Peter English v Aradlay Insurance Brokers Pty Limited

Industrial Relations Commission (NSW)|2004-09-22|Before: Schmidt J, Mr P

Industrial Relations Commission of New South Wales in Court Session

CITATION : Peter English v Aradlay Insurance Brokers Pty Limited [2004] NSWIRComm 280 APPLICANT: Peter English PARTIES : RESPONDENT: Aradlay Insurance Brokers Pty Limited FILE NUMBER: 5193 of 2002 CORAM: Schmidt J Unfair contract - insurance industry - transmission of business - offer of continued employment - substantially same conditions - negotiation of franchise agreement - breach of obligation to give reasonable notice - three months' notice given - mitigation - any failure to give notice completely mitigated - exercise of discretion refused - redundancy - unfairness not found - ongoing employment and franchise agreement - identity of employer - not established - long service leave - failure to pay - unfairness found CATCHWORDS : Evidence Act s.144 - judicial notice - inapplicable

Annual Holidays Act 1944 LEGISLATION CITED : Evidence Act 1995 Industrial Relations Act 1996 Long Service Leave Act 1955 Gattalero v Westpac Banking Corporation [2004] HCA 6 Re Government Cleaning Service Limited (Privatisation) Award (No 2) (1994) 55 IR 199 CASES CITED : Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352 Pan Foods Company Importers & Distributors Pty Ltd and Ors v Australia and New Zealand Banking Group Ltd and Ors (2000) 170 ALR 579 Westfield Holdings v Adams (2001) 114 IR 241 HEARING DATES: 09/14/2004; 09/15/2004 DATE OF JUDGMENT: 09/22/2004

APPLICANT: Mr P Coleman of counsel SOLICITORS: Carroll & Associates LEGAL REPRESENTATIVES: RESPONDENT: Mr MJ Heath of counsel SOLICITORS: Carneys Lawyers

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

PETER ENGLISH v ARADLAY INSURANCE BROKERS PTY LIMITED Application under section 106 of the Industrial Relations Act 1996

1 Peter English complains about the fairness of his contract of employment with Aradlay Insurance Brokers Pty Limited, which came to an end in September 2001, after Aradlay had sold part of its insurance business to Elders Insurance Limited. After advice of the sale in June 2001 and representations that his employment would continue with Elders, in September 2001 Mr English was given some 10 days written notice of the termination of his employment as Aradlay's Bathurst branch manager.

2 Afterwards, Mr English continued performing work in managing the Bathurst office until March 2002, while he and Elders pursued negotiations about a franchise of the Bathurst office. There was doubt as to who his employer then was. Whether he became an employee of Elders, or of Golf n Gear Pty Limited, the service company of the Elders' franchisee at Orange, in September 2001, was unclear. He was certainly paid as an employee of the franchisee, but all of his dealings were with Mr Ewen Cameron, Elders' NSW Insurance Manager. In March, the employment came to an end and Mr English, having formed his own company, Central West Insurance Services Limited, commenced providing services to Elders, it appears in anticipation of a formal franchise agreement being entered. Mr English ultimately refused the Elders' franchise in July 2002. He then left and pursued his own multi agency business, through Central West.

3 Mr English complained that his contract of employment with Aradlay was unfair in relation to its termination and redundancy provisions, as well as in relation to his long service leave entitlements. He was paid no long service leave by Aradlay, nor later by Elders or by Golf n Gear. He claimed that his contract should have provided for 12 months' notice of termination; 12 months' redundancy pay and payment of long service leave, on termination with Aradlay.

4 Aradlay's case was that when the employment came to an end in September 2001, having had notice of termination since June, Mr English had the option of entering a franchise agreement with Elders. He was also offered employment, either with the Elders' Orange franchisee, or by Elders. Mr English took up employment and continued working as the Bathurst branch manager, on similar or even better terms than under his employment with Aradlay. That employment continued until March 2002, when the new franchise began to operate. In the circumstances, Aradlay had no obligation to make any payment for notice, redundancy or long service leave to Mr English, nor should it have to do so, as a matter of fairness.

5 For his part, Mr English always denied in correspondence to Aradlay that Elders had ever offered him employment. In his affidavit evidence in these proceedings, he said that he was unsure as to who his employer after Aradlay in fact was, but in cross examination his evidence was that this was not 'technically' right, because he considered that Elders was in fact paying the money which he received as an employee.

6 I also observe at this point that while it was suggested in Aradlay's reply to the summons that the provisions of the Federal Insurance Industry Award 1998 applied to the employment while it persisted, this claim was abandoned at the hearing. This was of some moment, because the evidence showed that the sale agreement between Aradlay and Elders had proceeded on that incorrect understanding.

7 The parties agreed that the following issues required determination in the proceedings: 1. Whether, in all the factual circumstances, the contract was unfair in not providing for redundancy severance pay on termination of employment.

If so what is fair redundancy severance payment?

Whether, in all of the factual circumstances, the contract was unfair in the amount of notice given to the applicant on termination of employment?

If so what, in all the circumstances, constitutes a fair notice period?

If unfairness is found in the contract, should an order be made under section 106(5) to include an amount in respect of long service leave on termination of employment. The evidence

8 Evidence was called from Mr English and from Mr Douglas, Aradlay's managing director. Aradlay intended to call evidence from Mr Cameron, who had conducted negotiations with both Aradlay and Mr English on behalf of Elders, however he fell ill during the hearing and was finally not called.

9 Mr English was employed as Aradlay's Bathurst branch manager since 1993. He has spent his working life in the insurance industry, in country NSW. While there were disagreements between the parties as to various matters which had arisen during the course of the employment, it is unnecessary to resolve them. What was undisputed was that Mr English had occupied that position for over eight years, having been headhunted for it. He had been successful in his work; had operated fairly autonomously in his position, reporting either to Mr Douglas or Aradlay's Operations Manager, Mr Smillie and in 2001, the Cowra branch had also come under his control. He undoubtedly contributed to the success of the Bathurst branch by his management.

10 When Aradlay decided to divest itself of its country NSW insurance business, it actively sought a purchaser who was prepared to take the business on as a going concern, offering to employ existing employees, on similar terms and conditions. Such a purchaser was found in Elders and this aim was undoubtedly reflected in the sale of business agreement. Clauses 10 and 11.1 of the agreement provided: 10. EMPLOYEES

10.1 At Completion, the Purchaser will offer or procure the other company in the Elders Group to offer employment to the employees of the Vendor specified in Item 14 of the Schedule (which states their present salary, allowances and other entitlements, date of commencement of employment in the Business (or any predecessor of the Business), and the accrued annual and accrued long service leave entitlements of the employees determined in accordance with statutory entitlements as at the date this Agreement).

10.2 The offers will be for employment from the Completion Date on terms and conditions substantially the same as those under which each is employed by the Vendor up to the Completion Date.

