Peter English v Aradlay Insurance Brokers Pty Ltd

Unfair contract - Industrial Relations Act 1996 - s 106 - contract of employment - sale of respondent's business - sale agreement provides for continuation of employment on no worse terms than available with respondent - appellant in branch managerial role - appellant alleges purchaser declines to offer ongoing employment but only franchise arrangement - business taken over gradually by purchaser with respondent operating the business during changeover period - further employment arranged with another franchise by purchaser during changeover period - appellant fails to reach agreement with purchaser on terms of franchise and leaves employment - at first instance appellant fails in claim for reasonable notice and severance pay - application for leave to appeal - error demonstrated in relation to severance pay - leave to appeal granted - no error established in relation to period of notice - principle of mitigation considered - no obligation to accept unsatisfactory employment - contract unfair in failure to provide appropriate level of severance pay where ongoing employment not secured by respondent - significant difference between employment and possible franchise arrangement not recognised in original decision - no basis for rejecting appellant's uncontradicted evidence that purchaser refused to offer ongoing employment - appellant not cross-examined on this issue - Court not obliged to accept evidence not called into question but must do so on firmly established basis - no suggestion that appellant's evidence unsatisfactory or inherently incredible or unconvincing - appellant's evidence consistent with other aspects of evidence - rejection of appellant's evidence critical to first instance findings - appellant's uncontradicted evidence accepted on appeal - appeal upheld - respondent to pay 20 weeks' severance pay -costs.

CATCHWORDS: Appeal - Industrial Relations Act 1996 - s 106 - unfair contract proceedings - principle of mitigation considered - no obligation to accept unsatisfactory employment - use of uncontradicted evidence considered - grounds not established for rejection of evidence not cross-examined upon - principles considered.

Brent & ors v Bastian (2003) 124 IR 223 Browne v Dunn (1893) 6 R 67 Collier v Sunday Referee Publishing Company Ltd [1940] 2 KB 647 at 653 Davies v General Transport Development Pty Ltd [1967]AR 371 Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 Hill v C. A. Parsons & Co. Ltd [1972] Ch 305 at 314 King v State Bank (NSW) (No 2 ) (2002) 126 IR 407 CASES CITED: Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419 at 426 Re Government Cleaning Service (Privatisation) Award (No 2) (1994) 55 IR 199 Sydney Water Corporation & anor v Industrial Relations Commission of NSW [2004] NSWCA 436 Westfield Holdings v Adams (2001) 114 IR 241 Yetton v Eastwoods Froy Ltd [1967] 1 WLR 104 at 120

APPELLANT: Mr P Coleman of counsel SOLICITORS: Carroll & Associates LEGAL REPRESENTATIVES:

RESPONDENT: Mr M Heath of counsel SOLICITORS: Carneys Lawyers

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

FULL BENCH CORAM: Wright J, President Boland J Haylen J 25 July 2005

Matter No IRC 6048 of 2004 Peter English v Aradlay Insurance Brokers Pty Ltd. Application by Peter English for leave to appeal and appeal against a judgment of Justice Schmidt given on 22.9.2004 in matter No IRC 5193 of 2002. JUDGMENT OF THE COURT [2005] NSWIRComm 253

1 The appellant, Mr English, seeks leave to appeal and, if leave is granted, appeals against a judgment of Schmidt J in which her Honour declined to find that the appellant's contract with the respondent was unfair in that it failed to provide for reasonable notice or redundancy pay in the circumstances of the appellant's termination of employment. 2 Mr English had been employed as the respondent's Bathurst branch manager since 1993 having been "head hunted" to take the position. During a period of more than eight years he had successfully undertaken this work, operating in what was described as a fairly autonomous manner and, late in his appointment, had been given additional responsibility for the Cowra branch. Her Honour found that Mr English had undoubtedly contributed to the success of the Bathurst branch by his management and it was part of the appellant's case that he had not only contributed to the financial success of the business but that he had held out to him the prospect of secure employment. 3 The respondent decided to sell part of its insurance business to Elders Insurance Ltd and that sale was completed in early June 2001. On 7 June 2001, the respondent announced to those branch managers affected including the appellant, the sale of its business to Elders. On the same day the respondent issued a memorandum to staff advising that an important aspect of the sale agreement was ensuring that the respondent's staff were not disadvantaged by this development, that the contract for sale included provisions whereby Elders would take on all staff at current salary and package levels, that all long service leave and other leave entitlements would be retained and that all branches would remain open with no staff being asked to relocate. It was emphasised that Elders had made it clear that it wanted to maintain all staff levels in the branches and that management from Elders would be calling meetings in the following days within each branch to meet the employees and discuss their future plans. 4 Her Honour set out an extract of the sale of business agreement whereby, at completion, Elders would offer or procure another company in the Elders' group to offer employment to the employees of the vendor with their accrued annual and long service leave entitlements. The offer of employment would be "on terms and conditions substantially the same" as those under which each employee was employed by the respondent up to the date of completion of the sale. 5 On 25 June 2001, the appellant and other employees were advised that their employment with the respondent would continue for up to three months until franchise issues were resolved and Elders had their systems in place to pay wages and the like. They were also advised that Elders proposed to offer branch managers, such as the appellant, the opportunity to become Elders' franchisees and, although this prospect was not mentioned in the sale agreement, it was seen by the respondent as providing a potential benefit to the managers. An earlier offer for managers to take up franchises with the respondent had not been pursued because not all the managers were interested in that prospect. At this time, the respondent also advised that Elders had undertaken to offer branch managers a franchise agreement "or to become employees of Elders' franchisees in your town". The managers were advised that, if they were not satisfied with the deal being offered by Elders, they should continue to negotiate for suitable terms. 6 It seems that the appellant had already been offered the opportunity of purchasing the Elders' franchise at Bathurst: Mr English received a written proposal in early July 2001, confirming previous discussions, stating a purchase price of $166,188 for the Aradlay business and $15,000 for the Elders business, with Elders offering to fund a loan and provide other benefits. There was to be a contribution to staff wages and other matters. The appellant assessed the total cost to him to be over $290,000 and refused to accept that proposal and he asked the respondent how this would affect his employment. 7 In August 2001, the appellant was advised by the respondent that it was a condition of the sale that the business be sold as a going concern and that Elders was obliged to offer him employment with comparable terms to his current contract. Elders had confirmed their intention to honour this obligation. Because of the need to appoint licensees in individual towns there would be a delay in becoming Elders' employees and formal offers were to be made after the licensees were appointed. The respondent advised the appellant to take up the offer when it was received and confirmed that no redundancy payments were proposed by the respondent. 8 In August 2001, the respondent also advised that it had entered into a service agreement under which all ongoing payments of wages and other overheads would be made by it on behalf of Elders for a period of three months. 9

