Paul Stephen Cummings v Crossocean Forwarding Services Pty Ltd

APPLICANT: Mr J V Murphy of counsel SOLICITORS: Szekely & Associates (Mr W Szekely) LEGAL REPRESENTATIVES: RESPONDENT: Mr J Clarke of counsel SOLICITORS: Clayton Utz Lawyers (Mr R M Walker)

JUDGMENT: - 37 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: GLYNN J 30 NOVEMBER 2001 MATTER NO. IRC 2944 OF 2000 PAUL STEPHEN CUMMINGS v CROSSOCEAN FORWARDING SERVICES PTY LTD Application under section 106 of the Industrial Relations Act 1996 JUDGMENT [2001] NSWIRComm 303

1 Paul Stephen Cummings (the applicant) has applied for relief pursuant to s 106 of the Industrial Relations Act 1996 (the Act) against Crossocean Forwarding Services Pty Ltd (the respondent) in relation to a contract of employment and/or arrangement between the applicant and the respondent. 2 The applicant claims the contract of employment and/or arrangement between the applicant and the respondent under which the applicant performed work in any industry was unfair, harsh and unconscionable and contrary to the public interest, and seeks an order declaring it void in whole or in part either from its commencement or from some other time. 3 In the alternative, the applicant seeks an order varying the contract of employment and/or arrangement, to include terms as to period of notice, continuity of employment, calculation of payments to be made on total package, redundancy, bonus and consultation in the event of restructure or reorganisation. 4 Insofar as the money claims have been particularised, the amount of $270,206 is claimed, together with uncalculated sums as to tax. 5 The applicant also seeks orders for interest and costs. 6 The background to the applicant's employment with the respondent is complicated. Set out below is the history set out in the applicant's Summons for Relief (but I note that it is subject to dispute by the respondent as to certain of the applicant's claims embodied in that history): 2. The Applicant was employed in 1992 with Asia World Holdings Pty Ltd. That employment ceased in 1993 at which time any entitlements due and owing to the Applicant were paid to him by that company. 3. In 1993 Asia World Shipping Services Pty Ltd employed the Applicant and it changed its name to Asia World Container Sales and Leasing Pty Ltd. 4. In the period 1993 to 1997, Asia World Container Sales and Leasing Pty Ltd acquired all the shares of EES Shipping (NSW) Pty Ltd. The Applicant became employed by EES Shipping (NSW) Pty Ltd in 1995 and retained all of the entitlements that he had received whilst employed by Asia World Container Sales and Leasing Pty Ltd. For all purposes, the Applicant was entitled to continuity of employment. 5. The Applicant continued as an employee of EES Shipping (NSW) Pty Ltd until 1997 when TNT International Australia Pty Ltd bought the business conducted by EES Shipping Pty Ltd and took over obligations for staff including the Applicant. For all purposes, the Applicant was entitled to continuity of employment. 6. The Applicant then became an employee of TNT International Australia Pty Ltd which changed its name to Crossocean Forwarding Services Pty Ltd ("CFS") in 1997. 7. In 1997 the Applicant was employed by CFS in New South Wales. The Applicant was then asked to go on secondment by CFS to New Zealand to become National Manager of the New Zealand operations of CFS and to continue the duties previously undertaken by the Applicant in New South Wales. 8. The Applicant commenced as National Manager for the New Zealand operations of CFS on 13 February 1998 as General Manager of Groupage Services. The appointment was for a term of two years commencing 6 August 1997. 9. That Agreement was extended for a further six months as from 6 August 1999. 10. In or about October 1999, CFS sold its business to Owens Group. 11. On 4 October 1999 the Respondent terminated the services of the Applicant with immediate effect. 12. On termination of the Applicant's employment the Respondent paid to the Applicant five (5) months pay in lieu of notice and redundancy plus outstanding statutory entitlements for annual leave. 7 Mr J V Murphy of counsel appeared on behalf of the applicant. Mr J Clarke of counsel appeared on behalf of the respondent. 8 The applicant gave evidence on his own behalf. 9 The respondent called two witnesses. Robert Wilkins Date is currently the General Manager of Crossocean Forwarding Services Pty Limited (Crossocean). He has held that position for approximately six years, including his time as the General Manager for TNT International Australia Pty Limited. The latter company was subsequently renamed Crossocean around June 1998. 10 Ian Charles Newman was employed as the Chief Executive of the Owens Group Limited (Owens) from 1 August 1999 to 2 February 2001. Owens purchased Crossocean on 4 October 1999. From August 1997 until 31 July 1999 he was Chief Executive Officer with Union Shipping Group Limited, which, at that time, owned Crossocean. Submissions - Applicant - General 11 As a consequence of the respondent's unfair dealings with the applicant the respondent acquired on favourable terms the business which had been built up by the applicant. The respondent was keen to get into this business and achieved that desire by way of false and misleading representations to the applicant and subsequent unfair treatment of him. As a consequence the respondent dispensed with the services of the applicant at a cost to it of payment out of the 4 months remaining of the 6 months extension at a rate substantially below the applicant's salary package at the time. Having got rid of the applicant in this manner it retained to itself the ongoing benefit of the purchase of the applicant's business. 12 As a consequence of the respondent's unfair treatment of the applicant his expectation of ongoing employment with the respondent in the business that the respondent had acquired from him was unfulfilled. Further, as a result of the unilateral imposition by the respondent upon the applicant of the Non-Competition provision in the employment contract some months after the applicant commenced employment with the respondent and without his consent, the applicant was prevented from engaging in employment in the industry in which he had many years experience in his home country, Australia. The applicant was effectively exiled for this period. 13 This is a clear case which warrants the intervention of the Commission pursuant to section 106 of the Act. Submissions - Applicant - Specific 14 The contract or arrangement between the applicant and the respondent was or became unfair in a number of respects. 15 The applicant was induced by representations made on behalf of the respondent to sell the business of his company to it and to accept employment with it. Those representations were to the effect that his employment with the respondent would be long term. The dispute in the evidence between the applicant and the two witnesses for the respondent as to whether or not the applicant's employment was to be for a 2 year fixed term period (the respondent's position) or of indefinite duration with an initial minimum period of 2 years (the applicant's position) should be resolved in favour of the applicant. 16 There is no dispute on the evidence that the applicant was given no notice at all of his termination. He was encouraged to believe that he would have an ongoing role with the purchaser of the business. He was deprived of any opportunity to make any representations to either the respondent or the ultimate purchaser of the business, the Owens Group, whose Chief Executive at that time was Ian Newman, as to any ongoing role that the applicant may have been able to fill in the business. Mr Newman agreed that the position to which the applicant was appointed, namely General Manager of Groupage services continued on in the company. 17 There was non-recognition of the applicant's length of service. The only period of employment that the respondent recognised was that commencing on 6 August 1997. This is despite the fact that the applicant was listed as, and acknowledged to be, an employee of EES at the time of the purchase of the business of that company by the respondent. Mr Date readily accepted that up until the applicant became an employee of the respondent he was working for EES. 18 The reason stated for the termination of the applicant's employment was that as a result of the takeover by the Owens Group the position of "National Manager, which is currently held by Cummings, will no longer be required …". The position of National Manager, New Zealand, which the applicant held at the time of his termination was never envisaged to be a permanent position. It was always contemplated by both the applicant and the respondent that he would eventually return to the role of General Manager, Groupage Services, the position into which he was initially employed by the respondent in August 1997. 