Plaintiff v Defendant

2 Mr Zafiriou was a party to a written contract of employment[3] with the defendant which, among other things, governed the circumstances in which his employment could be brought to an end. The contract of employment was for an indefinite period, but provided that either party could terminate the contract upon the giving of four weeks' notice. However, it also provided that where the employer terminated the employee's employment 'for reasons of redundancy/retrenchment', the employee was entitled to a severance payment.[4]

3 Mr Zafiriou alleges that his employment was terminated because his position had been made redundant, that the rationale of unsatisfactory performance was contrived to avoid having to make a redundancy payment and that he is entitled to a large payment under the redundancy clause of the employment contract given his long years of service. In the alternative, he says that his employment could only have been terminated for unsatisfactory performance if the defendant had first complied with its disciplinary and termination procedures, which required it to give him a number of warnings and opportunities to improve his performance before terminating his employment. He says further that there has been a breach of an implied term of trust and confidence in the employment contract.

4 The Court is therefore asked to construe the contract of employment and to determine Mr Zafiriou's rights under the contract, having regard to the circumstances of his termination. For the reasons that follow, I have concluded that Mr Zafiriou's employment was not terminated for reasons of 'redundancy/retrenchment', that the disciplinary and termination procedures did not apply to require the giving of formal warnings and opportunities to improve before Mr Zafiriou's employment could be terminated, that Mr Zafiriou had no prospect of transferring to a related company and ultimately being made redundant from that company, and that Mr Zafiriou is therefore not entitled to the payments and damages that he claims.

5 The defendant is a part of a multinational conglomerate ('Saint-Gobain') founded in France in the nineteenth century. Saint-Gobain has significant operations in Europe, North and South America, and in Asia and the Pacific region, including in Australia and New Zealand. It is principally involved in the manufacture and distribution of construction materials and packaging products.

6 In 1999, Saint-Gobain acquired a Victorian company, Flexovit Abrasives Australia Pty Ltd, which became Saint-Gobain Abrasives Pty Ltd ('Abrasives'). Flexovit was originally a privately held company whose major shareholders were its founders in Australia, Mr Roger Freeman and Mr Geoff Freeman. It made, imported and distributed industrial abrasive products such as grinding wheels, sanding belts and discs and carbide burs. Following Saint-Gobain's acquisition of Flexovit, Mr Zafiriou, who was a long-standing employee of Flexovit, became an employee of Abrasives. The Freeman brothers continued to hold senior positions in Abrasives, with Mr Roger Freeman occupying the role of managing director until his retirement in June 2010.

7 At the time of Mr Zafiriou's termination, Saint-Gobain's operations in Australia were also carried out through a number of other divisions or companies, including, most relevantly, Saint-Gobain Industrial Ceramics Pty Ltd ('Ceramics'), for which Mr Zafiriou also worked on a part-time basis.

8 Mr Zafiriou is a qualified accountant with almost 30 years' experience in accounting and senior management roles.[5] He joined Flexovit in 1987. He was initially appointed as the company accountant, but after Flexovit acquired another abrasives company[6] in late 1990, Mr Zafiriou's role expanded to include the finance functions of the two companies and the implementation of a computer system that would integrate their operations. His title was changed to Financial Controller. He remained in this role until approximately 1996, when he was given additional duties and his title was changed to Commercial Manager. When Saint-Gobain purchased Flexovit in 1999 and the management structures of the two companies[7] were consolidated, Mr Zafiriou's title was changed to General Manager - Commercial Operations. He had a number of different areas of responsibility, including information technology ('IT'), finance, customer service and warehouse operations. The integration of Flexovit into the Saint-Gobain group as Abrasives was completed in approximately 2003, and Mr Zafiriou remained responsible for the same aspects of the Abrasives business thereafter. He continued to report directly to the Managing Director of Abrasives, Mr Roger Freeman, until Mr Freeman's retirement in mid-2010.

9 Mr Zafiriou's responsibilities were initially solely with Abrasives, but in May 2005 he was offered the opportunity to take over as general manager of Ceramics on a part-time basis. At the date his employment was terminated, Mr Zafiriou's responsibilities were spread across Abrasives and Ceramics, with 70% of his time devoted to Abrasives and 30% of his time given to his role as general manager of Ceramics. As Mr Zafiriou's principal duties were with Abrasives, Ceramics reimbursed Abrasives for Mr Zafiriou's services and Mr Zafiriou was effectively 'on loan' to Ceramics from Abrasives for part of his working week. In his capacity as general manager of Ceramics, Mr Zafiriou reported to Mr Laurent Tellier, who was then based in China.