10.3 If an employee accepts an offer of employment ( transferring employee ) then the Vendor must immediately release that employee from his employment.

10.4 Each party must use its best endeavours to ensure that the employees referred to in clause 10.1 accept the offers made.

10.5 On Completion, the Vendor will pay or allow to the Purchaser a sum equal to 64% of the amount (determined in accordance with statutory entitlements), which on the Completion Date, will be applicable in respect of each transferring employee for accrued annual leave (including applicable loadings) and accrued long service leave entitlements.

10.6 If any transferring employee is a member of a superannuation fund established or maintained or contributed to by the Vendor ( existing fund ): 10.6.1 the Purchaser will ensure that as soon as possible after Completion each such employee will be offered membership of an existing superannuation fund ( new fund ) which must confer on such employee rights to benefits substantially the same as under the existing fund; and

10.6.2 in respect of each such employee who accepts membership of the new fund, the Vendor must us its best endeavours to ensure that the existing fund pays to the new fund an amount as determined in accordance with the rules of the existing fund calculated as at the date of payment.

10.7 The Vendor will be responsible (and the Vendor and the Shareholder will jointly and severally indemnity the Purchaser against all claims including any legal costs incurred by the Purchaser) for the salary and wages (including any allowances or benefits, and for the fringe benefits tax payable on it) of all the transferring employees for the period up to Completion, form which time the Purchaser will be responsible for them. Any necessary apportionment must be made and adjusted at Completion or on such later date as the parties may agree.

10.8 Subject to performance of the obligations of the Vendor under clauses 10.5 and 10.7, the Purchaser must indemnify the Vendor against all claims, (whether for wrongful dismissal or otherwise), for salary and wages (including any allowances or benefits), holiday pay (including applicable loadings), other leave entitlements which are or may become payable to any transferring employee under any contract of employment, award or statutory entitlement and any other amounts paid by the Vendor in respect of such claims whatsoever (including any legal costs incurred by the Vendor).

11.1 Supply of Going Concern The Vendor and the Purchaser agree that this Agreement produces for the supply of a going concern.

11 The 'Elders group' was defined to mean 'Elders Limited ACN 004 045 121 and Elders Insurance Brokers Pty Ltd ACN 008 152 538'.

12 The sale was completed in early June 2001, whereupon on 7 June Aradlay announced to its affected branch managers, including Mr English, the sale of its business to Elders, at a meeting which Mr Douglas addressed. A media release followed shortly afterwards. In a memo to staff of 7 June, Mr Douglas, advised: One of the most important aspects of the sale agreement for the board was to ensure that our staff were not disadvantaged, hence I am very pleased to announce that as an integral part of the agreement the following conditions were agreed to an included in the contract - Ø Elders will take on all staff at current salary and package levels Ø All LSL and other leave entitlements will be retained. Ø All branches will remain open and no staff will be asked to relocate.

There were offers made to us from other potential purchasers that did not give any guarantees as to staff and positions being retained. These were not considered due to this issue. However Elders made it very clear form the start that ye wanted to maintain all staffing levels in our branches.

Management from Elders will be calling meetings in the next few days with each branch to meet withy you and to outline their plans.

13 On 25 June, Mr English (and other employees) were advised in writing by Mr Douglas that their employment with Aradlay would continue for 'up to 3 months until you resolve the franchise issues and Elders have their systems in place to pay wages etc.' This advice referred to the fact that Elders proposed to offer branch managers such as Mr English, the opportunity to become Elders' franchisees. This opportunity was not one referred to in the sale agreement, but was one which Mr Douglas regarded as being of potential benefit to the managers. He had earlier raised with the branch managers the possibility of their becoming Aradlay franchisees. This had not been pursued, because they were not all interested. Mr Douglas further advised in his letter that: 'As far as what Elders are offering you, I am unable to comment with any great authority, as I have not been involved in the discussions. Elders undertook when we were negotiating the sale to offer each of you either the franchise agreement or to become employees of Elders franchisees in your town. If you are not happy with the terms of the deals being offered you need to enter into the usual commercial negotiations until you are happy with the deal.

Ewen Cameron has advised that he will be seeing each of you again this week before he sees me on Wednesday to progress the discussions further. You need to take this opportunity to raise any concerns that you might have so that he can consider them.

14 Mr English had already met with Mr Cameron, who had offered him the opportunity to purchase a local Elders franchise at Bathurst. A written proposal was promised. In July it arrived, including a purchase price of $166,188 for the Aradlay business and $15,000 for the Elders business, amongst other conditions, with Elders funding a loan; it contributing to staff wages and bearing 'normal costs associated with conducting the business on a day to day basis, including rental'. Mr English assessed the total cost to him of over $290,000. He refused the proposal and asked Aradlay how this would affect his employment.

15 Mr Douglas advised him in August, that it was a condition of the sale that the business was sold as a going concern and that Elders was obliged to offer him employment under comparable terms to his current contract. He had written confirmation from Elders that it would honour this obligation, but there was a hold-up, because of the need to appoint licensees in individual towns. Formal offers would be made after the appointments were made and Mr English was urged to take up the offer, when he received it, Mr Douglas confirming that no redundancy payments were proposed by Aradlay. In the meantime: '... Aradlay has entered into a service agreement which involves making all ongoing payments of wages and other overheads on Elders behalf until the expiry of 3 months or the appointment of a licensee in the branch involved, whichever occurs sooner. All liabilities, including annual leave and long service leave accumulation, transfers to Elders from 15/6/01'.

16 As to redundancy, Mr Douglas said: 'I would urge you to take up Elders' offer of employment and I would reiterate my verbal comments that Aradlay does not intend making any offer of redundancy to any employee as an alternative to the offer of employment with Elders. We have taken advice in relation to this transaction and it is clear that where an employee unreasonably declines an offer of alternative employment on the transfer of a business and that employment, on an objective measure, is substantially the same, then in such circumstances the employee forfeits any right to a redundancy payment. Therefore the offer of employment negates ANY obligation to make a redundancy payment to you. Hence I again strongly urge you to accept Elders' offer.

17 A copy of an extract from clause 10 of the sale agreement was enclosed. It envisaged Elders or 'the other company in the Elders Group' offering employment on substantially the same conditions, including annual leave and long service leave entitlements.

