For Ms Sneddon
36 The case advanced for Ms Sneddon was that she was the head of an executive team which included Mr Stoneman, another shareholder, director and Proteus' deputy CEO and chief financial officer. The evidence showed that Ms Sneddon first approached Mr Marshall and the financial performance of the two entities was discussed between them, but the ongoing negotiations which ensued were almost exclusively conducted between Mr Marshall and Mr Stoneman, with Mr Marshall being assisted by his accountant, Mr Stephen Champion, whom Mr Stoneman also dealt with.
37 Mr Marshall was a sophisticated, well educated, experienced and very successful businessman. He had his accountant conduct a due diligence of Proteus. There was no evidence that in reaching an agreement with Proteus, that Mr Marshall ever relied on anything other than his accountant's advice. There was no evidence by way of positive assertion, or otherwise, that he relied on any representation made to him by anyone connected with Proteus. While there was reference in the summons to various representations, there was no claim advanced that Mr Marshall placed any reliance on those representations. Recovery of damages was dependent on factual reliance on the conduct said to be a misrepresentation. (See Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1998) 39 FCR 546.) That there was a misrepresentation relied upon, which caused a loss, was argued to be an intrinsic element of causation in a claim such as this and was fundamentally missing from the case advanced.
38 Ms Sneddon should not be made Mr Marshall's guarantor. He made an agreement which involved the sale of his business for $2.5 million, accepting a mix of cash and shares. In accepting market value of the shares, he took the risk that the value could go up or down. He assumed that risk and could not now look to Ms Sneddon to guarantee that the market value would only go up. It was also relevant that there was no claim advanced that the sale agreement was unfair and should be avoided, either in this Court or any other Court.
39 There was, in any event, no misrepresentation. The evidence showed that the UBS Warburg report had been provided to Mr Marshall by Mr Stoneman. It was prepared by an international investment bank in December 2000. There was no suggestion that it had been fraudulently or negligently prepared. At its highest, the applicant drew comparisons between the report and an opinion based report prepared by an administrator, with the benefit of hindsight, a number of years later.
40 The UBS Warburg report referred to a potential contract with Telstra. It led to a positive forecast for the company. The evidence as to that contract was not capable of leading to the conclusion, that the Telstra deal was not still on the table during the negotiations with Mr Marshall.
41 The report also addressed investor concerns, which were identified as management's ability to deliver on forecasts. It prudently identified this as a significant issue for investors, as was the state of the Australian market, with high growth rates being identified as difficult to achieve. Comparisons were drawn with comparable companies and positive conclusions were drawn. The IPO valuation was calculated as falling within the $90 million to $125 million range, after numerous limitations were identified.
42 Mr Marshall was also provided with Proteus' financial material, including actual profit and loss history of Proteus' operations, including for 1999 and 2000. The business was developing software which would enable outplacement services to be provided, largely online. It was this software which was to provide the anticipated increases in revenue dealt with in the UBS Warburg document. The projections provided by Mr Stoneman for the year ending June 2001, were based on a combination of actual unaudited results and projected result for different time frames. The figures later produced in the administrator's reports, showed some differences from actual results, but only slight ones. They could not support a conclusion that there had been any misrepresentation as to Proteus' financial position in early 2001. No evidence had been led to challenge the veracity of any of Proteus' audited accounts, which in any event, did not differ markedly from the later report to creditors.
43 It followed that any representations made about Proteus' financial position must be accepted as having been accurate at the time and could not found any misrepresentation. Those figures could not have misled Mr Marshall into making a decision to sell his business and to take up employment with Proteus. There could be no penalty for making a representation which was true. Even if it was not true, which was not conceded, but had not been relied upon, it could not found any relief.
44 As to the Telstra contract, the evidence showed it was discussed early on, but on Ms Sneddon's evidence, she had never suggested that the contract had been finalised, consistently with Mr Marshall's own evidence. The negotiations were ongoing. At some later point, Proteus was informed that it had the contract, but 48 hours later that was rescinded, news which was a distinct shock. Negotiations continued, albeit they were finally unsuccessful. Ms Sneddon's affidavit evidence was that this occurred in November 2001. In cross examination, she could not recollect precisely when this had occurred. Her recollection then was that it was in December, she could not recollect the year. It was submitted that it could not have been December 2000, given the evidence of the ongoing discussions in 2001 and other evidence. There was no evidence that the loss of the contract occurred before Mr Marshall joined Proteus.
45 When Ms Sneddon told Mr Marshall about the Telstra contract, namely that it was being negotiated and would have a big impact on the business, what she said was true. It was never a misrepresentation. That the negotiations later failed, could not make it so.