19 It was only during the cross-examination of Ian Charles Newman that the real reason for the termination of the applicant's employment emerged. Ian Newman's evidence makes it clear that at sometime during 1998 the respondent had determined to terminate the applicant's employment because "… we were not happy with the performance and issues taking place in the business and also relationship problems". 20 At no time during the applicant's employment with the respondent did the respondent raise with him any concerns it had in relation to performance and relationship issues. Thus the applicant was denied basic procedural fairness in that he was never given any opportunity to put his side of the story in relation to these matters. 21 As to the "Term" of the employment contract, subcl 3(d) of the employment contract, which the applicant was not taken to in cross examination, makes it patently clear that the contract contemplates employment continuing beyond the "Initial Term" and beyond the "Further Term". 22 The applicant was cross examined at length as to his involvement in a company, Lightning Logistics Australasia Pty Ltd, which was registered in Queensland on 13 March 2000, less than three weeks before the expiry of the six month non-competition provision in the contract of employment between the applicant and the respondent. The applicant's evidence was that he was appointed a director of that company by his employer in New Zealand, Dennis Smith, because he, the applicant, was an Australian resident. The applicant did not work for Lightning Logistics or have any other involvement with it. 23 There is not the slightest shred of evidence that the applicant was in breach of the restrictive covenant in his contract of employment with the respondent. It is clear that he did not engage in any employment with a competitor of the respondent in Australia during the six month period of the covenant. In fact he was unable to accept an offer of employment from Circle International in Melbourne because of the covenant. 24 There is no allegation by the respondent against the applicant concerning any alleged breach of the restrictive covenant in either the pleadings or the evidence filed by the respondent in this matter. Such an allegation, if it is to be made is a serious matter which ought to be supported by evidence which is capable of being tested. There is no such evidence in this case and it is submitted that the Court should disregard this matter entirely. 25 In relation to the respondent's conduct of the litigation, the issue of the payment of an $8,000 bonus (after tax) to the applicant was not raised in the Reply to the Summons for Relief filed by the respondent on 18 August 2000. However this issue occupies considerable prominence in the evidence filed on behalf of the respondent. 26 The relevance of this material has never been explained. Bob Date agreed that he had not raised this issue with the applicant at the time of his termination, and agreed that this issue played no part in the decision to terminate the applicant's services. It can therefore have no relevance at all to the issues before the Court. It is submitted that the issue has only been raised in these proceedings for the purpose of creating prejudice against the applicant. Bob Date's explanations as to why this material was included in his evidence lack credibility and the Court is invited to so find. 27 The applicant was subjected to a deal of pointless cross examination about his involvement with EES and related companies. Following objection it was put that the line of questioning was in relation to the applicant's dealings in relation to EES New South Wales and whether there is anything outstanding in terms of moneys that might have been repayable to EES New South Wales, not pursued by the applicant. No attempt was made by the respondent to put forward any evidence that would support such a proposition. Again it is submitted that the cross examination was without any basis and designed only to create prejudice. 28 The applicant was also asked whether on the occasions the business was acquired by other entities did he make any claim at that time for severance payments against his employer. The proposition is ludicrous given the unchallenged evidence of the applicant that he was in continuous employment from 1992 up until he was terminated by the respondent on 4 October 1999. 29 The applicant gave evidence that he raised the question of his income tax situation with the respondent. He was cross examined about the payment made to him of $NZ1,000 per month into his New Zealand bank account without tax being deducted from that sum. It is the responsibility of the employer, not the applicant, to ensure that the appropriate amount of tax is deducted prior to payment to the applicant. 30 The applicant was criticised during cross examination for having failed to file a tax return for the last ten years. Whether or not the applicant has failed to file a tax return over a period of time, foregoing his entitlement to a tax refund, can have no relevance to the issues before the Court, and, it is submitted, was only raised in the proceedings to create prejudice. 31 The applicant was cross examined as to his movements and those of his daughter on the day he returned from New Zealand to Sydney after his dismissal. It was suggested by counsel for the respondent during debate on an objection to a question, that there was evidence to suggest that the applicant's daughter entered the respondent's office on that day, a public holiday, on a number of occasions and that this explained one possible reason why the payroll records concerning the applicant were missing, namely that they were removed form the applicant's office. 32 Again, not the slightest shred of evidence was put forward by the respondent to support this proposition and the respondent's attempt to create a scenario in which the applicant was responsible for removing the missing payroll records from his office in Sydney after his termination is entirely inconsistent with the evidence of Bob Date that it had been discovered well before the applicant's termination that these records were missing and, indeed, the matter had been raised with the administrator without result. Submissions - Respondent 33 The contract between the applicant and the respondent was a fixed term contract which commenced on 6 August 1997. At its inception it was for a term of 2 years, which was subsequently extended by mutual agreement between the parties for a further 6 months. The extended contract was to expire on 5 February 2000. 34 Even if the right to terminate was unfair in all of the circumstances, as claimed by the applicant, if the contract is properly to be seen as a fixed term contract then all the applicant can rightfully claim is that the respondent pay out the balance of the term. The respondent says that has occurred whilst the applicant maintains the pay out was not based on the full remuneration package. 35 There is nothing unfair, harsh or unconscionable about the contract of employment entered into between the applicant and the respondent. The parties intended to enter into a fixed term contract and they did so. This was the applicant's understanding. 36 There is no suggestion that the manner in which the contract was formed was tainted by unfairness or inequality of bargaining power. There is no evidence that the circumstances in which the contract was entered into were unfair or harsh in any way. The applicant was encouraged to seek legal advice before entering into the contract. An officer of the respondent went through the terms of the contract on a clause by clause basis with the applicant. 37 It is clear from the terms of the employment contract entered into by the applicant that the contract was for a fixed term of 2 years (clause 3(a) ). Clause 3(d) cannot be seen as providing a mechanism for a further extension. Rather, the clause merely provides a mechanism for the parties to agree for whatever reason for the fixed term to "run over". 38 The applicant's allegations as to representations that the contract of employment would be long term should not be accepted. The purported effect of those representations is inconsistent with the applicant's own admission that he was entering into a fixed term contract of 2 years. 39 The applicant's evidence was that he controlled the company which was purchased by the respondent and it was his decision to sell and that if he had not been happy with the terms of the sale it would not have proceeded. It is to be inferred that if he was not satisfied with the agreement he would have said something about that. 40 It is open to the Court to find that the applicant was not continuously employed by EES (NSW) prior to the purchase of the assets of that company by the respondent. The onus of proof as to continuity of employment rests on the applicant. The only evidence the applicant can put forward as to continuity of employment is his own word. 41 The failure of the applicant to provide group certificates for the 1996/97 and 1997/98 financial years indicates that on his own evidence he was not paid remuneration by EES (NSW) for a period exceeding one year. The absence of the missing group certificate is unexplained. Accordingly, the inference should be drawn that in the absence of proof the applicant cannot demonstrate continuity of employment. 