18 Mr English responded on 8 August, advising that he understood that he was still employed by Aradlay, that Elders had not offered him employment, only the opportunity to enter a service contract, at great cost. He pointed out that he had no obligation to enter any arrangement with Elders. He sought redundancy pay 'in view of my contribution since joining the company and the excellent profits produced I feel that fair redundancy is the very least I should expect'. On 14 September Aradlay refused to make such a payment. Mr Douglas advised that: 'The board firmly believes that you have been offered a position which is practically the same as your previous position on similar if not higher remuneration. Our advice is that where such an offer has been made and that offer is unreasonably declined then you forfeit any right to redundancy payment. Further to the above you were advised of the offer of employment with Elders as early as 12th June 2001, and in subsequent meetings with Elders representatives during the first week of July. The Elders offer still stands but at some stage they will need to set a deadline for a decision from you, at which time you will need to decide whether to accept their offer or otherwise. Should you decide against accepting the offer, your employment will cease from this date. We believe that this has constituted due notice under the award. Should you elect not to accept the offer of employment with Elders you will be paid out all long service leave and holiday leave entitlements as owed at the date of termination'.

19 In cross examination Mr Douglas explained that he had a sense of frustration at the time. He was being told by Mr English that Elders had not offered him employment and by Mr Cameron, that it had. Elders had made it clear from the early negotiations that it wished to retain Mr English at Bathurst as an employee or a franchisee, given his knowledge and experience. He respected both Mr English and Mr Cameron and in fact had been advised both verbally and in writing by Mr Cameron that employment had been offered. Mr Cameron had written on 31 July that: Further to our telephone conversation this morning, I confirm the offer which has been presented to Mr Peter English and Mr Steve Duff situated at your offices in Bathurst and orange As part of the integration of Aradlay business into Elders separate licencees (sic) will be appointed in each location As part of this process both Peter and Steve will be offered employment with these license holders. Broadly speaking the terms of the employment will be;

· Salary equal to the current level of salary. · Salary package to increase in line with the current value of their vehicle. · Continuous (sic) of their current superannuation. I understand that the salary packages may vary in each situation and due to privacy I have not listed dollar amounts. I trust this helps clarify the situation and should you have any further question, please do not hesitate to call me.

20 In cross examination, Mr Douglas explained that he understood this as confirming that an offer of employment had been made. Whether employment had been offered was the subject of discussion with Mr Cameron on many occasions before and afterwards. Mr Douglas agreed that there was a potential difference between employment with Elders and employment with a franchisee. He understood that Elders operated its business through franchises and that offers of employment were being made with franchisees. He did not, however, regard this as breaching the sale agreement, and understood that Elders was bound by the agreement to offer employment with it or a subsidiary, so did not regard this as an issue. He was also aware, in Mr English's case, from conversations with both Mr Cameron and Mr English, that they had not come to the end of their discussions about Mr English taking up a franchise in Bathurst, despite Mr English's refusal of the Elders' offer. Mr English had approached him for some help, which he had given him. He was hopeful that those negotiations would conclude successfully. Over the years Mr English had expressed interest in operating his own business and so he offered his support and advice in relation to the negotiations.

21 On 17 September, Mr English responded to Mr Douglas, advising his view was that he had no obligation to enter into further negotiations with Elders and that Aradlay was obliged to pay him redundancy pay. Nevertheless, the discussions between Mr English and Mr Cameron were still continuing, as Mr English's fax to Mr Cameron of 25 September makes clear.

22 On 18 September, Mr Douglas wrote again to Mr English, advising of the takeover of the Bathurst branch by Elders on 28 September and confirming the date of termination of the employment of all employees, including his, as 28 September, when 'all outstanding leave entitlements will be paid out.' On the same day, Mr English spoke to Mr Cameron, who then wrote to him advising that he was aware of the termination date of the Aradlay employment on 28 September and that: 'As of this point the staff and you will come under employment through the Elders Agent for the Bathurst region.'

23 There was no written response to this offer from Mr English. Nevertheless his evidence was that he continued his discussions with Mr Cameron and that as a result, he continued working at the branch after 28 September, for which he was paid by Golf n Gear. His evidence was that his work was largely unchanged.

24 On 28 September, Aradlay paid him his accrued annual leave, but no long service leave. In cross examination, Mr Douglas explained that this payment accorded with his discussions with Mr Cameron. Under the sale agreement, there was to be no such payment, but he and Mr Cameron agreed to depart from that course in Mr English's case. As to long service leave, at that time Mr Douglas understood that Mr English had no rights to long service leave, because of the provisions of the Insurance Award, which he understood applied to his employment. If Mr English later accrued such rights, Aradlay had an obligation under the sale contract to contribute to that payment.

25 On 2 October, Mr English provided Mr Cameron a signed tax file number declaration. It identified Golf n Gear as the employer, but Mr English explained that when he signed the declaration, this part of the form had not been completed. Mr Carpenter signed it on 12 October. Mr English's evidence was that he had no discussions with Mr Carpenter, who he knew. His discussions were all conducted with Mr Cameron. In cross examination, he explained that he had given no thought to becoming an employee of Mr Carpenter. He accepted ongoing employment while the franchise discussions continued. He understood Elders was providing Mr Carpenter with the money for his salary, which Golf n Gear was passing on. He believed Elders was in reality paying him and he understood the arrangement to be temporary, until the franchise was finalised.

26 Golf n Gear paid him at the rate of some $72,0000, the grossed up value of his former package with Aradlay, including the car component, as Mr Cameron had earlier advised Mr Douglas. This was obviously an advantage to Mr English, because he was also able to continue using Aradlay's car, as the result of an arrangement made between Mr Douglas and Mr Cameron.

27 Mr English and Mr Cameron pursued their ongoing discussions about the Bathurst franchise. In October, Mr English was provided with further information by Mr Cameron and as he explained in cross examination, satisfactory terms were agreed between them, subject to the formal terms of the franchise agreement being agreed and Mr English's questions about financial information he had been provided, including in relation to the Elders' business he would be purchasing from Mr Carpenter, being satisfied. There was to be a 10-year term and Mr English was to purchase the Aradlay business in Bathurst, as well as Elders' Bathurst business from Mr Carpenter and Mr Gregory.

28 In January, Mr Cameron instructed that henceforth only Elders products were to be sold. In February, Aradlay advised Mr English that 'Aradlay services to Elders Aradlay offices will cease on 28 February 2002'. He was asked if he was interested in purchasing the vehicle he was using. Mr English was not and a disagreement developed as to its return. Aradlay collected it on 28 February, in circumstances he found unnecessary and embarrassing. He later received a group certificate from Golf n Gear, indicating that his employment with it had ceased on 28 February. He was, however, paid no pro rata annual leave or long service leave on termination.

29 Elders also provided further details to Mr English about the franchise in February. He then incorporated Central West on 19 February, in order to pursue his discussions with Elders, upon being advised that it did not deal with individuals. On 18 March, he discovered that Elders had begun depositing into his account wages for him and others employed at the Bathurst office. He spoke to Mr Cameron. The first payment went to his personal account before he expected and the later payments went into that of Central West. Mr English's affidavit evidence was that he had been given no notice of this, although it was apparent from his answers in cross examination and documents in evidence, that this payment reflected the fact that it was agreed between Mr English and Elders that he would begin operating the franchise as from 1 March, even though final agreement on the terms of the franchise had not been reached. An 'Insurance Consultant Appointment Details' form was completed, which noted that Mr English had become a consultant for Elders at Bathurst from 1 October, with an annual retainer of $90,000, excluding GST. Mr English was to meet mobile phone and car costs. Mr English signed it on 5 February.

