Leahey v CSG Business Solutions

Date of hearing: 19-23 June 2017, 13-14 July 2017 and 14 September 2017

National Practice Area: Employment & Industrial Relations

Solicitor for the Applicant: Streeterlaw Solicitors

Solicitor for the Respondents: DLA Piper Australia

BETWEEN: FORRESTER PATRICK LEAHEY Applicant

AND: CSG BUSINESS SOLUTIONS (AUS) PTY LTD (PREVIOUSLY KNOWN AS CSG COMMUNICATIONS PTY LTD) ABN 69 010 533 650 First Respondent

CSG LTD ABN 64 123 989 631 Second Respondent

JUDGE: LEE J DATE OF ORDER: 18 SEPTEMBER 2017

1. The proceedings be listed for a case management hearing at 10:15 am on 29 September 2017 for orders and directions to be made as to the future conduct of the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A Introduction 1 The second respondent (CSG) is a technology service provider in Australia and New Zealand. It has different business units but primarily is a provider of print and technology services to a range of businesses and other enterprises. The business involves the sale of equipment or hardware, together with ongoing provision of services. The business, obviously enough, requires a number of persons to be involved in sales, either as employees or pursuant to agency relationships. 2 The applicant, Mr Leahey, was employed by the first respondent, CSG Communications Pty Limited (which is a service company of CSG). There was no attempt made by the parties to discriminate between CSG and its service company and it was common ground that CSG could be regarded, as between the parties, as being responsible for any liabilities of its service company. Therefore, save for one exception at [216] below, in the balance of these reasons, I will refer to CSG without distinguishing between the respondents. 3 Prior to his employment, from 1 July 2012, Mr Leahey had been engaged by CSG as an independent contractor with the title "Regional General Manager NSW & ACT". This changed in June 2013 when Mr Leahey entered into an employment agreement, which is dated 26 June 2013 (Employment Agreement). 4 By letter dated 23 August 2016 (Termination Letter), Mr Leahey's employment with CSG was terminated. It is worth setting out extracts from that letter, which CSG contends set out the reasons: As you are aware, you have fallen considerably short of your sales targets for FY16. This follows on from a marginal year in FY15. Comments that you made to senior executives (including myself) on separate occasions over recent months that your motivation and energy for your current role was low, cause me great concern about your continued effectiveness in the role. In addition to that, the company recently concluded its investigation into an incident you were involved in which occurred on 7 July [2016] in Brisbane. Having spoken to people who were present on that occasion, and having considered your version of events that you self-reported to the Business Solutions People & Culture Business Partner, CSG is satisfied that your conduct was unacceptable as you used inappropriate physical force against one of CSG's sub agents. Your behaviour on 7 July [2016], in itself, gives CSG reason to make a determination to end your employment. That behaviour, coupled with your inadequate performance and expressed lack of engagement, confirmed the company's thinking that your ongoing employment was not sustainable. Therefore, in accordance with clauses 13.1 and 13.4 of [the Employment Agreement], CSG has made the decision to end your employment with immediate effect today and to pay you an amount equivalent to four weeks' notice calculated on your base salary. 5 Mr Leahey's case is essentially threefold. 6 The first aspect of the case is that CSG was not telling the truth (or at least the whole truth) concerning the reasons behind the termination of his employment. In his amended statement of claim, Mr Leahey says that the termination constituted adverse action by CSG against him because he exercised one or more of eleven workplace rights and, by doing so, CSG acted in contravention of s 340 of the Fair Work Act 2009 (Cth) (FWA). 7 The workplace rights pleaded in the amended statement of claim are repetitive and overlapping but Counsel for Mr Leahey, Mr Mahendra, accepted in opening that they can be placed into four broad categories: (a) the right to be paid an annual bonus calculated in accordance with the Employment Agreement, called a Short Term Incentive (STI Workplace Right); (b) a complaint that Mr Leahey made about the Brisbane Incident (Incident Workplace Right); (c) the right to a redundancy payment under s 119 of the FWA in the event that Mr Leahey was made redundant (Redundancy Workplace Right); and (d) the fact that Mr Leahey was absent from work on personal sick leave (Sick Leave Workplace Right). 8 In final submissions, Mr Mahendra accepted that the Incident Workplace Right and the Sick Leave Workplace Right had both "fallen away" and were abandoned. Accordingly, the case finally pressed on behalf of Mr Leahey in relation to CSG taking adverse action, is that the termination of Mr Leahey's employment was because, or partly because, Mr Leahey: (a) had a workplace right (s 340(1)(a)(i)), that is, the Redundancy Workplace Right; and/or (b) made a complaint or enquiry in relation to his employment (s 341(1)(c)) being the STI Workplace Right, and in doing so exercised a workplace right (s 340(1)(a)(ii)). 9 The second aspect of the case is that Mr Leahey pursues CSG for damages for breach of contract by reason of an alleged failure of CSG to make payment of a Short Term Incentive (STI) for the year ended 30 June 2015 (FY2015) and for the year ended 30 June 2016 (FY2016). 10 The third aspect of the case is that Mr Leahey seeks a sum of $94,003 plus statutory interest (LTI Amount), being the agreed value of rights said by CSG to have been forfeited by Mr Leahey pursuant to the terms of the "CSG Limited Long Term Incentive Plan" (LTI Plan). 11 The balance of these reasons are organised into the following sections: Section B: Procedural History & Issues for Determination; Section C: Findings as to the Relevant Factual Background; Section D: Relevant Approach to Fact Finding on Critical Issues; Section E: Determination of the Issues of Law and Fact; Section F: Conclusion and Orders.

B PROCEDURAL HISTORY & ISSUES FOR DETERMINATION 12 Following Mr Leahey's employment being terminated in August 2016, proceedings were filed in this Court in November 2016. Following an unsuccessful attempt at mediation in April 2017, a series of procedural directions were made in order to facilitate an early final hearing. 13 An order was made on 26 April 2017, that pursuant to s 37P(2) of the Federal Court of Australia Act 1976 (Cth) (FCAA), the legal representatives confer and attempt to agree and produce two documents: the first being a document which identified agreed background facts, and the second being a document which identified the facts and legal issues for determination at hearing. 14 Despite what appeared to be good co-operation between the parties, which was reflected at the hearing, the parties were unable to agree. The reason I ordered this course of conferral was my assessment, following case management hearings, that the pleading included a bewildering number of alleged workplace rights and that the joinder of issue did not readily identify the true nature of what was likely to be bona fide in dispute. 15 Prior to the hearing, an attempt was also made to facilitate the parties reaching agreement on relief in the event that Mr Leahey succeeded on the second and third aspect of his case, being the claims in contract and in relation to the LTI Plan. This was somewhat more successful in that the parties were able to agree on the LTI Amount (although, for reasons I will explain below, this agreement had the effect of obscuring the true nature of the dispute as to the LTI Plan). 16 The parties were not, however, able to agree quantum in relation to the STI for either FY2015 (FY2015 STI) or FY2016 (FY2016 STI). Having said that, the parties agree that following a determination being made as to the rights and obligations of the parties, the issue of damages may be the subject of agreement. Given the co-operative spirit in which the litigation was conducted by Mr Mahendra and Mr Fredericks (who appeared for CSG), I consider that there is a likelihood that all questions of quantum will be agreed once the fundamental construction and interpretation issues that divide the parties are resolved. 17 In any event, at the conclusion of the evidence, the parties were able to agree upon almost all the issues of fact and law which were required to be determined in these proceedings. On 23 June 2017, I made an order pursuant to s 37P(2) of the FCAA that the Court would proceed to determine, initially, the questions identified as Issues 1 to 7 of the document styled "Issues of Fact & Law for Determination" (Issues Document). Those issues of fact and law for determination (including the balance of issues to be determined, if necessary, at a subsequent hearing) are set out below: 1. What happened in relation to the Brisbane incident (as defined in the amended statement of claim at [22]) and what, as at the date of termination of [Mr Leahey], was the belief of the decision maker (or makers) within CSG as to what happened? 2. Who made the decision within CSG to dismiss [Mr Leahey] and was the decision maker's (or makers') reason (or reasons) those specified in the letter from CSG to [Mr Leahey] dated 23 August 2016? 3. Has CSG proved, as a matter of fact, on the basis of all the evidence, that a substantial and operative reason for the decision to terminate [Mr Leahey] was not a pleaded reason prohibited by s 340(1) of the [FWA]? 4. Given the alleged terms of the Employment Agreement being: a. the admitted "condition of [Mr Leahey's] employment" that [Mr Leahey] was eligible to be paid an STI "upon the achievement of specified key performance indicators (KPIs) within a financial year"; and/or b. an alleged implied term requiring CSG to consult and agree with [Mr Leahey] in good faith prior to implementing KPI targets; and/or c. an alleged implied term to exercise its discretion in setting KPI targets in good faith and not arbitrarily or capriciously, i. was [Mr Leahey] paid the correct amount of [the FY2015 STI]? ii. was an amount of STI payable to [Mr Leahey] for [the FY2016 STI] and, if so, by what means is it to be calculated? 5. Did the conduct of [Mr Leahey] in relation to the Brisbane Incident amount to conduct which would have justified the summary termination of his employment? 6. Did the reasonable belief to be attributed to CSG as to the conduct of [Mr Leahey] in relation to the Brisbane Incident, justify the summary termination of his employment? 7. If the answer to both of 5 and 6 is no (and, as a consequence, it is agreed there was an unlawful determination that [Mr Leahey] was a 'Bad Leaver' for the purposes of the rules of the [LTI Plan]), is [Mr Leahey] entitled to recover the [LTI Amount] being … the agreed value of the rights alleged by [Mr Leahey] to be payable pursuant to the rules of the [LTI Plan]? TO BE DETERMINED LATER 8. If the answer to 3 is no, and there has been a contravention of s 340(1) of the FWA: a. did [Mr Leahey] suffer loss "because of the contravention" (within the meaning of s 545(2)(b) of the FWA)? b. should the Court make any order under s 545(1) of the FWA compensating [Mr Leahey] and/or any other order? 9. If [the FY2016 STI]...is payable to [Mr Leahey]…: a. is the amount calculated greater than an amount already paid to [Mr Leahey] on account of [FY2016 STI]…and, if so, by how much? b. did [Mr Leahey] suffer any recoverable damages for breach of contract by reason of the failure to pay any amount identified in 9(a) or in any other amount? 10. Should the Court be satisfied, in accordance with s 570 of the FWA, that an unreasonable act or omission of a party to this litigation caused the other party to incur costs such that the Court ought make a costs order against that party and the terms of any such order? (emphases in original) 18 In final submissions, the alleged implied terms in Issue 4(b) and (c) were abandoned and the only complication that remained was that although the Issues Document was otherwise agreed, Issue 4 of the Issues Document remained somewhat controversial in the sense that Mr Fredericks contended that the issue as framed in Issue 4 (as refined) was not within the pleaded case he had met at the hearing. This matter can be resolved very shortly. The cases of both parties departed somewhat from the pleadings and I do not believe there is any substance in the contention that Mr Fredericks was unable to meet that part of the case as is defined by Issue 4. I do not consider there to be any prejudice to CSG established in allowing the contract case, in the form ultimately advanced by Mr Leahey, to proceed. 19 Prior to dealing with the contested issues, it is convenient to first make some detailed, relevant factual findings.

C FINDINGS AS TO THE RELEVANT FACTUAL BACKGROUND 20 I have already outlined in Section A (Introduction) the nature of the relationship between Mr Leahey and CSG, and the way in which his employment with CSG was terminated on 23 August 2016. 21 As can be seen from the Issues Document, the central factual issues which require resolution to quell the controversy as to liability are of a relatively narrow compass and include: (a) what happened in relation to the Brisbane Incident; (b) who made the decision to terminate Mr Leahey; and (c) the reason or reasons why Mr Leahey was terminated. 22 Generally, I will deal with my factual findings in relation to these issues in Section E (Issues 1 to 3). What follows in this section of my reasons are some findings as to the relevant factual background against which these critical issues fall to be determined, including recounting some of the general dealings between the parties as to Mr Leahey's performance and his enquiries about remuneration. 23 As noted at [3] above, Mr Leahey had previously been engaged by CSG as an independent contractor and, obviously enough, this status changed when he entered into the Employment Agreement. 24 On 19 June 2013, Mr Leahey received an offer of employment (Offer Letter). The Offer Letter noted as follows: I have pleasure in confirming your role of Regional General Manager, ACT & NSW with [CSG] with the following conditions: • $250,000 pa base salary • $16,470pa superannuation contribution • STI of $250,000pa in accordance with agreed KPIs which will be based on financial targets and non-financial targets as detailed in [sic] KPI document attached (draft) • LTI of 457,143 awarded on the basis of the performance vesting criteria as established by the Board • Standard sick and annual leave entitlements as per [the FWA] 25 Prior to the entry into the Employment Agreement, on 20 June 2013, Mr Leahey received an email from Ms Dianne Silvestro, the then "Executive General Manager, People & Culture". This email attached a "draft Employment Agreement and draft KPIs for 2013/14". Ms Silvestro informed Mr Leahey that: At this stage the [LTI Plan] details are being drafted by Jillian and they will be released to the relevant employees very shortly. In this pack from Jillian [sic] will have all the information about the [LTI Plan]. 26 As anticipated in the Offer Letter and the email of 20 June 2013, on 24 June 2013, Mr Leahey received a letter from the managing director of CSG, Ms Julie-Ann Kerin, which enclosed the "CSG Limited Long Term Incentive Plan" rules (Rules) and indicated that Mr Leahey had been selected to apply for what were described as 'Performance Rights' under the LTI Plan (Performance Rights). The LTI Plan was said to: …underpi[n] CSG's strategy of rewarding performance and retaining key talent and we see you as having an integral part of CSG's future. Specifically, the [LTI Plan] aims to recognise your time with CSG by rewarding you with rights which will allow you to share in the growth in value of CSG and strengthen the link between your performance and remuneration. 27 It is common ground that on 26 June 2013, Mr Leahey accepted the offer in the Offer Letter by entry into the Employment Agreement (effective 24 June 2013) and also accepted the invitation to participate in the LTI Plan, in which he received 457,143 Performance Rights. 28 The Employment Agreement set out the express terms of the employment of Mr Leahey, including clause 7.1, by which CSG agreed to remunerate Mr Leahey in accordance with Item 8 of Schedule 1. That Item provided as follows: Item 8 Package Remuneration Package $250,000 pa base salary $16,740 superannuation contribution STI of $250,000pa in accordance with agreed KPIs (draft KPIs attached) LTI of 457,143 performance shares as detailed in the attached documentation Pay Period Monthly Pay method Direct Bank Deposit