46 It followed that the information provided to Mr Marshall and his accountant, Mr Champion was accurate. Mr Champion was not called to give evidence. It must be inferred that nothing he had to say would be of assistance to Mr Marshall. Nor was any expert evidence led analysing any of the financial representations said to have been made. There was simply no cogent evidence to the effect that any false representations had been made.
47 As to Mr Marshall's complaints about not knowing what his duties were, having sold his business as a going concern to Proteus and accepting employment as the National Director of the merged business, it was submitted that they were laughable and ought to be rejected. The employment contract had been prepared by his lawyer. He never sought a statement of duties and on his evidence he was happy to sign the contract. It was ludicrous to suggest any difference in the bargaining position of these parties. His solicitors were also the author of the sale agreement. In cross examination, he agreed that he understood the effect of the agreements.
48 As to the events of February and March 2002, the evidence showed that Mr Marshall was offered retention of his salary and title and duties which dealt with the same subject matter, career transition. The Unit was to be divided in half, in a way which better suited him, relating to that aspect of his duties which he was better at.
49 This followed a stream of complaints from Mr Marshall about his administrative duties and filling in forms and adhering to Proteus' policies and procedures. The attempt to amend his duties to remove some of his management responsibilities, only met with further complaint. However, his contract required him to perform duties allocated to him by the CEO or the Board. The evidence showed that Proteus had taken steps contemplated by clause 11 of the contract, as being required, before it could be terminated, but had not terminated the contract, when repudiation was alleged.
50 It was also relevant that having not accepted the position proposed by Ms Sneddon, within six months, Mr Marshall established another business of the same kind, because, he explained of legal advice that he was no longer bound by his restraint. It would be noted that when that advice was called for, it had not been produced. By 2004, he was earning more from this business than he was earning at Proteus.
51 It followed from the evidence that it would not be concluded that the contract was unfair when it was entered in 2001. The complaints about unfairness during the term of the contract did not arise until after there was a physical merger of the two businesses, with a move in premises in September 2001, although there was some complaint that Ms Sneddon had invited clients to a cocktail function, without his knowledge. That complaint was submitted to be ludicrous, as Proteus having acquired the Workshift business at considerable cost, its CEO was certainly entitled to contact clients who were Proteus' clients, after the acquisition.
52 The evidence showed how quickly the relationship became strained thereafter, with complaints being made by Mr Marshall in these proceedings of his cruel, petty and unfair treatment. It was relevant however, that in cross examination, Mr Marshall was unable to explain many of these complaints - for example, what amounted to 'inappropriate micromanagement'. He took the view, for example, that a request by the chief financial officer to provide details of his AMEX expenses amounted to inappropriate micromanagement. How that was inappropriate was submitted to be inexplicable.
53 Similar complaints were made about the need to justify mobile phone expenses. Ms Greggery's evidence was that she had attempted to obtain such information from Mr Marshall and in cross examination, Mr Marshall agreed that it was inappropriate that Proteus had been asked to pay his wife's expenses, when she was not a Proteus employee. Other complaints were not submitted to have been established, including that made in relation to the design of the office fit out, as Mr Marshall conceded in cross examination.
54 Ms Greggery gave evidence about her concerns as to the operation of the career transition unit under Mr Marshall's direction, particularly in relation to billings and budgets, expenses and revenue. Her evidence was that reporting requirements were consistent with the structure in place before Mr Marshall's arrival and that other heads made similar reports. Mr Marshall complained that Ms Greggery described the Unit's December figures as 'disgusting', but agreed in cross examination, that they were pretty poor. Ms Sneddon described the results as the worst ever recorded. How this could be described as petty or cruel, was not apparent. The evidence did not suggest that it was being said at the time that these results were Mr Marshall's fault, but he plainly took the view that the criticism was being unfairly directed to him.
55 It was accepted that at this time, the industry had been affected by the events of September 11 and that the relationship between the parties was being affected by the failure of the Unit to meet projected budgets and by the statutory demand which Mr Marshall had made on Proteus. The evidence demonstrated it was submitted, that the financial performance of the Unit was poor and that its performance was being discussed.
56 While it was suggested in Mr Marshall's evidence that he was being excluded from meetings at this point, the evidence of Ms Greggery was that up until about 25 November, regular weekly meetings were held, some of which Mr Marshall attended and some of which he advised he could not attend. In cross examination, he agreed there were other meetings which concerned his Unit which he did attend. While he complained about being excluded from involvement in major projects, there was no evidence to support the complaint. On Ms Greggery's evidence, for example, he was involved in the major projects underway for AMP and Sunway Metcorp.