42 In respect of the claimed obligation to offer the applicant employment, the respondent had no legal obligation to the applicant to offer him employment. It is established that when a company transfers its business to another entity, the employees are dismissed: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; Burton v Litton Business Systems (1977) 16 SASR 162. 43 It is for the purchaser in a sale of business to decide whether, and to what extent, to retain the persons previously employed by the vendor in the new business: Frost v Newlands Coal Pty Ltd (1998) 44 AILR #3-830. 44 The position as to unfairness might be different if the employee was led to believe he or she had continuous employment but that was clearly not the case here. The agreement that the purchaser would employ the applicant on terms clearly agreed (or one can infer the sale would not have proceeded) is to be seen in the light of the above case law. It is not unfair to employ someone on terms agreed between the parties when the employer otherwise had no obligation to employ the applicant. 45 The respondent submitted that the role of the vendor, EES (NSW), had to be taken into account. In ordinary circumstances upon a transfer of business where an employee is not immediately re-employed by the purchaser of the business, the employee has the right to sue the vendor (the employer) for damages for wrongful dismissal. The employee remains entitled to reasonable notice. Burton v Litton Business Systems Pty Ltd (1977) 16 SASR 162 per King J. 46 Whether or not the employee is also entitled to a severance payment on the basis of redundancy is not clear, although authority suggests not: Clarke v Hancock (1993) 36 AILR #8. 47 Accordingly, the applicant is only entitled to claim for reasonable notice from the vendor. However, any claim by the applicant against the vendor must be seen for what it would be - a claim against himself. The applicant was the Managing Director of EES (NSW), one of only 2 directors and beneficially holding 87% of the issued shares. This was his company. He was its corporate mind and (except when under administration) its decision-maker. The applicant was not a mere employee. He was in effect the company. 48 The applicant's proper legal position is that if there is any claim it should be against his own company. There is nothing unfair in what has happened to the applicant, and in fact it would now be unfair to the respondent to visit upon it any right the applicant may have had against his own company. A determination of unfairness is to be made in the entire circumstances of the case: Port Macquarie Golf Club Ltd v Stead (1996) 64 IR 53 at 67. 49 The respondent put a number of matters to be considered by the Court in the event that the Court found in favour of the applicant: (a) the applicant does not come with clean hands: breach of his restrictive covenant; (b) the applicant has mitigated his loss which should be taken into account; (c) the respondent should not be in any worse position than the vendor [ie EES] of the business would have been; and (d) in the circumstances, the applicant has received due payment, or will have by payment of annual leave. 50 The applicant has not sought to claim in the Summons for relief that the restrictive covenant was unfair. At least some of the allegations made by the respondent in the Supreme Court Summons are supported by the evidence of the applicant in these proceedings in cross-examination. In particular, the applicant conceded on cross-examination that he became a director of Lightning Logistics during the period of his restraint clause. The taking up of that directorship is itself a breach of the restraint clause (clause 15.2(a) of the employment contract). 51 Mitigation includes a number of concepts including that of failure to mitigate. The respondent does not claim this to be a case of any failure to mitigate. This is a case where the applicant's alternative employment should be taken into account as a proper mitigation of any loss. It is accepted that the application of mitigation principles is to be considered on a case by case basis: Harcourt Brace & Company (Australia) Pty Ltd v Cory (1998) 81 IR 321 (Full Court). Here, there is clearly reasonable and suitable alternative employment, which should be taken into account: Abboud v State of NSW (2000) 99 IR 299 at 303 (Full Court). Further, it is accepted that mitigation is relevant when seeking moneys in respect of an unexpired portion of a fixed term contract: Glynn J in Harcourt Brace (1st instance); Nordby v Barclays Investment Services (1993) 53 IR 319. 52 If the view of the Court is that the respondent has become, in the circumstances, responsible for the obligations of the vendor of the business, EES (NSW), then it is relevant to consider the obligation of the vendor. 53 The obligation of the vendor sued for wrongful dismissal following a sale of the business is for provision of reasonable notice. There is no liability for severance payment. The vendor would not in fact have been liable for reasonable notice because the applicant duly mitigated his loss by taking the position with the respondent. The position with the respondent is also reasonable alternative employment. The reason it is reasonable despite being for only a fixed term is that the applicant's right against the vendor was for reasonable notice. A fixed term contract of 2 years (extended to 2 ½) on any view is reasonable notice. 54 As of 6 August 1997, the applicant knew he had only 2 years to go, had time to reorganise his affairs, to seek new employment. That is the purpose of notice (or payment in lieu); Fryar v System Services Pty Ltd (1996) 137 ALR 321 at 331 per von Doussa J. 55 If, though not as a matter of legal form but of substance, this Court is of the view that the applicant is entitled to have his contract with the respondent treated as constituting continuity of service, then the respondent should equally as a matter of substance be able to say that in all fairness the applicant was aware of his position as of 6 August 1997 and had, for all intents and purposes, notice of impending termination, and that notice was eminently reasonable. 56 Further, the notice period of 5 months at the end of the contract (the pay-out of the balance of the unexpired fixed term) also represents reasonable notice in the circumstances of an employee employed for such a short period. 57 Even if, the view is taken that the applicant is entitled to some sort of severance payment, it is to be seen that the respondent has already provided the applicant with the equivalent. The applicant has already been given the equivalent of 5 months formal notice. The purpose of a severance payment partly overlaps with that of reasonable notice - Newton v Goodman Fielder (1997) 81 IR 227 per Hill J at 238. 58 There is no inconvenience or hardship here. The applicant was given 5 months' notice which is more than adequate in the circumstances. However, in effect, the applicant under the fixed term contract (as extended) had 2 ½ years to find alternative employment and did so. This is the part that overlaps with reasonable notice. The applicant is not at the end of his working life and unable to find further work. He is relatively young. That purpose for the making of any severance payment is unnecessary. Credit 59 Both parties spent considerable time and effort in their written submissions in attacking the credit of each other's witnesses. I have examined all the instances advanced by counsel. 60 I have formed the view that many of the differences do not need to be resolved. Where they do, as for instance as to the term of the applicant's employment, I have been able to resolve them in the light of the evidence as a whole. Legislation 61 The relevant legislation is set out below: 105 Definitions In this Part: contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. unfair contract means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. Note. The jurisdiction of the Commission under this Part is exercisable only by the Commission in Court Session. Division 2 Unfair contracts may be declared void or varied 106 Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. Consideration Nature of the Contract 62 It is important that one issue be decided early. That issue is whether the contract of employment was long term, as was contended for by the applicant, or fixed term as contended for by the respondent. 63 Determination of this issue requires consideration of discussions at two different points of time. The first point is the time of the acceptance of the respondent's offer by the administrator, the second is the period of discussion following the presentation to the applicant of the draft contract of employment. 