29 The Employment Agreement did attach the "draft KPIs" referred to in Item 8. As was noted in the Offer Letter, the amount of the STI (which was to be calculated "in accordance with agreed KPIs which will be based on financial and non-financial targets as detailed in the KPI document attached (draft)") was to be $250,000. This was reflected in the documents attached to, and comprising part of, the Employment Agreement relating to the STI, which comprise pages 75-7 of Exhibit B (STI Schedule). The STI Schedule itself comprised three separate documents being: (a) a list of KPIs for FY2014; (b) a 'Scorecard' comprising a 'Corporate scorecard' for FY2014 (which set out various corporate targets, weightings and KPI values for those targets for that financial year) and a 'Divisional scorecard' for FY2014 (which set out 'Financial' and 'Non-Financial' KPIs, indicated targets, assigned weightings and provided a value for these targets for that financial year); and (c) a document describing a 'Divisional (Additional) Incentive', referable to a KPI value, if the EBITDA target contained in the Divisional scorecard had been exceeded by sums identified in $500,000 increments. The confusing nature of the STI Schedule is examined further below. 30 Of course, Mr Leahey's first full year as an employee of CSG was FY2014. The draft KPI targets, as set out in the second document of the STI Schedule, appear to set the anticipated targets for the payment of the FY2014 STI (in respect of which there is no complaint). It is unnecessary to determine whether these draft KPIs, that is, the Scorecard for FY2014, changed. What is relevant to note, for present purposes, is that after entry into the Employment Agreement, Mr Leahey received an amount comprising his anticipated STI entitlements in monthly instalments. 31 As to the LTI, pursuant to the Rules, it is common ground that Mr Leahey also received what were described by the parties as 133,333 'shares', which were allocated on 2 December 2013 (by which, I infer, 133,333 Performance Rights were allocated). In January 2014, Mr Leahey was granted 93,333 additional "Stage 1" Performance Rights. 32 On 1 July 2014, Mr Leahey, who previously had held the title of "Regional General Manger, NSW & ACT", was appointed as the regional general manager of South Australia. Not long thereafter, in August 2014, he had a discussion about what additional amount he was going to be paid for taking on responsibilities in relation to South Australia with Mr Declan Ramsay, the "Executive General Manager (Business Solutions Australia)" of CSG, to whom Mr Leahey directly reported. 33 On 10 October 2014, Mr Leahey was provided with a draft Scorecard for FY2015 and, shortly thereafter, had a conversation with Mr Ramsay about his draft Scorecard, during which he and Mr Ramsay wrote on the draft Scorecard with suggested changes. It will be necessary to return to the issue of the Scorecard for FY2015 in more detail (and make additional findings) in Section E below. 34 Nothing of any enduring relevance occurred until 1 September 2015, when Mr Leahey participated in a performance review with Mr Ramsay (September 2015 Meeting). Mr Ramsay raised no significant issues in relation to Mr Leahey's performance. During the September 2015 Meeting, Mr Leahey again enquired about an increase to his base salary for managing South Australia, about payment (or more properly, the finalisation of payment) of the FY2015 STI and also details in relation to what needed to be achieved in order to obtain the FY2016 STI. The conversation, to the extent that it related to the FY2016 STI, was as to the provision of a Scorecard referable to that year. 35 On 16 September 2015, Mr Leahey received an assessment of his performance against what was said to be the Scorecard for the FY2015 STI. At around that time, Mr Leahey telephoned Mr Ramsay and disputed that the FY2015 Scorecard (that had been used to assess his performance for FY2015) was the Scorecard that had previously been provided to him, and disputed how his performance had been assessed. 36 It was around this time, in September 2015, that Mr Mark Thomas joined CSG in a senior management role with the title (reflecting the peculiar lexicon of modern management) of "Chief People Executive". 37 On 26 October 2015, Mr Ramsay sent Mr Leahey an email setting out options for payment of the FY2015 STI. It was as follows: As per our conversation on 16th September please see the below summary: Attached are the 2 versions of the STI for FY15. 1. The official STI that was reviewed and approved by the CEO 2. The second [STI] that was re done by you and I. (PDF you provided to me) I have also provided a spreadsheet of the 3 different outcomes of the 2 STI's [sic] above and a DR proposed 1. First one is the one approved by CEO stating an amount of -$42 887 is owing by you to CSG due to the pre-payment 2. A DR proposed showing a payment to you from CSG of $27 113 after pre-payment and also a Q1 16 pre-payment with no further pre payments to bring in line with all others in the Business. Total payable to you by CSG of $77 114 - TO BE APPROVED BY CEO 3. A FL proposed as per the STI you provided me showing an amount owing by you to CSG (including a Q1 16 advance payment) of -$63 486. Can you please advise what option on the spreadsheet FL STI - 1, 2 or 3 you are suggesting we take to the CEO for approval. Once we receive your suggestion this will be presented to the CEO for final approval and payment depending on the option you select. This will then close out FY15. If you have a different view can you please document it in detail for our consideration. We are then happy to have a conversation regarding the FY16 STI structure, the base pay plan amount and the company policy around payment policy and industry benchmarking. 38 The day after, Mr Leahey responded to Mr Ramsay's email, and made an enquiry about his remuneration in which he stated, among other things, that: I am aware that I technically did not meet the criteria for this part of the incentive payment (that is, the FY2015 STI) but I never received a salary increase for taking on the South Australia part of the business and this was something that I had requested and discussed with you and HR several times. I strongly feel that with SA I have turned an underperforming part of the business around and deserve some compensation. I understand that with the nature of business things change including targets but I also feel that targets need to be fair and achievable. Sales is an incentive driven business and receiving targets in November each year does not make things easy, it would be preferable to commence the year with agreed targets in place and not have to wait 4 months into the year to find out what target numbers are… In relation to the structure of FY16 I am more than happy to get in line with the rest of the business and look forward to sitting down with you and [Mr Thomas] to work out the best way to do this… 39 It is important to put this email into some context. It was copied to Mr Thomas and the reference to getting "in line with the rest of the business" was a reference to the fact that Mr Leahey had been paid his STI on account during the year, rather than being paid after the final determination of quantum after the end of the financial year. The evident frustration of Mr Leahey in relation to finalisation of his FY2015 STI and the belated setting of targets was entirely understandable. It was now October 2015, well into the second quarter of FY2016, and yet the position as to the FY2015 STI had not been finalised (let alone targets set for FY2016). This is against the background that the STI Schedule (Exhibit B, page 76) had made clear that amounts were to be paid to Mr Leahey progressively on account by reference to achievement to date. Further, all "other bonus entitlements will be paid after the annual declaration of the financial results (late August)" (underlining added). How could CSG assess an additional bonus when it was tardy in resolving the final amount paid by way of STI? 40 The STI was a very important part of Mr Leahey's agreed contractual remuneration. It is apparent that within the management of CSG there was a view that the payment of STI was a form of pure discretionary bonus; indeed, from time to time, there was reference to the STI payment being a 'bonus' (see, for example, the reference in [39] above where the underlined word 'other' implicitly suggests the STI is a species of 'bonus', or the evidence of Mr Thomas extracted at [59] below). Indeed, it was often referred to as a 'bonus' during the course of hearing by Counsel for CSG. On one level this is explicable as it was not the same as base salary and the amount of payment was dependent on achievement of financial and non-financial performance targets. Moreover, it seems to me that discretionary considerations would come into play when EBITDA targets were very substantially exceeded (see the 'Divisional (Additional) Incentive' at Exhibit B, page 77). This 'Divisional (Additional) Incentive' received no attention in the case, because EBITDA never reached the level which would have meant it became relevant. 41 Having noted this, at least insofar as Mr Leahey was concerned, there was a contractual obligation to pay the STI upon achievement of KPI targets and, as I explain below, an obligation to discuss and then set 'agreed' targets in a timely way in order to allow Mr Leahey to obtain the benefit of the Employment Agreement. As it turns out, it appears that a consequence of management treating the STI as though it was a pure discretionary bonus caused dilatoriness and uncertainty in setting targets, of which Mr Leahey complained. The confusion as to the FY2015 Scorecard - which was still being debated four months after the end of the FY2015 financial year (see [37] above) - is a case in point: these were supposed to be prospective KPI targets against which an employee was to have his or her contractual remuneration later assessed and (at least with respect to Mr Leahey) was to be monitored and paid progressively throughout the year. It seems remarkable that the affairs of CSG were being conducted in such a way as to result in the uncertainty that Mr Leahey had to endure. It is perhaps stating the obvious to remark that a 'target' as used in the present sense is, as a matter of ordinary English, a goal or object aimed at or to be attained. Leaving aside for a moment the content of any contractual obligation, to set targets after the time has passed during which efforts could be made to meet them is not only intuitively odd but is also behaviour apt to cause the sort of uncertainty which is a cause of some of the problems that have arisen in this case. In making this comment I am conscious, as is evident in the following paragraph, that budgets were no doubt distributed in a timely way. However, the remuneration structure set up by the Employment Agreement, properly construed, necessarily required the question of KPIs to be looked at ex ante and not ex post (at which time final assessment against those targets would occur). Another apparent manifestation of the view that STI payments were purely discretionary was the diktat, which later emerged, without any reference to CSG's contractual obligations (to at least Mr Leahey), that no FY2016 STI payment would be made (see [59]-[60] below). 42 In any event, returning to the narrative and the FY2016 year, on 2 November 2015, Mr Leahey had an exchange of emails with Mr Ramsay in which Mr Leahey noted that he was on target to exceed his budget for New South Wales (with a possibility of exceeding budget if certain deals went through), and would only be slightly behind budget for the Australian Capital Territory and South Australia. The email chain acknowledged that Mr Leahey was unlikely to hit his so-called 'EBITDA number' for New South Wales and Mr Ramsay noted that Mr Leahey was "[$]1M behind" budget. 43 On 3 November 2015, Mr Leahey sent an email to both Mr Ramsay and Mr Thomas requesting payment of his FY2015 STI, as well as following up on the email he had sent on 27 October 2015. In this email, Mr Leahey noted: "I really need to get paid". 44 On 23 November 2015, for the first time, Mr Leahey attended a meeting (November 2015 Meeting) in which any performance issues were raised with him. That meeting had been arranged to discuss the finalisation of issues relating to the FY2015 STI issue and also, it seems to me, the outstanding issue of finalisation of the targets for the FY2016 STI. Two days later, Mr Leahey received an email from Mr Ramsay summarising what were said to be the "key messages" that arose from the meeting held on 23 November 2015. This is an important email, which usefully sets out how CSG perceived its 'reward structure', and is worth extracting at some length: [Mr Leahey] As promised, I have documented the key messages from the discussion [Mr Thomas] and I had with you on Monday 23rd November 2015. I have done this so there is a clear understanding of expectations and where we stand so we can now move forward in a positive manner. Remuneration To summarise your remuneration is: Salary $250,000 pa Superannuation $19,307 (this is the current legislative Superannuation cap) STI $250,000 pa split (20% company performance, 80% Divisional performance) LTI 457,143 Performance Rights under the 2012- 2015 plan While much of our discussion was remuneration related it is important to acknowledge that CSG's reward structure is important to our 'high performing' culture. As discussed by any standard your remuneration package is a significant one. The base salary which is guaranteed compensates for what are the base expectations as outlined in your position description. The STI is designed to reward outperformance in the short term with a heavy weighting on individual contribution. The LTI provides longer term balance to short term decisions and encourages common purpose across the executive group regarding the creation of shareholder value. I stress, however, it is the achievement of the results that generate the rewards - not the reverse of this. (emphasis in original) 45 After then dealing with details concerning the FY2015 STI and the FY2016 STI, Mr Ramsay went on: To give you every chance of success and allow you to focus on the largest area of opportunity, management of the Adelaide office will be reallocated to allow you to concentrate on NSW. [Mr Thomas] also spoke about leadership and accountability for the local culture. It is an important component of your role to ensure we have a professional and constructive environment that allows all CSG people who work from the Sydney office to maximize their performance. You cannot underestimate the impact that your leadership style and behaviours have on other staff. We discussed a number [sic] general examples including perceptions of others being important at times (even if reality is different) and I ask you reflect upon these. Having positive constructive discussions with people and stamping out/not fuelling the gossip will go a long way to addressing this. In an effort to improve this we also agreed for you to transition your office into a common meeting room and you will move out to the sales floor to be involved in the day to day. Can you please do this ASAP. In summary, getting results and creating the right culture in tough times are leadership qualities that are required of all senior managers. We need you to rise to the challenge, by leading from the front in these areas and displaying the 'can do' attitude we know that you possess. NSW represents the largest market and potential opportunity for CSG; and under your leadership you have the opportunity to not only be personally very successful but to ensure that this success flows through to CSG and the team. 46 A considerable amount of time was spent on evidence which went to the issue of the allocation of revenue for the purpose of meeting targets which, as would already be evident, were material to a particular regional general manager meeting annual revenue targets. 47 I accept that there was a mutual understanding between the parties, being a mutually known fact, existing at the time of the entry into the Employment Agreement that, as a general proposition, revenue derived from one geographic region would be allocated towards the revenue budget of the regional general manager for the state or territory in which the head office of the customer was located. Although there was some confusion in the evidence about the precise scope of this established practice, it seems to me plain that this 'rule' existed, at the time of the Employment Agreement, given: (a) the evidence of Mr Leahey, gleaned from industry experience of twenty years and, in particular, his evidence that the practice reflected his understanding at the time he performed the role of regional general manager as a contractor before entry into the Employment Agreement; (b) the evidence of a current regional general manager for Victoria, New South Wales and the Australian Capital Territory, Mr Paul Williams; in this regard I note that Mr Williams was an impressive witness who did not seem to have any doubt as to the existence of the practice (at least during the time that the Employment Agreement was in existence); of course, any understanding of Mr Williams of contemporary practice, or practice after the entry into the Employment Agreement, is not relevant to determining what was a common understanding at the time the Employment Agreement was struck, but there is nothing about Mr Williams' evidence that suggests that the practice had somehow changed over time; (c) Mr Ramsay's evidence, which was somewhat consistent with that of Mr Williams; (d) commercial commonsense, in that if one has a regional general manager, then revenue generated is likely to be allocated by reference to the region or regions for which that manager is responsible. 48 It is apparent, on the evidence, that the mutually known fact as to the rules as to revenue allocation, at the time of entry into the Employment Agreement, were as explained by Mr Williams (T 142): …wherever head office is, that that's where the lead should go to, or the opportunity go to ..... we're really talking about new business here. It's not existing. So any new business lead that comes in, it typically will go to the RGM (regional general manager) of the head office of that area. Then if - if there was a time when, say, for example, I had a really good relationship with the new business opportunity, then I would liaise locally with the - with the RGM in that space and tell them about the opportunity, and then I would still probably own it and run with it, and then we would - we would split the revenue fifty-fifty. 49 Mr Williams agreed that the practice that the revenue goes where the head office is located geographically was well established and further explained the rationale as being (T 142): …it's a little bit around a cultural thing as well, because we don't really want sales people going all around Australia and going at whatever opportunity they can get. But we don't want to lose the opportunity as a business. So if we can win it, we absolutely want to win it. 50 The apparent exception to the general geographic allocation rule would be when one regional general manager was responsible for the introduction of a 'deal' and there would be a discussion, at the time of the introduction of the deal, between the introducing regional manager and the regional general manager in whose area the head office of the customer was based, for a 50/50 revenue split to be agreed. There was some effort to suggest that this arrangement was not operative when a deal was introduced by a person other than a regional general manger (for example, the CEO) but I do not believe that this was established on the evidence at all (let alone established as a mutually known fact at the relevant time). The well entrenched rule made commercial sense; not only because the management of the business was organised on geographical grounds, but also, as explained by Mr Williams, there was the need to ensure that sales people did not run all around Australia trespassing on the turf of others. 51 Notwithstanding this, in November 2015, CSG did not allocate certain sales to Mr Leahey, which had the effect of impacting upon Mr Leahey's ability to achieve his budgetary targets for FY2016. This departure from established procedure caused some tension. Not only did Mr Leahey consider that what occurred was unfair; according to Mr Williams, he also considered that the diversion of revenue for what was described as the 'Queensland deals' (Queensland deals) was unfair to Mr Leahey (T 148): Because we - we were told that the - the rules were in play; that head office is where the head office is, and if someone has an opportunity to go in there, if we get a lead to go into that space, it goes to that territory. And I thought it was against the - the spirit of what - what the rule was. 52 I should pause here to note that in referring to the subjective views of Mr Leahey and Mr Williams and dealing with their views as to what happened, I am not having regard to irrelevant post-contractual behaviour for the purpose of construing the Employment Agreement: see Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at 582 [35] (Gummow, Hayne and Kiefel JJ). Nor am I having regard to the idiosyncratic views as to fairness, which is similarly beside the point in a commercial world governed by the objective theory of contract formation. The relevance of this subjective evidence is limited to its use and weight in corroborating the other evidence that the rule (as explained by Mr Williams and Mr Leahey) was well entrenched and was a mutually known fact at the time of entry into the Employment Agreement. More generally, the extrinsic evidence as to revenue allocation to which I have referred is admissible to identify the meaning of those descriptive terms in the Employment Agreement as relate to revenue and KPIs; the evidence also relates to the "genesis" and the "aim" of a transaction (objectively ascertained) to show the principled attribution of meaning to revenue targets and KPIs, and to reject a meaning contrary to the established practice (which would be inconsistent with the terms of the bargain objectively ascertained): see DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 at 429 per Stephen, Mason and Jacobs JJ. There is no need in this case to enter upon discussion about the so-called 'ambiguity gateway'; the terms of the Employment Agreement are what reasonable persons in the position of Mr Leahey and CSG would have understood them to mean, considering the surrounding circumstances and the commercial purpose and objects to be achieved by the Employment Agreement: see, for example, Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486 at 491 [16] (Kiefel, Bell and Gordon JJ). Provisions as to KPIs and revenue allocation are to be construed by reference to the commercial purpose sought to be achieved, on the basis that the parties intended to produce a commercial result, which made commercial sense, and one which is consistent with the commercial object of the Employment Agreement which allowed an important part of the remuneration to be struck for a regional general manager, by reference to regional revenue targets: Ecosse at 491 [17]. 53 Before leaving the rule as to revenue allocation, for completeness, I should note that there was a suggestion made on behalf of CSG that the Business Solutions Division of CSG was not focused on print and non-digital technologies. The reason why Mr Leahey was not allocated revenue for the Queensland deals was because those deals represented a new area of growth for CSG outside of the Business Solutions Division, in which Mr Leahey operated. It was said that the Queensland deals represented the development and growth of the Digital Display Division (which was not established until 1 July 2016). It followed that there was nothing arbitrary or capricious about CSG exercising its management prerogative to allocate the Queensland deals to a manger with the requisite skills to conduct those deals, given their intrinsic nature. 54 Although the evidence was far from pellucid, I accept that CSG may have been moving away, for sound commercial reasons, from allocating revenue on simply a regional basis. The difficulty for CSG is that the Employment Agreement, for reasons I will detail below, was based on a remuneration system which had, as one component of that remuneration (the STI), targets or KPIs based on the common understanding and established practice that deals would be allocated according to their regional location, subject to providing some previously agreed 50/50 variation in the event the deals were introduced through the work or contacts of another regional general manager. I will return to this subject in Section E below in the context of dealing with the FY2016 STI. 55 Returning to the chronology, again, on 11 December 2015, Mr Ramsay informed Mr Leahey that his EBITDA FY2016 performance was behind budget. 56 On 29 March 2016, Mr Leahey sent an email to Mr Ramsay, Mr Thomas and Ms Kerin requesting details about his FY2016 STI. The response of Mr Thomas to this email was to send an email to Mr Ramsay (not copied to Mr Leahey) which was in the following terms: Firstly, if i am not mistaken when we meet [sic] with [Mr Leahey] last year on his 2015 bonus that he was unhappy with, I believe you spoke about his current targets. You said to him something along the lines of……."you don't have them in writing but you know your targets don't you [Mr Leahey]? …" I remember this because you repeated this 3 or 4 times before he agreed. (and you were also concerned he was behind budget for the current year when we spoke to him). Secondly, Julie-Ann's call but I don't think it appropriate or should be expected by [Mr Leahey] that the CEO gets involved in setting his targets. 57 Mr Ramsay's response, the next day, was as follows: Yes [Mr Thomas] correct on both points. He knows his targets and i have no intention of troubling the CEO with this. I also find his timing incredibly poor based on the previous note about a Syd MA. 58 Shortly thereafter, Mr Thomas responded to Mr Ramsay: [Mr Ramsay] Thanks. I suspected that we would both be on the same page. I will leave to you to deal with as this is essentially a line management issue but happy to be involved however if you want some support in a meeting with him. Let me know 59 The reference by Mr Ramsay to incredibly poor timing was never really explained. In any event, on 16 May 2016, Mr Leahey received an email from Mr Domenic Capaldi, the "Financial Performance Manager" of CSG, stating that there would be "[n]o bonus accrual in FY16". This was a reference to the FY2016 STI. This was not peculiar to Mr Leahey; the evidence of Mr Ramsay (T 247) and Mr Thomas (T 263) was that there were no FY2016 STI payments made. The decision was apparently made by the CSG Executive Team (which included Mr Thomas) because of budgetary pressure to make a forecast that had been made to the Australian Securities Exchange (ASX). This can be seen from the following extract from the evidence of Mr Thomas (T 264): HIS HONOUR: … the board was faced with a situation presumably where it gave guidance to the market, and it had become apparent that if you paid out the STIs, that guidance would have to be revised or, alternatively, a decision would be made not to make the guidance, in which case the forecast would… have to be amended. And there was a decision taken on that basis, as I understand it, is that right?---That's correct, your Honour. Did you know from your own involvement in that process whether any consideration was given as to whether or not, in respect of some or other contracts, there was a contractual obligation to pay STIs or was it just regarded as a purely discretionary matter?---It was regarded that it was a discretionary thing. It's very typical in businesses…that companies don't hit their target, particularly the core financial ones, that there are no bonuses across the piece. 60 One could be forgiven for thinking that this apparent lack of concern for compliance with its contractual obligations to its employees was a somewhat cavalier approach to be taken by a public company towards its obligations to its employees (or at least those employees who had contracts in a form similar to the Employment Agreement). In any event, the immediate response of Mr Leahey was to email Mr Capaldi to ask him to clarify what "no bonus accrual in FY16" meant and to telephone Mr Ramsay with the same query (T 132). Mr Ramsay responded by indicating (somewhat surprisingly, in the light of Mr Capaldi's definitively worded email) that he was still trying to find out what was happening in relation to the FY2016 STI. 61 On 18 May 2016, Mr Leahey participated in a performance interview with Mr Thomas. This interview was part of a programme of interviews that Mr Thomas had decided to undertake in order for him to be apprised of the individual characteristics of relevant managers. It formed part of a process whereby Mr Thomas prepared a "Talent Review and Organisational Structure" document (Talent Review document) which was an analysis of what was described as the "Quality of Leadership and how we structure the business". As part of what was called (in Americanised 'HR speak') a "snapshot of bench strength", the review process identified features relevant to the individual performance of senior management. Eventually an appraisal document was prepared by Mr Thomas which was described as a "Performance/Values Matrix: Senior Management" (Matrix) (Exhibit B, page 269B), which indicated three categories, providing a ranking of those senior managers who: (a) had peaked/been over-promoted at their current level; (b) had the potential for growth at their current level; or (c) had the potential for more senior roles, with development. Mr Leahey was eventually identified by Mr Thomas, partly as a result of highly subjective assessments, as falling in the first of the three categories, that is, a person whose performance had peaked or a person who had been over-promoted at his current level. 62 During the course of a wide ranging discussion, Mr Leahey said to Mr Thomas, among other things, that there was too much focus on getting the sales numbers on target (prima facie, a somewhat surprising remark from a salesman) and that Mr Leahey felt he had lost enthusiasm for his current role. This last comment came to be characterised by Mr Thomas, in an expression redolent of the ambiguous nature of these assessments, as Mr Leahey saying he had "lost his mojo" (T 294). 63 I accept that these comments caused Mr Thomas some concern as to the suitability of Mr Leahey for further advancement within CSG and contributed to him genuinely forming the view that Mr Leahey was a less valuable manager than others. After this assessment was complete, Mr Leahey's position was identified, along with others, for redundancy in a possible restructure. 64 There was evidence that during this meeting, Mr Leahey indicated that he wished to remain with CSG for ten years (T 115). Although Mr Thomas did not record this comment in his notes, I accept that Mr Leahey did make this comment but it is hard to be certain of the context and whether that was a reference to a continuing relationship as an employee performing the tasks he was then performing. Whatever the context, it is clear that Mr Thomas took away from the meeting an impression that Mr Leahey lacked enthusiasm for his current role. 65 In late April or early May 2016, Mr Leahey was walking past the CSG boardroom and chanced upon seeing a 'Power Point' presentation which reflected the organisational effect of the possible restructure, which reduced the number of regional general managers within the business. 66 On 24 June 2016, Mr Ramsay sent an email to the regional general managers setting out a table indicating the performance of the master sales agents in each territory. This analysis did not reveal that Mr Leahey's master sales agents were performing any worse than, for example, those reporting to Mr Williams. 67 On 7 July 2016, the Brisbane Incident occurred (which I will address, in detail, in Section E) and a fortnight later, Mr Thomas and Mr Ramsay met with Mr Leahey and had a lengthy discussion. Again, this is an important meeting, and it is necessary to set out a number of the matters discussed. 68 Prior to doing so, it is convenient to again interrupt this factual summary to make a point about the evidence of this meeting. At the time the hearing commenced, Mr Leahey proposed to tender a transcript of the meeting which he had recorded covertly. Despite no objection being taken by CSG to the tender, I indicated that, even absent objection, I was concerned as to whether it was appropriate that I receive the material (or that it be in a party's possession) given the provisions of ss 11 and 12 of the Surveillance Devices Act 2007 (NSW) (SDA). The SDA contains a prohibition on communication or publication of private conversations and prohibits a person possessing a record of a private conversation recorded by the use of a listening device in contravention of Part 2 of the SDA. Section 12 relevantly provides: 12 Possession of record of private conversation or activity (1) A person must not possess a record of a private conversation…knowing that it has been obtained, directly or indirectly, by the use of a listening device…in contravention of this Part. Maximum penalty: 500 penalty units (in the case of a corporation) or 100 penalty units or 5 years imprisonment, or both (in any other case). (2) Subsection (1) does not apply where the record is in the possession of the person: (a) in connection with proceedings for an offence against this Act or the regulations, or (b) with the consent, express or implied, of all of the principal parties to the private conversation or persons who took part in the activity, or (c) as a consequence of a communication or publication of that record to that person in circumstances that do not constitute a contravention of this Part. 69 It eventually became apparent that there was a further telephone recording (see [88(c)] below) that had also been obtained in circumstances which appeared potentially to be in breach of Part 2 of the SDA. 70 Although I indicated that in these circumstances it would necessary for me to perhaps conduct a voir dire (or, in any event, to rule on the admissibility of this material), my concerns were rendered otiose because each party to the relevant recorded conversations, through their legal representatives, expressed that they were content (and hence provided their explicit consent) for the Court to be provided with the recorded material or otherwise implicitly provided their consent by originally recording the conversation. I consider this to be sufficient, given the terms of s 12(2)(b) of the SDA, to allow the Court to receive the recordings and, given that there was no objection, the relevant recordings were admitted into evidence. 71 Returning to the terms of the conversation, the following occurred: (a) After an exchange of pleasantries, the meeting commenced with Mr Ramsay noting that "what we're doing here today mate is having a conversation about what happened, two weeks ago, on Thursday" (Exhibit B, page 306), relating to the Queensland Incident; this was described as the first part of the conversation and then, "as per [Mr Thomas'] email" it was suggested there would be a "broader conversation" about what Mr Leahey wanted to do including, ominously, "what you want to do with your life" (Exhibit B, page 306). (b) Mr Thomas then said, after speaking to witnesses, that the material he had obtained "puts us in a really difficult position" and referred to the expectation that as a "Senior Manager in the business, that we can't have people punching other people in, what could be perceived as a violent way" and that "we can reasonably conclude that your actions were totally inappropriate" (Exhibit B, pages 306-7). (c) It was then said this conclusion as to what had occurred did not leave CSG with a "lot of room to move and it is a likely outcome is that we see it as gross misconduct and, as you're probably aware, gross misconduct means that your employment will be terminated and terminated with effect immediately. It means that there would be no notice paid and it would have to be some other implications for you and…we shouldn't beat around the bush on that. That is with respect to your last tranche of performance rights because under the rules of the Plan; gross misconduct…the words are actually "a wilful breach". The Directors don't have any choice or any discretion on the matter, you automatically get classed as a bad leaver" (Exhibit B, page 307). (d) Mr Leahey then referred to the fact that he had not had a chance to respond to the allegations and that this was the first time that he had sat down and been told of the conclusions reached by CSG (Exhibit B, page 308). Mr Thomas responded by saying that he had put the allegations to Mr Leahey on the telephone, noted that there was no CCTV footage of the event, then said he had spoken to a number of "independent people" and that "we can only come to the conclusion, what we're entitled to do if you think if [sic] an Employment Law perspective, we can come to what is a reasonable conclusion and we have concluded, on what we've found" (Exhibit B, page 309). (e) There was then a discussion concerning whether or not Mr Leahey had been provided with procedural fairness, at which point Mr Thomas responded, curiously, that the obligation to give procedural fairness only applies in certain circumstances, not present here, where unfair dismissal laws applied (Exhibit B, page 310). (f) Mr Thomas then moved away from the discussion of the incident by saying "what I was trying to paint to you is a picture [Mr Leahey], if we go down that path and that's the conclusion, the end outcome. We don't have any flexibility or the Board won't have any flexibility" and if he was terminated on grounds of "serious misconduct" it had to be reported to the CSG Board (Board) and "[t]hat is just the rules of the Plan. No one has got any flexibility…" and he would be deprived of his entitlements under the LTI Plan (Exhibit B, page 311). (g) Mr Thomas then moved to the previous comments that had been made to the effect that Mr Leahey had had a "gutful" of the current job and that he was better off going back to being a master agent (Exhibit B, page 312). (h) Following a discussion of performance and enquiries by Mr Leahey as to whether or not he was being fired based on his performance, Mr Thomas then said "we as a [sic] executive team and business, have lost confidence. Now the path then is that we would issue notice under your contract which [sic] are obviously entitled to do…with four weeks' notice and then parties can go their separate ways. The difficult [sic] or if I highlight a [sic] issue with that, is that we run into a similar problem as the last scenario around the incident that when we go to the Board because we have to tell them that once [sic] of the performance rights holders has left. The problem that we run into as soon as they ask why, why has the person we [sic] left. We say on the scenario I've just painted; on the performance of [Mr Leahey] over the last couple of years but particularly the last year has fell [sic] well short of expectation. The problem with that is that again, the Directors will look at definitions of a good leaver or bad leaver and I will quote here "dismissal due to poor performance shall be considered a bad leaver" and…once you're a bad leaver, the rights lapse…" (Exhibit B, page 313 - I note, incidentally, that it is unclear from what, if any, document Mr Thomas was quoting). 72 After painting these scenarios, Mr Thomas then turned to resignation. He said (Exhibit B, page 314): One of the things that often happen in this situations, [sic] similarly we've had at discussions with other people that have been confronted with that choice, people say "okay what's the situation if I resign". Unfortunately, if that's what you chose to do, that doesn't help us to a great degree because voluntary resignation is also a bad leaver. Right that's the rules of the Plan. 73 All of the above was prologue to Mr Thomas then suggesting a way forward, which he was entreating Mr Leahey to take. Again this was introduced by explaining that the consequences of a termination effective "immediately with no notice for gross misconduct" was said to be that although CSG would be obliged to pay amounts for annual and long service leave and statutory requirements, the shares (that is, I infer, the Participation Rights) "would still lapse". Mr Ramsay then noted that that the shares (which I interpolate would be obtained upon exercise of the rights under the Rules attaching to the Participation Rights) were worth about $200,000 (Exhibit B, page 314). 74 Finally, the point of the conversation was reached. It was said that an alternative was being presented to Mr Leahey to "try to come up with a way that at least can protect the shares". The alternative option presented was for Mr Leahey to sign an agreement (the terms of which were not discovered or put in evidence) which effectively said the parties had mutually agreed to separate. Again, this alternative option was presented in the context of a representation being made to Mr Leahey that if he simply resigned, that course would "vacate the shares" (Exhibit B, page 314). 75 If the alternative option was taken up and such a release was signed, Mr Thomas indicated that he, Mr Ramsay and also the CEO would be prepared to recommend to the Board that Mr Leahey be treated as a 'Good Leaver' which would then "preserve your shares" and that an agreement would be reached about exiting the business. Allied to this proposal was the opportunity for Mr Leahey to return to becoming a master agent with CSG (Exhibit B, page 315). 76 The reaction to these entreaties (for that is what they were) was for Mr Leahey to continue to dispute the version put to him concerning the Brisbane Incident and to deny that there was anything wanting in his performance. Mr Thomas then returned to the alternative option, saying, in my view less than accurately, that "I'm not trying to force you down a particular path" adding that "[i]f I was in your shoes, I think it is a pretty clear decision, I know what I would do, but we're trying to put it out there so you can decide" (Exhibit B, page 325). 77 In short, the apparent alternative option put to Mr Leahey was for him to sign an agreement effecting mutual releases in a way which was said to secure him financial benefits that would not otherwise be available to him if he adopted another course of action, such as resignation or if he was dismissed on notice because of CSG's lack of confidence in him. As part of the deal, he would also be appointed a master agent. 78 I do not consider that these discussions reflect well on CSG in general, and Mr Thomas in particular, and I will return to what I will describe as the "Exit Discussion" later in these reasons. In any event, no agreement was reached between the parties along the lines suggested and on 23 August 2016, Mr Leahey's employment was terminated by the Termination Letter, the relevant parts of which I have already set out at [4] above.

