales is established (see also Perception Pty Ltd and anor v Myalong Pty Ltd and anor [2001] NSWIRComm 158 per Peterson J). In Savage, the Full Court noted that XcelleNet rejected the view that both the contract and the industry must be "in and of New South Wales". It was held to be an error to focus on such a contract and that the test was to look for the industry. Nothing in this case detracts from the conclusion that I have reached in relation to this particular matter.

[156]

141 Having dealt with these matters, it becomes necessary to consider whether or not the contract, in its widest sense, was unfair in the way in which it dealt with the applicant. The applicant's case is that the contract with the first respondent was unfair insofar as it failed to treat him as being on secondment to the second respondent, or to treat him as being on leave of absence and thereby maintaining his continuity of employment. If either of these courses had been adopted, he would have been entitled to reasonable notice and redundancy upon termination of his employment in 1999. It is to be remembered that the letter of termination indicated that there was no position for him in Singapore nor in Australia, or in any of the European firms operating under the PriceWaterhouse global network. This decision was said to have been reached "with the knowledge of the Australian firm". The first and second respondents' lack of precision in dealing with transfers and secondments clouds the full import of the arrangements that are made whereby employees perform work in other PriceWaterhouse global entities. So it was in Mr Bastian's case. He was asked to go to Singapore in circumstances where the respondents were keen to pursue an expanding, potential market. They had no other suitable candidate and were not prepared to pay to recruit a star for the job. They knew the task would be initially difficult and that the second in charge was likely to take over the role. Other senior staff from PriceWaterhouse firms were placed there on secondment. It is not surprising that the applicant, in pursuit of his desire to become a partner, was persuaded that the acceptance of this position would permit him to show his true capacity and strengthen his claim for partnership and perhaps work with other entities within the PriceWaterhouse global operation. The late inclusion of the term that there would be no guarantee of a position in Australia at the end of two years was explained away by the desire not to set a precedent for Australians going overseas to work for other PriceWaterhouse entities. At the time that this appointment in Singapore was being finalised, Mr Bastian was entitled to know, in clear and unmistakeable terms, whether or not his employment with the Australian firm was terminated in order for him to be able to make an informed judgment about the value of the offer that was being made to him. He was also entitled to be informed as to whether he was just a "fill in" for two years while they looked for somebody better. If he had been forewarned of these matters, he could have there and then asked for appropriate separation payments or perhaps persisted in seeking different terms to take up the Singapore position. He was denied that opportunity by the way in which the respondents negotiated the package of arrangements for the Singapore position. In addition, if he had been told that his employment in Australia would be terminated and that he would only have two years in Singapore and that it would be the end of his career in PriceWaterhouse, he could easily have chosen to remain in his position in Sydney and not attempt to prove his worth on the international stage. There was no suggestion that there was anything about his performance in his role in the Sydney office of the firm that warranted his termination in the middle of 1997. He could have simply remained in that position. To the contrary, performance assessments made during that period showed him to score highly in terms of competence and technical ability although there were some criticisms of his personal style. The representations that I have found in substance made by Poulter and Watson were designed to assure Mr Bastian that, whatever happened, a position would be found for him when he left the Singapore position. All of these matters helped mask the situation that the respondents now say was brought about by Mr Bastian accepting their offer to move from his Sydney employment.

[166]

151 In a number of cases, this Court and its predecessors have grappled with the extent to which severance pay arising from redundancy has elements which overlap the concept of reasonable notice as that concept has developed in the common law and been applied by this Court. In my view, there is no precision about this matter but, to some limited extent, there are elements in the notion of redundancy which seem to be reflected in components of reasonable notice. An important distinguishing factor, recognised by the Termination, Change and Redundancy Case is the loss of security of employment. It is for that reason, unless a particular award provision is made, that redundancy is often payable even though new employment is immediately obtained after the termination. In this particular case, Mr Bastian appeared to have secure employment with options to develop and improve his skills, and thus his total remuneration, by participating in the global PriceWaterhouse structure. That all came to an end in 1999 and, although he obtained employment immediately with KPMG, I do not see that as a reason disentitling him from some consideration for the payment of either reasonable notice and/or redundancy pay. It was agreed between the parties that the employment with KPMG was equivalent to the position Mr Bastian held with the Australian firm, the first respondent, as at 1997 prior to taking up the Singapore position. It was, therefore, in terms of package and relative status and seniority, something less than the position he obtained in Singapore. As it turned out, it was not a secure position and after three or four months his position became redundant with KPMG. In those circumstances, I believe, in fairness, that there should be no discount or reduction in the severance payments/reasonable notice payments made to Mr Bastian. Because of the difficulty of drawing a clear line between the two concepts of reasonable notice and redundancy, I am of the view that both these considerations, in this case, should be taken into account in deciding a monetary amount to be paid for all of the elements contained within these two notions. In my view, an amount equal to ten months' pay at the package applicable as at 27 April 1999 is appropriate in all the circumstances.