64 On my understanding of the evidence, discussions between the respondent and the applicant in July 1997 were directed to the negotiations for the sale of the business, including the coming across of the applicant to the respondent. 65 The basic elements of the applicant's salary package - salary, car, superannuation and term of employment - were presented by Mr Date to the applicant as soon as the respondent's offer had been accepted by the administrator. 66 Mr Date said that his original discussion with the applicant was based on a one year period. He said that the applicant was uneasy "and you might put it as unhappy" about that, and Mr Date later conceded the term would be extended to two years. 67 The applicant disagreed with Mr Date's evidence that in that initial discussion the applicant was offered a contract for a one-year period. He said the employment offer was for a two year contract with an option to extend. 68 It is notable that that disagreement between the applicant and Mr Date went to the period of the fixed term agreement, not to its nature as a fixed term agreement. 69 I do not think the difference in the recital of those events goes to credibility, but I am inclined to accept Mr Date's recollection in that it reflected the suggestion in the draft proposal to purchase EES put to the TNT Board. 70 In any event, the evidence of both the applicant and Mr Date makes it quite clear that at all times a term contract of employment was contemplated by both parties. 71 Despite his acceptance of the offer of employment, including that term, the applicant said that at the time he accepted the respondent's offer it was his firm expectation that the position offered to him was an ongoing long term position, subject only to his satisfactory performance. 72 In his affidavit the applicant had said that that firm expectation was based on a number of factors. These were his own perceptions as to other factors, such as his knowledge of the appointment of others of his EES staff to positions in TNT and his knowledge of TNT's acquisition of an extensive network of overseas shipping agents. Those factors were not ones advanced to him by the respondent. 73 There is no claim in his affidavit in reply that one of those factors was a representation by Mr Date that as long as the applicant's performance was there, the applicant had nothing to worry about. That claim was made in oral evidence. I think that if such a representation by Mr Date at that time had weighed so heavily in the applicant's consideration in 1997 as to his future, it would have been raised much earlier in these proceedings. 74 The fact that the sale of EES to the respondent would not have gone ahead unless the services of the applicant came with it, perhaps influenced the applicant's view as to his future with the respondent. I think the applicant may have made a number of assumptions as to his future as a consequence of that condition of sale, assumptions that were not conveyed to the respondent. 75 The respondent, in its internal consideration as to whether to purchase the business, had already set its limitations on the period it anticipated the applicant would be employed by it. 76 The respondent's purpose in wanting the applicant available for a period upon its purchase of EES was made starkly clear in the draft proposal dated 25 July 1997 for that purchase put to the respondent's board: Contract the present Managing Director for at least one year, which will be critical for the transfer and maintenance of the customer base, in particular agency for relationships overseas and for groupage (LCL) customers in Australia. 77 The suggested limitation on the length of such proposed contract is also clear from that proposal. 78 It was also proposed that: The business will be absorbed into TNT International, with the groupage (LCL) part of the business to trade as EES Shipping/a Division of TNT International. 79 The applicant relied upon the case of Cooper v Darwin Rugby League Inc [(1994) 57 IR 238] to support his claim that the contract between the applicant and the respondent was not one of fixed term. In that case Northrup J considered, in an interlocutory decision, the operation of s 170CC of the Industrial Relations Act 1988 (Cth) (IRA 1988) and the meaning of par 2 of Art 2 of the Termination of Employment Convention in relation to the terms of a specific contract of employment one of which terms was a term of employment for three years and another which provided for a notice period for termination available at the instance of either party. 80 Northrup J expressed the opinion (at p 241) that the contract of employment was for a specified time but could be terminated before the expiration of either party on notice, or by the employer, for misconduct. On that construction he found that the applicant was not a worker engaged under a contract of employment for a specified time within the meaning of the Convention and so not excluded from operation of certain provisions of the IRA 1988 as to unfair dismissal. 81 That decision does not help the applicant. It was found that the contract as such was for a specified time, but did not qualify as such within the terms of the Convention. Neither the Convention nor the IRA 1988 is under consideration in these proceedings. 82 I now turn to the discussions leading to the Employment Services Agreement dated 13 February 1998. That Employment Services Agreement (the contract of employment) was stated to be entered into between TNT International Australia Pty Limited ("company") and Paul Cummings ("Employee"). 83 As to the term of that Agreement, clause 3 provided that: (a) The employment will commence on 6 August 1997, and continue for a term of 2 years (" Initial Term "), subject to termination as provided in this Agreement. (b) By written notice given not less than 2 months before the expiry of the Initial Term, the Company may request the Employee to continue in the Employment for a further 1 year dating from the expiry of the Initial Term (" Further Term "), subject to termination as provided in this Agreement; and (c) If the Company gives notice in accordance with paragraph (b) of this clause and the Employee elects to continue in the Employment, the provisions of this Agreement continue to apply with such changes as are necessary and as are noted in writing. (d) If: (i) the Company does not give notice in accordance with paragraph (b) of this clause but the Employee nevertheless continues in the Employment after the expiry of the Initial Term; or (ii) the Employee continues in the Employment after the expiry of the Further Term. the terms of this Agreement continue to apply with such changes as are necessary, but notwithstanding clause 16, the Employment may be terminated by either party by one month's written notice to the other or otherwise as provided in clause 16. 84 Clause 16 deals with termination by the respondent in the event of such occurrences as incapacity through illness or injury, bankruptcy, unsoundness of mind, misconduct etc, none of which are relevant to this matter. 85 The applicant said he had not been pushing for a contract: "it was the other way around". 86 In relation to the discussions leading to the employment contract, the applicant said in his affidavit dated 27 April 2001 that in all conversations with Mr Date the period under discussion was two years. In oral evidence on 30 April 2001 the applicant said he always believed that his contract with TNT would be ongoing, and not one for a two year period only. 87 The applicant accepted that the written contract clearly indicated that it was for a term fixed for two years. He also accepted that he had not been promised that the contract would go on ad infinitum. However, he said he had understood, from conversations with Bob Date, that he had nothing to worry about and would remain an employee if his performance was adequate. He said that Bob Date, when the question was raised with him, replied that as long as the applicant's performance was there he had nothing to worry about. 88 Questioned by respondent's counsel as to the difference in what the applicant said were oral representations and the written terms of the contract as to its term, the applicant said he had never had a written contract before. He was told that the term of the contract was for the company's protection and certainly was not there for the applicant. It was the respondent's people who said they needed him to stay for those two years and that was why they wanted the contract of employment put in place. 89 The applicant, in the course of the discussions that ensued as to the draft contract, did not make any complaints to Mr Date, Mr Newman or anybody else about the term of the contract being expressed as two years. It was not one of the concerns he raised with Mr Longo as to the contract's terms. 