Also in August 2001, the appellant was advised by the respondent that he should take up Elders' offer of employment because the respondent did not intend to make any offer of redundancy having taken advice that where an employee unreasonably declined an offer of alternative employment in circumstances where the employment was substantially the same, then the employee would forfeit any right to a redundancy payment. The appellant responded by noting that he was still employed by the respondent, that Elders had not offered him employment but only an opportunity to enter a service contract at great cost to himself, and that he had no obligation to enter any arrangement with Elders. He sought redundancy because of his contribution to the company. By mid-September 2001, the respondent replied that the appellant had been offered a position which was comparable to his existing position if not on a higher rate and that if he declined the offer of such employment he had forfeited his right to redundancy. The respondent asserted that, as early as July 2001, Elders had made him offers of employment and that its offer of employment still stood although a deadline on acceptance was likely. If the Elders' offer was not taken up then the respondent would pay out all long service leave and holiday leave owed to the appellant at the date of termination, but not redundancy pay. 10 Her Honour records the respondent's frustration at this time - with the appellant saying he was not being offered employment yet Elders advising that they wished to retain him as an employee or franchisee because of his knowledge and experience. At the end of July 2001, Elders advised the respondent in writing that offers had been made to the appellant, and that employment would be with the new licence holders. The respondent did not see any real or significant difference in the appellant being offered employment with Elders as opposed to being offered an Elders' franchise: the effect of the sale agreement was that employees of the respondent would be offered employment on Elders' staff or with a subsidiary. The respondent was, however, aware that Elders was also offering a franchise to managers. 11 On 17 September 2001, the appellant advised the respondent that he was under no obligation to enter into further negotiations with Elders and that the respondent was obliged to pay him redundancy pay. The respondent was aware, however, that discussions were continuing between Elders and the appellant. On the next day, the respondent wrote to the appellant advising of the takeover of the Bathurst branch by Elders after 28 September 2001, confirming that would be the date of termination of the employment of all employees and when all outstanding leave entitlements would be paid out. On the same day, Elders wrote to the appellant concerning the termination date of 28 September 2001, noting at this point that staff and the appellant would be employed through the Elders' agent for the Bathurst region. Her Honour records that there was no response by the appellant to this offer, if indeed it was an offer, but, in any event, discussions continued and, after 28 September 2001, the appellant continued to work at the branch performing largely the same duties. It appears at this point he was not paid by Elders but by Golf n' Gear Pty Ltd, a service company of the Elders' franchisee at Orange. On 2 October 2001, the appellant provided Elders with a signed tax file declaration, although the employer was not identified in this document when it was handed over. The name of the service company, Golf n' Gear Pty Ltd, was apparently inserted afterwards. 12 There was some debate as to whether the appellant had agreed to becoming an employee of the Orange franchisee or Elders, with the appellant at one stage asserting that he had not agreed to become an employee of the Orange franchisee although he did become aware that he was being paid through that franchisee with money being supplied by Elders. He regarded this arrangement as temporary until discussion about the Bathurst franchise had been completed. In addition, while under this arrangement, the appellant was paid his gross salary including a motor vehicle component, although he was able to continue to use the respondent's car as a result of arrangements made between the respondent and Elders. Her Honour noted that this was an advantage to the appellant. 13 It appears that by October 2001, after continuing discussions, terms had been agreed subject to the execution of a formal franchise agreement and certain financial information being provided whereby the appellant would become an Elders' franchisee operator at Bathurst purchasing both the respondent's business and the Elders' Bathurst business. In January 2002, Elders instructed that only Elders' products were to be sold from that office. In February 2002, the respondent advised the appellant that the respondent's services to Elders' offices would cease on 28 February 2002. The appellant's "employment" with the Elders' Orange franchisee terminated on 28 February 2002 and the appellant received a group certificate from Golf n' Gear Pty Ltd. 14 In mid-February 2002, the appellant incorporated his own company in order to pursue discussions with Elders having been advised that Elders did not conduct business with individuals. In mid-March 2002, the appellant discovered that Elders had begun depositing into his bank account wages for both himself and those employed at the Bathurst office and although he was surprised at this occurrence, it appeared to her Honour that it was the result of arrangements made between the appellant and Elders whereby he had begun operating the Elders' franchise in Bathurst from the beginning of March 2002 although no formal agreement had yet been reached or executed. It also appeared that, at this time, the appellant became a consultant for Elders at Bathurst dating from 1 October 2001 with an annual retainer higher than his previous rate but from which he was to pay mobile telephone and motor vehicle costs. It also appeared that the financial arrangements operating at this time had the appellant operating as a de facto franchisee of Elders. 15 Between April 2002 and July 2002 there were further discussions and disclosures between Elders and the appellant relating to the proposed franchise. On 16 July 2002, the appellant declined the Elders' franchise offer and left the Bathurst operation having decided to go into business as an independent multi-agent. In informing Elders of this decision, the appellant took the opportunity to point out how different the proposed arrangement was from that in which in principle agreement had been reached and how unsatisfactory it was from his perspective. 16 From her Honour's summation of the evidence, it appears that the course of the appellant's employment and working history was as follows: (a) for over eight years the appellant was employed by the respondent (having been "head hunted' to work for it); (b) in June and July 2001, the appellant was notified of the respondent's sale of its business to Elders. The appellant's employment with the respondent ended in September 2001 after 10 days' notice had been given; (c) between October 2001 and March 2002, the appellant worked at the same tasks but under arrangements whereby he was paid by an Elders' franchisee, using a service company, Golf n' Gear Pty Ltd; (d) from March 2002 until July 2002 he worked as a consultant to Elders, but effectively operating as a franchisee while the terms of the franchise arrangement were formalised. 17 On appeal, no issue was taken with her Honour's statement of the issues which she described as follows: i. Whether, in all the factual circumstances, the contract was unfair in not providing for redundancy and severance pay on termination of employment. ii. If so, what was a fair redundancy severance payment? iii. Whether, in all of the factual circumstances, the contract was unfair in the amount of notice given to the appellant on termination of employment? iv. If so, in all the circumstances, what constituted a fair notice period?