30 From 1 March, Mr English used his personal vehicle in the business. He paid employees and received a retainer to pay his own wages and run the company. Out of the retainer he paid expenses such as petrol, phone costs, workers compensation, insurance and accountant's fees. When he questioned Mr Cameron as to what the sums deposited into his account were for, he was promised something in writing, but nothing was ever provided. In cross examination, however, he agreed that these arrangements accorded with the agreement he had reached and what he expected in operating the franchise.

31 On 23 April, Mr English received a disclosure document from Elders. He was dissatisfied with its terms and had still to receive outstanding financial information. In June, more information was provided and he became aware of a disagreement between Elders and another franchisee, over transfer of staff entitlements from Aradlay. Emails were exchanged as to details of the information provided by Elders and its basis. On 16 July, Mr English declined the franchise offer and left the Bathurst operation, having decided to go into business as an independent multi agent. His advice was: 'I have given considerable consideration to the offer of a franchise and have decided not to proceed.

The documentation that I have from the solicitors is not even close to the agreement I had negotiated with Ewen and is not a contract that I would be prepared to sign.

I have been unhappy with the time it has taken to put the deal together and to now find that there are changes is most disturbing. I have not even been able to have Wayne Carpenter supply a detailed list of the clients I am supposed to purchase form him and he has never explained how he arrived at the original figures.

Just a couple of concerns were: The deal with Ewen was for Bathurst. This is now Piper Street. No fall clause as agreed on the entire purchase. (Elders, Carpenter & Gregory) The book was supposed to be the guarantee of the loan.

In view of this I have decided that it would be best for all concerned if I left and struck out on my own as a small agent.

In anticipation of your request, I have vacated the office and handed my keys to Graeme Bell.

I have a great admiration for Graeme's abilities and I am confident of the Bathurst offices long term future. I am sorry that I will not be a part of its continued growth.

Should you wish to contact me you can call my mobile ... or Email....

Once again, I am sorry but I feel that this decision is in my best interests.

32 In November 2002, he was informed by Elders of an alleged overpayment and in March 2003 proceedings were commenced to recover a sum of $17,562.98.

33 Mr English also filed an affidavit in reply in which he contradicted, in a number of respects, the evidence given by Mr Douglas and Mr Cameron (in an affidavit ultimately not tendered when Mr Cameron was not called). Importantly, his evidence was that on 7 June, Mr Cameron had informed those present at the meeting that they would not be offered employment with Elders and that Mr Smillie, who remained at the meeting after Mr Douglas left, had also left the meeting, after telling those present that he could not tell them anything about the sale. As to Mr Cameron's letter of 18 September, offering him employment, Mr English asserted that Mr Cameron later informed him that only support staff was being offered employment and not him. He would have to decide whether he would take up a franchise. He was never formally offered employment 'with Elders, or any other entity under a transitional arrangement. I understand the interim arrangement was a measure used by Elders to cope with the transition. I do not know who my employer was during this period'.

34 As I noted earlier, in cross examination Mr English explained that this was not technically correct. He understood his employer was Elders. It was reimbursing Golf n Gear for the payments made to him.

Was the contract unfair in not providing for 12 months notice of termination? 35 It was common ground between the parties that there was no written contract of employment between them and no express term agreed as to notice. It follows that reasonable notice of termination was required to be given by Aradlay, under the term implied at common law. The fairness of the contract, in those circumstances, nevertheless here arises for consideration. (See Reich v Client Servers Professional of Australia Limited (Administrator Appointed) (2000) 99 IR 69.)

36 This question must be answered in a context where Mr English was advised by Aradlay of the sale to Elders in early June 2001, immediately upon the sale agreement being concluded and that he would be offered continuing employment with Elders. The advice was confirmed in a memo. He was given written advice on 25 June that his employment with Aradlay would continue for a further three months, or until he had entered a franchise agreement with Elders, if that occurred earlier. He was also later offered the opportunity to acquire an Elders' franchise upon the termination of his employment, which he declined. He was formally advised on 18 September that his employment with Aradlay would terminate on 28 September.

37 Throughout this time Mr English had ongoing discussions about his position, both with Mr Douglas and Mr Cameron, while protesting to Aradlay that he had not been offered employment and in any event, had no obligation to enter into any arrangement with Elders.

38 In those circumstances, it would be to ignore reality, to proceed on the basis that as at 28 September, Mr English had been given no notice of the termination of his employment until 18 September. While the date of the termination of his employment was not specified on 7 June, the advice given on 25 June was clear. The precise date was confirmed on 18 September. It follows that Mr English had at least three months' notice of termination.

39 That notice operated in a context where, since early June, he also knew that the Aradlay business had been sold as a going concern to Elders and that consequently, his employment with Aradlay would come to an end, in circumstances where steps had been taken to ensure that employees would continue in employment in the business, on the same terms and conditions. The end result was that after over eight years' successful service as Bathurst branch manager, earning a package worth around $72,000 in total on termination, his employment came to an end on 28 September.

40 While three months' notice might have fallen at the lower end of the scale of what fair notice in such circumstances might require, before exercising the discretion to make an order to vary the contract to require more notice, consideration needs to be given to the practical result of such a step. Even if the view could be properly reached, that Mr English only received 10 days notice of termination, so that the obligation to give reasonable notice was thereby entirely breached, considerations of what must flow from that conclusion could also not be overlooked.

41 The fact was that despite his ongoing protestations to Mr Douglas and his affidavit evidence, Mr English was offered and accepted ongoing employment and continued working in the business after 28 September, on a basis which was financially advantageous to him, even though on his evidence, he understood it was to be a temporary measure, pending finalisation of the franchise agreement, which he was negotiating with Mr Cameron. Initially he received salary of some $72,000, representing the value of his former package, plus the use of a car. In February a $90,000 retainer was agreed, with he to pay mobile phone and car costs.

42 In cases of transmission of business, where employees receive ongoing employment on the same terms and conditions, questions of breach of contract for failure to give notice do not often arise, because of the operation of the principle of mitigation. In such cases, the employee has mitigated any loss suffered, by taking up the ongoing employment available.

43 Here, it was argued that the Court, for a number of reasons, should not apply the principle of mitigation. That the new employment was not with Elders, but rather with a franchisee; that it was temporary, pending finalisation of the franchise; that it might have involved a demotion, given that there was no responsibility for Cowra and the franchisee might not have given Mr English the autonomy which he enjoyed, when employed by Aradlay. Similar arguments were advanced in relation to the franchise arrangement, which was practically implemented in March. Going into business as a franchisee was said to be different to ongoing employment with Elders and no account should be given to any earnings flowing from that arrangement.