[167]

152 The next issue concerns the payment of bonus and whether anything should be included within the applicant's package for this element. A further issue is whether the availability of a discretionary bonus should result in any payment because of the participation of the applicant in the successful bid for the Athens Olympics project. The respondent points out that, when the applicant was appointed to Singapore, his contract provided for a base bonus to be calculated and paid in accordance with the bonus metrics. This was not a guaranteed minimum and in fact, for the year 1997/1998 a bonus of $40,000 was paid. The terms of the bonus in the second year were separate from those agreed for the first year. The discretionary bonus involved a sum of $100,000 before profit. It was available on the basis of an incentive and a reward for performance and in recognition that, in the first two or three years of the joint venture in Singapore, there would be no profit made. For the 1998/1999 year, none of the other employees in Singapore received a bonus because none qualified under the scheme that applied and because the second respondent came in below budget in circumstances where the Asian crisis had an impact. The applicant, however, submits that the role he played in the winning of the Athens Olympics bid for the firm was of such importance that an amount, suggested to be S$50,000, should be paid out of the discretionary bonus pool. There had been some discussion between Hagger and Poulter about the applicant's request for a bonus flowing from his Athens work, but the consensus appeared to be that such a bonus should be paid from the funds of the Athens firm rather than from the joint venture. This appears to have more to do with the fact that the joint venture was not performing well in difficult economic circumstances and ignores the provision of the S$100,000 discretionary bonus for precisely such outstanding performances. If the $100,000 pool was not illusory, then it is difficult to see why an amount should not have been paid to Mr Bastian for his Athens work: the evidence was clear that co-operation between firms would certainly allow some contribution to be made from the Athens firm if the bonus was paid. The respondents also say that the bonus pool was only available for qualitative performance warranting a payment and, although the applicant's role in securing the Athens project was a key role or even a pivotal role, it remained untested as to the extent to which that work generated future work for the respondents. Interestingly, in cross-examination, Mr Poulter accepted that Mr Bastian's involvement in the Athens project had as its objective to assist in winning the bid and that part of the objective was achieved. He also agreed that the success in the bid did generate "order book" and also generated work elsewhere in Singapore. It appears, therefore, that the requirements for payment from this pool were met by Mr Bastian but it may well have been that the issue of who should pay or in what proportions was somewhat of a thorny issue within PriceWaterhouse which was able to be side stepped when Mr Bastian was terminated.

[170]

155 The applicant's claim to be reimbursed for the loss made on the purchase of the motor vehicle in Singapore excited much attention in the evidence called by the respondents. That evidence established there were, by Australian standards, unusually high costs incurred in owning and operating a motor vehicle in Singapore. It was, in fact, Mr Poulter's direction that, rather than have the firm supply a car to Mr Bastian, the company should provide a loan for that purpose. In his calculations, the applicant noted that he had been informed that depreciation would run at about S$6,000 per annum and that, in fact, the car allowance paid to him made a small allowance for depreciation of S$5,720. Working on the basis that he made a loss of S$40,000 on the sale of the motor vehicle, the applicant claims an amount of S$34,280. Not surprisingly, the Singapore package envisaged that Mr Bastian would have a car, and the only issue became how much would be paid in the package on account of this element. In discussions between Mr Bastian and Mr Hagger, when Hagger was attempting to work out the cost of closing down the joint venture, it appeared he accepted that people such as Bourdeaux would be entitled to payment for the loss on his motor vehicle and that "worst case" positions, which included such losses, were put together so that they could be considered by the shareholders. In these discussions, Mr Hagger did not suggest that such payments were unreasonable or otherwise not to be contemplated. In this exercise, Mr Bastian's loss on his car was also factored in. It appears to have been part of the respondents' approach to pay something for losses on motor vehicles and, indeed, the first respondent paid half of the loss incurred by the applicant when he sold his car on leaving Australia, based upon an NRMA valuation. I am of the view, in line with the firm's practice, that there should be some amount paid on account of this element. The applicant has calculated the total loss at S$34,280 and I would allow half that amount, S$17,140, as a one off reimbursement. That figure will not be included separately in the package for the calculation of other payments contemplated in this judgment.

[171]

156 The respondents press that, should there be any order made for the payment of any sum to Mr Bastian, then the principles of mitigation should be applied. It is then submitted that, since he was able to obtain employment with KPMG at the same level as his position in the Sydney firm before he left for Singapore, no amounts should be payable at all. I reject that approach as I do not regard it as being just in the circumstances of the case. I accept, on the authority of the Full Court of the Commission in Court Session in Harcourt Brace that regard should be had to the principles of mitigation. That does not automatically mean that there should be discounted from any money order made in favour of the applicant sums of money earned during the period for which payment in lieu of reasonable notice had been ordered. Mr Bastian acted reasonably in accepting the first employment he could obtain on his return to Sydney, and while he acted reasonably in doing so, that employment was not at the senior level he had enjoyed nor at the rate overall with its prospects for large bonuses that was available to him while employed in Singapore. The complicating factor in this case is, as a matter of fairness, I have taken into account both the elements of redundancy and reasonable notice in finding that the contract should be varied to include a payment of the equivalent of ten months' salary on the total package upon termination. I do not believe that there is any warrant for applying the principles of mitigation to severance payments made on account of redundancy as a general principle or in the circumstances of this case. As I have indicated earlier, the TCR test case contemplated that specific provisions could be made when work was arranged with a new employer so that severance pay could be avoided. In concept, this is not such a case: there is nothing in the terms and conditions of the respondents which seem to embody such an approach to their non-award employees. It is because of these considerations that I do not believe it is appropriate or just in the circumstances of this case that there should be any amount deducted in mitigation because of the short period of employment that Mr Bastian was able to take up with KPMG. This approach seems to be consistent with the approach of the Full Court in New South Wales Health and Research Employees Association of NSW (unreported, 31 March 1993, pp 80 - 83) cited with approval in Harcourt Brace.

John Bastian v Noel Ashely Brent & ors practising under the business name PriceWaterhouseCoopers & Ors.

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