An issue about long service leave was decided in favour of the appellant and was not subject to review on this appeal. 18 Her Honour considered separately the fairness of the contract in relation to redundancy pay and notice and concluded that there was no unfairness warranting the making of a money order in favour of the appellant. In relation to the claim for 12 months' notice, her Honour noted that there was no provision in the contract and the question was: What would be reasonable notice under a term implied at common law? 19 Essentially, her Honour concluded that it ignored reality to overlook the period between June 2001 and July 2001, when the sale was announced and progressed and when the contract with the respondent terminated on 28 September 2001, with only ten days actual notice being given, as throughout this period the appellant was aware of the sale and its consequences. In this period, he had been offered ongoing employment with Elders. Her Honour did accept that, while in early June 2001 notice of the sale had been given, it was not until mid-September 2001, that the precise date of termination was known. Nevertheless, throughout this period there were discussions as to ongoing employment with Elders. Having recognised the "reality" of that situation, her Honour noted that three months' notice might have fallen at the lower end of the scale for fair notice. Nevertheless, the practicalities had to be considered before making an order varying the contract: even if it could be concluded that only 10 days' notice had been given, the reality was that the entire situation had still to be considered. That reality included the fact that, despite protesting at not being paid redundancy, the appellant was offered and accepted ongoing employment and continued working in the business after 28 September 2001 on a basis that was financially advantageous to him, even though he regarded it as a temporary measure pending finalisation of the franchise agreement. It was noted that his initial salary under these arrangements and his February 2002 remuneration were, if anything, an advantage to the appellant. 20 Her Honour then approached the issue on the basis that, in a transmission of business where continuing employment on similar terms had been arranged, questions of breach of contract for failure to give notice often did not arise because of the operation of the principle of mitigation, with the employee mitigating any loss by virtue of that employment. The appellant argued that there were two distinct periods: immediately after 28 September 2001 and March 2002, where arrangements were entered into whereby the appellant was employed but importantly, it was argued, the mitigation principle should not apply because the employment was not with Elders but was with a franchisee, that it was temporary pending finalisation of a franchise, that it possibly involved a demotion in not having responsibility for the Cowra office, and that the franchise arrangements may not have given the appellant the same flexibility he had enjoyed when employed by the respondent. Franchise arrangements were emphasised as being distinctly different to employment, involving different responsibilities and therefore should not be considered under the application of the mitigation principle. 21 Her Honour rejected these arguments, stating that the requirement of s 106 (6) regarding mitigation could not be ignored. Her Honour saw considerable public interest in companies selling their businesses as going concerns arranging for ongoing employment for their employees: while there was dislocation, continuing employment was a preferable outcome. Her Honour concluded that, regardless of complaints of the temporary nature of some of the employment and the failure to pay redundancy pay, in fact, the appellant was employed in almost the same way and to no financial disadvantage for a period that extended for five months - to the end of February 2002. During that period, any loss was entirely mitigated. Her Honour was of the view that five months' notice would have been fair notice in the circumstances of his employment, having regard to the appellant's age, position, his remuneration, the circumstances in which he came to be employed and how and when his employment came to an end. Her Honour also referred to the four month period when the appellant effectively operated as a franchisee until he abandoned that arrangement without notice. It was noted that, if that period was taken into account, then it was beyond any doubt that the appellant had mitigated all of his losses during that period of notice -assessed even on the most generous terms conceivable. 22 In relation to redundancy, her Honour recorded the appellant's contention that he had never been offered employment with Elders but only to take up a franchise and that the work he performed was merely temporary while these arrangements were being considered. The promise of ongoing employment with Elders therefore never eventuated. Her Honour found her decision in Re Government Cleaning Service (Privatisation) Award (No 2) (1994) 55 IR 199 of assistance in determining what was a redundancy and the circumstances in which an award for redundancy would be made, noting that in test case provisions and statutory provisions, redundancy pay would not normally be available in cases of succession, assignment or transmission of business. Her Honour was of the view that similar considerations applied to the present case. It was noted that the terms and conditions of the new employment proposed with Elders were not reduced but enhanced and superannuation was unaffected. There were none of the disadvantages which had been identified in the Government Cleaning Service (Privatisation) Award case. 23 A further issue in this case was the fact that the respondent argued that it was not its conduct but the conduct of Elders that had resulted in the appellant not obtaining ongoing employment - these were circumstances which would not warrant orders being made against the respondent. The appellant argued that the respondent should be held to account for the resulting unfairness because it had stood by when it became apparent that Elders did not propose to offer him ongoing employment in breach of the sale agreement. At this point, her Honour noted that the respondent in its evidence understood that ongoing employment, in fact, had been offered and would continue to be offered to the appellant although he would be given a choice of taking employment or a franchise. The appellant's evidence was that in September 2001 he had been advised that the written offer of employment was not made to him as manager, but was available only to the support staff and that the appellant had to decide whether or not he wanted to take up a franchise. That contention was contained in the appellant's affidavit in reply and was not dealt with by the evidence of the respondent: as it turned out, the person alleged to have made that statement was unable, because of illness, to give evidence and the statement by the appellant was not subjected to cross-examination. Her Honour appears to have accepted that this was the appellant's understanding but had difficulty in accepting that it reflected what was actually occurring in the negotiations between the parties. Her Honour's view was that there was much room for misunderstanding in these discussions and account had to be taken of the terms of the sale agreement and the various written statements by Elders offering ongoing employment. 24 Her Honour's view on the fairness of the arrangement was influenced by the fact that the respondent had determined not to pay redundancy pay in circumstances where it had made arrangements in the sale agreement for ongoing employment with the purchaser of its business. Further, the appellant had actually continued working with Elders after being terminated by the respondent, allowing for the fact that this employment continued while there were negotiations as to the terms of a franchise that the appellant might take up with Elders. Her Honour noted that there was no suggestion that the appellant suffered any adverse consequences from the sale such as hardship from unemployment or loss of non-transferable credits. The only losses arose from the starting up of his own business which was his decision and could hardly be laid at the feet of the respondent. Redundancy was concerned with consequences of termination for the employee, especially where unemployment resulted or the accrued benefits of the former employment were lost - this did not apply to the appellant. The focus of redundancy pay was to compensate employees for loss of non-transferable benefits and for the inconvenience and hardship caused by termination. In all the circumstances, these issues did not arise in relation to the appellant. THE APPEAL 25 There was no issue raised by the parties contesting the views expressed by the Full Bench in King v State Bank (NSW) (No 2) (2002) 126 IR 407, namely that the appeal was an appeal stricto sensu and was directed at correcting error. The Full Bench was not at liberty to simply substitute its own decision for that made at first instance. Further, pursuant to the provisions s 188(1) it was necessary for the appellant to obtain leave to appeal. 26 The focus of the appellant's case on appeal was that her Honour was in error in effectively holding that comparable alternative employment was offered to Mr English. A central plank of that argument was said to be her Honour's error in rejecting or refusing to accept the appellant's evidence in his affidavit in reply to the effect that he had been advised by Elders that he would not be offered employment but had to decide whether or not to take up a franchise. Apart from the issue of what use was to be made of this piece of evidence, the appellant conceded that there were very few facts in dispute. 27 Of some significance for this appeal is that the appellant accepted that the following matters were made out on the evidence: (a) the sale of business agreement provided that Elders were to offer employment to the appellant and other employees on substantially the same terms and conditions; (b) the appellant was offered a franchise by Elders which involved purchasing and operating a business in Bathurst; (c) on 18 September 2001, the respondent formally gave 10 days' notice of termination of employment to the appellant; (d) the appellant received no termination payments from the respondent; (e) from 1 October 2001 until February 2002, the appellant was employed to perform similar work for similar remuneration. While the identity of this employer was not clear, the respondent informed him that he would be employed through the Elders' agent for the Bathurst region and was also informed by Elders that the Orange franchisee would pay him until the franchise was finalised; (f) in about February 2002, the appellant reached an understanding with Elders, subject to checking and a formal contract, to operate the Bathurst franchise. This agreement, if formalised, required the appellant to pay Elders $254,000 over ten years; (g) between March and July 2002, the appellant continued to work in Bathurst under that understanding; his remuneration from Elders was similar to the remuneration he had received as an employee of the respondent; (h) in July 2002, the appellant ceased working in the Bathurst office of Elders with no formal franchise agreement being signed because of what the appellant regarded as significant differences between the original offer as agreed and the franchise document tendered to him. 28 The appellant continued his assertion that at no time was he offered employment by Elders on either substantially the same terms and conditions or at all. The validity of this assertion turned upon a consideration of the arrangements proposed by Elders and what actually occurred to the appellant after 28 September 2001. The appellant also argued that there were only 10 days' formal notice because the notice to staff of the sale did not specify a date for termination of employment: therefore, her Honour was in error finding that three months' notice was given. The appellant accepted that his earnings remained approximately the same while the franchise was being negotiated, on and off, over approximately nine months after termination but it was the unique circumstances of this case that required those earnings not to reduce what would otherwise be payable in lieu of notice - any adjustment due to mitigation ought only include earnings after the appellant's relationship with the business was finally severed in July 2002. 