90 Such assurances as I accept were given by Mr Date to the applicant as to continued employment/performance were, I think, given in the context that the contract was one with a fixed term. 91 It was not until February 1998 that a written contract of employment was presented to the applicant. However, it would seem that that written contract mirrored the terms agreed orally in August 1997, with the addition of the non-competition clause and other conventional provisions of such a contract. (In the evidence and submissions the non-competition clause was variously described as the "restraint" clause, the "restraint of trade" clause and the "restrictive covenant". All such references in this decision may be taken as references to the non-competition clause (cl 15) of the contract of employment.) 92 The applicant advised Mick Longo, the respondent's then financial controller, of at least two concerns with the written contract, one going to cl 16.1(d), termination, the second being the insertion of a restraint clause. The contract was amended to ensure that the voluntary administration of EES did not provide a basis under cl 16.1 for the termination of the applicant's services. 93 He was advised that the restraint of trade provision would remain in the contract to protect the company. 94 The applicant's evidence strongly suggests that his request to Mr Longo was that the non-competition clause be omitted in its entirety from the contract, rather than that he had complained of any of its specifics, for instance, as to its term or its geographical spread. He does not seem to have sought any further negotiation of it, nor did he obtain legal advice. 95 As a matter of practicality the applicant was to an extent boxed in to that contract. He no longer had a business. It had been operated by TNT for some six months. He occupied a responsible position with TNT as General Manager of Groupage Services. To reject the contract at that time may have involved seeking another position. However, on the basis of the internal documentation set out earlier, the respondent at that time probably needed the applicant almost as much as he needed the respondent, but the respondent was not tested by the applicant as to extent of that need. 96 In respect of that clause, counsel for the applicant, in responding to an objection, said that the restraint clause was very much at the heart of this case, in that the consequences of the termination of the applicant's employment by the respondent, included the fact that the applicant had been prevented, after many years, from working in his home country for 6 months. 97 However, the non-competition clause was not otherwise attacked by the applicant in these proceedings in that no orders were sought in relation to it. 98 I make no findings in respect of that clause, but simply note that a restraint clause would normally be expected to be found in such a contract. Its mere existence in the contract of employment would not of itself render that contract unfair. 99 I am of the view that, although there is dispute between the applicant and the respondent as to the extent to which the applicant was taken through the draft employment services agreement by officers of the respondent, the applicant did study that document closely. The presence of the Non-Competition clause was quite prominent. However, the second change sought by the applicant related to an omission, not always so readily picked up, in that he saw the need for an exemption to be made in respect of EES, in cl 16(1)(d). Extension of the Contract 100 The applicant had been seconded to New Zealand as National Manager in February 1998. 101 The applicant's initial term of employment was due to end on 6 August 1999. 102 Although there are some differences in the evidence of Mr Date and the applicant, it seems clear that it was anticipated that the re-location to New Zealand would be for at least six months and, at the end of the relocation, the applicant would return to Sydney to take up his old position. It was said by Mr Date, that would be for the applicant to work out his contract. 103 That anticipation however, was, as events made clear, very insecurely rooted. 104 A communication dated 14 May 1999 from Bob Date to Paul Cummings was in the following terms: Further to our recent discussions and given your concerns about your contract, the likely change in ownership, the unknown implications of that changed ownership and the desire by the potential owner not wanting to make changes to existing arrangements for sometime I suggest we extend your contract for a further 6 months. On the issue of your continued involvement in New Zealand this time will allow us with the new owner to resolve it. Irrespective I would like to discuss more fully the New Zealand issues. However before I do that could you supply in writing your views on what has still to be done in New Zealand, the timing and your approach. Could you please respond as soon as possible. 105 The reply on 17 May 1999 to that communication from Paul Cummings was as follows: Thank you for your offer to extend my contract. I accept your offer. Could you please issue me your sign off letter as soon as possible. I would appreciate also a written confirmation re the offer for the sale advancement. On the issue of New Zealand I will prepare for you my views on what is still to be done, timing and approach. I will get this to you no later than Wednesday 26th May 1999. I look forward to meeting with you to discuss New Zealand matters in depth. 106 On 20 May 1999, two memoranda were sent by R W Date to Paul Cummings. The first of those was "to confirm that on the successful sale of Crossocean a special one off success fee of A$10,000 (Pre tax) will be paid to you". 107 The second stated: This is to advise that your Employment Services Agreement dated the 6th August 1997 will be extended by a further 6 months. 108 Of course, it is true that clauses in the initial contract of employment were capable of variation by agreement between the parties. As already stated, the applicant did agree to the proposed six months extension. 109 However, the circumstances in which the applicant came to agree to the variation of the extension of the initial term by six months, rather than by twelve months, as provided for in the original contract, need to be examined. 110 At that time the applicant was undertaking the role of National Manager in New Zealand and was located in New Zealand. He knew, as did the respondent, that the respondent was looking to sell Crossocean. 111 The applicant said he was concerned with the period of six months because there were new buyers coming into the company and his contract was reaching expiry. He said his acceptance of six months was based on meetings he had with Ian Newman and the document he compiled at Ian Newman's suggestion, of his achievements in New Zealand, a document Ian Newman agreed to put to any prospective buyer. Mr Newman's position as put to the applicant was that to sign a six month contract would give time for assimilation to a new owner. The applicant accepted that the prospect of new buyers could also mean the end of his contract. However, the applicant said that at the expiry of the six months extension to his contract, his expectation, after his meeting with Ian Newman, was that he was in a position to go forward with the new buyer. 112 The applicant said that he had complained to Ian Newman and earlier to Bob Date that the length of the extension was to be for 6 months, not twelve months. (In oral evidence, but not in his affidavits, the applicant said he had complained that he was not happy with the six month extension when offered to him. 113 Mr Date appeared to accept in evidence that the applicant had requested an extension of one year not six months to somebody in the respondent company, but not to him. 114 Mr Newman said the six months extension was offered to the applicant "because the business at that stage was going to be sold and it was in the interests of the business we [ie Bob Date and Ian Newman] felt to maintain the existing management during the sale process". 115 It is clear from that evidence that the respondent sought only to maximise the advantage to itself in any decision as to continuing the applicant's employment. No regard was had to the terms of the contract of employment as to the length of any "Further Term" the offer for which rested solely with the respondent. 116 The respondent had obtained what it wanted - the freight forwarding business previously operated by the applicant. The applicant had worked for the respondent since August 1997 consolidating the respondent's position with the applicant's former clients. Between August 1997 and Christmas 1997 the applicant and Mr Date made at least three and possibly four major overseas trips to visit overseas agents as quickly as possible. 117 In my view, the respondent at all times, commencing with the purchase of EES, had its own interests firmly in focus. It wished to retain the services of the applicant only for so long as it was needed to cement its hold on that business. 