D Relevant Approach to Fact Finding on ADVERSE ACTION 79 I turn, in Issue 3 of Section E below, to my key factual findings relevant to the determination as to whether CSG acted in contravention of s 340 of FWA by taking adverse action because Mr Leahey had the Redundancy Workplace Right and/or made a complaint or enquiry in relation to his employment, being the STI Workplace Right, and in doing so exercised a workplace right. 80 In making the findings below as to the reasons why Mr Leahey was terminated, it is useful initially to reflect upon the principled approach to fact finding in an adverse action case. As was recently explained by Flick J in Australian Building and Construction Commissioner v Hall [2017] FCA 274 at [17]-[25], a number of matters need to be borne in mind when considering fact finding and onus when contraventions of the FWA are alleged, three of which merit mentioning and expanding upon here. 81 First, when making findings of fact, there is a necessity to have regard to the fact that while the standard of proof in this case is upon the balance of probabilities (Evidence Act 1995 (Cth) s 140(1)), the strength of the evidence necessary to establish a fact or facts on the balance of probabilities or the "degree of satisfaction that is required in determining that that standard has been discharged" varies according to the considerations listed in s 140(2) (see Qantas Airways Ltd v Gama [2008] FCAFC 69; (2008) 167 FCR 537 at 571 [110] per French and Jacobson JJ). Section 140(2) of the Evidence Act provides that, without limiting the matters that may be taken into account, the Court "is to take into account": (a) the nature of the cause of action; and (b) the nature of the subject matter; and (c) the gravity of the matters alleged. 82 As the Full Court observed in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; (2007) 162 FCR 466 at 480 [30]: The mandatory considerations which s 140(2) specifies reflect a legislative intention that a court must be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence. Ordinarily, the more serious the consequences of what is contested in the litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion. 83 As to the adverse action case, the alleged contraventions are of civil remedy provisions (see Part 4-1 of the FWA). They are, accordingly, serious: see Australian Competition and Consumer Commission v Australian Safeway Stores Pty Limited (No 3) [2002] FCA 1294; (2002) ATPR 41-901 at 45,414 [53] per Goldberg J. Having noted this, it is important not to overstate this factor or to generalise. Section 140(2) requires a fact-finder, in considering satisfaction of proof, to have regard to the truth, consistent with the accumulated experience of the courts, that such satisfaction is not a state of mind attained independently of the nature and consequence of the fact proved and the seriousness of an allegation made. As Dixon J famously explained in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362, the inherent unlikelihood of an occurrence must affect the answer to the question of whether the issue has been proved. 84 This is why, in having proper regard to s 140(2), it is not the end of the analysis to note that a suggested finding would amount to a contravention of civil remedy provision. All breaches of civil remedy provisions are not the same. Some might involve behaviour which, at one end of the continuum of possible contravening conduct, could be characterised as being misguided but morally benign, or, at the other end of the continuum, could be contravening conduct characterised as being seriously depraved. Although findings as to a contravention of the FWA are not findings lightly to be made, forming an opinion as to reasonable satisfaction about matters in evidence involves consideration of not only the consequence of such a finding but also the nature of the conduct. This is another way of saying that all of the s 140(2) mandatory considerations must be taken into account. Here the conduct alleged (although serious and unlawful) is not the type of conduct which, if proved, is so egregious that it would be regarded as conduct which, by its nature, human experience would suggest is inherently unlikely to have occurred. 85 Secondly, Division 7 of Part 3.1 of the FWA provides, among other things, that where, such as here, it is alleged that a person takes action "for a particular reason" then a person takes action "for a particular reason" if the reasons for the action include that reason: see s 360. Additionally, s 361(1) relevantly provides that if it is alleged that a person took action for a particular reason and, such as here, the taking of that action for that reason would constitute a contravention, "it is presumed that the action was…taken for that reason… unless the person proves otherwise". As French CJ and Crennan J explained in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 248 CLR 500 at 506 [5], the task of a court in a proceeding alleging a contravention is to determine, on the balance of probabilities, why the employer took adverse action against the employee, and to ask whether it was for a prohibited reason or reasons which included a prohibited reason. The imposition of the statutory presumption in s 361, and the correlative onus on employers, means that direct evidence of state of mind, intent or purpose of the decision-maker will bear upon the ultimate determination as to why the adverse action was taken. This is a question of fact, to be answered in the light of all the proved facts: see Barclay at 517 [44]-[45]. Put another way, whether a respondent in the position of CSG has discharged its onus is a question to be resolved at the end of a proceeding and upon consideration of the entirety of the evidence adduced: Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157; (2015) 238 FCR 273 at 279 [27] per Jessup J. 86 Thirdly, related to the second point, is that in order to invoke the reverse onus of proof, an applicant need only establish that "the evidence is consistent with the hypothesis" that a respondent was actuated by a proscribed reason. That is, Mr Leahey will succeed, if the evidence is consistent with the hypothesis that CSG was actuated by a proscribed reason, and that hypothesis was not displaced: see General Motors-Holden's Pty Ltd v Bowling (1976) 12 ALR 605 at 617; (1977) 51 ALJR 235 at 241 per Mason J.

Issue 1: What happened and what CSG believed happened at Brisbane 87 Given the alleged centrality of the Brisbane Incident to the decision-making processes of CSG, as reflected in the Termination Letter (see [4] above), it might have been anticipated that precisely what occurred on 7 July 2017 at a CSG work function in Brisbane would have been the subject of a significant factual contest. 88 As it turned out, CSG did not call any evidence from alleged eye-witnesses to the Brisbane Incident and the evidence of what occurred is best gleaned from: (a) paragraphs [73]-[90] of Exhibit A (being the outline of Mr Leahey's evidence) and Mr Leahey's cross examination; (b) the oral testimony of Mr Daniel Bogdan, who was called by Mr Leahey; and (c) the transcript of a recorded telephone conversation between Mr Trevor Gow and Mr Thomas, which comprised pages 294-6 of Exhibit B. 89 A review of all the evidence, including this material, establishes that what occurred was as follows: Mr Nick Dalton (a sub-agent of a Queensland master agent) approached Mr Leahey. Mr Dalton and Mr Leahey had a conversation, which was witnessed by Mr Gow and Mr Bogdan. During the course of that conversation, Mr Dalton said to Mr Leahey something to the effect of "I don't like you". Following a further brief conversation, Mr Dalton then initiated physical contact by grabbing Mr Leahey's ear, tugging it while saying "are you deaf and stupid"? Mr Leahey then told Mr Dalton not to touch him again, but notwithstanding that comment, Mr Dalton again approached Mr Leahey and invaded his 'personal space', at which time Mr Leahey pushed Mr Dalton away with an open hand. Mr Gow and Mr Bogdan then intervened. 90 I am conscious of the fact that Mr Dalton was not called to give evidence and I have not had the opportunity of hearing his version of events. Notwithstanding this, I have to make findings on the basis of the evidence that was adduced before me and there was no substantial contest about the fact that the Brisbane Incident occurred in the way I have recounted, or the account which emerges from the evidence of Mr Leahey, Mr Gow and Mr Bogdan. Although various other accounts were given in information conveyed to CSG during the conduct of the inquiry into the Brisbane Incident, those representations were the subject of a limitation pursuant to s 136 of the Evidence Act. It is notable that, in closing submissions, Counsel for CSG submitted, in my view sensibly, that CSG: …recognise[d] where the direct evidence as to what happened in relation to the [Brisbane Incident] lies and that the Court may form a view that the incident occurred as generally described by [Mr Leahey]. 91 The distinct question as to what the decision-makers within CSG believed occurred is somewhat more complicated. The significance of a finding as to what CSG believed potentially has relevance in two ways. First, there was a suggestion by CSG that this question has some importance to the determination of the LTI Plan claim (a submission I reject below). Secondly, the question of whether CSG actually believed Mr Leahey had engaged in misconduct was said by Mr Leahey to be material, as it was alleged to bear rationally upon whether the evidence of the decision-makers as to the motivation for terminating his employment ought to be accepted. 92 Accordingly, I now turn to the question of whether Mr Thomas genuinely believed that Mr Leahey engaged in conduct which could be characterised as "inappropriate physical force against one of CSG's sub-agents" (as described in the Termination Letter). 93 What is clear is that Mr Thomas is the relevant focus of this inquiry as Mr Ramsay did not conduct any investigation of the Brisbane Incident and there was no detailed evidence about what Mr Ramsay was told or what he subjectively believed in relation to the Brisbane Incident. To the extent that Mr Ramsay had a view, I am satisfied that this view was informed by what he had been told by Mr Thomas In short, he deferred entirely to Mr Thomas in relation to what happened in Brisbane and as to the appropriate remedial response. 94 To my mind the most unsatisfactory aspect of the evidence of Mr Thomas with regard to the Brisbane Incident is the tension between the contention that Mr Leahey had engaged in conduct which amounted to a common law assault which was completely unacceptable to CSG and the notion that CSG was entirely sanguine with the idea that Mr Leahey continue to represent CSG as a master agent. There was an attempt to reconcile these two positions by suggesting that a higher standard of conduct was expected of an employee rather than a consultant, but given the nature of the conduct as characterised by CSG and the repeated assertions that the conduct was sufficiently serious so as to justify summary termination, that explanation seems to me to ring very hollow. 95 I am satisfied that Mr Thomas did attempt to conduct an inquiry into the Brisbane Incident. Mr Leahey asserts that the inquiry had been prejudged and, in any event, was conducted maladroitly. CSG countered this suggestion by submitting that any notion that Mr Thomas prejudged his investigation was misplaced. CSG contended that the evidence demonstrates that Mr Thomas made a genuine effort to conduct a proper investigation including relying on enquiries made by another employee, Ms Bree Grindlay, and by conducting his own enquiries of persons who witnessed the Brisbane Incident, giving proper weight to the accounts of witnesses whom Mr Thomas considered to be independent of both the protagonists. CSG submitted that Mr Thomas "considered and weighed up the different accounts in a reasonable manner and formed a view on what happened which was reasonably available to him on the material he had". 96 The submissions of Mr Leahey deal with the investigation of Mr Thomas in a highly critical way. Mr Leahey contends that Mr Thomas ignored what are said to be glaring inconsistencies in the account given by Mr Dalton, and chose to accept more incriminating versions of events, despite these inconsistencies. Similarly, Mr Leahey contends that Mr Thomas chose to identify a minor inconsistency between Mr Bogdan's version of events with that of Mr Leahey in order to justify his reason for disbelieving Mr Bogdan and Mr Leahey, and irrationally discounted the corroborating version of events given by Mr Gow. A particular illustration of the flawed way that Mr Thomas approached the investigation is that the transcript of the recorded communication between Mr Thomas and Mr Gow demonstrates that Mr Thomas' notes included words not said by Mr Gow, namely, inserting the word "flicked" in preference to the word used ("grabbed") in the context of Mr Gow describing what Mr Dalton did to Mr Leahey's ear. 97 On balance, I think there is merit in the contention of CSG that Mr Thomas did investigate, in good faith, what happened. Although it is possible to point to some logical flaws in the reasoning process of Mr Thomas, and a somewhat troubling inaccuracy in the notes recording Mr Gow's version of events (which did have the effect of downplaying Mr Dalton's actions), I accept the evidence of Mr Thomas that he genuinely believed that Mr Leahey had acted inappropriately in relation to the Brisbane Incident. 98 What I do not accept, however, is that Mr Thomas considered the behaviour of Mr Leahey to be as egregious as CSG and Mr Thomas then made out. If Mr Leahey had been regarded by Mr Thomas as a valuable employee, rather than one who had been over-promoted, I do not believe that CSG would have regarded the behaviour, although unfortunate, as being sufficiently serious to justify serious disciplinary action, let alone summary termination. In this sense, CSG opportunistically fastened onto the Brisbane Incident as a partial justification for taking a step to dismiss Mr Leahey in circumstances, as I explain, where CSG wished to part company with Mr Leahey as a senior manager.