29 The appellant's case then concentrated upon what were alleged to be errors made by her Honour: it was said the findings that after September 2001 employment was with Elders, that the employment was not temporary and that the appellant left the alternative engagement voluntarily were findings that were not open on the evidence. Indeed, the appellant went so far as saying that her Honour wrongly rejected his evidence in reply, that he had been told by Elders that the offer of employment was not open to him as a manager but only applied to the staff, and that he had to make up his mind whether he wanted to be a franchisee or not. This last error was said to be compounded by the fact that the appellant was not cross-examined upon this evidence, the respondent did not contest it and that there remained no basis therefore to reject the evidence. 30 In dealing with these submissions, it is necessary to keep in mind the nature of the jurisdiction under s 106 exercised by the Court and to understand how her Honour approached this application. It seems abundantly clear from the terms of her Honour's judgment that she was adopting a global approach to what actually happened to the appellant in assessing whether the contract or any associated arrangement was unfair in its terms or operation. Her Honour accurately recorded the evidence called by both sides, including the evidence critical to the appellant's case where the appellant says he was advised that employment was not open to him with Elders but only a franchise. Her Honour spoke of looking at the reality of the matter and thereby disclosed an intention not to be diverted by technicalities but rather looking at all the circumstances for their general effect in assessing whether or not there was unfairness. Such an approach demonstrates no error: for nearly 40 years the Court and its predecessors have been guided by the words of Sheldon J in Davies v General Transport Development Pty Ltd [1967] AR 371 that the provision provides, in appropriate cases, the power to depart from the classic principles of contract law and to deal with "arrangements" between parties whether or not they have formally entered into a contractual relationship. Nor is the Court involved in a rigid exercise of awarding damages calculated on the strict application of common law principles although the approaches of the law in a variety of fields often provides guidance for the just disposition of an application and the making of a money order that is just in the circumstances of the case, once unfairness has been disclosed in the arrangements between the parties: see, for example, Westfield Holdings v Adams (2001) 114 IR 241 at 282-284. 31 In relation to the issue of reasonable notice, her Honour noted that, in fact, for a period of five months the appellant continued to be paid by the respondent because of arrangements of an interim nature made with Elders. Her Honour expressed the view that a period of five months as notice was not unreasonable and here, looked at broadly, there was the continued employment of the appellant by the respondent until the end of September 2001, the continuation of that employment with Elders being serviced by the respondent until March 2002, then the appellant's work for Elders until the breakdown of negotiations on the taking up of a franchise and the termination of that arrangement in June 2002. During this period the appellant accepts that he was not paid less than when he was employed directly by the respondent. During all of this time, the appellant was aware that the business had been sold although the precise date of termination of employment was not known until mid-September 2001 when 10 days' notice of that date was given. 32 Even though the appellant was working during this period, her Honour was satisfied in a general sense that he had adequate notice - during this period it was open to the appellant to find some other suitable employment or employment with which he was comfortable. Although it may not be surprising that he chose to stay with the work he knew while the details of the sale were worked out and also the details of a franchise, nevertheless, in a general sense, there was a period between five months and almost one year during which the appellant had notice that his employment was to terminate. The principle of notice does not require just the payment of salary in lieu of notice as actual notice may be given and worked out, although recent experience suggests that this has become a less frequent occurrence. 33 Quite apart from those considerations as to notice, her Honour turned to consider the extent of mitigation pursuant to the provisions of s 106(6). That provision requires the Commission in making an order under s 106 to take into account whether or not the applicant took any action to mitigate the loss. For a period of four months, the appellant continued to work for and be paid by the respondent followed by work with the Elders' franchisee. Between March 2002 and June 2002, the appellant worked with Elders. During the entirety of this period. the appellant accepts that he was paid no less than the remuneration available to him under his employment with the respondent as at June 2001. Her Honour concluded that there was no loss suffered by the appellant and that there were no reasons why those payments made to the appellant should not be taken into account in mitigation, resulting in no order being required for the payment of money to the appellant on account of appropriate notice. 34 It was submitted that from June 2001 the well settled world of the appellant had been overshadowed by uncertainty both as to when his employment would actually cease with the respondent and what precisely would be his position with the purchaser. Accepting for the moment the appellant's arguments that he was never offered employment with Elders but only a franchise, it was said that this form of engagement was so far removed from employment that it called into question the appropriateness of taking into account the sums actually paid to the appellant during this period. While it may be readily accepted that the requirement to purchase a franchise, to become an employer and to shoulder the responsibility of running a business is fundamentally different to the continuation of a simple employment relationship, such a conclusion is not conclusive when considering the application of the principle of mitigation in s 106 proceedings. 35 It is plain that the assessment of appropriate compensation under s 106(5), and also under s 106(6), involves an act of judgment on the part of the trial judge where the general law principles as to mitigation of damages are relevant but not decisive as to what award is made. In any event, the authorities as to mitigation make clear that while the duty to act reasonably to mitigate damage does not generally require an employee to take employment of a different or inferior kind, that part of the rules of mitigation known as the rule as to avoided loss, or mitigation in fact, means that where an applicant actually avoids loss by obtaining other employment (or earnings), the earnings will reduce the damages or compensation even though the non-acceptance of the other employment would not have constituted a failure to mitigate: relevant authorities include Collier v Sunday Referee Publishing Company Ltd [1940] 2 KB 647 at 653, Hill v C. A. Parsons & Co. Ltd [1972] Ch 305 at 314 and Yetton v Eastwoods Froy Ltd [1967] 1 W.L.R. 104 at 120 which are usefully discussed in Macken et al, Law of Employment, Fifth edition, 2002, at 312 - 313, Freedland, The Contract of Employment, 1976, at 261ff, Freedland, The Personal Employment Contract, 2003, at 362ff and Treitel, The Law of Contract, Eleventh edition, 2003, at p 980. 36 Thus, in the normal course of employment, a person who loses their employment might take up any number of positions, including consultancies on their own account, but what is earned in those endeavours will frequently be taken into account as mitigating the loss, in a practical sense, and reducing the amount of a money order made on the basis of the requirement to provide reasonable notice. On this approach, the details of the manner in which that work was arranged is usually of little moment - irregular and small payments might be disregarded in the exercise of the discretion to make a money order but substantial amounts earned during the period under consideration are likely to be taken into account and serve to reduce the money order made in favour of an applicant. This is such a case and her Honour made no error in the application of the principle of mitigation. The appeal therefore fails in relation to the failure to provide reasonable notice. 37 In relation to the redundancy claim issues of appropriate severance need to be considered separately from the question of notice. In the Termination, Change and Redundancy Test Case (1984) 8 IR 34, it was stated that there were a variety of factors that had been identified as relevant in awarding redundancy, including the mitigation of hardship necessarily inherent in the retrenchment of employees, the financial hardship or fear of it caused by the interruption to employment and disruption to a worker's routine in society including the loss of security of employment. There can be little doubt that in the present case the appellant lost the security of employment with the respondent in circumstances where it had sold part of its business but continued with other aspects of that business. The appellant had been headhunted to join the respondent and after more than eight years' continuous employment was entitled to feel a significant degree of security in that employment. 38 In Brent & ors v Bastian (2003) 124 IR 223, a Full Bench considered the approach to be taken to redundancy pay and the role of mitigation in relation to money earned after termination of employment. The decision at first instance was decided before amending legislation introduced the provisions of s 106(6) regarding mitigation, and the Full Bench therefore considered the circumstances in which general principles of mitigation might apply to redundancy. In doing so, note was made of the earlier Full Bench decision in Westfield Holdings v Adams (2001) 114 IR 241 where the Court said that, ordinarily where an employee has been successful in avoiding his or her loss or has failed to take reasonable steps to avoid loss in the period following dismissal, the Court in determining what is just in the circumstances of the case should give consideration to whether and to what extent any money amount in respect of notice of termination that is contemplated to be the subject of an order under s 106(5) should be reduced by monies earned or imputedly earned in the relevant post-termination period. It would not ordinarily be appropriate to reduce redundancy or severance payments when making orders under s 106 because of the efforts or success of the employee in obtaining alternative employment. Importantly in that case the Full Bench confirmed that the principle of mitigation would not normally apply to monies paid on account of redundancy but that the principle was open for consideration in relation to the amount of notice. 