44 I am unable to accept any of those arguments. If there was, in truth, a breach of the contract, by only 10 days' notice being given, Mr English had an obligation to mitigate his damage. That obligation cannot be ignored, as s 106(6) makes clear. While, as the Full Court in Westfield Holdings v Adams (2001) 114 IR 241 observed, it will not be appropriate in every case to apply the principle strictly, here I can see no reason why it should not be given its full force.

45 It seems to me that there is a considerable public interest in companies which dispose of their businesses as a going concern, acting as Aradlay did and negotiating terms with a purchaser, which ensure that employees have ongoing employment, on similar terms and conditions. The dislocation which results from unemployment, is obvious. While redundancy pay is designed to ameliorate those consequences for employees, it cannot be doubted that ongoing employment is preferable. In considering the question of mitigation, that is something which cannot be overlooked.

46 In this case, the fact was that Mr English kept working as an employee in the Bathurst office, doing essentially the same work, albeit without responsibility for the Cowra office. There was no evidence that he had less authority than before in that position. His financial position was better as a result. The employment was understood by him to be temporary and he was uncertain as to the identity of his employer, although in cross examination he asserted a belief that it was Elders. While Mr English was dissatisfied that he had not received redundancy pay from Aradlay, the new employment nevertheless in reality continued, without any apparent difficulty or complaint, from 28 September to the end of February - some five months. During that period, any loss was entirely mitigated.

47 The employment came to an end in February, as the result of the agreement then reached with Elders. While in these proceedings, Mr English complained that he had no choice but to enter the franchise, because he was not being offered ongoing employment, it cannot be overlooked that on his own evidence, he was also content with the agreement he had reached with Mr Cameron, as to the basis of the franchise and so agreed to implement it in March, before formal agreement was reached.

48 It was, of course, Mr English's case that a period of five months' notice was not adequate in his circumstances. Indeed, it was submitted that judicial notice would be taken of the fact that his remuneration package for his position was low, a factor which should lead to longer notice being given. That submission cannot be accepted, particularly given the High Court's approach in Gattalero v Westpac Banking Corporation [2004] HCA 6, where the view was taken that the common law doctrine of judicial notice no longer operates in New South Wales, because of the provisions of s144 of the Evidence Act, which have codified the applicable principles. The section provides: 144 Matters of common knowledge

(1) Proof is not required about knowledge that is not reasonably open to question and is: (a) Common knowledge in the locality in which the proceeding is being held or generally, or (b) Capable of verification by reference to a document the authority of which cannot reasonably be questioned. (2) The judge may acquire knowledge of that kind in any way the judge thinks fit. (3) The court (including, if there is a jury, the jury) is to take knowledge of that kind into account. (4) The judge is to give a party such opportunity to make submissions, and to refer to relevant information, relating to the acquiring or taking into account of knowledge of that kind as is necessary to ensure that the party is not unfairly prejudiced.

49 That Mr English's remuneration for his position was low is not, in my view, either knowledge that is not reasonably open to question; common knowledge, or knowledge capable of verification by any document, the authority of which cannot reasonably be questioned. It is, therefore, not a matter falling within s 144. Nor is it a factor which could properly impact upon notice fairly required, in the way asserted.

50 In my view, five months' notice would have been fair notice in the circumstances of this employment, given matters such as Mr English's age, position, his remuneration, the circumstances in which he came to be employed and how and when his employment came to an end, after some eight years' service.

51 It is also relevant that from 1 March to 16 July, a further period of over four months, Mr English operated the Elders' franchise, it appears successfully and without complaint, essentially continuing to perform the same work, albeit now on his own account, rather than as an employee. Under that arrangement, while not an employee, on the evidence, he also appears to have completely mitigated his losses, until he abandoned the franchise without notice. If that further period is taken into account, there cannot be any doubt that he had mitigated all of his losses during a period of fair notice, assessed even on the most generous terms conceivable.

52 I am entirely unable to conclude in the circumstances of this case, that justice could be achieved between these parties, if the contract was now varied to require the giving of more notice.

Was the contract unfair in not requiring redundancy pay on termination?

53 It was common ground that there was no contractual entitlement to redundancy pay, which Mr English argued in these proceedings made his contract relevantly unfair. Aradlay's case was that fairness would not require a payment for redundancy in the circumstances, given that the business was sold as a going concern and Mr English accepted ongoing employment in the business.

54 In his negotiations with Aradlay, Mr English complained that he had never been offered employment with Elders. In his evidence, Mr English initially complained that he was unsure as to who his employer was and that the employment was, in any event, only ever intended to be temporary, while the franchise negotiations on foot between he and Elders, were pursued. He resiled from this in cross examination, stating his belief that it was Elders paying him. He nevertheless insisted he was never offered ongoing employment. It was also argued that employment with an Elders' franchisee did not accord with the sale agreement, which Aradlay had made with Elders and that this was also relevant to the question of redundancy pay.

55 In Re Government Cleaning Service Limited (Privatisation) Award (No 2) (1994) 55 IR 199, I observed at 218: When a business is sold, or a governmental undertaking privatised, the original employment comes to an end. Employees do not always obtain work with the new employer. The fact that the old employer assists the employees to obtain work with the new employer, does not alter the consequence, that the termination of the original employment arose as a result of the employer's decision, that it no longer wished any of its employees to perform the jobs they were performing and not through any fault on the employee's part. It seems to me that employees in that situation have been made redundant, whether or not they are assisted in obtaining alternate employment.

56 I also went on to observe, however, at 219 that: Whether in such circumstances an industrial tribunal should exercise its discretion to make an award of redundancy pay is a different question, the answer to which will depend upon the particular circumstances involved. In the TCR Case and under the EP Regs it is clear that no such payments are to be made in cases of succession, assignment or transmission of business. What the outcome in terms of redundancy pay should be in circumstances where a Governmental undertaking is privatised must be decided on the facts and circumstances peculiar to the privatisation.

57 Similar considerations arise here. In that case, I concluded that there were a number of features of the transaction under which the business in question was transferred as a going concern, which led to the conclusion that a redundancy award should be made. They included that the sale had been structured to ensure that transferring employees did not receive superannuation benefits available under the relevant superannuation schemes to those made redundant; that the employees had been offered employment for three or five years, depending upon satisfactory performance of their employer's cleaning contract, rather than ongoing employment, not subject to such a limitation; and the consequence that under the relevant award provision, there was an exclusion from redundancy pay for termination arsing from 'the ordinary and customary turnover of labour'. Also relevant was that conditions of employment had been altered in the new employment, including reduced long service leave entitlements, wages, hours, maternity leave and sick leave.