57 To the extent that complaints were made about budgets, the complaint could not properly be assessed, because the budgets had not been led in evidence. Ms Greggery gave evidence about discussions about the budgets with Mr Stoneman and Mr Marshall, when Mr Marshall was unable to provide advice as to the amount and timing of cash expected to flow into the divisions. She was not cross examined about this evidence.
58 While Mr Marshall complained about the setting of participant fee scales, Ms Greggery's evidence was that this was Mr Marshall's responsibility and that the schedules he produced were incomplete and never finalised by him. Again, she was not cross examined on this evidence. Similar complaints were made about brochures not being produced for his Unit. Ms Greggery's evidence was that Mr Marshall had the responsibility to produce them, which he never did.
59 As to administrative assistance, the evidence showed that he had such assistance for a considerable period, despite Proteus' policies that executives including Ms Sneddon attended to such tasks themselves. The evidence suggested an inability on Mr Marshall's part to adapt to his new environment. In reality, he only had to do so in the last month of his employment, given the level of administrative support he was provided till then. His evidence demonstrated his keen awareness of his position in the Proteus hierarchy and that he struggled to adapt to the flatter management structure under which Proteus operated.
60 It was submitted that problems, undoubtedly, had arisen had to be dealt with. This was done through the audit Ms Sneddon commissioned. It was submitted to be relevant that Mr Marshall had not dealt with this audit at all in his first affidavit, sworn in September 2002, in order to support his complaints of unfairness. The summons initiating these proceedings was filed some four working days after the termination of his employment. No complaint was there made about any unfairness in the audit, it was only dealt with in response to Ms Marsden's affidavit. In cross examination, Mr Marshall conceded that the audit report wasn't critical of his performance, but dealt with the performance of the Unit. It was submitted that the cross examination of Ms Marsden could only lead to the conclusion that the audit was conducted in a transparent and fair way and that its only agenda was to document how the Unit was running. It was undertaken in February 2002, after Mr Marshall had been running the Unit since the preceding July. It was critical of aspects of adherence to operating systems; failure to maintain files and records; absence of regular reports, failure to apply accounting procedures; problems with billing; failure to keep accurate information about participation numbers; participant progress; and incomplete participant records, booking and attendance records. Various programmes were not being applied and outcomes not being recorded.
61 The cross examination of Ms Marsden had failed to establish anything other than that the audit had been transparently conducted and reported. While it revealed performance sadly lacking on Mr Marshall's part in running the Unit, it did not demonstrate that he was a victim. He was a senior executive, well paid to run this Unit. He had a number of opportunities to discuss the report, which he did. He could have sought more such opportunities, but did not do so.
62 It was submitted that Ms Sneddon's evidence that in their discussion of the report Mr Marshall told her that he found his position overwhelming, would be accepted. In cross examination, Mr Marshall conceded he used that word, but on his evidence, used it to describe the need to deal with record keeping and marketing. To suggest, in the light of that evidence, that no avenues were open to Proteus to remedy the situation with which it was faced, but to continue the status quo, was submitted to be ridiculous.
63 Ms Sneddon's letter of 27 February suggested that an agreement had been reached with Mr Marshall about a new role. It was accepted that Mr Marshall immediately made clear that he had not agreed to such a change. It was submitted that what would be concluded from all of the evidence was that Mr Marshall 'did not communicate his real feelings or his feelings at all or his views and resorted to paper later'. It should be concluded, on that basis, it was argued, that what Mr Marshall was in truth complaining of in these proceedings, was that there had been a constructive dismissal and that his dismissal was unfair, a claim precluded by s 109A of the Act.
64 The evidence showed the difficult position in which Proteus was placed when Mr Marshall was demonstrably not performing in his role. While Mr Marshall claimed that the letter proposing the change in his role made him ill, so that he needed to take sick leave, in cross examination he conceded that by 8 March, he was well enough to go to work, but did not return until 18 March. Any complaints about the unfairness of sending correspondence to him before his return had no foundation in those circumstances, as did his pursuit of other correspondence, about his other financial interests at the time.
65 Complaint was made about how Mr Marshall was dealt with while away on sick leave. This leave was taken when Ms Sneddon crystallised her concerns with Mr Marshall in writing. In his evidence, Mr Marshall claimed that when he received the letter he became unwell, but in cross examination, he agreed that for some part of the time he was absent, he was not sick or unwell. He had already exhausted his sick leave entitlement, did not seek any discretionary leave, but accepted payment which he was not entitled to, for time away from work, for periods when he was not unwell and was engaging in correspondence with Proteus about his financial interests. It was submitted that complaint could not be made about the correspondence sent to him during this period, given the correspondence he was then himself pursuing, with his solicitor's assistance.