39 Her Honour determined the question of whether or not redundancy pay should be made by the respondent by considering what steps had been taken by the respondent to secure continuity of employment for the appellant. Clearly, the respondent had made provision in the sale agreement for its employees to continue employment with another Elders' entity. Because of the appellant's complaint, firstly, that he was deserving of redundancy pay and, secondly, that no such employment had actually been offered to him by Elders, the respondent made enquiries of Elders and there was evidence of Elders' response in July 2001 stating that the appellant would be offered employment with the licence holder of the Elders' operation in Bathurst. That employment was to be on a salary equal to the current level of salary, the salary package was to increase in line with the current value of the vehicle and there was to be continuity of current superannuation. That letter does not appear to have been sent to the appellant. 40 Significantly, on 3 July 2001, Elders wrote to Mr English referring to previous conversations regarding the structure of Elders at Bathurst following the acquisition of the respondent's business and confirming an offer to the appellant to acquire the servicing rights to the Elders' portfolio. Broadly put, that letter proposed that the appellant enter into the general representative's agreement with Elders, that he purchase the servicing rights to both the respondents and the Elders' business at Bathurst at a total cost of approximately $180,000, that there would be loans available from Elders and that the appellant would employ all staff although there would be some subsidies and contribution made on that account. That proposal was rejected by the appellant. However, on 18 September 2001, Elders wrote to the appellant noting that his employment with the respondent would cease at the end of September 2001, and that: As of this point the staff and you will come under employment through the Elders' agent for the Bathurst region. Your employment will be based on your current terms and conditions. Thank you for your patience through this changeover period and I will be in touch to clarify in the near future. I would appreciate it if you could inform all staff of this offer. 41 The evidence clearly points to arrangements being made by the appellant to secure employment with Elders once it took over the business. There was some evidence that, in the early days after the sale was announced, Elders spoke to the employees concerned and certainly confirmed to the respondent that the appellant had been offered employment, but in circumstances where it was also interested in having the appellant take up the Bathurst franchise. The appellant's evidence seemed to be consistent that, from the very beginning, he informed the respondent that he was redundant and that he had never been offered employment with Elders but had been offered the franchise in Bathurst, a prospect that remained under discussion for many, many months until the negotiations broke down in July 2002. This was the situation from the 7 June 2001 meeting between branch managers and representatives of the respondent and Elders. With the evidence in this state, consideration needs to be given to the effect of the appellant's uncontradicted evidence that he had been informed that the offers of employment were for the staff at the Bathurst office and that the only ultimate offer from Elders was to take up the franchise of that office. 42 Her Honour records that evidence of the appellant and seems to have otherwise accurately stated the evidence brought by the parties. The appellant submits that her Honour rejected this vital and uncontradicted piece of evidence about Elders' position but, on a full reading of the judgment, that does not appear to be the way in which her Honour dealt with that piece of evidence. Her Honour firstly acknowledged that evidence and the fact that it was not cross-examined upon. Her Honour then put it in the context of other evidence as to the arrangements made by the respondent for its employees to continue employment with Elders, Elders' discussions with the appellant, Elders' assurance to the respondent that it had offered either employment or a franchise to the appellant and the appellant's continuing work with Elders while the details of the franchise were being considered. Her Honour then expressed the view that the arrangements were such that they were capable of being misunderstood by the parties and that the vital exchange relied upon by the appellant in his affidavit in reply did not have the implications he read into it. 43 Having reached this position on the evidence, her Honour seemed to be influenced by the fact that, even though it occurred while negotiations were continuing, the appellant took up employment with Elders. This event might provide some evidence that Elders was willing to take the appellant as an employee but that inference is severely reduced because of the fact that this employment took place while they were finalising franchise arrangements: it is understandable that it might have suited both parties to allow those duties to be performed for salary while the ultimate terms of the franchise were being considered - that is the thrust of the appellant's evidence. What stands unknown is, would the employment have continued had the appellant, in July 2002, rather than leaving the Elders' business, simply announced that he intended to continue as Bathurst manager and would not to take up the franchise? This possibility raises additional questions: if the appellant decided to stay with Elders, could he be employed in the same or a comparable position or would the ultimate franchise holder seek to operate the business personally - much like Elders' sought to achieve with the existing branch managers? Would the franchise still be an attractive or financially viable proposition if it contained another layer of employment at a managerial level? There is nothing in the evidence to suggest that Elders considered these matters. One inference available from the appellant's voluntary termination of employment at that point was his understanding that if he was not to take up a franchise then there would be no employment for him: that issue will be considered next. In addition, her Honour seems to have formed the view that, once the employment continued with Elders on whatever basis, the fact of that employment meant that there could be no unfairness in the respondent not paying redundancy pay to the appellant. With respect to her Honour that approach seems to elevate the mere fact of employment to the employment contemplated by the respondent in its sale agreement with Elders. The evidence does not go that far and her Honour was in error in treating that employment as other than covering a temporary situation while the parties worked out what they undoubtedly thought would be the terms of a franchise arrangement. 44 The question therefore remains whether, in fact, the respondent arranged for suitable or comparable employment for the appellant with Elders upon the sale of its business. Certainly, the evidence demonstrates that was the position the respondent attempted to secure by the terms of the sale agreement. The respondent then enquired of Elders whether or not employment had been offered to the appellant because of the appellant's complaints and had received a written assurance that comparable employment had been offered to the appellant. The question is then asked: what more could the respondent do? The appellant's answer is that it could not stand idly by and allow the terms of the sale agreement to be ignored. 45 Her Honour's process of reasoning appears to have been as follows: She found the appellant's employment was unbroken and continued unaltered except as to the identity of the employer and that the appellant in fact accepted and continued in employment as a branch manager as a result of discussions with Elders. Her Honour at one point rejects the proposition that Elders gave the appellant no choice as to future employment or that he was "forced" into franchise negotiations. Having set out those conclusions, her Honour noted that the sale agreement required employment to be offered to the appellant and that the respondent had "repeatedly" been assured that employment was being offered. This was confirmed in writing although there was a reference to employment with a franchisee and her Honour then noted that Elders offered the appellant employment, in correspondence "in ambiguous terms" which might technically be a breach of the sales agreement in that it offered employment with a franchisee and not Elders directly. 46 Her Honour then states that the proposition that the appellant was only offered employment until franchise negotiations were concluded rested on his affidavit in reply: however, that statement was inconsistent with and in direct contradiction of the written offer made to the appellant earlier that day by Elders and was also in breach of the sale agreement. Having recorded the appellant's submission that the Court "must" accept the appellant's evidence as to this matter in circumstances where he was not cross-examined on it, her Honour concluded that the evidence did not reflect the "true force" of what was being put by Elders. Her Honour came to this conclusion because the communications showed "much room for misunderstanding" about what was being put and the real effect of what was being put in ongoing negotiations. The appellant bore the onus of establishing that Elders was not the employer but that the employer was Golf n' Gear Pty Ltd, a service company connected with the Elders' Orange franchise. However, her Honour could not conclude on the evidence that Golf n' Gear Pty Ltd was the employer rather than Elders, nor that the employment had a limited life. 47 Her Honour was correct in rejecting the appellant's assertion that she was bound to accept his evidence in reply, which was not challenged in cross-examination, that ultimately he was not offered employment with Elders but only the chance to take up a franchise. The evidentiary rule in Browne v Dunn (1893) 6 R 67 requires that any matter upon which it is proposed to contradict the evidence given by a witness must normally be put to him so that he may have an opportunity of explaining the contradiction - failure to do so may be held to imply acceptance of the evidence. As pointed out by Samuel JA in Ellis v Wallsend District Hospital (1989) 17 NSWLR 553, the authorities do not establish any rule of law that a judge is bound to accept any evidence which is not challenged in cross-examination. His Honour noted that the rule established in Browne v Dunn, as was pointed out by Hunt J in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (1983) 1 NSWLR at 18, had two aspects: firstly, it established a rule of procedural fairness; and, secondly, a rule relating to the weight or cogency of evidence not challenged by cross-examination. 48 In Ellis, Samuels JA also refers to the joint judgment of Hope and Glass JJA in Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419, at 426: A tribunal of fact may, and indeed generally should, have regard, in deciding what its findings of fact should be, to the failure of a party to cross-examine his adversary upon evidence which the adversary has given to satisfy the onus which lies upon him. As Browne v Dunn ... shows, it may be wrong in many cases for a party to suggest that the other party's evidence should not be accepted, if there has been no relevant cross-examination; and, if a tribunal of fact rejects that evidence in those circumstances, the result may be a wrong finding of fact, or, to use other language, unreasonable: cf Precision Plastic Pty Ltd v Demir (1975) 132 CLR 362, or even a perverse finding of fact. However even if, in the circumstances, a tribunal ought to accept evidence upon which there has been no cross-examination, its failure to do so is not a mistake of law.