118 The initial employment agreement provided for the company to request the employee to continue in employment for a further term of one year. It did not provide for it to request the employee to continue for a further term of six months. 119 Contrary to the respondent's submissions, the variation of the contract of employment in May 1999 to provide for a "Further Term" of six months, rather than one year, was made in circumstances where the applicant was in a substantially inferior bargaining position to the respondent. At that time the applicant had lost whatever bargaining power he had still retained though not exercised, as at February 1998. 120 I find that in all the circumstances set out above, including the conduct of the respondent in securing the variation to the contract of employment of a further term of six months, rather than for the one year originally provided for in that contract, that variation was unfair, with the consequence that that varied agreement was an unfair contract in the terms of s 105(a) of the Act. 121 That finding having been made, it is now necessary for the Court to consider what orders, if any, should be made pursuant to s 106 of the Act in relation to the specific claims made by the applicant. Total Length of Employment 122 The applicant claimed entitlements as to long service leave, notice and redundancy, based on his having been an employee since 1992 of EES or its predecessors up until the business of EES was sold to TNT International Australia Pty Ltd (later Crossocean Forwarding Services) in August 1997, and of his having been an employee of the respondent since 6 August 1997. 123 As to the length of service claimed by the applicant, the respondent's position was that the applicant was employed by the respondent from 6 August 1997 by way of a two (2) year fixed term contract. This contract was then extended for a further period of six (6) months to 5 February 2000. The respondent did not concede that the applicant's length of service extended to any earlier periods. With respect to when EES Shipping (NSW) Pty Ltd was acquired by the respondent, the respondent stated that there were no payroll records for the applicant at the time of acquisition. 124 The Agreement for Sale dated 6 August 1997 contained a number of conditions relevant to these proceedings: 8.1 The Purchaser covenants and agrees that it will employ or offer positions of employment to all of the employees of the Vendor set out in Schedule 3, from the date of completion. 8.2 The Vendor hereby agrees with the Purchaser that it will terminate the employment of each of the employees of the Vendor not set out in Schedule 3 who were engaged in the conduct of the Business with effect from the date of completion. 8.3 The Purchaser shall be at liberty to re-employ all or any of the employees of the Vendor from the date of completion. 8.4 The Purchaser agrees to pay, and assumes liability to pay, all holiday pay, sick pay, all long service leave for the employees set out in Schedule 3, being payments which the Vendor would be liable to pay if the employment of such employees was terminated. In addition, the Purchaser agrees to pay the superannuation guarantee levy payments to a maximum amount of $20,000.00 for the employees set out in Schedule 3, being payments which the Vendor would be liable to pay if the employment of such employees was terminated. The Vendor and the Administrators make no warranty as to the accuracy of the annual leave days and monetary entitlement of each of the employees listed in Schedule 3 and the Purchaser shall rely on its own enquiries in this regard. 8.5 8.5.1 The Purchaser shall indemnify and keep indemnified the Vendor against any claim by an employee set out in Schedule 3 against the Vendor in respect of holiday pay, sick pay and long service leave or its monetary value. 8.5.2 The Vendor and/or the Administrator shall in no way be liable for redundancy pay paid to any employee whom the Purchaser proposes to employ in the Business pursuant to clause 8.5.1 hereof and further the Purchaser shall reimburse the Vendor and/or Administrators for any redundancy paid to any employee who is re-employed by the Purchaser whether on or after completion. 125 The applicant was named in the Third Schedule as an employee. 126 In the Agreement for Sale, EES Shipping (New South Wales) Pty Limited (Administrators Appointed) was described as "the Vendor" and TNT International (Australia) Pty Limited as "the Purchaser". 127 There was confusion in the applicant's evidence as to the existence of group certificates for 1996/97 and for 1997/98. In cross-examination he said that, contrary to Counsel's assertion, he believed he had produced the group certificate for 1996/97. In that same period of cross-examination, the applicant said that although he had received income from EES NSW for the financial year ending 30 June 1997, he did not have a group certificate for that period. However, he was adamant in cross-examination that only one group certificate was missing, that being for the period of the administration in the financial year 1997/98. 128 The evidence of the applicant was that he did not have a group certificate for the period of administration of EES because he continued to work for EES without remuneration, although his superannuation "and other things" were still held intact. He had, although working full time, stopped taking a remuneration because of the state of the company's finances. Cash flow was severely squeezed. In re-examination, the applicant clarified the period of non-remuneration in 1997 as being for the last six months, including the period of the administration, prior to the sale of EES in August 1997. 129 The point being made by the respondent as to the lack of group certificates was that the applicant had not been, for those periods, an employee of EES and therefore that period could not be claimed by the applicant as being continuity of employment. 130 Mr Date agreed in cross-examination that there was no dispute that the applicant would become an employee of TNT after the decision was made to purchase the business. He saw the applicant as an employee of the company at the time of the acquisition of EES. Mr Date said he assumed at the time of the applicant's termination that the applicant was an employee at the time of, and prior to, the acquisition of EES by the respondent. 131 The formal letter of offer dated 29 July 1997 and sent by J E Bryant, Director, on the letterhead of TNT International to the Administrators of EES for the purchase of the freight forwarding business of EES included the following details of the offer: 4. Employees of EES as per the enclosed list would be offered positions with TNT, and it is a condition that Paul Cummings commences employment with TNT. 5. The Annual Leave entitlements for these employees as per the schedule will be reinstated as entitlements with TNT upon employment. 6. The unremitted Superannuation Guarantee Levy payments for these employees will be made by TNT for the employees who take up the TNT offer of employment. This condition is on the understanding that the liability does not exceed $20,000 in total for the employees listed on the schedule. … 9. The sum of $20,000 is tendered for the business as detailed above and represents the business and assets less the liabilities for Annual Leave and Superannuation Guarantee Levy. 132 The employee schedule attached to that offer included the name of Paul Cummings with his annual leave entitlements as to hours and dollars noted as "t.b.a.". Those details were clarified in the Third Schedule, Employees, of the Agreement for Sale dated 6 August 1997, where under the heading "Employee", Paul Cummings was stated to have 26.25 annual leave days with the money entitlement of $4,079.37. 133 The respondent cannot now abrogate its acceptance in its own documents of the applicant as having the status of an employee of EES, together with the respondent's acceptance of responsibility for entitlements attaching to that status. 134 The fact that the respondent could not find the applicant's name on the payroll at some later time, or even his group certificate for 1996/97 at the time, is certainly, in the light of the evidence before the Court, not sufficient to displace such evidence that the applicant had been an employee since 1992. It was certainly not sufficient to displace the obligation on the respondent to take the applicant's service since 1992 into account for the purpose of calculating entitlements to benefits affected by length of service as at the date of the applicant's termination. 