Issue 2(a): The relevant decision-makers 99 In answering Issue 2, I will consider two questions, being: (a) who decided to terminate Mr Leahey's employment; and (b) why was Mr Leahey's employment terminated? 100 By the time of final submissions, Mr Leahey submitted that Mr Ramsay and Mr Thomas were joint decision-makers, but recognised that Mr Thomas took the greater role in the making of the decision. The position of CSG was to submit that the decision-maker "was either Mr Thomas (with significant input from Mr Ramsay) or that Mr Ramsay and Mr Thomas were joint decision makers". 101 The evidence of Mr Ramsay was that "[u]ltimately the decision was made by [Mr Thomas]" (T 195). Mr Thomas gave evidence that the "decision was made between myself and Mr [Ramsay]" (T 287). Determining whether the decision-maker was Mr Thomas (with significant input from Mr Ramsay) or whether the decision was a joint decision, is not without difficulties. I had originally inclined to the view that if a so-called 'sole' decision-maker asserts that another person also made the decision, this was a fairly good pointer to the fact that the decision was made jointly. However, upon reflection and having considered their respective roles and reviewed their respective oral evidence closely, I consider the evidence of Mr Ramsay is likely to be correct and that the decision was made by Mr Thomas (albeit with input from Mr Ramsay on the financial aspects of Mr Leahey's performance). Mr Ramsay's evidence was less than clear on the point, but I do not think the input of Mr Ramsay went so far as a definitive recommendation. 102 Mr Mahendra, in final submissions, put Mr Leahey's case this way (T 414): We say that the decision-makers didn't care what happened…it was opportunistic… we say that it was a joint decision of [Mr Ramsay] and Mr Thomas to dismiss [Mr Leahey]. And that is consistent with Mr Thomas' evidence, although [Mr Ramsay] seeks to shift that responsibility to Mr Thomas.…But we say, even if Mr Thomas was the decision-maker, his decision-making was, infected by any evaluation of the [Mr Leahey] by [Mr Ramsay]. 103 Before moving on, it is appropriate to pause to consider the principled approach to be taken to assessing decision-making when various individuals are involved. In Elliott v Kodak Australasia Pty Ltd [2001] FCA 1804; (2001) 129 IR 251, the Full Court considered a situation where two supervisors assessed an employee for redundancy by reference to identified criteria. A third person, a general manager, then made the ultimate decision to terminate the employment of the employee. It was explained that if either of the supervisors' assessments was influenced by a prohibited reason, that would have impugned the decision of the general manger, even though the prohibited reason had not been disclosed to him. In doing so, at 260 [37] the Court explained that one supervisor made "an indispensable contribution to the rankings" and both supervisors "co-operated in a joint assessment, with each giving an account of what influenced them individually". If one supervisor "was influenced in giving a low mark by a prohibited reason, it can be assumed that if the ranking were done without having regard to that prohibited reason" then this would, inevitably, have, affected the ranking process, whatever the views of the other supervisor. Furthermore, whatever debate there might be about the extent of the general manager's power or involvement in the decision, the manager's evidence was that he took the supervisors' assessment and worked from there. It followed that if the supervisors' assessment was affected (or infected) by either supervisor holding an undisclosed prohibited reason, then the general manger "would have, in effect, inadvertently adopted it so that its force continued regardless of the lack of any express prohibited reason in the mind of" the general manager (at 260 [37]). 104 In dealing with the Full Court's decision in Kodak, in Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Ltd [2015] FCA 1014; (2015) 253 IR 166, Reeves J observed (at 198 [121]) that: … where the reasoning process is dispersed through an assessment process involving a number of persons…the judgment in Kodak requires me to examine the reasoning process employed by each person whose involvement had a material effect on the ultimate decision. This inquiry…focuses on the conscious reasoning processes of those who had a material effect on the ultimate outcome to determine whether their reasoning processes were free of the alleged prohibited reason or reasons. If one or more of the reasons employed by one or more of them was a prohibited reason, that will impugn the ultimate decision. This is what I consider the Full Court meant by "inadvertently" adopting an "undisclosed prohibited reason" in Kodak… (references omitted) 105 It follows from the above that, notwithstanding my finding about the ultimate decision being made by Mr Thomas, it is necessary that I give separate attention to the question of whether CSG has proved that Mr Ramsay, in assessing the performance of Mr Leahey (and providing any input to Mr Thomas in making the decision), was not actuated by a prohibited reason. 106 Such an approach does detract from the principles explained by the High Court in Barclay. The approach to determining the reasons of Mr Thomas does not involve an objective test, nor does it take account of any unconscious reasons. However, it is common ground that, at the very least, the decision of Mr Thomas was the culmination of a process involving the input of Mr Ramsay. As Reeves J explained in Clermont Coal at 198 [120]-[121], the authorities place the relevant focus on the reasoning process that led to the ultimate decision. This means where the decision was made by one person, based on one incident, "the task is relatively straightforward". On the other hand, where the reasoning process is dispersed through an assessment process involving a number of persons, "the task is much more complicated". In such a case, examination is to take place of the reasoning process of each person whose involvement "had a material effect on the ultimate decision". This relevant inquiry focuses on the "conscious reasoning processes of those who had a material effect on the ultimate outcome to determine whether their reasoning processes were free of the alleged prohibited reason or reasons".

CSG's Contentions 107 CSG points to what it describes as the clear evidence of both Mr Ramsay and Mr Thomas that there were three reasons for deciding to terminate Mr Leahey's employment: (a) the conclusion reached as to Mr Leahey's conduct in relation to the Brisbane Incident; (b) Mr Leahey's poor performance; and (c) Mr Leahey's attitude or, to put it as it was put in final submissions by CSG, Mr Leahey's "lack of mojo" and his expressed desire to no longer continue in his role. 108 These three reasons were, of course, set out in the Termination Letter (see [4] above). In short, the evidence of both Mr Thomas and Mr Ramsay was that the reasons, as set out in the letter, were accurate and were complete, in the sense that no other reasons informed the decision. CSG submitted that not only was nothing inherently implausible or farfetched about this evidence, but that the "genuineness of their beliefs and reasons for termination cannot be doubted". 109 I have already dealt with CSG's contentions as to the subjective views of Mr Thomas in relation to the Brisbane Incident (and Mr Ramsay's passive role with regard to the formation of CSG's views as to the Brisbane Incident). It is necessary to then turn to the contentions of CSG in relation to the second and third identified reasons for Mr Leahey's termination.

Poor Performance 110 CSG submitted that the question as to whether Mr Leahey was a poor performer was somewhat of a 'red herring'. CSG pointed out that this was not an unfair dismissal case and the relevant issue was the subjective perception of poor performance at the time the decision to terminate was made, rather than the distinct issue of whether or not the decision had adequate justification. 111 CSG contended that the fact that Mr Leahey may have met his targets in FY2016 if the Queensland deals were included in his numbers is irrelevant and that it is similarly irrelevant (for this part of the case) as to whether he had a contractual right to have the revenue from the Queensland deals allocated to him so that he could meet his revenue targets. 112 The cross-examination of Mr Ramsay dealt, in some detail, with the September 2015 Meeting and the November 2015 Meeting. In assessing this evidence, CSG pointed to the fact that it was necessary to have regard to the fact that the financial performance being discussed at the September 2015 Meeting was different from the financial performance discussed at the November 2015 Meeting. It was submitted that this is because the September 2015 Meeting related to performance in FY2015 and the November 2015 Meeting related to performance in FY2016. 113 In this context, it is said by CSG that it is unsurprising that Mr Leahey may not have been perceived as a poor performer at the September 2015 Meeting but that his performance had declined, such that he was regarded by the time of the November 2015 Meeting as falling into that category. Additionally, CSG points to Mr Leahey's email of 27 October 2015 in which he acknowledged that he was falling short of some of his targets. In this regard, CSG notes that in the absence of the Queensland deals (in the introduction of which Mr Leahey played no part) he achieved 87% of his target for revenue, 63% for EBITDA and 49% for technology sales. 114 As to the fact that performance issues were first raised in November 2015, this is said to be of little relevance; there will always be an initial time when performance issues are raised and, as noted above, there were rational reasons as to why one may have been a good performer in previous years and yet be regarded as a poor performer the following year. As at November 2015, Mr Leahey acknowledged that he was unlikely to hit the critical EBITDA number for New South Wales and that the variances from budget for each of the geographic regions for which he was responsible showed that he would be below budget. Close enough was not good enough for CSG and achieving 93% of budget (as was considered likely) was not regarded as a good performance and represented a significant monetary gap in achieving targets.

'Mojo' Deficiency 115 The evidence of both Mr Thomas and Mr Ramsay was that they had a view that Mr Leahey no longer wanted to be a regional general manager but wished to return to being a master agent. This lack of enthusiasm for the role had been communicated, in terms, by Mr Leahey. In these circumstances CSG contended it was hardly surprising that CSG would regard Mr Leahey as an unenthusiastic employee and appraised his overall worth to CSG informed by this assessment.

Mr Leahey's Contentions 116 I now to Mr Leahey's submissions on the stated reasons of CSG. As to the first reason, being the Brisbane Incident, Mr Thomas could not have believed that Mr Leahey had engaged in serious misconduct and, in this regard, it was noted that the letter does not make any express reference to serious misconduct. I pause to remark that I have previously made a finding as to what I believe was the view of Mr Thomas (and hence CSG) in relation to the Brisbane Incident (see [97]-[98] above).

Poor Performance 117 As to the second reason, the position of Mr Leahey was that the performance that was identified as a concern was his performance as against his sales targets, but that it was clear, on the evidence that his performance against his sales targets for FY2015 was not a concern for Mr Ramsay. When one turns to FY2106, the sole reason that Mr Leahey did not meet his sales targets was because of the departure from previous practice in allocating sales with regard to the Queensland deals. Further, Mr Leahey's deficiency in meeting his targets for FY2016 was hardly unique: only one regional general manager met his budget for FY2016. 118 In contradistinction to the position in relation to the Brisbane Incident, CSG contended that Mr Thomas was largely dependent upon Mr Ramsay for his view of Mr Leahey's work performance. In Mr Ramsay forming his view, the starting point is the September 2015 Meeting, at which time Mr Ramsay raised no performance issues. This is of central significance, according to Mr Leahey, because the first time performance issues were raised with him was after he had started making complaints and/or enquiries about his remuneration. In this regard, Mr Leahey points to the chronology including all the events preceding 23 November 2015, when, quite unexpectedly, during the November 2015 Meeting (which was arranged to discuss Mr Leahey's FY2015 STI, as well as arranging a form of remuneration for his managing South Australia), CSG raised performance issues with Mr Leahey for the first time. 119 Mr Leahey contends it was only then that CSG changed the ordinary protocol in respect of the allocation of interstate sales, which then directly impacted upon his ability to achieve his budgetary targets. 120 In summary, Mr Leahey says that it is "abundantly clear" that any alleged performance issues (of which there were none because Mr Leahey had met 93% of his budget for FY2015 and was on track to exceed his budget for FY2016, at least insofar as New South Wales was concerned) only arose "because [Mr Leahey] was complaining and / or making enquiries about his remuneration". It was only after Mr Leahey had made numerous complaints about his remuneration that CSG embarked on a process by which it could make Mr Leahey's position redundant and through which it had identified him as a poor performer and someone who only occasionally displayed CSG's "values". 121 Mr Leahey also rejected the contention that whether or not he was a poor performer was a 'red herring' because the only performance issue actually raised with Mr Leahey was his performance against financial budgets. Even on CSG's case, the only other performance issue, being Mr Leahey's attitude, only arose after 18 May 2016 during the course of his discussion with Mr Thomas (see [123] below). Further, Mr Leahey rejects the contention of CSG that the November 2015 Meeting only related to performance in FY2016. 122 It was further said that Mr Ramsay's evidence was inconsistent and that he did not identify, with any precision, any other performance concerns he had in respect of Mr Leahey, save for his confusing evidence as to a lack of fulfilment of sales targets.

'Mojo' Deficiency 123 As to the third matter, the position of Mr Leahey, perhaps not surprisingly, is that he had not 'lost his mojo'. It was submitted that "for obvious reasons the alleged 'express lack of engagement' could not, on any rational view, [sic] been a basis for dismissing an employee". It was said that the only evidence that CSG could point to in this regard was the conversation that Mr Thomas had with Mr Leahey on or about 18 May 2016, which was some three months prior to the termination of Mr Leahey's employment. Further, Mr Leahey's evidence was that he clearly indicated to Mr Thomas, during this conversation, that he wished to remain with CSG for ten years, and he was not challenged with regard to this evidence.

The Decision of Mr Thomas 124 As noted in [61] above, the so-called "snapshot of bench strength" was reflected in the Matrix which, in turn, was included in the Talent Review document. This review was an important process, for which Mr Thomas bore primary responsibility. The whole point was to identify the subjective worth of regional general managers and rate them in relative terms. 125 Mr Thomas gave evidence, to which it will be necessary to return and explain, that the rankings of the regional general managers reflected a combination of a series of subjective assessments by a number of people. So although "the [Matrix]…did take into consideration the views of a number of people, so it wasn't just my assessment", the final version was prepared and finalised by Mr Thomas in June 2016 and did reflect his views. Mr Leahey was, according to Mr Thomas, rated as a regional general manager who had peaked or been over-promoted. 126 Some effort was made by Counsel for Mr Leahey to point to inconsistencies between the ranking assigned to Mr Leahey based on financial factors and the actual performance of Mr Leahey against his sales targets (and contrasting this to the performance of other regional general managers against their targets). With respect, this attack rather misses the point. This assessment was not being made by reference to ascertaining how a regional general manager performed for the purpose of meeting regional targets but by reference to broader, more evaluative criteria to ascertain the various senior managers' value to the business moving forward. Even leaving aside highly subjective non-financial 'values', when it came to financial considerations, as Mr Thomas explained (T 342): …I should just add that in looking at the - the assessment of all of these people around their performance, we - we were very much conscious of who - who generates the business. And if business has happened to be generated from a lead that comes from someone else in the business, whether it be from the CEO, another senior person, or even, in fact, outside of the state, and there is some arrangement to push the revenue, that's really some - somewhat - and it needs to be removed in looking back at that individual's performance, because they actually haven't generated that business. They actually haven't done the work, even though they may be credited with it in the sales - the - the revenue numbers. And that sort of tries to explain why this doesn't match up. It's not intended to - to match the KPIs for STI purposes. We're trying to look at the underlying performance of - of the people across the business. 127 There was a real focus by Mr Leahey at the hearing on purely financial considerations. Although Mr Leahey may have had an entitlement to the allocation of revenue within his region which was generated and introduced by others (for the purpose of setting contractual targets), this is a quite distinct matter from whether the regional general manager is someone who is perceived as 'growing' the business. If one has regard to the evidence of Mr Thomas, which seems to me to accord with commercial commonsense, the reason why he placed Mr Leahey where he did on the Matrix was not some form of calculus but was (for want of a better word) impressionistic and was the result of a multifactorial and subjective assessment. 128 Mr Thomas was not forming his views in June 2016 in a vacuum. I have already recounted what occurred at the performance interview between Mr Leahey and Mr Thomas (see [61]-[64] above) and the impression as to Mr Leahey's lack of enthusiasm that Mr Thomas took away. There was the intuitively surprising comment that although Mr Leahey liked the 'start-up' phase of becoming a regional general manager, "but I don't enjoy now - focus numbers". Other contemporaneous notations made by Mr Thomas reflected his assessment that Mr Leahey seemed weary of his role. For example, Mr Thomas recorded that Mr Leahey: (a) favourably remarked upon the control he had over his destiny as a master agent in comparison to his role as an employee; (b) did not elaborate about why he was confused regarding CSG's culture and about how he would make changes to make the salesforce more effective; (c) indicated he was unsure where he saw himself in five years and that he "feels [like he is] treading water". 129 Adapting a quote from Alan Clark, used in a very different context in his book The Tories: Conservatives and the Nation State 1922-1997 at page 273: "[t]he term 'motivation' is a tiresome one, with its overtones of psychoanalysis. But if it means anything, it is an apt description of what" Mr Thomas perceived Mr Leahey did not have. 130 Mr Thomas rejected the proposition that was put to him by Counsel for Mr Leahey that he created the Matrix "with Mr Leahey at the bottom because you saw him as a troublesome employee and you wanted to get rid of him" (T 347). I accept his evidence in this regard. I have no doubt that the Talent Review document reflected Mr Thomas' genuine views in June 2016. Whether they are fair or reasonable, or the rankings in the Matrix are open to dispute, is beside the point. The simple fact is that Mr Thomas, through his own assessment and after considering the subjective views of others, considered that Mr Leahey had "peaked" and was "over promoted at [his] current level". 131 At the end of the day, Mr Thomas was undertaking a process of ranking by reference to "a standard model that's used across many businesses in looking at measuring bench strength. It's a basis of looking at performance in the round…it's referring to overall performance in the job" (T 332). Although Mr Thomas sought, to some extent, to defend the decision (which led to litigation) as not being his sole responsibility (a topic to which I now turn), I am satisfied he was the decision-maker.