While recognising that there were exceptions to the rule in Browne v Dunn, Samuels JA emphasised the restricted circumstances in which the rule might be held not to apply. His Honour noted that Newton J in Bulstrode v Trimble [1970] VR 840 at 849 suggested that the omission to cross-examine might be of little importance where the witness' evidence appeared incredible or unconvincing or was contradicted by other evidence which appeared worthy of belief. His Honour went on to refer to the approach of Gibbs J in Precision Plastics that the exception might operate where the evidence was "inherently incredible" or "inherently unconvincing". Finally, his Honour referred to Cross on Evidence (3rd Aust ed 1986) at 439 for the following proposition: "... in general, however, this exception to the rule should only operate where the issue is a fairly crude and obvious one". 49 In dealing with this evidentiary situation, her Honour did not refer to these authorities. Her Honour, however, did not make any findings that any identified piece of evidence, and in particular any identified piece of evidence called by the respondent, rendered the appellant's uncontradicted evidence in his affidavit in reply "inherently incredible" or "inherently unconvincing". Her Honour had the benefit of observing the appellant giving his evidence but made no adverse findings or comments as to his demeanour, nor is there any suggestion that there were any aspects of the appellant's approach to his evidence that were unsatisfactory. The issue then arises as to what was the nature of the material considered by her Honour that permitted the uncontradicted evidence of the appellant in his affidavit in reply to be rejected or to be diminished in its force to the extent it had little weight or impact? This issue is of sufficient importance and significance for the resolution of the matter in which we consider there was some element of error, as to justify the grant of leave to appeal. 50 In dealing with these issues it is necessary to reconsider significant aspects of the evidence. The sale agreement was signed on 7 June 2001 and nominated Elders Ltd as the "purchaser" of the respondent's business at Bathurst. Clause 10.1 provided that at completion the purchaser would offer or procure "the other company in the Elders Group" to offer employment to the employees of the vendor with their accrued annual leave and accrued long serve entitlements. The employees were identified in a schedule together with their salaries and other entitlements. The Definition provisions of the agreement defined the "Elders Group" to be Elders Ltd and Elders Insurance Brokers Pty Ltd and thus Clause 10.1 operated so that Elders Insurance Brokers Pty Ltd was to offer employment to the Bathurst branch employees of the respondent. Clause 10.2 of the sale agreement provided that the offers would be for employment from the completion date on terms and conditions substantially the same as those under which each was employed by the respondent up to the completion date. The "completion date" was defined to mean 15 June 2001 or such other date as agreed by the parties. Clause 10.4 provided that each party "must use its best endeavours to ensure that the employees referred to in Clause 10 accept the offers made". 51 On 7 June 2001, the respondent sent a facsimile to all staff of its New South Wales country branches announcing that "Elders Insurance Ltd" had purchased the regional business of the respondent including the Bathurst branch. The announcement stated that one of the most important aspects of the sale agreement for the respondent's board was to ensure that the staff would not be disadvantaged and they were "pleased to announce" that it had been agreed and included in the contract that Elders would take on "all staff at current salaries and package levels". The respondent had rejected offers from other proposed purchasers who would not give "any guarantees" as to staff and positions being retained: Elders, however, had made it very clear from the start that they wanted to maintain all staffing levels in the branches. It was said that management from Elders would be holding meetings with each branch to meet the staff and outline their plans. 52 The respondent's evidence was that a meeting of country branch managers was organised for 7 July 2001: the respondent's managing director, Mr Douglas, and another director, Mr Smillie, attended the meeting. The appellant was also in attendance. Mr Douglas left the meeting after explaining aspects of the sale and left Mr Smillie to talk to and answer questions from the branch managers. The appellant's evidence was that after Mr Douglas left the meeting, the Elders' representative (Mr Cameron) stated that the managers were not being offered employment with Elders but were being offered the opportunity to negotiate for the franchise of their branch. Mr Smillie was at this meeting but did not give evidence in the proceedings. 53 On 21 June 2002, the respondent sent a document to the branches headed "Business as usual" stating that some issues needed clarification as there were some feelings of "uncertainty" amongst the staff in regard to the changeover and transfer to Elders. Staff were counselled that there was no need to panic and it was confirmed that the completion date of the sale occurred on Friday, 15 June 2001. It was announced that the transfer to Elders would be gradual and until further announcement, all management responsibility for the branches rested with the respondent. The respondent would continue to pay wages, superannuation, office rents and overheads etc. It was stated that Elders had much to do in sorting out franchise negotiations, developing its plans and organising and implementing training and for that reason the respondent had been engaged to continue to administer the country branches until Elders' systems were in place. It was said that this could take up to three months in total to complete. 54 After receiving the "business as usual" circular, the appellant and two other managers sent a facsimile to the respondent referring to the terms of that circular and asking: "We would like to know exactly what is being offered by Elders. There has been some vague discussions held but they do not appear to be very attractive, ie partnerships etc. Where do we stand with Aradlay at present? If we decide not to link with Elders, what are our options?". The trio sought a meeting to discuss these concerns and in order to be better placed to understand the full circumstances and "to make the right decisions". On 25 June 2001, the respondent replied to this facsimile confirming at present they were still employed by the respondent, Aradlay, under a service agreement which would run for "up to three months until you resolve the franchise issues" and Elders had their systems in place. Elders were reimbursing the respondent for the costs of employment until the end of the agreed period. In relation to what Elders was offering, the respondent stated the following through its managing director, Mr Douglas: ... 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.