135 I find on the totality of the evidence presented, including the oral evidence of the applicant, that the applicant had continuity of employment from 1992 until 4 October 1999. Notice or Payment in Lieu 136 The applicant contended that he was entitled to reasonable notice of termination or payment in lieu thereof. Given the seniority of the applicant's position, the length of service for which he should have been credited (ie 7 years approximately) the applicant's age (ie 48 years) and the circumstances of the respondent's acquisition of the applicant's business including the overseas agent network built up over many years and the unfair manner in which the applicant was treated in terms of his accepted length of service and the dishonest manner in which he was terminated, this is a case which would warrant the order of a payment in lieu of notice equivalent to no less than 12 months at the full value of the applicant's salary package. 137 For the reasons set out earlier, the respondent opposed payment in lieu of notice. 138 From the employees' point of view, a major purpose of notice is to allow them to seek other employment, their chances of obtaining it being enhanced by seeking it from the platform of an existing position. Notice also allows employees to order their future, particularly as to their financial arrangements. 139 I have found that the applicant's contract of employment had a fixed term of two years with a possible extension of the "Initial Term" for one further year, but was actually extended by six months. 140 That being so, the applicant was at all times on notice as to the date on which his contract would terminate, and he could make his arrangements accordingly. 141 Payment out of a fixed term contract terminated prior to its stipulated expiry date is appropriate relief. The respondent has already paid out the unexpired period of the six months extension. 142 I have decided that the relief the Court orders will include payment for the difference between a "Further Term" of employment of one year and the six months extension of the contract that was granted to the applicant. 143 That approach leaves no scope for either notice or payment in lieu. The claim is refused. Redundancy 144 The applicant claimed a payment of $99,249.20 in respect of redundancy, that amount representing the equivalent of 32 weeks at his package rate of $161,280. 145 Some of the reasons for making redundancy payments overlap with those for notice or payment in lieu. However, one of the essential elements to be satisfied before consideration can be given to entitlements for redundancy is that the employee concerned had an expectation of continuing employment. As I have already found, any expectations the applicant may have had in that regard were based more on his own perceptions of other factors, than on the representations by the respondent. 146 In any event, for a redundancy to occur requires the elimination of a job that the employer no longer requires to be carried out at all. In this case the evidence is that the role of running the groupage services, for which the applicant was employed in August 1997 was an on-going one, and continued after his termination. Mr Date had been doing it since the applicant went to New Zealand. The New Zealand position had been one occupied on a secondment basis. 147 The contract of employment between the applicant and the respondent was a fixed term contract. While one can never state categorically that a fixed term contract will never give rise to redundancy entitlements, this case is not the exception to the general principle. Bonus 148 The applicant said that he met the requirements for the bonus to be paid the previous year. He had no doubts he would have met the requirements for the following year. 149 Whether or not the applicant would have met the requirements for bonus to be paid to him for the last period of his employment is something that cannot be known and it cannot be known solely because of the respondent's actions in terminating the applicant's services. 150 In July 1999, Mr Date approved the payment of a bonus of $8,000 to the applicant. (Other bonus issues raised by Mr Date in his affidavit did not play any part in the applicant's termination. They are not relevant.) 151 Whether or not the applicant would have satisfied the requirements to receive a bonus in 1999/2000, or indeed in 2000/2001 if he had continued in employment for a further six months, cannot be known because of the actions of the respondent. It, as I have found, acted unfairly in its offer of a six months only extension, not the twelve months provided for by the contract of employment. 152 I do not think it fair that the respondent can rely on its own unfair actions to deny some recompense to the applicant. I therefore take this factor into account in my consideration of mitigation. Monetary Orders Salary Package 153 The applicant claims that his remuneration package totalling AUD$161,280 comprised: (a) base salary of $80,000 (increased from $70,000 as from August 1998); (c) $12,000 pa motor vehicle allowance for car in Sydney; (d) house in NZ at NZ$600 pw (AUD$24,960 pa); (e) living allowance in NZ at NZ$200 pw (AUD$8,320 pa); (f) car in NZ (about NZ$12,000 pa); (g) airfares to and from NZ for applicant at least monthly and his wife and daughter (monthly) (in total about AUD $24,000 pa); (h) statutory superannuation ($9,676.80); (i) bonus payments (clause 6) ($8,000); (j) telephone costs for business purposes in NZ. 154 As to the amount of moneys paid to the applicant, the respondent says the remuneration package was limited to: (a) base salary of $70,000; (b) $12,000 car allowance in Australia; (c) statutory superannuation. 155 It said that the applicant had not met the bonus criteria set out in clause 6 entitling him to include such amounts in his package and that all other amounts referred to by the applicant relate to expenses that were incurred or anticipated whilst the applicant was in NZ. Such amounts were to ensure that the applicant was not out of pocket by virtue of the secondment, but not so that he was remunerated more highly. 156 The applicant was paid out the remainder of the six months extension to his contract on the basis of a base salary of $70,000. The applicant claimed that his base salary was $80,000. 157 The respondent did not take into account in its calculations as to termination payments, those amounts it said were paid to the applicant as expenses in connection with his position in New Zealand. 158 The applicant accepted that a number of items in his remuneration package were only provided to him upon his acceptance of secondment in New Zealand. He said he would not have expected to continue to receive those amounts had he returned to Australia for his employment. 159 The question as to the elements of the applicant's package to be taken into account in calculating his termination payments is intertwined with the circumstances of his transfer to New Zealand and of the six months extension to his employment contract. 160 The applicant's base salary was increased from $70,000 to $80,000 when he went to New Zealand. He said that the increase was presented to him as an increase in remuneration, not on the basis, as put to him by counsel for the respondent, "that the increase was only as a result of the fact that you were doing an added role whilst in New Zealand?" 161 The applicant said that the additional $10,000 was an increase in remuneration without strings attached. The rest of the package certainly might be taken to address his concerns as to the financial impact on his remuneration if he went to New Zealand. 162 In relation to Mr Date's claim in oral evidence that the applicant was "somewhat blackmailing us", by saying "if you don't give me the $10,000 I don't go", examination of the applicant's oral and affidavit evidence shows that the applicant wanted some unspecified additional remuneration, given that he was going to New Zealand, but it was the respondent who initially put forward an increase of $10,000, a position accepted shortly afterwards, by Mr Date in oral evidence. 163 That claim of "somewhat blackmailing us" in cross-examination, contrasts with the words Mr Date says in his affidavit that the applicant used in relation to the matter of additional remuneration and does not fit the tone of the conversation he recorded as a whole: … The other issue that I [ie the applicant] want to raise is that given that I'm going to New Zealand, I think it would be appropriate that I got some additional remuneration. 164 Challenged by Mr Murphy as to that difference, Mr Date accepted that those words were not blackmail: "I think I was being kind in those words there …". 165 Such qualification of his evidence is one that makes the Court wary as to the partisanship inherent in Mr Date's evidence in relation to the respondent's interests. 166 Mr Date said no one was looking as far ahead as two years to consider whether the extra $10,000 would be removed when the applicant returned from New Zealand. He accepted the period in New Zealand was to be in the order of six months. 167 On the evidence, at the time the New Zealand transfer was under consideration, it was the anticipation of all concerned, the applicant, Mr Date and Mr Newman, that at the end of the New Zealand assignment, the applicant would return to Sydney to take up once again the position of General Manager, Groupage Services. (Some evidence suggested that the applicant at all times maintained both roles while located in New Zealand.) 