The Input of Mr Ramsay and others 132 As I noted at [103]-[106] above, it is necessary that I give attention to any input provided by Mr Ramsay which was relied upon by Mr Thomas in making his decision. 133 It is also necessary that I deal with the involvement of others, given that Mr Thomas was at some pains to say he was not alone in the ranking of Mr Leahey as a less valuable employee in relative terms to other regional general managers. Mr Thomas said the Matrix took into consideration the views of a number of people, so it "wasn't just my assessment" (T 339). 134 Dealing first with Mr Ramsay, it was clear that his involvement was predominately "around the sales targets of the performance of FY15 and the motivation of [Mr Leahey] to continue on as a regional general manager" (T 195). The case made by Mr Leahey was that there was a deliberate decision by Mr Ramsay not to allocate the Queensland deals to New South Wales, in order to deprive Mr Leahey of his ability to achieve his budget so that CSG could assert poor performance as a means to get rid of him as a problematic or complaining employee. 135 Prior to dealing with how Mr Ramsay's views impacted upon Mr Thomas, it is convenient to make it clear that I reject this contention. Although Mr Mahendra was able to point to the fact that in September 2015, Mr Ramsay had referred to Mr Leahey as a valuable member of the CSG team, Mr Ramsay was convincing in his evidence that his view as to the financial performance of Mr Leahey had been informed by Mr Leahey's failure to meet his budget. According to Mr Ramsay (T 239): Looking at the numbers and understanding…there was a $2 million gap between the target and the actual and $500,000 of EBITDA. 136 Mr Ramsay explained that this realisation prompted him to have a conversation with Mr Leahey. Despite the fact that Mr Leahey's financial performance would have been very different for FY2016 if the Queensland deals had been allocated to him, the evidence of Mr Ramsay was that performance was "more than just a P and L" (T 242). Following the November 2015 Meeting, a good snapshot is provided of Mr Ramsay's view from the email that he sent summarising what was said to the be the "key messages" that arose from that meeting (see [44]-[45] above). It was apparent that there was discussion at that meeting about the impact of Mr Leahey's leadership style and behaviours on other staff and the need for Mr Leahey to have a positive, constructive role. I accept that as at November 2015, Mr Ramsay had some misgivings about certain aspects of Mr Leahey's performance and that he inclined to the view that Mr Leahey was not a particularly valuable performer. Given that Mr Thomas had independently formed the view that he had reached, it is hardly surprising that Mr Ramsay was willing to go along with an overall assessment that Mr Leahey was not a valued part of the future of CSG. In this regard, Mr Ramsay accepted that Mr Thomas relied upon him in relation to the assessment Mr Thomas made as to the overall financial performance of Mr Leahey. 137 As to the extent of Mr Ramsay's input on the decision of Mr Thomas, at the end of the day, despite Mr Ramsay being the person conveying details as to Mr Leahey's overall performance, I do not believe that the views of Mr Ramsay played a substantial or material role in the decision-making of Mr Thomas. As I have explained, Mr Thomas had a broader agenda looking at the business for the purposes of assessing "bench strength" generally. Not only do I find that Mr Ramsay's views were not influenced by a prohibited reason (but rather were a genuine reflection of his views as to Mr Leahey's financial performance and enthusiasm for his role), I do not believe that Mr Thomas, in effect, adopted the views of Mr Ramsay. Mr Thomas formed his own quite independent views as to the relative worth of Mr Leahey to the business as compared to his peers. This is another way of saying that I do not consider that the views of Mr Ramsay operated in any substantial or operative way so as to influence the decision made by Mr Thomas. 138 Turning to the 'others' that, on the evidence of Mr Thomas, may have participated in the Matrix ranking of Mr Leahey (see [125] above), their views and level of participation received no attention at all in submissions. This is not surprising as the cases advanced by both Mr Leahey and CSG were that there were only two potential decision-makers: Mr Thomas and Mr Ramsay. Returning, however, to the principled approach to be taken to assessing decision making when various individuals are involved (see [103]-[106] above), what of the involvement of the other people to whom Mr Thomas made reference? 139 The strong impression I formed of Mr Thomas was that he was somewhat reluctant to accept sole responsibility for the decisions made in relation to Mr Leahey. This was reflected in the fact that he was quite definite about asserting that Mr Ramsay was a joint decision-maker. As I have already noted, when justifying the relative ranking of Mr Leahey, Mr Thomas was quick to assert that he was not the only one who held the view that Mr Leahey lacked value to CSG going forward. It seems to me that this evidence had much more to do with parrying an attack on the merit of his views, rather than suggesting that he deferred to the views of others or relied upon them in informing his view of "bench strength". I do not consider this is a case where Mr Thomas adopted the reasoning process of others. 140 Mr Thomas gave evidence of a discussion between himself and Ms Kerin before the relevant documentation, including the Matrix, went to the Board, and that he agreed with Ms Kerin on "where the people fitted in on this particular chart" (T 317). As one would expect, given Mr Leahey was a regional general manager, and hence had some seniority within CSG, it is to be expected that discussions of this type would take place with the CEO and also Mr Ramsay (being Mr Leahey's line manager). 141 Apart from Ms Kerin and Mr Ramsay, the evidence was that there was a "sense check process" where "two other members of the executive team cast their eyes across the overall chart to sense check that it looked fair and reasonable", being the CFO, Mr Neil Lynch, and Mr Stephen Birrell (who headed the Enterprise Business) (T 339). Like the discussion with the CEO referred to in the last paragraph, this process was much more in the nature of confirming that none of these people had a subjective view which was in conflict with the view independently formed by Mr Thomas, rather than a means by which the view of Mr Thomas was formed. 142 Given the process which preceded its preparation and the way that the Matrix was prepared, as I have explained above, Mr Thomas genuinely and independently formed the relative assessment of Mr Leahey's ranking within CSG based on his discussions with Mr Leahey, his understanding of the financial performance (predominantly provided to him by Mr Ramsay) and the fact that the assessment was not the subject of any disagreement by the others who reviewed it, prior to it being presented to the Board. Although it is correct in one sense to say that the ranking was collaborative, in the sense that it had been discussed and agreed prior to being provided to the Board, it was ultimately a product of the work and views of Mr Thomas and the subjective, relative ranking by Mr Thomas was ultimately the reason, as I have explained, why Mr Thomas believed that Mr Leahey was expendable.

Conclusion on Reasons for Termination 143 It will already be evident that I reject the submission of CSG that the genuineness of the reasons given for the termination "cannot be doubted". This is because I have already concluded that CSG opportunistically fastened onto the Brisbane Incident as a partial justification for dismissal. 144 Rather than there being the three reasons as specified in the Termination Letter, as I have explained, I consider the reason, and the only operative reason, for the dismissal was that Mr Thomas considered that Mr Leahey was not, in a relative sense, a valuable employee following the programme of interviews and enquiries that he undertook, and the finalisation of the Matrix. 145 It was a month later the Brisbane Incident occurred. Subjectively, Mr Thomas considered the Brisbane Incident to be worthy of investigation and, as I have already found at [95]-[98] above, he regarded Mr Leahey's behaviour as being inappropriate but not so egregious as to prevent Mr Leahey from having a future association with CSG. I have little doubt that but for the view held by Mr Thomas as to Mr Leahey lacking significant worth to CSG, the Brisbane Incident would have been cause for no more than a quiet word or a warning to Mr Leahey. Indeed, if Mr Leahey had been at the other end of the "bench strength" analysis, I do not believe it unduly cynical to imagine that CSG may have been more willing to accept his side of the story as to what happened. 146 Putting to one side the speculation of counterfactuals, the perception of Mr Leahey by Mr Thomas was why the Brisbane Incident was used as the catalyst to bring matters to a head. This was the reason for the Exit Discussion to which I have already made reference at [71]-[78] above. The content of this discussion is entirely consistent with a concerted effort to move on someone regarded as having peaked and been over-promoted, while seeking to retain his contacts and skills as a master agent. This is what happened. 147 Little point of it was made in submissions, but before turning to other topics I wish to record a further matter which I have taken into account in assessing the evidence of Mr Thomas. This matter is the representations that were made to Mr Leahey as to the legal effect of the LTI Plan, in the context of seeking to procure his agreement to some form of release document, when some of those representations were less than accurate. 148 I will return to the LTI Plan in more detail and set out relevant clauses below, but it will be recalled, for example, that it was said by Mr Thomas that the Board had no discretion (see [71(c), (f)] above) when, in truth, the Board had an absolute discretion in allowing someone leaving in the circumstances discussed with Mr Leahey (indeed even where a participant was a Bad Leaver) to retain Performance Rights: see LTI Plan cl 7.2 (Exhibit B, page 97). 149 Similarly, Mr Thomas was correct to note (see [71(h)] above) that it was always open to CSG to dismiss Mr Leahey, pursuant to cl 13.1 of the Employment Agreement, on four weeks' notice; it was quite wrong, however, to suggest that a termination because of a loss of confidence because of a failure to meet expectations would meet the criteria of Bad Leaver in cl 1.1 of the LTI Plan - which was the clear substance of what was communicated to Mr Leahey. 150 Mr Leahey has every reason to consider that he was treated poorly during the course of the Exit Discussion. Although that does not, of itself, ground any cause of action as pleaded, it does mean that the actions of CSG, through Mr Thomas, are to be judged in the context of a recognition that Mr Thomas was prepared to make somewhat cynical use of the Brisbane Incident as a catalyst to seek to put in place a 'neat' solution to what was considered to be Mr Leahey's suboptimal performance. 151 I should note that it was never put to Mr Thomas (or Mr Ramsay, for that matter) that any false representations as to the effect of the LTI Plan were made by Mr Thomas in a calculated or deliberately false way and, in these circumstances, I do not find that this was the case.

Issue 3: Has CSG proved no prohibited reason? 152 Having made findings as to the reason why Mr Leahey was terminated, that Mr Thomas made the decision, and the extent of involvement of others, I now turn to the distinct question of whether the reason for the decision to terminate was a reason prohibited by s 340(1) of the FWA. 153 It will be recalled that the case finally put was that the termination of Mr Leahey's employment was because, or partly because, Mr Leahey: (a) had a workplace right (s 340(1)(a)(i)), that is, the Redundancy Workplace Right; and/or (b) made a complaint or enquiry in relation to his employment (s 341(1)(c)) being the STI Workplace Right and in doing so exercised a workplace right (s 340(1)(a)(ii)). 154 It is convenient to deal with both these aspects of the adverse action case separately but before doing so it is appropriate to make some general remarks about this part of the case. 155 Subsection 340(1) of the FWA provides: A person must not take adverse action against another person: (a) because the other person: (i) has a workplace right; or (ii) has, or has not, exercised a workplace right; or (iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or (b) to prevent the exercise of a workplace right by the other person. 156 It is trite that three matters must be established before a person will be held to have engaged in contravening conduct. 157 First, the person has taken "adverse action against another person". This is not in dispute. The expression is defined in a table contained in s 342(1) of the FWA which identifies, relevantly for present purposes, that the relevant person who must take the adverse action is "an employer", and that the person against whom the employer takes the adverse action must be "an employee"; and the employer takes "adverse action" if the employer, among other things, "dismisses the employee". 158 The second matter that must be established is that the employee against whom the employer has taken adverse action has, among other things, a "workplace right", or has exercised or not exercised such a right, or proposes to or proposes not to, exercise such a right. Section 341(1) provides a person has a "workplace right" if, among other things, the person "is entitled to the benefit of" a "workplace law". The expression "workplace law" is defined in s 12 of the FWA to mean, among other things, "any . . . law of the Commonwealth, a State or a Territory that regulates the relationships between employers and employees (including by dealing with occupational health and safety matters)". A person also has a "workplace right" if, among other things, the person, being an employee, "is able to make a complaint…in relation to his or her employment". I will return to the concept of a 'complaint' below. 159 The third matter, of signal importance here, is that the employer took the adverse action for a proscribed reason, or for reasons that included a proscribed reason: (see [85] above for the discussion of s 360). Further, where the particular reason is one of a number of reasons for which the adverse action is taken, the particular reason must be a "substantial and operative factor" as to constitute a "reason", potentially amongst many reasons", or must be an "operative or immediate reason for the action": see Barclay at 542 [127] per Gummow and Hayne JJ; 544 [140] per Heydon J. Importantly, for present purposes, the need to there to be a connexion between the reason or reasons as found and the adverse action arises from the presence of the word "because" in s 340(1) of the FWA which prohibits a person from taking adverse action "because" a person has a "workplace right", or because the person has, has not, proposes to exercise, or proposes not to exercise, such a right.

Redundancy Workplace Right Case 160 The way in which Mr Leahey puts his case is that the reasons for termination were "a device to avoid a redundancy payment". Section 119 of the FWA relevantly provides that an employee is entitled to be paid redundancy pay by the employer if the employment is terminated at the initiative of the employer because the employer no longer requires the job done by the employee to be done by anyone. Mr Leahey's case is that this entitlement to a benefit under a workplace law was a workplace right and that the termination taken "because" Mr Leahey had this workplace right constituted adverse action. 161 Although there was evidence that there was a proposal to make the position of Mr Leahey redundant and that the regional general manager of Victoria commenced acting in Mr Leahey's role following his termination and still does so today, my finding is that Mr Leahey's role has not been made redundant. There was relevantly unchallenged evidence about the fact that efforts have continued to find a permanent replacement for Mr Leahey although those efforts have not, as yet, come to fruition. 162 Although the evidence given as to these apparently less than vigorous efforts to replace Mr Leahey was given at a very high level of generality, I consider, on balance, that I should accept it. 163 It follows that there was no finalised plan to make Mr Leahey redundant at the time of his termination. I am conscious, of course, that adverse action could have been taken in anticipation of any such a plan being put in place in the future (and it was common ground that there was such a consideration). Irrespective of the correctness of my factual finding about no redundancy plan actually being put in place, the problem with this aspect of the adverse action case follows from the lack of any causal connexion at all between the existence of any such existing or contemplated plan and what I have found to be the reason why Mr Leahey's employment was terminated. CSG wanted Mr Leahey to move on from being an employee. As CSG compellingly submitted, the relatively modest amount of money that would be required to be paid as a redundancy payment had nothing whatsoever to do with the termination taking place when it did and how it did. The Brisbane Incident brought matters to a head, but, as I have explained, the decision to terminate was informed by a broader assessment by Mr Thomas of Mr Leahey's value to CSG. It follows that CSG has proven that no device was adopted to terminate Mr Leahey at the time or in the way CSG did in order to avoid payment of redundancy payments or because Mr Leahey had an entitlement to redundancy payments.

STI Workplace Right Case 164 Mr Leahey specified how he identified the complaints and enquiries that he made about his remuneration or his STI payment as follows: (a) during the September 2015 Meeting, Mr Leahey enquired about an increase to his base salary for managing South Australia and for payment of the FY2015 STI, and details in relation to the FY2016 STI Scorecard (see [34] above); (b) on 27 October 2015 Mr Leahey complained or enquired about his remuneration (see [38] above); (c) on 3 November 2015 Mr Leahey sent an email to both Mr Ramsay and Mr Thomas requesting payment of his FY2015 STI (see [43] above); (d) on 7 December 2015 Mr Leahey sent an email to Mr Thomas in respect of amounts Mr Leahey believed were owed to him; (e) on 29 March 2016 Mr Leahey sent an email to Mr Ramsay, Mr Thomas and Ms Kerin requesting details about his FY2016 STI (see [56] above); (f) on 16 May 2016 Mr Leahey telephoned Mr Ramsay making an enquiry as to what "no bonus accrual" meant in the context on his FY2016 STI (see [60] above). 165 A person also has a "workplace right" if, among other things, the person, being an employee, "is able to make a complaint . . . in relation to his or her employment". The ordinary meaning of the word "complaint" is a statement expressing a grievance or a finding of fault; and an expression of grievance need not be factually correct, substantiated or ultimately made out in order to constitute a complaint within the meaning of s 341(1)(c)(ii) of the FWA: see Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271; (2014) 314 ALR 346 at 347 [600] per Dodds-Streeton J. 166 I accept that Mr Leahey made complaints or enquiries about his remuneration and his entitlement to an STI payment. The difficulty is, as I have found, that I do not believe that the making of those complaints or enquiries was in any way causally connected to the overall subjective assessment made by Mr Thomas as to the relative worth of Mr Leahey to CSG. The flaw in the adverse action case is that CSG has established that the termination was not "because" of the matters which are said by Mr Leahey to constitute proscribed reasons. In making this finding, I am conscious of the need for me to have a reasonable satisfaction that CSG has made out its case in this regard on the whole of the evidence (as explained in Section D above), including the necessity for CSG to displace the hypothesis based on the chronology which, as Mr Leahey asserts, is at the very least consistent with adverse action being taken for a prohibited reason. 167 I accept that Mr Thomas was not actuated by a proscribed purpose in assessing Mr Leahey, and I further accept (as I have explained above at [137]-[142] above) that Mr Thomas did not adopt the views of any other person who had such a proscribed purpose. 168 Despite: (a) rejecting those parts of the evidence of Mr Thomas and Mr Ramsay which asserted that the Termination Letter was complete and accurate; (b) rejecting parts of the evidence of Mr Thomas as to the involvement of Mr Ramsay as a joint decision-maker; and (c) my misgivings as to the opportunistic and troubling aspects of CSG's behaviour towards Mr Leahey which I have described, on an assessment of the whole of the evidence, I have reached a level of satisfaction, in accordance with s 140(1) of the Evidence Act, that CSG has proved upon the balance of probabilities that the termination was for a reason other than the exercise by Mr Leahey of the workplace rights that have been identified. 169 It follows that the adverse action case must fail.

Issue 4: The FY2015 STI and FY2016 STI 170 Given it was argued that a condition of Mr Leahey's employment was that he was eligible to be paid an STI "upon the achievement of specified [KPIs] within a financial year", the questions to be determined are: (a) Was Mr Leahey paid the correct amount of the FY2015 STI? (b) Was an amount of FY2016 STI payable to Mr Leahey and, if so, by what means is it to be calculated? 171 I will deal with each STI for FY2015 and FY2016 separately below. Before doing so, it is useful to say something about the obligation to pay the STI generally.