It was stated that Elders would be speaking to the three again to progress discussions and that was an opportunity for them to raise their concerns. Mr Douglas, for the respondent, stated that he was prepared to discuss the issue with the three but they needed to understand that he could only give them general advice "... as the deal has been finalised and I have no real control over what happens anymore now that Elders are in the business". 55 On 26 June 2001, the appellant sent a facsimile to the respondent stating that the reason for requesting the meeting was to find out the respondent's intentions "regarding our situation with Aradlay". Mr English complained that he had been a loyal employee for over eight years and had built the Bathurst branch to become a profitable branch that had never returned a negative result and that he had done so by working weekends, early mornings and late evenings. However, after all this effort the branch had been sold and it appeared "that I am to be cast aside without any further consideration". 56 It is to be remembered in this sequence that on 3 July 2001, Elders had written to the appellant regarding earlier conversations as to the structure for Elders Insurance in Bathurst and confirming an offer for Mr English to "acquire the servicing rights to our portfolio". This letter set out the broad proposal as including the appellant purchasing the servicing rights to both the Aradlay and Elders business in Bathurst at a cost of $166,188 for Aradlay and $15,000 for the Elders business. There was an estimate of commission earnings included and the appellant was to employ all staff although there were some arrangements proposed whereby Elders would contribute to that cost and the cost of the office. The appellant was to be responsible for the cost of operating his own vehicle and mobile telephone. It appears that by the end of June that offer had been rejected by the appellant but the discussions resumed in the week or two before 28 September 2001, the date the appellant ceased to be the respondent's employee. 57 On 31 July 2001, Elders Ltd wrote to the respondent following a telephone conversation confirming the offer which had been made to the appellant and another branch manager. The letter stated that as part of the integration of the respondent's business into Elders, different licensees would be appointed in each location. As part of that process the appellant would be "offered employment with these licence holders". Broadly, the terms of employment would be salary equal to the current level of salary, salary packages to increase in line with current value of their vehicle and continuity of current superannuation. For what was said to be privacy reasons, the dollar amounts were not included in that letter. On 3 August 2001, the respondent wrote to Mr English noting that he had apparently rejected the offer of purchasing the franchise rights from Elders for the Bathurst business and reminding him of the terms of the sale agreement that the respondent's business was sold as a going concern and that the purchaser was required to offer its employees employment on comparable terms and conditions. The letter records having received confirmation from Elders that they intended to honour this condition with the only holdup being the appointment of a licensee in Bathurst and Orange and once those appointments had been made, "formal offers" would be made. The respondent urged the appellant to take up the Elders' offer of employment and confirmed that the respondent would not being paying redundancy. That approach had been taken on advice that redundancy was not payable where alternative employment had been arranged on substantially the same terms. 58 On 8 August 2001, the appellant replied to that letter asserting that he was still an employee of the respondent and that he had no obligation to enter into any arrangement with Elders. He expressed the view that because of his contribution to the respondent he deserved redundancy and then stated: In regard to your comments concerning ongoing employment with Elders, I would point out that I have never been offered any employment by them, only the opportunity to enter into a service contract at great expense to myself. In view of my dealings with them today I would advise that I have no intention of entering into any further negotiations. 59 By letter dated 14 September 2001, the respondent advised the appellant that the Board, having received further legal advice, had resolved that it would not authorise a redundancy payment to him. The Board believed he had been offered "a position" that was "practically the same as your previous position" on similar if not higher remuneration. The respondent had been advised that the appellant had been offered employment with Elders as early as 12 June 2001 and then at subsequent meetings during the first week of July 2001. There was a deadline for meeting their offer which sooner or later had to be met by the appellant. The letter stated that should he decide against accepting the offer, his employment with the respondent would cease and that this would constitute due notice under the award. It was further advised that should the appellant elect not to accept the offer of employment with Elders, he would be paid out all long service leave and holiday leave entitlements calculated to the date of termination. 60 On 18 September 2001, the respondent advised the appellant that Elders would be taking over the running of the Bathurst office from 1 October 2001 and that his employment with the respondent would cease on 28 September 2001 with the other current Bathurst branch employees. On the same date, the appellant received a letter from Elders Ltd recording that the appellant had advised them of the respondent's letter regarding the termination of employment of staff at the Bathurst office and confirming Elders' understanding that the appellant's employment with the respondent would cease as at 28 September 2001. The letter continued: As of this point the staff and you will come under employment through the Elders' agent for the Bathurst region. Your employment will be based on your current terms and conditions. Thank you for your patience through this changeover and I will be in touch to clarify in the near future. I would appreciate if you could inform all staff of this offer. If there are any questions in the meantime please give me a call ...