10 As at 30 June 2010, Mr Zafiriou's responsibilities at Abrasives included IT, ACCC compliance, insurance, legal affairs, occupational health and safety and the management of the motor vehicle fleet, as well as responsibility for warehousing, distribution, logistics and customer service. He was involved in two major restructuring projects: 'Project Cooper' and 'Project Spartan'. Project Cooper involved the closure of a manufacturing facility in Lidcombe, New South Wales, and Project Spartan involved centralising the distribution and customer service functions for the east coast in Melbourne. Project Cooper was completed in September 2010 and Project Spartan in early October 2010.

11 Mr Zafiriou was also charged with co-ordinating the 'High Jump' IT project, which involved the labelling and scanning of products to improve warehouse efficiency. The High Jump project was completed in September 2010, when the system went live.

12 It is apparent that during his long years of service at Abrasives, Mr Zafiriou accumulated a range of responsibilities and that under the management of Mr Freeman he enjoyed significant freedom and flexibility in the functions that he undertook. He was involved at a high level in many important initiatives at Abrasives and considered himself to be Mr Freeman's right hand man and his likely successor as managing director of Abrasives.

13 By contrast, Mr Zafiriou's ongoing role at Ceramics was uncertain, as its local manufacturing operations were in decline. The manufacturing capacity was reduced by half in late 2009, and there was a proposal to close the manufacturing plant altogether. Ceramics ultimately closed its manufacturing operations in Australia in August 2011. Had his employment not been terminated in October 2010, Mr Zafiriou proposed to resume working at Abrasives on a full time basis when this occurred.

14 Although Mr Zafiriou hoped to become the managing director of Abrasives upon Mr Freeman's retirement, Mr Steven Chaur, an external candidate, was appointed to this position. Mr Chaur joined Abrasives on 12 May 2010.

15 Mr Zafiriou admits to being disappointed that he was passed over for the position of Managing Director. However, Mr Zafiriou spoke to Mr Chaur shortly after his appointment to confirm that he wished to stay on. It is common ground that both Mr Chaur and Mr Zafiriou expressed themselves to be content for Mr Zafiriou to remain at Abrasives as a senior member of the leadership team.

16 Immediately upon his appointment, Mr Chaur set about formulating a plan for the future of the Abrasives business in order, he told the Court, to bring Abrasives into alignment with the global group framework and to lift customer satisfaction. Mr Chaur's plan was completed in July 2010 and submitted for approval to his superior, Mr Gonzague de Pirey, in Paris. It was referred to throughout the proceeding as the '100 day plan'.

17 According to Mr Chaur, the 100 day plan was an 'external and unbiased management view of the company in the first 100 days',[8] resulting in the identification of a number of areas for change and improvement. One of the key actions proposed was to 'align the organisation structure to a simpler and focused functional organisation'.[9] The 100 day plan therefore contained a proposal to restructure management along functional lines. Among other things, it involved reducing the number of direct reports to the managing director from ten to six.

18 Viewed broadly, the 100 day plan identified problems in sales and marketing and proposed significant management changes in those areas. The major changes proposed in the 100 day plan were to the sales and marketing areas of the Abrasives business, not to the areas managed by Mr Zafiriou. Nonetheless, there were to be some changes to Mr Zafiriou's role.

19 The 100 day plan described Mr Zafiriou's existing role as 'GM Commercial Operations' to include 'procurement, warehousing & logistics, customer service, NZ conversion operations, IT/BPCS, company secretary (for ASIC), ACCC legal compliance and: General Manager Industrial Ceramics (2 days per week)'. Mr Zafiriou did not disagree with this description of his existing responsibilities, although it did not include a number of his other smaller responsibilities such as company secretariat, insurance, car fleet management and the like. Under the revised management structure, Mr Zafiriou was designated as 'GM Supply Chain', with responsibilities for procurement, warehousing and logistics, demand planning, customer service, grain procurement and GM Industrial Ceramics (part time).

20 It follows that it was proposed that Mr Zafiriou gain some functions (grain procurement and demand planning) and lose others, notably IT. There was some uncertainty about whether he in fact lost the ACCC compliance function (it appears that he did not), but he did ultimately lose the company secretariat role, albeit not as a result of the 100 day plan.[10] Furthermore - and this was clearly a matter of considerable personal importance to Mr Zafiriou - his title was to be changed from 'General Manager - Commercial Operations' to 'General Manager - Supply Chain'.[11] Whether or when the title change occurred (as a matter of both fact and law) and when Mr Zafiriou learned of the proposal to change his title is a matter of dispute.

21 Mr Zafiriou says that he first heard of the proposed title change on 8 October 2010 when an organisational chart was attached to a generally circulated email announcement about proposed changes to the sales and marketing division. The organisational chart showed him to be the 'General Manager - Supply Chain'. However, Mr Chaur gave evidence that the change to Mr Zafiriou's title was discussed with Mr Zafiriou as early as 12 August 2010 at a meeting between Mr Chaur and Mr Zafiriou in Mr Chaur's office (the 'August meeting'). Mr Zafiriou recalls the August meeting but denies that there was any such discussion. However, it was common ground that the loss of the IT function was discussed at the August meeting. At the very least, therefore, Mr Zafiriou was told about the most significant proposed change to his responsibilities on 12 August 2010.