The STI Generally 172 CSG admitted that it was a condition of Mr Leahey's employment that he was eligible to be paid an STI upon the achievement of specified KPIs within a financial year. Notwithstanding this admission, CSG, in its final submissions, put in dispute that: (a) the KPIs must be agreed; (b) the KPIs must be in a particular form, that is, there must be a Scorecard; (c) the KPIs must be measured in some particular way; (d) CSG must consult (in good faith or otherwise) with Mr Leahey before specifying the KPIs; and (e) a sliding scale is to be used when measuring the financial KPIs. 173 Precisely how the Employment Agreement could provide that it was a term of Mr Leahey's employment that he was eligible to be paid an STI upon the achievement of specified KPIs and yet there be no obligation on CSG to specify or provide those KPIs to Mr Leahey, was never explained. No doubt this was because a construction of the Employment Agreement that provided such a result would not only be counterintuitive but would flout business commonsense. 174 As I briefly touched upon at [52] above, the rights and liabilities of CSG and Mr Leahey under the Employment Agreement are to be determined objectively, by reference to a textual and well as a contextual analysis (that is, by reference to the entire text of the Employment Agreement as well as any document referred to in its text) and commercial purpose: see Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37; (2015) 256 CLR 104 at 116-117 [46]-[52] per French CJ, Nettle and Gordon JJ; at 131-133 [107]-[113] per Kiefel and Keane JJ; at 134-135 [119]-[121] per Bell and Gageler JJ, and the observations of Kiefel, Bell and Gordon JJ in Ecosse at 491 [16]-[17], citing Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640. 175 In conducting this process of construction, the Court is entitled to approach the task on the basis that the parties intended to produce a contract that makes commercial sense, that is, a contract consistent with the commercial object of the agreement: see Woodside Energy at 656-657 [35] per French CJ, Hayne, Crennan and Kiefel JJ. 176 At [28]-[29] above, I set out the terms of Mr Leahey's remuneration, and explained how the STI Schedule, which comprised part of the Employment Agreement, provided for "draft KPIs" which were prepared for the purposes of the FY2014 year. 177 Central to the bargain was the provision of remuneration to Mr Leahey in exchange for his promises to CSG under the Employment Agreement, including that if Mr Leahey met his targets, he was to obtain a "STI of $250,000pa in accordance with agreed KPIs which will be based on financial targets and non-financial targets as detailed in KPI document attached (draft)". It will also be recalled (from [39] above) that the STI Schedule had provided, in terms, that so-called "bonus entitlements will be paid after the annual declaration of the financial results (late August)". 178 It followed that the agreement was that Mr Leahey would be paid an amount of STI on account during the course of a financial year by reference to his targets identified in a Scorecard (similar to the draft which comprised the STI Schedule) and that at the end of the financial year, following assessment of his performance, the necessary adjustments would be made in order to ensure that he had been paid the correct amount of STI for the financial year. Although it is not legitimate to use anything which the parties did after the Employment Agreement was made as an aid in the construction of the Employment Agreement (Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at 582 [35] per Gummow, Hayne and Kiefel JJ), the parties informed me that this is what occurred in relation to FY2014 and that Mr Leahey was also paid amounts on account of his FY2015 STI. It was obscure on the evidence as to whether amounts were paid on account by reference to the percentage of EBITDA achieved until the end of a given month or as a pre-payment of the full STI amount (see T209-10) and as to how "these were reconciled on an interim basis every quarter", as Mr Leahey noted in his evidence. This level of detail is unnecessary for the purpose of resolving the current controversy. 179 What is critical is that as to the years beyond FY2014, it is beyond doubt, as an incident of either: (a) the admitted express term that Mr Leahey was eligible to be paid an STI upon the achievement of specified KPIs within a financial year; and/or (b) the duty to co-operate (being the doing of such acts which are necessary by one of the parties to enable the other to have the benefit of the bargain: see Butt v M'Donald (1896) 7 QLJ 68 at 70-71 per Griffith CJ, Cooper and Power JJ concurring), that CSG was obliged to provide to Mr Leahey, in a timely way, a Scorecard (which was to be discussed with him, settled upon and which then was the yardstick against which his performance was to be judged for the purposes of the STI for the relevant year). 180 There was some arid debate as to whether any obligation to provide and reasonably agree a Scorecard must be an implied term of the Employment Agreement. The failure of Mr Leahey to articulate such an argument was the subject of criticism by CSG in its final submissions. However, I consider the better view is that resort to implication of an ad hoc implied term is unnecessary and the obligation arises as I have explained in [179] above. As I have previously noted, in Avenia v Railway & Transport Health Fund Ltd [2017] FCA 859 at [142]-[143], in not dissimilar circumstances: The Full Court in University of Western Australia v Gray [2009] FCAFC 116; (2009) 179 FCR 346 at [135], quoting Society of Lloyd's v Clementson [1995] CLC 117 at 131, observed that contractual terms implied in fact (of the kind contended for by the parties in the present case) are "individualised gap fillers, depending on the terms and circumstances of a particular contract". Gageler J in Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 at [113] made the same point, drawing the distinction between contractual terms implied in law (which can be seen as incidents attached to standardised contractual relationships, operating as "default rules") and terms implied in fact which should only be implied where the well-known conditions set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] UKPCHCA 1; (1977) 180 CLR 266 are met, including that the term is "necessary" to give "efficacy" to the particular contract, and that the term to be implied is not inconsistent with any express term of the contract. Often parties turn to ad hoc implied terms where such an implication is not actually necessary. It is beyond the scope of this judgment to debate the difficult questions surrounding where the context or framework within which the contract is interpreted finishes and implication of a term begins and, in particular, whether notions such as a duty to co-operate can be seen as an informing or organising principle around a formed bargain, not as separate and distinct implied terms: see Chief Justice Allsop's extra-curial observations in "Conscience, Fair-dealing and Commerce - Parliaments and the Courts" (FCA) [2015] Federal Judicial Scholarship 17 at [34] … As will be seen, it suffices for present purposes to note that this is an example of a case where a proper construction of the express terms of the contract by reference to context, including the nature of the employment relationship and the duty to co-operate, demonstrates there are no real 'gaps' and hence there is no need for an ad hoc expedient to fill perceived but illusory voids. 181 This is only part of the necessary contractual analysis. The real difficulty comes in resolving the confusing and potentially inconsistent aspects of the Offer Letter, Item 8 of Schedule 1 to the Employment Agreement and the components of the STI Schedule. Both parties agreed that this was a challenging exercise, but the Court must do what it can, by reference to the entire text of the Employment Agreement and its commercial purpose, to ascertain objectively what the parties meant by their bargain when the Employment Agreement was formed. 182 The first thing that should be noted is that three documents which comprise the STI Schedule are difficult to reconcile. As Item 8 of Schedule 1 made plain, attached to the body of the Employment Agreement were "draft KPIs". The first document that comprised the STI Schedule (Exhibit B, page 75), which is partly illegible, but I am told is headed "Key Performance Indicators: 2013-2014", was directed solely to three 'measures', all of which relate to so-called 'Divisional' rather than 'Corporate' targets (Document One). It was common ground that the targets to be given to Mr Leahey were to be a Scorecard comprising a Corporate scorecard and a Divisional scorecard, the nature of which is set out at [29] above. 183 Consistently with the Offer Letter, Item 8 of Schedule 1, and the second document that comprised the STI Schedule (Exhibit B, page 76) (Document Two), Document One provided for an STI of $250,000 for Mr Leahey. 184 I do not think one can make much of Document One other than confirming that the STI was for an amount of $250,000 and its use as an illustration of a type of draft document that could be used for calculating an STI. Given that the parties agreed that any STI was to be calculated by reference to both Corporate and Divisional targets, it appears that Document Two, which comprises both Corporate and Divisional targets, was intended by the parties to be the sort of draft Scorecard that was to be discussed and then provided to Mr Leahey by CSG and against which his entitlement to an STI was to be assessed. Although it post-dates the Employment Agreement, there is no suggestion that the summary given by Mr Ramsay of the remuneration structure following the November 2015 Meeting was in any way fundamentally inconsistent with the terms of the Employment Agreement, nor was there any suggestion (leaving aside the precise splits between Corporate and Divisional performance) that it did not reflect the basic mutual understanding at the time of entry into the Employment Agreement. It will be recalled this document referred to the "STI $250,000 pa split (20% company performance, 80% Divisional performance)" and how the "STI is designed to reward outperformance in the short term with a heavy weighting on individual contribution" (see [44] above). 185 It follows that the words upon which Counsel for Mr Leahey placed much emphasis in Document One, which related to the EBITDA target of $3.4m, that the "[p]ayment for [sic] will be calculated and paid based on % of budget reached at the end of the year and is uncapped" do not have any direct textual application. It is unnecessary to reach a concluded view but I suspect that those words are a reference to the notion that if Document One was used (which it was not), percentage performance against this first, financial measure could be used to buttress underperformance in percentage terms in the two non-financial measures for the purpose of reaching a total percentage figure. 186 The document which is the third page of the STI Schedule (Exhibit B, page 77) was not the subject of any attention in submissions. It contemplates a "Divisional (Additional) Incentive". By 'additional', the effect is that this is a bonus over and above the payment of STI when there has been exceptional performance in excess of $500,000 over target. Although it is again unnecessary to determine the point, this seems to me to be a discretionary bonus and its existence in the Employment Agreement has some contextual relevance. First, it supports the notion (consistent with textual indications) that the STI was capped at $250,000 - this is because this additional bonus provided for someone like Mr Leahey a reward, over and above the fixed STI, in the event that his performance was sufficiently over target that it deserved further recognition. Secondly, the fact that any such an additional bonus was to be paid in August each year, upon declaration of financial results, is also consistent with the notion that all relevant targets were to be set timeously and that finalisation of the STI would occur promptly at the conclusion of the relevant financial year. The reason is obvious: it would flout business commonsense to be paying a bonus at a time when there was a lack of clarity as to how much had already been required to be paid by way of contractual remuneration. 187 The further matter which is less than pellucid from the Employment Agreement is whether the STI was payable in part (or proportionally) in the event that some or all of the targets (on a Corporate or on a Divisional basis) were not met. As it turned out in final submissions, the case of Mr Leahey was refined to suggest that it applied to Divisional performance and that "scaling would only apply in respect of financial, but we say that's not limited to EBITDA, because the financial targets changed from solely EBITDA to both revenue and EBITDA" (T 601). 188 This scaling argument has real significance as Mr Leahey was paid his STI in advance (apparently unlike other employees), and also has significance for the calculation of his entitlement for the STI in dispute in FY2015 and FY2016. 189 Document Two, when referring to the category of the Divisional financial target, being $3.855 million (with a weighting of 70% of the Divisional performance and a KPI Value of $122,500) described this component as "[p]aid monthly at weighting % on actual region EBITDA". As noted above, this reflected similar wording in Document One, when referring to the Corporate financial category, being "[p]rofit calculated as a % achieved on a year to date basis". 190 The submission of Mr Leahey is that these references in Document One and Document Two are indications that "the contract is clear that scaling does apply" (T 597). It was suggested that another construction, which did not allow for scaling but was 'all or nothing' for financial targets, was commercially absurd. Given the fact a payment was made on account, Mr Mahendra submitted (T 598-9): …it would be nonsensical to then say, "Well, at the end of the year, you didn't actually achieve 100 per cent. Therefore, we can recover that money back from you." That's simply not how an employment relationship would work. … It simply says "STI of 250,000", and we say that makes sense, because you're getting paid a base salary to do a certain role at $250,000, and then, as you - you're achieving sales - and let's face it. These guys are salespeople. You're - the STI is effectively a commission based on what you're achieving…[a]nd that makes perfect sense. It's not as though you're going to get to, let's say, 95 per cent of your EBITDA target, and the employer can - is going to turn around and say, "Well, actually, we're not going to pay you two hundred and - a quarter of a million dollars." 191 The position of CSG, not surprisingly, was the obverse: that it would be commercially absurd for a regional general manager in the position of Mr Leahey to "still get an STI payment of 10 per cent, even though, on any view of performance, achieving 10 per cent of your EBITDA goal is something of a bust" (T 600). More generally, the position of CSG as to the provisions relied upon by Mr Leahey to support the scaling contention, is best summarised in the following exchange (T 593-4): MR FREDERICKS: …we say that the expression: Profit calculated as a percentage achieved on a year-to-date basis - is actually similarly expressed to - has a similar meaning to paid monthly, and I will leap ahead, your Honour, to where I'm going with all of this. The evidence was that, up until the end of the 2015 financial year, Mr Leahey was paid his STI in advance. So, while the STIs are normally payable yearly, Mr Leahey was paid in advance, effectively on account or on credit, however you want to look at it. We say that's what those references to paid monthly and weighting on [Document Two] and the reference to "achieved as a year-to-date basis" means on [Document One]. It's just, in determining how Mr Leahey is to be paid monthly, you have a look at how he's tracking against his target for EBITDA after that month. It's not a general provision that, at the end of the year, when you're determining the final entitlement, you put some scaling approach in, and I appreciate this is later post-contractual conduct, but the evidence… HIS HONOUR: Don't mention it then, because it's…just going to distract me and be irrelevant. MR FREDERICKS: Well, your Honour, that's what we say and, again, that's a challenge we have this being put now as a pure contractual claim, but dealing with it as best I can, we say that's how - the evidence is he was paid monthly and we say that's how those sort of year-to-date or percentage clauses… … HIS HONOUR: So put bluntly, you say the words that otherwise look like scaling words, "profit calculated as a percentage achieved on a year-to-date basis" when you try to reconcile them with the words of [Document Two] "paid monthly at weighting percentage on actual region EBITDA", when you read those things together, is directed to the question of how one goes about calculating monthly remuneration on account of STI rather than a question of the ultimate payment of the STI? MR FREDERICKS: That's it, your Honour. 192 The one matter upon which the parties agree is that the terms of the Employment Agreement, as they relate to the calculation of the STI, are unclear. It does not seem to me that the submissions of either party capture the terms of the bargain, objectively ascertained. Part of the reason seems to be the legacy of the parties taking into account post-contractual conduct, which conduct was the focus of much attention at the commencement of the hearing. 193 The overall remuneration package of Mr Leahey had two main components. The first was a "base salary" which represented half of his remuneration (leaving aside superannuation, the commercial worth of the LTI and any Document Three discretionary, additional bonus). The second related to an STI payment for a capped sum of $250,000; in the case of Mr Leahey, this was to be paid in advance. At the time of the Employment Agreement, the intention was that the money to be paid on account of STI would be struck by reference to how Mr Leahey's performance was travelling by reference to his set EBITDA target (which was the only Divisional financial target at that time). 194 The commercial purpose of the remuneration structure having these two components is again obvious: it was to give Mr Leahey an incentive and to align an important part of his total remuneration package with the performance of CSG on both an Corporate basis and by reference to Divisional performance - with a greater weighting (70% or so) to be given to regional, Divisional performance over which Mr Leahey, as a regional general manager, had some measure of control. 195 CSG did not seriously contend that if an employee achieved 95% of the EBITDA target, there would be no value to be attributed to this target in calculating the STI payment. Although this concession was made in the context of inappropriate use of post-contractual conduct as an aid to construction, no principled construction was put forward that the commercial effect of the Employment Agreement would be to deny an employee any payment representing this component of the STI if an EBITDA target had just been missed. In the case of an agreement which provided that payment was to be made in advance (as was the case with the Employment Agreement) such a construction, which would necessarily involve clawbacks, does seem somewhat unlikely. This seems to me to be a pointer towards the fact that the Employment Agreement contemplated some sliding scale when it came to reaching the EBITDA target on a Divisional level. 196 Moreover, the case of CSG was that an amount of $140,450 was properly payable (pursuant to the terms of the Employment Agreement) to Mr Leahey on account of his FY2015 STI. The amount actually paid on account of the FY2015 STI to Mr Leahey was $183,337, and hence it was said, on a number of occasions, that Mr Leahey had been overpaid an amount of almost $43,000. This argument, of course, necessarily accepted that a pro rata amount of STI had been properly payable to Mr Leahey in circumstances where he had met other targets but had not fully reached his EBITDA target. I mention this because it is not the case that CSG suggests that all targets - financial and non-financial, Corporate and Divisional - needed to be met in order for there to be payment of any amount by way of STI. A sliding component for the Divisional financial target seems to me more likely in circumstances where the payment of the whole STI is not an 'all or nothing' proposition, in the sense that it was contingent on all Corporate and Divisional targets being met. 197 Although the matter is not clear cut, I consider the better view is that it was agreed, as part of the Employment Agreement, that the way in which the STI was to be calculated was that proportional achievement of the EBITDA target specified in the draft KPIs would be combined with performance against any other non-financial Divisional targets and any Corporate targets, in order to achieve a final STI figure. It seems to me commercially plausible that this be the case given that the Divisional financial target was treated differently from all other targets, as it was the only target which was to be monitored on a monthly basis (for the purposes of paying STI in advance) and was the key performance measure for a person in a position such as that occupied by Mr Leahey - his primary worth to CSG was how much revenue he generated. 198 Additionally, for what seem to me to be powerful textual reasons, Mr Leahey was not entitled to be paid an amount of STI in excess of $250,000 and this represented a cap on any amount that would be payable. This is reinforced contextually, by reason of the fact that the Employment Agreement contemplated that in cases of exceptional performance, it would be possible for him to obtain a further purely discretionary bonus (as noted in Document Three). 199 It follows from the above, doing the best one can to make commercial sense of the entirety (that is, the text, context and purpose) of the Employment Agreement, that the key contractual features of the STI arrangement were as follows: (a) first, it was a condition of Mr Leahey's employment that he was eligible to be paid an STI; (b) secondly, the STI would be for a fixed sum of $250,000 per annum; (c) thirdly, it would be payable in accordance with 'agreed' KPIs which would be based on financial targets and non-financial targets as detailed in a KPI document (in a form similar but not necessarily identical to Document Two, being a Corporate and Divisional scorecard); (d) fourthly, as an incident of the express terms of the Employment Agreement and/or as part of the duty on CSG to do all such things necessary to enable Mr Leahey to have the benefit of the Employment Agreement and, as a corollary to this obligation, to refrain from doing anything that would deprive Mr Leahey of the benefit of the contract (see Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 607-608 per Mason J; Park v Brothers [2005] HCA 73; (2005) 80 ALJR 317 at 325 [38]; Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126 at 142 [36] per Gleeson CJ, Gummow, Kirby and Hayne JJ), CSG was required to: (i) provide Mr Leahey with targets in the form of a draft Scorecard; (ii) discuss, in good faith, the proposed Divisional 'agreed KPIs' and to thereafter set them reasonably and with promptitude; (although it is unnecessary to decide for the purposes of the current dispute, and was not addressed by the parties, I incline to the view that if Divisional targets could not be 'agreed', then CSG was entitled to set them provided it had taken into account what had been put to CSG by Mr Leahey, and CSG acted reasonably in doing so; again what is meant by 'reasonable' in this context is unnecessary to determine: see Avenia at [212] to [214] for some of the large questions which may arise in relation to such "reasonableness" considerations); (iii) provide the final Scorecard in a timely way (to allow Mr Leahey to understand his targets, and to provide for monthly payments where "the target[s] detailed in the Divisional scorecard are achieved" (as provided for in Document Two)); (e) fifthly, again as part of the duty on CSG to refrain from doing anything that would deprive Mr Leahey of the benefit of the Employment Agreement, to allocate revenue for the purposes of Mr Leahey meeting his targets pursuant to the mutual understanding or rule extant at the time the Employment Agreement was entered into; that is, a regional allocation depending upon the location of the head office of the customer, providing the revenue subject only to a prior, agreed revenue split between regional general managers; (f) sixthly, a scaling applied in respect of the Divisional financial KPI (which, at the time of the draft Scorecard, being Document Two attached to the Employment Agreement, was restricted to EBITDA performance), which would allow Mr Leahey to obtain the benefit of the proportional achievement against his specified target, for the purposes of calculation of the STI. 200 Against this background, I come to the dispute as to the FY2015 STI and the FY2016 STI.

The Scope of the Argument 201 As the argument was refined in final submissions, the dispute as to what was to be paid for the FY2015 STI involves resolution of (potentially) three issues: (a) what Scorecard was to be used (Scorecard Issue); (b) whether scaling applied in respect of financial performance which would allow Mr Leahey to obtain the benefit of the proportional achievement against his specified financial target for the purposes of calculation of the STI and if such scaling went beyond only the EBITDA target and applied to revenue generally (as contended for by Mr Leahey: see [187] above) (Scaling Application Issue); (c) in the event Mr Leahey is overpaid, whether CSG is entitled, as it asserted in final submissions, to offset any overpayment against amounts it was otherwise obliged to pay Mr Leahey (Set Off Issue).

Scorecard Issue 202 The evidence of Mr Ramsay was that he had "a conversation…with [Mr Leahey] around what the STI might look like in [FY2015]" and that during the course of that conversation there was a discussion to the effect that Mr Leahey did not believe that the "splits" contained in the initial proposed Scorecard were fair (T 188). The evidence was that Mr Ramsay went away and produced a draft Scorecard document, two copies of which were reproduced in Exhibit B, at page 156 in an unmarked form, and also at page 228 (which copy contained handwritten notations). 203 The unmarked version of the draft Scorecard was apparently provided to Mr Leahey on or about 10 October 2014 (Exhibit B, page 155). What is immediately apparent is that this draft Scorecard had an ex facie deficiency in that the Divisional component had values for weighting which exceeded 100%. There was then a discussion between Mr Ramsay and Mr Leahey, which is reflected in the handwritten notations of the same draft Scorecard (Exhibit B, page 228). These notations show a correction to the weighting (reducing the weighting for each of 'Salesforce' and 'Stock' from 10% to 5%, which ensured a weighting value of all Divisional categories adding up to 100%). The notations also reflected a discussion between Mr Ramsay and Mr Leahey as to: a proposal for payment of an additional $30,000 salary for Mr Leahey's South Australian responsibilities; some aspects of the Corporate scorecard; and the amount to be attributed to the Divisional financial category of 'Revenue Split' and the Divisional non-financial category of Salesforce (and, in particular, the respective KPI Value for these two categories of Divisional performance). The discussion concluded on the basis that Mr Ramsay would get back to Mr Leahey about any increase in salary and the unresolved issue as to the appropriate KPI Value as between the Revenue Split and Salesforce KPIs. 204 Despite efforts to resolve the issue, contrary to CSG's obligations, a revised, final form of the draft Scorecard was not provided to Mr Leahey in a timely way. 205 Much later, on 16 September 2015 (that is, well after FY2015 had been completed), CSG purported to provide Mr Leahey with a different Scorecard which confirmed that the KPI value for the 'Salesforce' had been increased to $20,000 (in accordance with the earlier suggestion of Mr Leahey) but then sought to vary the Scorecard further. There was some lack of clarity in the evidence as to whether this new Scorecard was based on the initial proposed Scorecard (prepared about a year earlier) to which I made reference at [203] above, but no party suggests that this lack of clarity matters. 206 What does matter is that this unilateral action in providing a further Scorecard again reflected the misunderstanding on behalf of CSG as to its contractual obligation to take the necessary steps to provide 'agreed' KPIs in a timely way, at the beginning of FY2015, in order to allow Mr Leahey to know his targets and to have some certainty about what needed to be achieved in order for him to obtain the benefit of an important part of the Employment Agreement, being the entitlement to the FY2015 STI. 207 Despite the fact that Mr Leahey subjectively believed that the Scorecard had not been finalised in the first quarter of FY2016, as an objective matter he was entitled, as a matter of contract, to have his Scorecard finalised timeously, as I have explained. Mr Leahey was also entitled to work on the basis that CSG could not, well after the conclusion of the relevant financial year, unilaterally change the basis upon which his performance was to be assessed. 208 Mr Leahey contends that payment ought be made based on what he now apparently contends is the final Scorecard provided to him in October 2014 (which is the draft Scorecard varied to: (a) reduce the weighting attributed to Salesforce and Stock to ensure weighting did not exceed 100%; and (b) increase the KPI Value to be attributed to Salesforce, as subsequently agreed in late 2015). Mr Leahey further asserts that there is no controversy that Mr Leahey achieved: (a) 100% of his target for Salesforce (a $20,000 KPI Value); (b) 93% of his target for Revenue (a $40,000 KPI Value); and (c) 93% of his target for EBITDA (a $100,000 KPI Value). 209 It follows, axiomatically, Mr Leahey contends, that he is entitled to a payment of $150,020 in respect of the Divisional scorecard. There was no issue between the parties that Mr Leahey was entitled to a payment of $50,000 in respect of the Corporate scorecard, and hence, Mr Leahey submits, he should have received a payment of $200,050 for his FY2015 STI (which, given he had only received on account of his FY2015 STI an amount of $183,333, means that there is an amount of $16,717 owing to Mr Leahey with regard to his FY2015 STI). 210 Although it was not addressed in the submissions of either party, the legal problem with these contentions is that, on the evidence, at the time the Scorecard ought to have been finalised in accordance with CSG's obligations under the Employment Agreement, there was simply no express or implied agreement as to the two outstanding issues discussed - an increase to salary because of the South Australian responsibilities or, more relevantly for present purposes, that the Scorecard was to be varied to change the KPI Value to be attributed to Salesforce and Revenue Split. Nor did CSG take final steps to resolve these issues. As to the second of these issues, this lack of clarity is perhaps unsurprising given that CSG was labouring under the misapprehension that it was not required to fix a Scorecard until such time as it decided whether it would pay the STI. For the same reason, Mr Leahey's efforts to obtain clarity were not met with success. For completeness, I do consider that it is possible, on the evidence, to infer that there was an agreement upon (or finalisation of) the other issue discussed relevant to the STI - to reduce the weightings attributed to Salesforce and Stock to ensure that the overall weighting did not exceed 100%. 211 As I explain below in the context of the FY2016 STI, this means that Mr Leahey's remedy is damages for the loss of opportunity of achieving his targets properly set for FY2015 in accordance with the Employment Agreement, less any amount paid to him on account of this obligation. This may not make any difference in financial terms to the result for which Mr Leahey contends, but it is the principled way to approach the difficulty caused by the failure of CSG to finalise a Scorecard following on from the discussion between Mr Ramsay and Mr Leahey when issues were raised, but left unresolved, about the draft Scorecard provided in October 2014. This means that in the absence of an assessment of damages, it is not possible to answer Issue 9(a) in the way it was formulated in the Issues Document.