66 The warning letter sent about his performance on 15 March showed that he was being given a further opportunity to attend to his performance, as his service agreement contemplated. In cross examination, Mr Marshall agreed that he did nothing to attend to the matters raised with him. While he also accepted that it was perfectly legitimate to appraise his performance and that he was well when he returned to work on 18 March, he could give no explanation for his failure to participate in the review process Ms Sneddon then wished to pursue with him.
67 Mr Marshall insisted on his solicitors attending the review meeting. No unfairness was demonstrated by the course Proteus was pursuing. Mr Marshall's evidence demonstrated however, that his claim was in truth an unfair dismissal claim (see Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Anor (2004) 61 NSWLR 661). He had not adhered to his obligations, responsibilities or duties and had breached his duty of fidelity to Proteus, by refusing to adhere to its policies. On the evidence, it would be concluded that he had resigned.
68 In any event, it was submitted that Mr Marshall's service agreement was not unfair, the necessary focus of the proceedings (see Truelove v Sydney Water Corporation Limited (2005) 146 IR 253). Mr Marshall was happy to sign the agreement on the basis that it was fixed for three years. It contained provisions for termination prior to the expiry of the term in specified circumstances. There was a restraint and a no further claims clause, which was not sought to be varied by the relief sought in the summons. The agreement was not unfair when it was executed and did not become unfair as the result of any conduct by Ms Sneddon. Mr Marshall's list of petty complaints did not render the contract unfair. The evidence demonstrated that the complaints had no real foundation. The no further claims clause should be given effect.
69 The audit process was shown by Ms Marsden's cogent and persuasive evidence to not have been unfair to Mr Marshall. The audit report did not even mention him by name. Ms Marsden's evidence showed that Mr Marshall's complaints had no foundation.
70 It followed that no orders should be made in favour of Mr Marshall. Even if the contract was found unfair, no orders should follow under s 106(5). Orders were to be made which were 'just in the circumstances of the case'. The power is not at large (see Zahos & Anor v Industrial Relations Commission of NSW & Ors (2005) 148 IR 208).
71 The money orders sought made it clear that what was sought by way of relief was payment out of the contract for the balance of its term. Lesser amounts were sought in the alternative. It was argued that if the necessary unfairness was found, contrary to Ms Sneddon's case, the proper money order to be made was 12 weeks' notice.
72 As to that money order it was noted, however, that the applicant had led no evidence in relation to steps taken to mitigate his loss. It followed that he could not satisfy the Court that he had lost anything. The only evidence led related to earnings in the 2004 tax year, when he earned more than he would have earned in his employment with Proteus. It followed that it should be assumed that there had been no loss.
73 As to orders sought against Ms Sneddon, it was submitted that it was relevant to have regard to the agreement made between Mr Marshall and the liquidator of Proteus. If orders were made on a joint and several basis, the applicant had indicated his intention to pursue the orders only against Ms Sneddon. While Ms Sneddon could look to Proteus, in the circumstances that would require leave of the Supreme Court. It followed that justice would not result in orders of the kind proposed by Mr Marshall, especially when he had also made a deliberate decision not to proceed against another obvious respondent, Mr Stoneman. It would not be just to make Ms Sneddon solely liable for the money orders sought.
74 It was also submitted that the Court would be slow to make any order against Ms Sneddon in these circumstances and if any order was to be made, it would be carefully framed so as to ensure that her exposure was properly limited to her involvement in the unfairness established. This was particularly so, given that many of the complaints made were not advanced against her personally, indeed, even in correspondence, often her assistance was being sought by Mr Marshall. As CEO she was acting as Proteus.
75 It would also not be overlooked that no orders were sought varying the share sale agreement. The evidence established no misrepresentation as to the value of the shares. The $2 value Ms Sneddon spoke of was based on an earlier transaction and was accurate. Even if misrepresentation had been established, reliance had not.
76 In any event, the applicant's complaint was that the shares he received were worth less than $2. Even if that had been established, which it had not, the applicant would have had to show that he would have acted differently. There was no such evidence, because the matter of reliance had not been addressed. This was a critical failure in the applicant's case.
77 The applicant had agreed to take shares over cash in the bargain which he made. The risk in diminution of the value of the shares was of the applicant's design and choosing. That the shares were now, presumably worthless, could not lead to the orders sought by way of variation to the service agreement.