22 Apart from the management reorganisation, part of Mr Chaur's plan to break down what he perceived to be the 'silo culture' at Abrasives involved instituting regular meetings between senior managers. He convened weekly 'hot spot' meetings[12] on Monday mornings to facilitate the exchange of information and ideas. In addition, there were to be monthly and quarterly meetings to deal with issues in more depth. Mr Chaur said that he wanted to improve communications between the different areas in the company, and he wanted his senior managers to approach their areas of the business more analytically. He told the Court that he identified a lot of anecdotal decision making and found not a lot of fact-based management when he arrived at Abrasives. As a result, Mr Chaur introduced weekly and monthly meetings to encourage the management team and their subordinates to start analysing data and make decisions based on that analysis.

23 As will be seen, Mr Zafiriou's performance at 'hot spot' meetings and his alleged failure to provide monthly reports in a timely fashion became a source of frustration for Mr Chaur.

24 So far as Mr Chaur was concerned, his first six months as managing director of Abrasives were marked by serious and ongoing complaints from a major customer, Blackwoods,[13] and a number of other customers about the timely delivery of orders. Emails tendered in evidence show persistent complaints from Blackwoods about deliveries, referring specifically to Abrasives' non-compliance with its obligation to 'Deliver in Full on Time' ('DIFOT'). DIFOT compliance fell within Mr Zafiriou's area of responsibility, whether he was designated as GM - Supply Chain or as GM - Commercial Operations.

25 In his evidence, Mr Zafiriou contended that Abrasives' DIFOT compliance was generally satisfactory and that the problem was principally caused by the customer's method of calculating DIFOT compliance. He also pointed to teething problems with the new warehouse arrangements following the implementation of Project Spartan and to difficulties caused by the resignation of the Western Australian sales manager.

26 Mr Chaur gave evidence that he was frustrated by this approach, as he thought that it revealed a lack of customer focus. He said he was concerned that Mr Zafiriou was dismissive of complaints and displayed an unwillingness or inability to carefully analyse the data to identify the source of the problem and to propose a solution that was satisfactory to the customer. In Mr Chaur's view, it was necessary to work with the customer to assuage the customer's concerns, wherever the fault lay.

27 In his evidence, Mr Chaur also expressed frustration at what he considered to be Mr Zafiriou's tardiness in complying with monthly reporting requirements and providing reports to weekly 'hot spot' meetings. Mr Zafiriou denies that there was any problem with his compliance with reporting requirements or participation in 'hot spot' meetings. He asserts that he performed well and points to the successful completion of the major projects with which he was charged: Project Cooper, Project Spartan and High Jump.

28 On 18 October 2010, Mr Chaur sent the Human Resources Manager, Ms Pam White, an email referring to matters that needed attention in order to 'complete the restructure by the start of November'. These matters included the following:

3. Zafiriou - please advise contractual termination clause (either party notice period), assume 6 - 8 months pay.

29 On 20 October 2010, Mr Chaur again sent an email to Ms White in which he said he would come back to Ms White with a 'plan' regarding Mr Zafiriou's termination.

30 On Friday, 22 October 2010, Mr Chaur asked Mr Zafiriou to prepare a detailed report on the Blackwoods situation, to be presented to senior managers on Monday, 25 October 2010. Mr Zafiriou prepared his report on Blackwoods over the weekend and presented it to Mr Chaur and others on the Monday. He subsequently reported to his colleagues that the presentation had gone well.

31 However, the following day, 26 October 2010, Mr Zafiriou's employment was summarily terminated in a meeting with Mr Chaur and Ms White. The reason given to Mr Zafiriou for the termination was his unsatisfactory work performance, although Mr Chaur expressed the view that he did not need a reason to terminate Mr Zafiriou's employment under the terms of the contract of employment. It is common ground that prior to his employment being terminated, Mr Zafiriou was not given any formal warnings that his performance was unsatisfactory or that his employment was in danger of being terminated for unsatisfactory performance. It would be fair to say that Mr Zafiriou was shocked and outraged to be dismissed in this manner.

32 The day before Mr Zafiriou's termination, on Monday 25 October 2010, Mr Chaur sent an email to his superiors in France and the US, and to Mr Freeman, setting out his reasons for terminating Mr Zafiriou's employment and describing how he proposed to dismiss Mr Zafiriou (the '25 October email'). The 25 October email sets out Mr Chaur's reasons for dismissing Mr Zafiriou and a 'termination plan' based on a dismissal with one month's notice and an ex gratia payment to bring the termination payment to six months. Mr Chaur told his colleagues that the role was not being made redundant and would be re-filled prior to December 2010 and that he had already commenced a confidential market search for a new general manager. He also told them that making Mr Zafiriou redundant would cost around $750,000 and was 'not an option to consider'.