Scaling Application Issue 212 I have at [197]-[199] above, set out why I consider that the Divisional financial target was to be treated differently from all other targets, on the basis that it was the only target that was to be monitored on a monthly basis (for the purposes of paying STI in advance) and that it was the key performance measure for Mr Leahey. At the time of the Employment Agreement, the only Divisional financial target was identified as being an EBITDA KPI. Both Document One (although in the context of a Corporate measure) and, more relevantly, Document Two indicated that this was the financial measure or target that was to be the subject of assessment for the purpose of payment of STI in advance and was the only Divisional financial target against which Mr Leahey was assessed. By FY2015, CSG, in completing the Divisional scorecard, now identified three categories for financial performance, being Revenue, EBITDA and Revenue Split. 213 CSG had a right under the Employment Agreement (provided it did not act unreasonably - or at least did not act arbitrarily or capriciously and acted honestly and conformably with the purpose of the Employment Agreement), as time went on, to change individual targets and KPI categories after discussion with Mr Leahey in order to reflect the exigencies of its commercial objectives. It is unnecessary to determine the limits on this exercise of this right for present purposes. 214 What is clear is that CSG could not arbitrarily vary what Mr Leahey needed to do in order to obtain the benefit of meeting a properly set financial target set by a Scorecard provided to him in accordance with the Employment Agreement. Accordingly, I accept Mr Leahey's submission that although the Employment Agreement could change various financial and non-financial targets (at both a Corporate and a Divisional level), the Employment Agreement did not contemplate a fundamental difference between the way in which the financial targets of the Divisional scorecard were to be met after they had been fixed, in accordance with the Employment Agreement, in a timely way, each financial year. Accordingly, even if Divisional financial targets may change as time went on, the Employment Agreement provided that there was a sliding scale allowed in respect of the financial targets which, from time to time, comprised the Divisional scorecard as they applied to Mr Leahey. 215 It was always open to CSG, in the event that it proposed a fundamental change to the whole nature of the assessment of Mr Leahey's performance against properly set Divisional financial targets, to enter into a further agreement with Mr Leahey or vary the Employment Agreement. This was not considered, presumably because CSG was operating under the misapprehension that it was entitled to vary the payment of the STI apparently by fiat and even after the event. For reasons I have explained, this misapprehends the nature of the contractual arrangements between CSG and Mr Leahey.

Set Off Issue 216 Despite there being no pleading of any form of set off in the defence to the amended statement of claim, CSG contended in final submissions that it was entitled to "offset" any amounts that had been paid to Mr Leahey on account of STI payments, against other amounts it was obliged to pay by way of STI. In addition to it not being pleaded, the legal basis of this alleged right of set off was not articulated nor was there any attempt to discriminate between amounts owing to and owed by the first respondent and the second respondent. As it turns out, subject to the determination of the quantification of damages, the issue of set off does not arise, but in any event, on the current state of the pleading, it is difficult to understand how this "offset", as articulated in submissions, arises.

The Principled Approach 217 As by now is evident, CSG breached the Employment Agreement by its failure to comply with its obligation to finalise targets and provide the necessary KPIs in order to allow Mr Leahey to obtain the benefit of the FY2016 STI. Although the issue as framed by the parties is how one is to calculate the FY2016 STI, in truth, the underlying legal question is what, if any, damages are payable by CSG for breach of contract. 218 In approaching this issue, it is worth revisiting some basal and uncontroversial principles. Damages for breach of contract are, in effect, a substitute for performance. The goal of awarding compensation is restitutio in integrum. It follows that damages to be awarded in this case are to put Mr Leahey in the position he would have been in if the Employment Agreement had been performed properly by CSG. This necessarily entails a comparison between an actual and a counterfactual state of affairs and hence a hypothetical inquiry: see, for example, S M Waddams, "Principles of Compensation" in P Finn (ed), Essays on Damages (Law Book Co, 1992) 1, 11. 219 Of course, here the inquiry is into a past hypothetical event, being a counterfactual where CSG had provided Mr Leahey with the ability to earn an FY2016 STI by reason of CSG providing him with the means to achieve the benefit of that part of his bargain, that is, the provision and finalisation of targets and KPIs in a timely way. 220 The approach to assessment of damages for the loss of a chance to obtain a commercial benefit in the context of breach of contract was considered by the High Court in Commonwealth v Amann Aviation Pty Limited [1991] HCA 54; (1991) 174 CLR 64. The matter was again considered in Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 (although in the context of a misleading and deceptive conduct case). In Sellers, at 350, the majority (Mason CJ, Dawson, Toohey and Gaudron JJ) referred to Malec v J. C. Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 and drew a distinction, relevantly, between: (a) proof of historical facts; and (b) proof of "past hypothetical situations", and noted that if the law is to take account of hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. 221 The principled approach can be seen from a case such as Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357 where, in a not entirely dissimilar fact situation, there was a failure of an employer to set objectives and review performance for the payment of a bonus which, in contrast to the present circumstances of the STI, was discretionary. In Silverbrook, it was explained that the relevant discretion should be understood against the proper scope and content of the contract and was to be exercised honestly and conformably with the purpose of the contract. In this regard, a bonus, which was part of the overall bargain, would be assessed against set objectives and the nature of the arrangements would not allow the employer to choose arbitrarily or capriciously that it need not pay money if the set objectives were satisfied. 222 In the circumstances of Silverbrook, damages for loss of opportunity were recoverable. At [2], Allsop P (with whom Beazley JA agreed) explained: …As a matter of general principle, damages for loss of a commercial chance or opportunity will be recoverable in contract when the contract as a whole (see Chaplin v Hicks [1911] 2 KB 786) or a particular provision of a contract (see Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64) is such as to promise an opportunity or chance to obtain a benefit and, in other cases, where the loss of a business or commercial opportunity is the consequence of a breach of contract and the loss of the opportunity or chance falls within the rules of remoteness in contract. See generally J W Carter, E Peden and G J Tolhurst, Contract Law in Australia (2007, 5th Ed, LexisNexis Butterworths) at 856-858. The task is to identify and characterise what, in substance, was promised and what has been lost or denied by the breach of contract. 223 This is not, of course, a loss of chance case vexed by the uncertainties which bedevil many loss of commercial opportunity cases. There is no doubt whatsoever that if CSG had complied with its contractual obligations, an FY2016 Scorecard would have been required to be prepared , discussed and provided in a timely way. The hypothetical inquiry is directed as to whether (and to what extent) the Scorecard targets would have been met and, in particular, how Mr Leahey would have performed. Both parties assumed that this task could be assayed by a mechanical comparison between Mr Leahey's actual FY2016 performance and a hypothetical FY2016 Scorecard. Given that damages are to be assessed at a subsequent hearing, it suffices to note for present purposes that this simplistic mechanical comparison does not seem to me to be self-evidently correct. 224 Of course, returning to the issues as to the FY2015 FYI for a moment, it can be seen that the relevant past hypothetical inquiry is even more narrowly focussed, namely, how Mr Leahey would have performed in the event that the outstanding issue as to the FY2015 Scorecard had been addressed and resolved, in a timely way, in accordance with the obligation of CSG under the Employment Agreement, after the discussion between Mr Leahey and Mr Ramsay in October 2014.

CSG's Discretion Argument 225 In any event, returning to FY2016, at the hearing, the debate focussed on what would have been the Scorecard for FY2016, being a Corporate scorecard for FY2016 which set out various corporate targets, weightings and KPI values for those targets for that financial year and the Divisional scorecard for FY2016 which set out Financial and Non-Financial KPIs, indicated targets, assigned weightings and provided a value for these targets for that financial year. As I noted (at [16] above) this is the issue which the parties have asked me to determine in the expectation that they will then be able to agree damages. 226 The approach of CSG in final submissions was to contend that CSG enjoyed an "overriding discretion not to make any [FY2016 STI] payment…having regard to [CSG's] financial performance". Indeed, CSG went further and submitted that it: …[w]ould have been entitled (under the [Employment Agreement]) to have a scorecard whereby corporate financial performance was a 'gatekeeper' to payment of an STI (that is, no STI would be payable if there was a poor corporate financial performance). This is, in fact, what occurred. In the light of [CSG] not meeting their EBITDA market guidance…[Mr Leahey] would not have received an STI payment and therefore has not suffered any loss. 227 Of course, these submissions do not reflect the true nature of the Employment Agreement. This is what made the STI different from the additional discretionary bonus referred to in Document Three. It follows that the true question for determination is whether or not Mr Leahey, if he had been provided with an FY2016 Scorecard, would have been likely to achieve a financial performance in FY2016 which would have meant he was paid a maximum sum of $250,000 (or some smaller sum depending upon performance).

The Corporate scorecard 228 The evidence reveals that CSG went some way to complying with its obligations by setting a Corporate scorecard. This document at Exhibit B, page 204K, identifies various financial and non-financial targets and describes various weightings. A resolution was, it appears, passed on 14 August 2015 noting the recommendations of the 'Remuneration Committee' and approving the recommendation made by the committee to approve a Corporate scorecard, subject to a clarification that "Revenue" increases on that Scorecard related to what the Board described as "organic growth". 229 The difficulty is that it is unclear whether or not the Corporate scorecard, which was the subject of this August 2015 resolution, was maintained. In this regard, in evidence was CSG's Annual Report for the year ended 30 June 2016 (2015/16 Annual Report). Although no evidence was led as to the date that this document was lodged with the Australian Securities and Investments Commission (ASIC) or the ASX, in accordance with CSG's obligations under s 319 of the Corporations Act 2001 (Cth) and ASX Listing Rule 4.5 as a listed disclosing entity, CSG would have been required to lodge the 2015/16 Annual Report with ASIC and the ASX within three months of the end of the financial year. 230 In the 2015/16 Annual Report, there was, of course, a 'Remuneration Report'. That Remuneration Report included the following: Short -Term Incentives For 2016 the Corporate Scorecard was based on the following targets: Category Target Weighting Financial (60%) Achieve EBITDA Targets 25% Achieve revenue growth within target 10% Ensure cash targets are achieved 25% Non-Financial (40%) Successful integration of all acquisitions 15% Improve Net Promoter scoring for customer engagement 7.5% Implementation of Customer Hub across Australia & NZ 7.5% Achievement of NZ objectives 5% Board reporting 5%

To encourage and reward Management for extraordinary performance there is an overachievement attached to the EBITDA target that will result in that component being paid at the percentage of the overachievement multiplied by the KPI weighting. Divisional Scorecards are established for Group Executives and Senior Managers which are linked to business performance, for which they are directly responsible. The STI payment is based on the following percentage framework: CEO/MD & CFO: 100% Corporate Scorecard Executive General Managers: 50% Corporate Scorecard/ 50% Divisional Scorecard Senior Managers: 30% Corporate Scorecard/ 70% Divisional Scorecard. From time to time, other entitlements in addition to the STI may be provided to Group Executives to reward performance that is considered exceptional in terms of shareholder return or Company performance. These entitlements are approved at the discretion of the N&R Committee. (underlining added) 231 There was no explanation provided by CSG as to why it is that there was any difference between the August 2015 resolution and what appears to have been the final version of the Corporate scorecard set by CSG. If CSG wished to explain the difference between what apparently had been resolved in August 2015 and what was the apparent position concerning the adoption of the Corporate scorecard, it was open for it to do so. In final submissions, CSG sought to suggest that financial targets were adopted by CSG which were inconsistent with those contained in the Remuneration Report (or indeed Outlook Presentations provided to the ASX, which comprised pages 205 and 206 of Exhibit B). This seems to be suggested in aid of a further submission, relying on evidence of Mr Ramsay, to suggest that various non-financial targets set in the FY2016 Corporate scorecard were not met. Such a submission seems to me to be at odds with the contemporaneous business records of CSG released to the ASX, which, as Mr Leahey submits, indicate as follows: 4.28 ... (a) The corporate target involved the successful integration of all acquisitions. Exhibit B at Pg. 205A shows that the FY2016 priority for growth was to seek out growth opportunities for potential "bolt on" acquisitions. Pg. 254A shows that in satisfaction of this target, the Respondents successfully acquired Code Blue and a Northern Territory Canon Dealer. Pg. 340B shows that PrintSync was acquired as a "bolt-on" acquisition and that CodeBlue had performed in line with expectations. Pg. 340C shows that the target was met. (b) The customer service target was to achieve an NPS score of 38 across the internal Call Centres. Pg. 344 of Exhibit B shows that the Respondents Achieved an NPS score of 48.8. This target was met. (c) The Business Transformation Plan target was to complete the implementation of Customer Hub. Pg. 340C of Exhibit B shows that Customer Hub had been implemented and the Respondents sought to continue to develop it. (d) The New Zealand target was to achieve the New Zealand business objectives. Those are identified at Pg. 254A of Exhibit B in respect of CodeBlue. That target was met (as shown above). (e) Contrary to [4.52.5] of the Respondents' submissions there was no "strategic growth target" for FY2016 as per the Annual Report or the Respondents' Notional Scorecard. The Respondents have simply tendered a document at Pg. 204K of Exhibit B to say that this was the Corporate Scorecard for FY2016 in circumstances where that Scorecard was never communicated to the Applicant or to the market more broadly. (f) The reporting target was clearly met, there being no announcement to the market to the contrary. (uncorrected, footnotes omitted) 232 There was no attempt by CSG, by way of admissible documentary or testimonial evidence from someone with detailed knowledge of the financial and non-financial performance of CSG during FY2016, to: (a) explain the differences between the August 2015 resolution and the Corporate scorecard released to the market; and (b) refute or otherwise qualify the inferences that can otherwise be drawn as to achievement of the Corporate targets (as arise from the business records of CSG that are in evidence). This is in circumstances where these matters were peculiarly within CSG's knowledge. It is trite that if CSG chooses not to come forward to assist with such an explanation, inferences from proved facts can be drawn more safely because CSG failed to give any explanation of matters peculiarly within its corporate knowledge. It seems to me, on the evidence that was tendered, that the proper conclusion on the hypothetical inquiry in which I am engaged is that the Corporate scorecard to be adopted (and which should have been provided to Mr Leahey) is that which was represented by CSG to the market as having been adopted as a matter of fact and that I should infer, consistently with the submissions made on behalf of Mr Leahey, that the targets on that hypothetical Corporate scorecard would have been achieved (as is reflected in the actual performance of CSG during FY2016).

The Divisional scorecard 233 Of course, consistently with the Employment Agreement, and as confirmed by the 2015/16 Annual Report, as a senior manager, Mr Leahey was to be paid an STI calculated as to 70%, by reference to a Divisional scorecard that would have been prepared in or around August 2015 (for the purposes of FY2016). 234 In these circumstances, on one view, it might be thought that the best guide one has as to an appropriate Divisional scorecard which would have been prepared at around that time is an actual Scorecard prepared by CSG at that time for Mr Leahey. In this regard, it will be recalled that a purported Scorecard (said to relate to FY2015) was in fact prepared and provided to Mr Leahey on 16 September 2015 (that is, at around the time the Employment Agreement would have required CSG to complete the Scorecard for FY2016). That Scorecard provided a Divisional scorecard contribution of 80% (rather than the 70% referred to in the 2015/16 Annual Report). 235 This prospect had not been addressed in final submissions. After allowing an opportunity for further submissions, difficulties became evident in adopting this Scorecard as the relevant counterfactual. The most obvious is that it is now common ground (subject to a matter to which I will return at [240] below) that any hypothetical Scorecard provided in the first quarter of FY2016 would have reflected the then FY2016 budget and would have included the following Divisional targets: (a) a Revenue target of $28,496,866 with a 20% weighting and KPI Value of $40,000; (b) an EBITDA target of $7,650,660 with a 50% weighting and KPI Value of $100,000; and (c) a Revenue Split / Technology Sales target of $6,973,784 with a 20% weighting and a KPI Value of $40,000. 236 The further difficulty in adopting the Scorecard provided to Mr Leahey on 16 September 2015, was that it contained Revenue targets and a Revenue Split for South Australia, which was not part of Mr Leahey's responsibilities for FY2016. 237 Approaching the matter differently, there was evidence given by Mr Ramsay as to the preparation of a "draft template" of the FY2016 Scorecard. Mr Ramsay gave evidence that he prepared a notional document to "get an understanding of where [Mr Leahey's] performance finished if we included the display deals that were done out of Queensland and head office in New South Wales" (T 201). This was a document which purported to be a draft for what such a Divisional scorecard for FY2016 might look like. 238 Mr Mahendra objected to this "Notional FY2016 Scorecard including NSW and ACT only" (Exhibit B, page 354) being admitted without limitation as to its use. Mr Mahendra explained that this and other notional Scorecards were provided in the course of the proceeding and were created for the purposes of the trial. Plainly, of course, the documents were not admissible as business records, having been prepared for the purposes of the litigation. Despite this, no objection was taken to the oral evidence adduced by Mr Ramsay relating to these notional Scorecards. 239 In any event, consistently with the objection taken, and by consent, the "Notional FY2016 Scorecard including NSW and ACT only" was the subject of a s 136 limitation in that it was not to be used as evidence as to what Mr Leahey would have received. Although the speculative evidence of Mr Ramsay as to the basis upon which he considered a notional Scorecard was adduced without objection, this evidence does not seem to me to rise above ex post facto speculation as to what Mr Ramsay considered, during the course of contested litigation, to have been the type of Scorecard that he would have recommended. 240 Of immediate relevance was that this notional Scorecard suggested an additional 'Subscription' target of $916,875. I would not adopt this ex post facto additional target in circumstances where there is no basis in the evidence to satisfy me that I should conclude that such an additional target would, in the counterfactual, have been set in the first quarter of FY2016. 241 Notwithstanding that the hypothetical inquiry of the type called for involves some uncertainty, doing the best I can on the basis of the evidence adduced, it seems to me that the hypothetical Scorecard comprises the Corporate scorecard as contained in the 2015/16 Annual Report, together with a Divisional scorecard which reflects the Divisional financial targets referred to in [235] above, supplemented by a Divisional non-financial target with a 10% weighting and a KPI Value of $20,000 (which has some foundation in the evidence as being similar to the non-financial target set in the actual Scorecard provided to Mr Leahey on 16 September 2015).