168 Mr Newman said that it was the respondent's intention that the applicant would leave after the two year period. At the end of 1998 it was actually looking to recruit a replacement. Later he denied that saying that that intention was contemplated during the applicant's employment, at sometime during 1998. 169 Supporting the applicant's claim that the $10,000 increase went beyond his secondment to New Zealand was the fact that there were so many New Zealand specific allowances granted to make sure he was not out pocket. 170 I find that the base salary of the applicant at the time of his termination was $80,000 per annum. Interest 171 The matters of interest and costs were not addressed by the parties during submissions. That omission was brought to their attention, and they were invited to consider their positions. By letter dated 14 November 2001 from the applicant's solicitors, the Commission was advised that: It has been agreed that between the legal representatives for the Applicant and the Respondent that interest on any monetary amount awarded should run from the date of filing of the Proceedings which is 26 January 2000. The representatives of both parties wish to defer making submissions on legal costs and therefore reserve their positions on costs until after Her Honour's judgement [sic] is handed down. Mitigation 172 As to the issue of mitigation, whether or not moneys awarded to a former employee on account of the unfairness of the contract and/or arrangement of employment and its failure to provide for fair and reasonable notice or payment in lieu should be discounted by moneys earned by the employee during the period of that notice and, if so, to what extent, are matters to be determined having regard to the relevant facts and circumstances of each case (see Harcourt Brace & Co (Aust) Pty Ltd v Cory (1997) 81 IR 321. In that case, no discounting was applied.). 173 The applicant's services were terminated at 10 am on 4 October 1999. He was given a one way ticket to Australia on a plane leaving at 4 pm. 174 The applicant had resided in New Zealand since August 1998. Obviously he had personal belongings in both his office and his residence. As a result of the respondent's actions he had perhaps four hours (taking into account the need to be at the airport some time before an international flight) to finalise all his personal affairs. The one way ticket provided meant that he would have to come back at his own expense to do so. That one way ticket confirms the applicant's claims as to the lack of consideration with which he was treated. It should have been obvious that he would have had personal arrangements to make in relation to his residence in New Zealand. 175 As already noted, the opportunity for the applicant to earn bonus was denied him because of the actions of the respondent. I am not able to quantify what any such bonus in that period might have been. I take the lack of opportunity into account as a factor against mitigation being assessed against the applicant. 176 The applicant had been unemployed since 6 October 1999. He had not been able to take up a suitable and reasonable alternative position he was accepted for in Australia later in that year because the putative employer could not wait until April 2000 for him to start. (The non-competition clause with Crossocean expired on 4 April 2000.) 177 In late February 2000 the applicant assumed the position of Group General Manager of Lightning Group Limited in Auckland and worked for that company for fourteen months. His remuneration as at 4 June 2000 was NZ$160,000 plus provision of a motor vehicle. 178 On the above chronology, he was in employment for about 5 and 6 weeks remaining of the restraint on his employment. 179 Lightning Logistics was registered on 13 March 2000. The applicant was appointed a director of it on that same day. He accepted that those events occurred within the six months restraint imposed by his contract with the respondent. As explained by the applicant he was appointed a director because his then employer required an Australian resident for that position. He denied acting in any way in competition with the respondent. 180 Evidence as to the business of Lightning Logistics was not before the Court. Counsel for the respondent conceded that there was no evidence before the Court that Lightning Logistics was in fact a business in competition with the respondent. He submitted that there was evidence from which the Court could make such an inference. 181 I do not make such an inference and I find that the respondent has not brought evidence to satisfy its claim that the applicant does not come to this Court with clean hands. 182 Other matters raised by the applicant as to the respondent's attitude towards him indicate a lack of generosity of spirit on the latter's behalf but not all of them were such as either to make the contract of employment unfair or to be appropriate to take into account in my consideration of the mitigation issue. For instance, the anti-applicant connotations in the use of the term "blackmail" by Mr Date, as referred to earlier, have echoes in some of the matters raised apparently to support the "unclean hands" claim against the applicant, in cross-examination of the applicant, not all of which were pursued: the various tax and bonus issues, the possibility of claims on EES and the earlier entities, the missing payroll records and breach of the restrictive covenant (which I have dealt with above). 183 All in all, I am of the view that, in this case, there should be no discounting of the moneys ordered to be paid pursuant to s 106(5). 184 The Court makes the following findings: (1) The contract between the applicant and the respondent was an unfair contract in terms of s 105(a); (2) The contract became unfair in terms of s 106(2) subsequently to its being entered into because of the inequality of bargaining power between the applicant and the respondent and because of the conduct of the respondent in relation to the variation of the contract to provide a "Further Term" of six months rather than the 1 year provided for in the Employment Services Agreement dated 13 February 1998; (3) On the basis of the evidence before the Commission in Court Session, it is just in the circumstances of this case that, pursuant to s 106(5), the Commission order the payment of money by the respondent to the applicant; (4) At his termination, the applicant was entitled to benefits of employment based on continued employment since 1992; and (5) the base salary of the applicant at the date of termination was $80,000 per annum. 185 In the light of those findings, the Commission intends to make orders to the following effect: (1) Pursuant to s 106(1) and s 106(5), the Employment Services Agreement between the applicant and respondent dated 13 February 1998 shall be varied to provide that at termination the applicant shall be paid an amount equal to the value of six months salary in addition to the moneys paid to him by the respondent at termination on 4 October 1999. (2) The payment referred to in Order (1) shall be calculated on the basis of a base salary of $80,000, a car allowance of $12,000 and the appropriate statutory superannuation. (3) The payments already made by the respondent to the applicant on his termination are to be adjusted to take account of a base salary of $80,000 and of any consequential changes, for instance, as to statutory superannuation payable. In relation to the proposed Order 3, I note that in its alternative submission, the respondent conceded that should the Commission be against it as to the total remuneration package, some payments already made would need to be adjusted. (4) Credit is to be given, as may be relevant, for payments already made to the applicant by the respondent, eg as to long service and annual leave. (5) Interest at the appropriate Supreme Court rates on the monetary amounts to be ordered will run from 26 January 2000. 186 The intention of the Commission is that the applicant shall in total receive an amount of money as near as possible (because bonus cannot be known) to that he would have received if the Employment Services Agreement had been varied in May 1999 to provide for a "Further Term" of one year. The Agreement is not varied to provide for a "Further Term" of one year, as such a variation may have further ramifications in relation to the restraint clause. 187 The applicant, in consultation with the respondent is to draw up the orders that embody the findings now made and quantify the amounts proposed to be ordered and file such draft orders within fourteen days. 188 Submissions on costs are deferred. The Commission is to be advised within fourteen days as to whether relisting of the matter is sought for that purpose. _______________________

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