58 The situation here was plainly not comparable, because terms and conditions in the new employment were not reduced, but enhanced. Superannuation was unaffected. Nevertheless, the applicant understood that the employment was only temporary, because of the franchise arrangement which Elders wanted him to enter and which he pursued in discussions, to the point of agreement. Aradlay argued that if correct, this outcome was not one reached as the result of its conduct. It had resulted from the conduct of Elders and the agreement it had reached with Mr English. Aradlay ought not to be made accountable for those developments.

59 Mr English argued that Aradlay should be held to account for the unfairness which resulted, because, despite the terms of the sale it had negotiated, Aradlay stood by when it became apparent that Elders did not propose to offer Mr English ongoing employment, in breach of the sale agreement. Aradlay was aware that Elders was only ever prepared to engage him as a franchisee. This Mr Douglas denied. He agreed that he was aware that employment with franchisees was being offered, as well as franchises to employees such as Mr English. He understood that Mr English was to be given a choice. He thought the franchise offer was a positive development and was anxious that Mr English and the other branch managers have the opportunity to make that choice. He also accepted that employment with a franchisee was not necessarily the same as employment with Elders. Nevertheless, upon being told by Mr English that he had not been offered employment, he made enquiries of Elders and was assured that he had been. He ultimately relied on Elders' contractual obligations.

60 If it was, in fact, Elders, which became Mr English's employer, the contractual obligation was, of course, satisfied. The argument that it was employment with the Orange franchisee which was offered, and accepted, flowed from the payments, made by Golf n Gear and Mr Cameron's letter to Mr Douglas.

61 It seems to me that the fairness of the contract in relation to redundancy pay, must be assessed by considering what transpired in the employment. Aradlay refused to entertain making a redundancy payment, because of the steps it had taken to ensure that Mr English had ongoing employment in the business it had sold, on the same terms and conditions. Despite Mr English's protestations to Aradlay, that he had no obligation to enter any arrangement with Elders, he in fact accepted employment in the business on more generous terms, albeit while franchise negotiations were pursued. Aradlay was aware that both Mr English and Elders were pursing their discussions about a franchise agreement. I do not accept that the possibility that after the termination, that Elders and Mr English might have agreed upon a franchise arrangement, can have made the employment agreement unfair in not providing for redundancy.

62 No doubt, had Aradlay been prepared to make Mr English such a payment, Mr English would have been financially better off. He believed he should have been granted redundancy pay, given the contribution he had made to the success of the business over the years. That, however, is not a basis for redundancy pay being ordered. As explained in Westfield, the focus of redundancy pay is to compensate employees for loss of non-transferable benefits and for the inconvenience and hardship caused by termination.

63 Here, Aradlay ensured that there was ongoing employment, on essentially the same terms and conditions, upon the sale of the business as a going concern. Mr English had substantial accrued entitlements to sick leave, which would have thereby continued in the new employment. The entitlement was not separately referred to in the sale agreement, like long service leave and annual leave, but it was common ground that it was an entitlement that Mr English had under his contract. Aradlay understood that it had an obligation to indemnify Elders, if the sick leave ever crystallised. That obligation was in fact the subject of discussion between Mr Douglas and Mr Cameron, albeit in respect of another employee. Such entitlements are not paid out on termination.

64 Mr English was however, then paid out his annual leave entitlements, a payment about which there was no complaint, but which should not have been made, if in fact Mr English took up employment with Elders. If the employer had in truth been the franchisee, the payment would have fallen due under the Annual Holidays Act 1944. I will return to deal with the question of long service leave, below.

65 There was no break in Mr English's employment. As a result of the agreement reached with Mr Cameron, it continued unaltered, other than as to the employer, reduced responsibilities and increased recompense. While he complained to Aradlay that Elders had never offered to employ him and that he was not, in any event, obliged to accept any offer it made, he in fact accepted and continued in the position of branch manger as the result of his discussions with Mr Cameron. There was no suggestion that he suffered any adverse consequences from the sale, or this development, such as hardship from unemployment, or the loss of non-transferable credits. In reality, that only arose as the result of the decision to begin operating the franchise in March and then the decision to walk away from it in July. It can hardly be thought that at either of those points, Mr English should have been treated as if redundant. If that be the case, it is difficult to see why he should have earlier received redundancy pay from Aradlay.

66 Mr English would have preferred if Aradlay had not disposed of its business and he could have continued in its employ. He also complained that he was forced, in effect, to enter into franchise negotiations, because Elders gave him no choice. I am unable to come to that conclusion.

67 The sale agreement required that he be offered employment. Mr Cameron repeatedly assured Mr Douglas that employment was being offered. He confirmed this in writing, albeit there making reference to employment with a franchisee. In correspondence from Elders, employment was offered to Mr English, in rather ambiguous terms, so far as the identity of the employer was concerned. It might have been the case, that in breach of the agreement, it was employment with an Elders' franchisee, rather than with Elders direct, which was offered and accepted. Mr English was left in confusion as to the identity of the employer, but believed that it was Elders. Mr Cameron was not called to give evidence. Nor was Mr Carpenter. The conclusion that Mr English was only offered employment, until the ongoing franchise negotiations were concluded, must rest on the evidence given by Mr English, in his affidavit in reply, that immediately upon making the written offer of employment to him, Mr Cameron spoke to him and advised him to the contrary, by saying: '... My facsimile to you on 18 September 2001 is an offer for employment only to the support staff of that branch after the changeover period. You Peter will have to decide whether or not you are going to enter into a franchise arrangement ... '

68 Such advice would have been in direct contradiction of the written offer made to him earlier that day by Mr Cameron and in breach of Elders' obligations under the sale agreement, which Mr Cameron had negotiated. Mr English was not cross examined about this, at a time when it was expected that Mr Cameron would be called to give evidence in the proceedings. It was submitted that the evidence must be accepted. I, nevertheless, have real difficulty in concluding that such was the true force of what was put to Mr English. The evidence as to the communications between Mr English and Mr Cameron showed that there was much room for misunderstanding as to what was being put and the real effect of the steps being taken, in the ongoing negotiations and arrangements which they were then each actively pursuing with each other, to the point of agreement shortly afterwards. If there be an evidentiary onus in this case to establish who Mr English's employer was after 28 September, it fell upon Mr English. I am unable to conclude on the evidence that it was established that the employer was Golf n Gear, rather than Elders and that the employment contract had the limited life Mr English understood.

69 In those circumstances, I am, on balance, unable to come to the conclusion that this contract was unfair in not providing for redundancy pay on termination. Such a conclusion must have regard to what options an employee has on termination of employment, in circumstances of redundancy, as well as how he or she exercises them. Redundancy is, after all, concerned with the consequences of termination for the employee, especially where unemployment results, or the accrued benefits of the former employment are lost. On the evidence that was not the situation Mr English found himself in.