The affidavit evidence in reply of the appellant, which was not challenged in cross-examination, was that on 18 September 2001 he was informed by Elders that the facsimile of that date offering employment was only an offer of employment to the support staff of the branch after the changeover period and that the appellant would have to decide whether or not he was going to enter into a franchise arrangement. 61 By letter dated 25 October 2001, solicitors acting for the applicant wrote to the respondent concerning the termination of his employment and making a claim for redundancy pay. That letter noted that in June 2001 the respondent had announced the Elders' takeover and the fact that Elders would be taking on the respondent's staff at their existing salary and package levels. The letter asserts: "Prior to termination no formal offer of employment was forthcoming from Elders to our client. We are instructed that our client was offered the right to purchase the franchisee rights from Elders in Bathurst". The letter continued that since termination from the employment of the respondent the appellant had remained on the payroll of Elders' Orange franchisee pending negotiations regarding the potential purchase of the Bathurst franchise and that those negotiations were continuing. The letter made two further points: firstly, that if the appellant decided not to purchase the franchise and the business continued through the Orange franchisee or a new owner, the appellant's role in the new organisation would effectively equate to a demotion as he would have decreased control and responsibilities; secondly, the appellant had been advised that the offer of franchisee rights for valuable consideration did not represent an offer of employment as the appellant would lose all the benefits associated with being an employee. 62 In dealing with this evidence her Honour rejected the submission that Elders gave the appellant no choice except to take a franchise and effectively discounted his evidence in his affidavit in reply on the basis of the terms of the sale agreement, the terms of the Elders' letter on 18 September 2001 and the fact that Elders had "repeatedly" assured the respondent that employment was being offered. Her Honour stated that Elders offered the appellant employment in correspondence "in ambiguous terms" but there is no such document in evidence addressed to the appellant apart from the equivocal letter of 18 September 2001. The reference to ambiguous terms seems to be a reference to the fact that although Elders undertook to employ the respondent's staff through Elders Insurance Brokers Pty Ltd, there was in fact no such offer and other staff were employed by Elders franchise holders. 63 In dealing with the appellant's proposition that he was only offered employment until franchise negotiations were concluded, her Honour stated that that proposition rested on his affidavit in reply and that statement was inconsistent with or in direct contradiction of the written offer from Elders on the same day and also in breach of the sale agreement. At this point her Honour did not weigh the appellant's uncontradicted statement that after receiving that facsimile he was told by Elders that the offer of employment was not available to him as a manager but only applied to staff and he had to decide whether or not he wished to become a franchisee. Her Honour's analysis did not consider the fact, in weighing these accounts, that Elders at no stage offered the appellant (or for that matter anyone else) employment with Elders Insurance Brokers Pty Ltd as a required by the terms of the sale agreement or that this offer had to be made on "completion date", 15 June 2001. That inconsistency and the importance of that inconsistency was not considered. Her Honour did not consider the evidence that as early as 3 July 2001, Elders had written to the appellant setting out a broad proposal for the taking up of a franchise and the consistency of that proposal with the version of events given by the appellant. 64 Her Honour's analysis did not deal with another aspect of the appellant's evidence in reply that at the meeting of 7 June 2001 called by the respondent at which representatives of Elders were present, Elders said that the managers were not being offered employment with Elders but only an opportunity to negotiate a franchise. Indeed, when the respondent on 3 August 2001 wrote to the appellant stating that they had received written confirmation from Elders that employment would be offered to him, he replied on 8 August 2001 that he had "never been offered employment" by Elders but only the opportunity to enter into a service contract at great expense to himself. Further, when his employment with the respondent concluded, solicitors on his behalf wrote to the respondent by letter dated 25 October 2001 asserting that prior to termination "no formal offer of employment was forthcoming from Elders" and that the only offer was for a franchise right and emphasising how different that was to an offer of employment. 65 If her Honour had regard to the totality of those matters and had applied the rule in Browne v Dunn and then considered whether there was established any grounds to apply the exception to that rule, as considered in Ellis v Wallsend District Hospital, in our view her Honour could not have come to the conclusion that the uncontradicted evidence of the appellant in his affidavit in reply was "inherently incredible" or "inherently unconvincing". Indeed, her Honour did not apply this test but diminished the value of the appellant's uncontested evidence by concluding that discussions were somewhat vague and capable of misunderstanding and that what the appellant stated was said to him could not therefore, against the background her Honour relied upon, have been the true import of what was being put to the appellant. That proposition was never canvassed with the appellant while he gave evidence and was never put to the appellant in cross-examination by the respondent as it remained an uncontested statement. Her Honour does not expand on the ambiguities of what was said to the appellant on 18 September 2001 - his evidence recorded a straightfoward and perfectly understandable proposition. It was not explained how that clear statement became unclear because of previous discussions and how it might be read differently. In such circumstances, her Honour had no acceptable basis to question that evidence: her Honour was in error in not accepting the full force of the appellant's uncontested evidence and in failing to act upon it. 66 The respondent's repeated plea: what else could it do? rings, a little hollow when all the facts are considered. The respondent had held out to its employees the lengths it had gone to secure ongoing employment at existing rates with the purchaser. The purchaser was a company of substance and well established in rural and regional Australia: it therefore represented a stable option in a time of uncertainty and some confusion. Contrary to the terms of the sale agreement, no one was offered employment with Elders Insurance Brokers Pty Ltd and no offers were made on 15 June 2001, the "completion" date referred to in that agreement. There is no evidence of an alternative "completion" date being agreed or of the respondent enquiring why employment was not being offered with Elders Insurance Brokers Pty Ltd, let alone on that day. 67 Under Clause 10.4 the respondent was obliged to use its best endeavours to ensure that its employees accepted the offers made but there is little evidence of the respondent taking steps to be informed of the terms of these offers or the means by which they were being conveyed. The respondent appeared content to accept general and non specific assurances from Elders when the appellant was complaining that no employment offer had been received from Elders. It was curious that Elders would not inform the respondent of the precise terms offered to managers, including the appellant, pleading privacy reasons when the salaries and entitlements of each employee were set out in a schedule to the Sale Agreement. Elders were advising the respondent that existing terms were being offered to the appellant yet would not disclose those terms and did not attach a letter containing a specific offer of employment. There is no such document in evidence - a significant fact when considered against the appellant's repeated complaint that he had received no offer of employment from Elders. 68 Her Honour seems to accept, and it is probably accurate, that the respondent saw no real distinction between employment and operating a franchise and was thereby satisfied that Elders had complied with its obligations under the sale agreement. It is difficult to understand why the respondent did not recognise the important difference between employment and operating a franchise. There was, however, no attempt made by the respondent to explain its inaction when only a few days after being assured by Elders that the appellant had been offered employment on his existing rates the appellant wrote denying receiving such an offer. The respondent does not explain its inaction when it received the letter from the appellant's solicitors on 25 October 2001, recounting the occasions when the appellant advised that no offer had been received from Elders and seeking redundancy pay. From early June 2001, the appellant and others had been writing to the respondent complaining of the lack of precision in what was being offered by Elders. The respondent's concentration on the terms of a franchise and how it had no control over these matters perhaps discloses the way in which it was approaching the problem - the terms of the franchise was a commercial problem for each manager. In the result, the respondent failed to take available steps to make sure that its employees were being offered their current terms of employment with Elders Insurance Brokers Pty Ltd; in so failing, the respondent acted unfairly after holding out to its employees that their employment and terms were safeguarded by the provisions of the sale agreement and the contract or arrangement between the appellant and the respondent was an unfair contract to the extent that it permitted that to occur. 69 In the course of addresses before her Honour, the respondent accepted that the appellant had been employed by Golf n' Gear Pty Ltd for a number of months. Indeed, on appeal the respondent accepted that from 1 October 2001 until March 2002 the evidence showed that the appellant was employed by Golf n' Gear Pty Ltd and was at no stage ever offered employment with or employment by Elders Insurance Brokers Pty Ltd. Elders were reimbursing Golf n' Gear Pty Ltd for the salary being paid to the appellant. Having regard to the evidence that Elders did not directly employ the appellant but used franchisees in operations like the Bathurst branch and having regard to the formal employment record before the Court and the lack of any evidence as to any Elders' entity acting as an employer in relation to the appellant between October 2001 and March 2002, it is difficult to see how her Honour had any doubt about the identity of the employer during this period, especially in light of the concession made by the respondent in addresses. 70 The evidence further establishes that during this period the employment was "temporary" in the sense that once the appellant's evidence in reply is accepted, then during this period the only issue was whether an agreement could be reached whereby the appellant would operate the Bathurst franchise for Elders. On the uncontradicted evidence of the appellant, if he did not take up the franchise there was no employment for him. It is in that sense, when dealing with the issue of an entitlement to severance pay, that the Court was entitled to form the view that this employment with Golf n' Gear Pty Ltd was "temporary" and did not amount to employment with either of the Elders' entities nor was it, in the circumstances, continuing comparable employment. Also relevant to this consideration was the fact that the appellant regarded this position as something of a demotion because he no longer had responsibility for the Cowra office, an additional responsibility he had picked up some 12 months or so earlier. 71 As to the temporary nature of the employment after 28 September 2001, the respondent's managing director, Mr Douglas, gave evidence that his understanding was that after that date the appellant (and the other branch staff) would be employed by the Bathurst agent "until such time as the negotiations ended one way or the other in relation to the franchise agreements". Further, Elders' letter to the appellant dated 18 September 2001 refers to employment "through the Elders Agent for the Bathurst region"; that employment was to be "as of this point" and Elders would be "in touch to clarify in the near future". This and other evidence already referred to speaks of an uncertain situation with temporary arrangements to fill the void until franchise terms had been finalised. This temporary employment was not the continuing comparable employment held out by the respondent to its employees. 72 Having regard to those conclusions, it is apparent that the appeal must succeed in relation to her Honour's refusal to order the payment of severance pay. On appeal it was submitted for Mr English that the appropriate level of severance pay might be calculated by reference to test case provisions and/or by reference to the amounts payable in accordance with Schedule 1 of the Employment Protection Regulation 2001: a person of Mr English's age with more than six years' service would receive 20 weeks' pay under the provisions of that Schedule. 73 As was pointed out by the Full Bench in Westfield Holdings v Adams, the terms of the Termination Change and Redundancy Case identify the purpose of severance pay and the different role performed by periods of notice. In Westfield Holdings the Full Bench at [144] stated that the numerous authorities referred to established that the focus of redundancy or severance pay was to compensate an employee for the loss of non-transferable benefits and for the inconvenience and hardship imposed by the termination. Those authorities identified some of the hardship flowing from redundancy, including the loss of secure employment, the hardships necessarily inherent in retrenchment and the competitive disability of the long term employee as a result of opportunities foregone, whether in the continuous service of the employer and the loss of legitimate employment expectations through no fault of the employee. These considerations arise in the circumstances of the appellant following the sale of the Bathurst office by the respondent. 74 Having regard to those considerations, it would represent both a restrained yet appropriate result for the appellant to receive 20 weeks' pay calculated by reference to his package as at 28 September 2001. 75 In this case, the appellant did not simply complain of a breach of contract but sought to vary the terms of the contract of employment to provide for notice and severance pay: the point raised in Sydney Water Corporation & anor v Industrial Relations Commission of NSW [2004] NSWCA 436 was not taken by the respondent either at first instance or on appeal. The Court is content, in those circumstances, to proceed on the same basis as adopted by the parties in the course of the proceedings. Nevertheless, the orders to be brought in by the parties shall include an order appropriately varying, or avoiding in part, the contract or arrangements between the parties. 76 The following orders should therefore be made: 1. Leave to appeal is granted. 2. The appeal is upheld and the decision of Schmidt J regarding redundancy pay is set aside. 3. On appeal, the respondent is ordered to pay the appellant 20 weeks' redundancy pay calculated on his total remuneration package as at 28 September 2001. 4. The respondent shall pay the appellant's costs of the appeal to be assessed in default of agreement. 5. The parties to file short minutes reflecting these orders within 14 days.

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