Queensland deals 242 The final matter necessary to resolve in order to determine Mr Leahey's entitlement to payment of the FY2016 STI, was a submission by CSG that Mr Leahey is not entitled to have any revenue or EBITDA of any of the Queensland deals attributed to his revenue figures. This is said to be because the Queensland deals represented "a key new area of growth for [CSG], namely the Digital Display Division, and were outside of [Mr Leahey's] division, the Business Solutions Division, which was a division focused on print and not digital technologies". It was further said that CSG could make a reasonable business decision to create new growth areas for the business and allocate revenue accordingly. 243 As an alternative, CSG submitted that if any of the revenue or EBITDA of the Queensland deals is to be attributed to Mr Leahey, it is inappropriate that he be awarded more than 50% of those revenue figures. CSG accepted "that the court may find it had a protocol, within its Business Solutions Division of 'splitting' revenue and EBITDA when a deal was done by [sic] [regional general manager] in the territory of another [regional general manager]". CSG accepted that in those circumstances, revenue would be split on a 50/50 basis between the two relevant regional general managers. 244 Mr Leahey's contention is that the entire value of the Queensland deals (which he characterises as being 'New South Wales deals') ought to be counted towards his FY2016 budget. Mr Leahey took issue with the submission made on behalf of CSG that Mr Leahey's division, the Business Solutions Division, was focused on print and non-digital technologies. The decision by Mr Ramsay not to allocate the Queensland deals to Mr Leahey, it was submitted, was "clearly contrary to the common understanding between the parties and/or at arbitrary or capricious exercise of his discretion". 245 At the end of the day, for reasons I have already explained, my task is to work out what was likely to have occurred in the counterfactual world where CSG had complied with its contractual obligations. Having considered the evidence concerning the rules and the way in which revenue was to be allocated, I consider that it is more likely than not that an agreement would have been reached between Mr Leahey and the relevant regional general manager in Queensland to allocate the revenue for the Queensland deals on a 50/50 basis in accordance with what I have found was the common understanding of parties at the time the Employment Agreement was entered into. Accordingly, for the purposes of the hypothetical inquiry, the revenue figures of Mr Leahey should take into account revenue for half of the Queensland deals.

Conclusion in respect of STI 246 I have explained the principled approach to determining the entitlement of Mr Leahey to claim damages in relation to the breach of the Employment Agreement by CSG in not providing Mr Leahey, in a timely fashion, with a finalised Scorecard for the purposes of FY2015 and FY2016. In accordance with the agreement reached between the parties, it is hoped that, given these matters of principle have now been resolved, the parties can now agree on an appropriate resolution of the issues as to quantum. On any view of it, the amounts in dispute do not seem to me to justify further disputation, upon proper consideration being given by the parties to their obligations in accordance with the overarching purpose pursuant to Part VB of the FCCA.

Issues 5 & 6: Was summary dismissal justified? 247 Given what I have found in relation to Issue 1 as to what happened in relation to the Brisbane Incident, and my finding as to what CSG believed happened, the answers to Issues 5 and 6 are clear. Mr Leahey's behaviour was not, for reasons I have explained, such as to have justified summary dismissal, nor did CSG, through Mr Thomas, believe that it was behaviour that was sufficiently serious to justify dismissal without notice.

Issue 7: Is Mr Leahey entitled to the LTI Amount? 248 It is necessary to set out some of the aspects of the Rules in order to ascertain whether Mr Leahey is entitled to be paid the LTI Amount. The relevant definitions are as follows: Bad Leaver means a Participant who ceases to be an Eligible Employee in any of the following circumstances: (a) the Participant's employment or contractual relationship is terminated, or the Participant is dismissed from office, due to: (i) serious and wilful misconduct (including, without limitation, fraud and dishonesty); (ii) material breach of the terms of any contract of employment, office or services entered into by the Company (or another member of the Group) and the Participant; (iii) gross negligence; or (iv) other conduct justifying termination of employment, office or contractual relationship without notice either under the Participant's contract of employment, office or services, or at common law; (b) the Participant resigns from his or her employment or office or terminates his or her contractual relationship; or (c) the Participant is ineligible to hold his or her office for the purposes of Part 2D.6 of the Corporations Act. … Good Leaver means a Participant who ceases to be an Eligible Employee and who is not a Bad Leaver, and, to avoid doubt, includes where a Participant's employment, office or contractual relation ceases due to death, permanent incapacity, redundancy, bona fide retirement, or any other reason the Board determines in its sole and absolute discretion. … Performance Right means an option granted under these Rules (in particular, Schedule 1) to acquire one or more Shares, by transfer or allotment in the absolute discretion of the Board. 249 In addition to these definitions, the following operative provisions are relevant: 9. Miscellaneous 9.1 Rights of Participants Nothing in these Rules: (a) … (b) … (c) … (d) … (e) may be used to increase rights of compensation or damages in any action brought against a member of the Group in respect of any termination of employment, office or contractual relationship; (f) confers any legal or equitable right on an Eligible Employee whatsoever to take action against any member of the Group in respect of their employment, office or contractual relationship; or (g) confers on an Eligible Employee any rights to compensation or damages in consequence of the termination of their employment, office or contractual relationship by any member of the Group for any reason whatsoever including ceasing to have rights under the Plan as a result of such termination. … Schedule 1 - Performance Rights … 7. Forfeiture of Performance Rights 7.1 Good Leaver (a) Unless otherwise stated in the Invitation, within 20 days of the Participant becoming a Good Leaver, the Board shall issue a written notice to the Participant notifying the Participant that the following Performance Rights shall not be forfeited: (i) those Performance Rights which have vested; and (ii) those Performance Rights which the Board can determine with certainty would have satisfied the applicable Vesting Conditions notwithstanding the relevant testing period has not expired. (b) All Performance Rights held by a Participant other than those the subject of the Performance Right Retention Notice will be forfeited. (c) Subject to the Corporations Act, the Listing Rules (where applicable) and any other applicable laws and regulations, the Board may determine that some or all of the Performance Rights retained by a Good Leaver are deemed to have vested. 7.2 Bad Leaver Unless otherwise stated in the Invitation, or determined by the Board in its absolute discretion, a Performance Right held by a Participant will be forfeited immediately on the date that the Participant becomes a Bad Leaver. 250 Two issues arise between the parties in relation to the entitlement of Mr Leahey to be paid the LTI Amount. The first is whether Mr Leahey was a Bad Leaver or a Good Leaver. In this regard, it was accepted by CSG (consistently with the definitions set out above) that unless Mr Leahey was properly classified as a Bad Leaver, he must be regarded as a Good Leaver. 251 The second question (which arises only if Mr Leahey is classified as a Good Leaver and hence is prima facie entitled to the value of his vested Performance Rights), is as follows: is Mr Leahey, by reason of the terms of cl 9.1 of the Rules, prevented from seeking relief to obtain the value of the Performance Rights? 252 I will deal with each of these arguments separately.

Was Mr Leahey a Bad Leaver? 253 The contention of CSG that Mr Leahey did, by his participation in the Brisbane Incident, engage in serious and wilful misconduct or a material breach of the terms of the Employment Agreement or other contract justifying termination of employment (Disentitling Conduct) has already been rejected. This is not the end of the issue, however, because CSG alternatively submits that, notwithstanding that Mr Leahey did not actually engage Disentitling Conduct, Mr Leahey is nonetheless to be classified as a Bad Leaver, if CSG had "a reasonable basis for believing, and did in fact believe, that the [Brisbane Incident] occurred". Fundamental to this alternative submission, of course, is the notion that CSG did have a reasonable basis for believing (and did, in fact, believe) that Disentitling Conduct had occurred. 254 Of course, as by now should be apparent, the argument of CSG fails at the outset. For one thing, it was never explained by CSG who, for the purposes of this alternative argument, formed the view that the Disentitling Conduct had occurred. Reference is made throughout the Rules to various opinions and decisions being made by the Board. No evidence was led by CSG as to the opinion of the Board as to what occurred in relation to the Brisbane Incident nor did CSG seek to prove that there had been any delegation by the Board as to the formation of that opinion. Doing the best I can, I assume it is said that because Mr Thomas had the relevant view (and held it reasonably), this view could be attributed to CSG for the purposes of the Rules. The legal basis of this apparent assumption in the argument was never articulated, but, in any event, it fails on the facts. I have found that Mr Thomas did not form the bona fide view that Disentitling Conduct occurred (in the sense that he did not subjectively believe that the Brisbane Incident constituted conduct which would have been regarded as serious and wilful misconduct, a material breach of the terms of the Employment Agreement, or other conduct justifying summary termination - see [98] and [144]-[145] above). 255 Leaving aside these problems, CSG's case is not tenable because even if Mr Thomas or the Board had believed the Disentitling Conduct occurred, this is not the point. The Disentitling Conduct did not occur as a matter of objective fact and there is nothing about the definition of Bad Leaver which, as a matter of ordinary construction, suggests that the question of whether a participant is a Bad Leaver is to be determined by the subjective and attributed view of CSG rather than an objective determination as to whether or not the conduct which would give rise to an employee being classified as a Bad Leaver had, in fact, occurred. 256 Both parties relied upon Bartlett v Australia & New Zealand Banking Group Ltd [2016] NSWCA 30; (2016) 92 NSWLR 639. It is not entirely clear why. As I explained in Avenia at [205]-[208], in Bartlett, the New South Wales Court of Appeal concluded (in the circumstances of a specific contractual power) that for the employer to summarily dismiss an employee it was necessary to establish that serious misconduct had, in fact, occurred: see 648-649 [30]-[34] per Macfarlan JA. The Court also discussed, at length, an alternative argument and noted that, even if it was sufficient for the employer to dismiss the employee summarily based on the employer's opinion that the employee had committed serious misconduct, the formation of that opinion had to be reasonable (see 651-652 [49]) and, it was found that in the circumstances of the case, an inadequate investigative process and lack of procedural fairness meant that the employer did not act reasonably when forming its opinion. 257 This discussion, in the context of a different contract, is beside the point. This aspect of the case falls to be considered by reference to an orthodox reading of the definitions of the Rules. Those provisions, both textually and contextually, make it plain that the relevant Disentitling Conduct must have occurred as a matter of objective fact. 258 There is no substance in CSG contending that Mr Leahey was a Bad Leaver.

Contractual Bar on Recovery 259 Starting from the now established premise that Mr Leahey was a Good Leaver, the contention by CSG that he should nevertheless be prevented from recovering the LTI Amount might be thought to be a point not exactly dripping in merit. 260 It is fair to say that I was not assisted by the submissions of either party in relation to this point, which was only raised squarely during the course of the hearing. The position of CSG was expressed to be as follows: To put it simply, the Rules must be interpreted and applied on the basis that they mean what they say and, in particular, that nothing in the Rules confers on the [Mr Leahey] "any rights to compensation or damages in consequence of the termination of their employment…including ceasing to have rights under the Plan as a result of such termination". 261 It was said, for this reason, that even if there had been a breach of the Rules "it is not a breach which is actionable by the [Mr Leahey] or entitles him to any damages". 262 The submissions of Mr Leahey were similarly economical. They were that: …on its proper construction (and having regard to the manner in which exclusion clauses should be read [see Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82; (1986) 161 CLR 500 at 510]) all clause 9.1 of the [Rules] does is confirm that the Rules themselves do not confer any additional legal or equitable rights upon a Participant. However, that does not mean that a Participant who has been granted performance rights pursuant to (as in this case) an employment contract, invitation, letter or application that was accepted is then denied the ability to bring a cause of action when the other party to the agreement breaches the [Rules]. 263 The issue is somewhat different to that addressed by the parties. 264 The first point is to ascertain the nature of the rights of Mr Leahey and this inquiry commences with understanding the commercial context of the LTI Plan. As noted in [26] above, the 24 June 2013 letter had explained that Mr Leahey had been selected to apply for Performance Rights under the LTI Plan. These Performance Rights were said to allow him to "recognise [his] time with CSG by rewarding [him] with rights which will allow [him] to share in the growth and value of CSG and strengthen the link between [his] performance and remuneration". Hence, the LTI Plan was an integral part of the long term remuneration of Mr Leahey. As was explained by Mr Ramsay following the November 2015 Meeting (see [44] above), the 457,143 Performance Rights formed part of Mr Leahey's remuneration and the LTI "provides longer term balance to short term decisions and encourages common purpose across the executive group regarding the creation of shareholder value". 265 Of course, as is common with such schemes, the way this is achieved is by allowing participants to enjoy the benefit of any appreciation in the value of the ordinary shares in CSG traded on the ASX. The Performance Rights confer the right upon participants, subject to the Rules, to obtain shares in CSG upon exercise of their Performance Rights. Clause 6.1 of Schedule 1 of the Rules provides that within 10 business days "after the valid exercise of a Performance Right" by Mr Leahey, CSG was obliged to "issue or cause to be transferred to [Mr Leahey] the number of Shares to which [Mr Leahey] is entitled for no further consideration". Properly characterised, prior to such an exercise, Mr Leahey enjoyed a right to require due performance of the obligations of CSG under the Rules but did not have any legal or equitable interest in an ordinary share of CSG (see cl 3.1 of Schedule 1 of the Rules which provides that prior to a Performance Right being exercised in accordance with cl 5 of Schedule 1, Mr Leahey does not have any such proprietary interest). 266 Not surprisingly, given the commercial context, people leaving CSG in 'bad' circumstances are treated differently in the Rules from those leaving in 'good' circumstances, subject to an overall discretion retained by the Board to not necessarily require forfeiture of Performance Rights of a Bad Leaver. 267 Of particular relevance, cl 7.1 provides that unless otherwise stated in the invitation (not the case here), within 20 days of Mr Leahey becoming a Good Leaver, the Board shall issue a written notice to Mr Leahey notifying him that the Performance Rights which have vested "shall not be forfeited". 268 This notification has not occurred because CSG wrongfully asserted and maintained that Mr Leahey was a Bad Leaver. Moreover, there is no evidence of Mr Leahey seeking the exercise in accordance with the Rules of his vested Performance Rights (I infer for the same reason). Hence, at least so far as the evidence reveals, cl 6.1 has not been formally engaged. 269 In these circumstances one would have assumed that declaratory relief would have been the orthodox relief sought, clarifying that Mr Leahey was a Good Leaver and making plain his entitlement to exercise his Performance Rights (and/or ancillary relief compelling CSG to comply with its obligations under the Rules). This did not occur because the parties, pragmatically, reached agreement that if it was determined that Mr Leahey was a Good Leaver, Mr Leahey would be entitled to payment of the LTI Amount (being, I infer, the value of the shares as at the time that Mr Leahey would hypothetically have exercised his Performance Rights). 270 CSG's argument that the Rules prevent Mr Leahey from recovering the LTI Amount must be determined by reference to the actual legal and equitable rights of Mr Leahey to enforce the obligations of CSG pursuant to the Rules, and not by reference to the abstraction that the parties have pragmatically agreed as reflecting, by consent, the appropriate relief in the event that Mr Leahey has not forfeited his Performance Rights. The submissions of the parties did not recognise this distinction, which has caused some confusion. 271 As to the three particular clauses relied upon by CSG (which I have set out in full at [249] above), none have application so as to prevent Mr Leahey exercising his Performance Rights and obtaining the value of shares in CSG. 272 First, as to cl 9.1(e), the action brought by Mr Leahey is not a claim for damages brought against CSG "in respect of any termination of employment, office or contractual relationship". Properly analysed, the claim made by Mr Leahey is to enforce the obligations of CSG pursuant to the LTI Plan. If Mr Leahey had properly been categorised as a Good Leaver, the vested Performance Rights of Mr Leahey were not to be forfeited. 273 Secondly, as to cl 9.1(f), Mr Leahey is not, properly analysed, taking action in respect of his "employment, office or contractual relationship". What Mr Leahey seeks to do is to realise the benefit of the exercise of Performance Rights already vested in him pursuant to the terms of the Rules. It is the vesting of the Performance Rights which gives rise to his present rights under the Rules where (as I have found) those Performance Rights have not been forfeited. 274 Thirdly, as to cl 9.1(g), again, for reasons I have already explained, despite the pragmatic agreement that Mr Leahey can obtain the monetary equivalent of the value of the shares he would obtain upon exercise of the Performance Rights (in lieu of relief in the nature of specific performance), the rights of Mr Leahey are not rights to compensation or damages in consequence of the termination of employment, office or contractual relationship. Damages are not sought by reason of the fact that Mr Leahey has ceased to have rights under the LTI Plan as a result of his termination; rather, he seeks to obtain the benefit of the Performance Rights which remain by reason of the fact that he was a Good Leaver. 275 The suggestion that Mr Leahey, even though a Good Leaver, could somehow be prevented from recovering the benefit of his already vested Performance Rights would be an extraordinary result, given the importance of this part of the remuneration to the overall bargain between the parties. Although the agreement between the parties, reached in an effort to narrow issues, has framed the agreed relief in a particular way, the principled legal analysis is that Mr Leahey, a Good Leaver, is entitled to exercise his Performance Rights in accordance with the Rules. It follows (and not because of the Rules but given the subsequent agreement between the parties), that the value of these non-forfeited Performance Rights can be expressed in monetary terms and hence that Mr Leahey is entitled to the LTI Amount.

F Conclusion and Orders 276 I have determined the issues agreed by the parties as necessary to resolve the matters of principle that divide them. Plainly, Mr Leahey will be entitled to judgment in a sum to be calculated but the parties will need to determine the amount to be paid by way of FY2015 and FY2016 STI in order to determine the amount of any judgment. 277 These reasons are very lengthy. This is because the parties were unable to reach any sort of consensus as to the basic terms of their contractual relationship. It is a matter of concern that superior court litigation lasting in excess of seven days would be required to resolve a dispute of this type. It seems to me that this is a further example where a number of points of little financial consequence are run, which might not have been litigated if the parties were conducting litigation in the absence of the protection against adverse costs contained in s 570 of the FWA. As I have previously noted (see Avenia at [280]) this can have the "unintended effect of encouraging the perpetuation of litigation that would be settled in circumstances where a party was at risk of adverse costs in the usual way". 278 I do not consider it appropriate that I presently make any observations concerning the costs of the hearing. Nor do I seek that any material be filed in support of any application for costs to be made in accordance with s 570 of the FWA, given that there may be some prospect that one or other party may wish to rely on otherwise privileged communications in support of any application: see McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086; (2007) 164 FCR 591 at 598-9 [27]-[31] per Buchanan J; Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221 at 255 [166]-[168] per Tracey, Gilmour, Jagot and Beach JJ. 279 In all the circumstances, I propose to list the proceeding for a case management hearing at 10:15 am on 29 September 2017 for orders and directions to be made as to the future conduct of the proceeding. This will allow time to ascertain whether a consensus can be reached as to the orders to be made disposing the proceeding. If no consensus can be reached, it will then be necessary for me to hear further argument upon the quantification of the damages to be paid to Mr Leahey and then, following the determination of this issue, to consider the question of whether any order for costs should be made. I certify that the preceding two hundred and seventy-nine (279) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.