70 A conclusion that the employment contract between Aradlay and Mr English was unfair in not requiring redundancy pay in the circumstances, could only rest upon a consideration of the conduct of Elders, it being established as having involved a breach of the sale agreement, in which Aradlay acquiesced. It was not Mr English's case that if he had been offered ongoing employment with Elders, that his contract with Aradlay would have been unfair in not providing for redundancy pay. Nor was it established that Aradlay was always aware that Elders intended not to abide by the sale agreement and stood idly by, nevertheless. That, in my view would not reflect a fair understanding of Mr Douglas' evidence.

71 Mr Douglas believed that the opportunity of becoming a franchisee was an attractive alternative to ongoing employment for the Aradlay branch managers, which they should have an opportunity to consider, as well as ongoing employment. He was aware of the offers of employment with franchisees, who would have been the branch managers (or their companies), in the case of other employees, if they had accepted the franchises Elders was offering them. While Mr Douglas' appreciation of the consequences of employment by a franchisee, proved to be somewhat deficient so far as Aradlay's obligations to pay long service leave entitlements were concerned, a matter to which I will return, I do not accept that Aradlay connived at a breach of the sale agreement, to the detriment of Mr English and by implication, to other employees.

72 The evidence showed that Mr English had rejected an offer of a franchise, which Elders made to him in August, Aradlay being aware of that offer and Mr English's interest in that opportunity, as I have noted. Discussions about a franchise continued in a context where Mr English was undoubtedly offered employment and accepted it, after receiving final confirmation of the date of termination of his employment from Aradlay, despite his protestations that he had received no offer and was not obliged to accept it anyway. Mr Cameron later put a second franchise proposal to him. He was interested in what was put and in fact, after successful discussions, agreement on acceptable terms was reached, subject to the terms of the franchise agreement itself being agreed, and the provision of certain financial information, to confirm the basis of the proposed purchase price.

73 The employment continued until Mr English incorporated a company to operate the franchise and in practical reality, started conducting the business, before any agreement had in fact been finalised. The franchise did not come to pass eventually, because Mr English was concerned about Elders' delay; the terms he was finally offered, which differed from those negotiated and because of his concerns about the provision of financial information, had not been adequately addressed. Rather than discussing these concerns with Elders and seeking to resolve them, Mr English preferred to start his own business as a multi agent and did so.

74 Even if I were to come to the conclusion that Aradlay had some responsibility for these developments, the applicant would have had to establish, on the evidence, that the franchise terms to which he in fact agreed and was content to begin operating the franchise upon, put him into a worse position than he would have been in, had the employment which the sale agreement contemplated, come about, or had continued, if it was in fact, Elders which became the employer. That exercise was not attempted. It may have been the case that Mr English was, overall, better off under the franchise arrangement he had agreed with Mr Cameron. It is unhelpful to speculate.

75 The franchise was finally not implemented, because of Mr English's concern that Elders had reneged on their deal and had failed to satisfy his concerns about various financial matters. Nevertheless, the evidence as to his position after 1 March under the franchise arrangement, suggested that he was no worse off, given the terms of the arrangement in place.

76 The evidence also showed that Mr English's financial position only deteriorated later when, in July, he decided not to proceed with the franchise, or to pursue further negotiations about terms with Elders, but to strike out on his own. There was no basis upon which it could be concluded that Aradlay should fairly be made accountable for the consequences of that decision.

77 In all of those circumstances, I am unable to conclude that the contract was unfair in failing to provide for redundancy pay. The business was sold as a going concern. Continuing employment on more generous terms was available to Mr English and he took it, while he pursued a franchise opportunity in which he was, on his own evidence, interested. That situation appears to have caused no real difficulty at the time. The problem was always, as Mr English agreed in his evidence, his preference that Aradlay pay him redundancy pay, notwithstanding the employment he took up and the franchise he later agreed on. Given the sale agreement Aradlay negotiated, it refused to do so and made no such payment.

78 I can find nothing unfair in the contract as a result.

79 A different conclusion must be reached in relation to long service leave. The sale agreement contemplated that the new employment would be ongoing and that employment would be with Elders, or Elders Insurance Brokers. Elders was not joined as a respondent to these proceedings by either party. Who Mr English's actual employer was after 28 September, is not entirely clear on the evidence. The evidence points in two directions. In reality, Mr English believed it was Elders.

80 The sale agreement made no reference either to a franchise agreement being offered to an employee such as Mr English, or to employment with an Elders' franchisee. As Mr Douglas recognised, employment with a franchisee would not necessarily be the same as with Elders. Questions of financial viability and ability to meet ongoing obligations might arise in future, although it should be noted that no such concerns were in fact raised, so far as Golf n Gear was concerned. Nevertheless, given that such a franchisee was not a party to the sale agreement, it would have no contractual right to look to Aradlay for a contribution to entitlements such as long service leave, if they crystallised in future, as the agreement contemplated Elders could do. This also could have had an adverse impact upon affected employees.

81 Mr English's employment came to an end in September. Aradlay then paid him outstanding annual leave, but not long service leave, despite the advice Mr Douglas had earlier given him. He was later paid nothing in respect of further accrued annual leave, when the employment arranged by Elders came to an end in March, nor anything in respect of long service leave in relation to his employment with either Aradlay, or as Elders had arranged. Had Mr English refused the offer of employment, Aradlay would have been obliged to pay his long service leave on termination. The same result would have flowed, if he became an Elders' franchisee upon termination, rather than taking up employment.

82 While it was submitted for Aradlay, in this context, that a commercial reading of the sale contract could encompass that the parties had contemplated that employment with a franchisee could be offered, in conformity with the obligations of the agreement, I am unable to so construe clause 10. The agreement makes no reference at all to franchises or franchisees. It is concerned with the terms upon which the parties will deal with each other in relation to the sale of the Aradlay business as a going concern. To so construe the clause would require the reading in of a number of words, which the fair and ordinary meaning of the words used, would not carry. Nor can it be seen that such a reading would be consistent with the commercial intent of the agreement. To the contrary, it would appear to be quite at odds with the arrangements and indemnities upon which the parties had agreed, as between each other.

83 The authorities relied upon, such as Pan Foods Company Importers & Distributors Pty Ltd and Ors v Australia and New Zealand Banking Group Ltd and Ors (2000) 170 ALR 579 and Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, do not assist. They talk about commercially sensible constructions of commercial contracts being more likely to give effect to the intent of the parties. Here, the evidence as to the parties' intent, was not consistent with the construction urged. Nor do the words readily permit such a reading, on a commercial basis, or otherwise. The words are that 'the Purchaser will offer or procure the other company in the Elders group to offer employment to the employees of the Vendor'. The Elders Group is a defined term. An offer of employment with any person or entity, other than one of the two in the Elders group, was clearly not contemplated by the parties to the agreement.

84 The terms of the sale agreement must also be understood in a context where, at the time of the agreement, Aradlay and Elders were proceeding on the understanding that the Insurance Award applied to the employment of three Aradlay employees. Under that award, no entitlements to long service leave apparently accrue until after 10 years' employment. Mr English did not have that length of service. That was why, in the schedule to the sale agreement, he is reflected as having no entitlement to long service leave. If he, (or other employees), achieved such an entitlement subsequently, Aradlay accepted that it had an obligation under the agreement to make a contribution to the leave, which Elders would then have been obliged to pay him, under the indemnity provided in clause 8.

85 There was no such indemnity given in favour of unidentified franchisees. In a case such as that of Mr English, his company, Central West, which was intended to become the Bathurst franchisee and which in fact operated the franchise for some months, was not even in existence, at the time of the sale agreement. This, too, militates against the construction for which Aradlay argued.

86 The parties' understanding of the application of the award was in these proceedings conceded to have been incorrect. The award did not apply to the employment, but the provisions of the Long Service Leave Act (1955) did. Under that legislation, an entitlement to long service leave arose after five years' service, in circumstances such as these, unless there was a transmission of business and Mr English became an employee of the transmittee. There were also transmission provisions in the Annual Holidays Act, but Mr Cameron and Mr Douglas agreed with each other that Mr English's annual leave entitlements should be paid out. Mr English made no complaint about this and indeed, it proved to be to his advantage, given that the following March neither pro rata annual leave entitlements, or any of his long service leave entitlements, were paid.

87 The evidence in this case showed that Elders went to considerable pains to ensure that it was the Orange franchisee which paid Mr English. In correspondence, Elders referred to employees being offered employment by franchisees. Nevertheless, the only evidence that it was the Orange franchisee which became Mr English's employer, was the fact that it paid him and that its name was later inserted in the tax declaration form which Mr English completed and provided in blank to Mr Cameron. Otherwise the evidence pointed to Elders.

88 In these proceedings, where neither Elders nor the Orange franchisee is a party and where no evidence was called from Mr Cameron or Mr Carpenter, it is difficult to reach a conclusion, as to who the employer was. Did Elders ever have the requisite intent to enter into any contract of employment with Mr English? On his evidence, Mr English plainly did not intend to become an employee of the Orange franchisee. He believed he was agreeing to an arrangement as to payment, which was in fact being met by Elders. The Orange franchisee was not a party to the sale agreement with Aradlay; Mr Carpenter appears to have had no discussions with Mr English about employment; and there was no evidence that he or Golf n Gear made him any offers of employment. The evidence certainly did not show that Mr Carpenter, or Golf n Gear, become a transmittee of the Aradlay business, under the provisions of the Long Service Leave Act.

89 The transmission provisions of that Act, appearing in s4(11), only come into effect, if Mr English's new employer was the transmittee of the business. Had Elders become the employer, there would have been no doubt that it was the transmittee. It had purchased the business from Aradlay. The evidence did not show any transmission between Aradlay and Golf n Gear - at best it only ever operated a part of the business. Nor did it show a transmission from Elders to Golf n Gear. To the contrary, the franchise agreement envisaged for an agreement between Elders and Central West, in respect of the business purchased from Aradlay, as well as the Elders' Bathurst business conducted by Mr Carpenter and by Mr Gregory.

90 In this context, was Mr English's contract with Aradlay fair, in not ensuring that he would be paid long service leave on termination? While the sale agreement contemplated that there would be no payment of such entitlements to employees upon completion of the sale, in Mr English's case Aradlay and Elders agreed to take a different course, understandably perhaps, given that Mr English was insisting he had no offer of employment from Elders and was not obliged to accept it, even if made. In September, Mr Douglas advised him that if he did not accept the offer of employment he had received, Aradlay would pay him his annual and long service leave entitlements on termination. Annual leave entitlements were paid, even though he did take up the ongoing employment on offer, but long service was not, evidently because of the erroneous view then taken as to the application of the Insurance Award.

91 The only conclusion available in all of these circumstances, is that the contract operated most unfairly. No payment of long service leave was made on termination by Aradlay, nor later by the Orange franchisee or by Elders, in the following February when employment ceased and the franchise began to be operated. If the Orange franchisee was the employer, it plainly had no obligation to Mr English under the Long Service Leave Act at that time, as it was not the transmittee of the business. If the employer was Elders, while having an obligation under the legislation, it acted as if it had never employed him and so had no such obligations to him either. The end result was that Aradlay has entirely avoided its obligations to Mr English under the legislation. Further complex proceedings brought under the Long Service Leave Act would be necessary in order to resolve where and when the various statutory obligations arose. Whatever the result, Aradlay's obligation would then crystallise, given Mr English's years of service; the provisions of the legislation and the terms of the sale agreement.

92 That is not an outcome which justice in all of the circumstances before the Court can permit. The evidence showed that when Mr Douglas became aware that employment with a franchisee, rather than with Elders might be offered, he plainly did not give adequate consideration to the consequences for Aradlay, or Mr English, so far as his long service leave entitlement was concerned. In cross examination, he explained that his view was that what employment was offered by Elders, direct with it or through a franchisee, was a matter for it. In so approaching the matter, so far as Mr English's long service leave entitlement was concerned, unfairness plainly resulted.

93 Mr Douglas also explained, that he formed this view in a context where Aradlay's branch managers were themselves being offered the opportunity to become franchisees and he was anxious that they have that opportunity. If this resulted, they, or their companies, would plainly enough have become the ongoing employer of the other Aradlay staff at that branch. The managers themselves would not necessarily have had ongoing employment. Mr Douglas saw this as having advantages for the branch managers. Nevertheless such an outcome, or the result in Mr English's case, if his employer was in fact the Orange franchisee, was inadequately addressed, given the terms of the sale agreement and the operation of the Long Service Leave Act.

94 This might be entirely explicable, given the incorrect view which Aradlay then had as to the application of the Insurance Award. That, however, cannot be a basis upon which relief can properly be declined in these proceedings, as to long service leave. The contract, in so far as it permitted this outcome was unfair and that unfairness must now be dealt with.

95 For all of the reasons given, the contract is found relevantly unfair and is varied, as from the day prior to its termination, to require Aradlay to pay Mr English his statutory long service leave entitlements, upon termination. Aradlay is ordered to pay Mr English the long service leave due to him on termination of his employment in September 2001, together with interest from that date to the date of this judgment.

96 The usual order as to costs would be that the respondent pay the applicant's costs, as agreed or assessed. If the parties are unable to agree, they have liberty to approach. ------------------------

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