33 Following Mr Zafiriou's termination, the supply chain manager who reported to him, Mr George Mihailidis, was asked to act in the position of GM - Supply Chain and, after the position had been advertised, Mr Mihailidis was appointed to that role. Mr Mihailidis was appointed to a position that differed in many respects from the position occupied by Mr Zafiriou, and on a lower salary. Furthermore, Mr Mihailidis' previous position as manager of the supply chain was not filled until May 2011, at which time the role was renamed 'Production/Inventory Planner'.

34 Mr Zafiriou's position with Ceramics was filled at short notice by Mr Roger Freeman, who effectively came out of retirement (or semi-retirement) to step into the breach.[14] Mr Tellier, who was based in China at the time, was not warned of Mr Zafiriou's dismissal, despite Mr Chaur's intention that he be informed before the dismissal occurred. Mr Tellier was annoyed about this, as he found himself with a business to run (at least in the short to medium term) in a far away country without a general manager. As events unfolded, Mr Freeman was drafted to act in that role until the Ceramics business was finally closed in August 2011.

35 On any view, therefore, no single individual was appointed to perform the combination of functions or duties that were performed by Mr Zafiriou prior to the termination of his employment. There was, in effect, a restructuring of duties and responsibilities following Mr Zafiriou's departure. One of the critical questions in this proceeding is whether the restructure was the cause of Mr Zafiriou's termination in that he became surplus to the requirements of Abrasives as a result of the reorganisation or whether Mr Zafiriou's termination on performance grounds caused the reorganisation.

36 Mr Zafiriou pleads his claim in a number of ways, all of which are based in contract:

(a) He alleges that his employment was terminated because his position as GM - Commercial Operations for Abrasives was made redundant. He claims under the redundancy term in the contract of employment to be entitled to payment of $811,688.91 less an amount of $66,668.96, being $744,999.95 (the 'Abrasives Redundancy Claim');

(b) Alternatively, he claims that his employment could only be terminated because of unsatisfactory performance or unacceptable behaviour if the defendant complied with the process set out in the defendant's disciplinary policy. He contends that compliance with this process would have led to his employment with Abrasives continuing for a further 12 months and that he would therefore have received a further 12 months remuneration in the sum of $264,850.00 (the 'Disciplinary Procedure Claim');

(c) Alternatively, he alleges that the contract of employment contained a term that the defendant would not without reasonable cause, conduct itself in a manner likely to destroy the relationship of trust and confidence between it and him. He asserts that this term obliged the defendant to, amongst other things, give him 12 months warning of the termination of his employment. He asserts he would have received a further 12 months remuneration (less 4 weeks pay in lieu of notice) being $244,405.83 (the 'Trust and Confidence Claim');

(d) By further and better particulars provided under cover of a letter from his solicitors dated 7 June 2012, Mr Zafiriou claims that had the defendant complied with its disciplinary policy:

(i) Mr Zafiriou would have been offered continuous employment with the defendant to work for the business of Ceramics;

(ii) his employment with Ceramics would have been under substantially the same terms and conditions that applied at the time of his dismissal, including the terms governing his remuneration;

(iii) his employment with Ceramics would have continued until at least the time that Ceramics restructured its business in August 2011; and

(iv) Mr Zafiriou's employment with Ceramics would have then been made redundant and he would by then have had the benefit of:

(A) an additional 10 months remuneration in the sum of $220,7089.33;

(B) a redundancy payment in the sum of $744,999.00;

(C) a further severance payment in the sum of $18,392.36;

(D) a bonus and the benefits of accruing entitlements to annual leave and long service leave;

(v) Had he not been terminated on 26 October 2010, Mr Zafiriou also claims that he would have had the opportunity to seek suitable alternative employment. He seeks damages of $35,000 under this head.

37 As it falls to the Court to construe the contract of employment, it is convenient to set out the relevant terms.

38 Two aspects of the contract of employment are particularly important: the provisions relating to termination of employment in clause 22 and the provision referring to the incorporation in the contract of the defendant's policies and procedures, which is clause 6.

39 Pursuant to clause 4.1, the contract of employment came into force on 1 July 2005 and would continue thereafter until terminated by either party in accordance with the provisions of clause 22.

22.1 This contract may be terminated by either party, by giving the period of written notice specified in the table below. This shall not prevent the employer from summarily dismissing the employee for serious misconduct or other justifiable cause.

Over 1 year and up to the completion of 3 years

....

22.4 If the employer terminates the employee's employment for reasons of redundancy/retrenchment, no compensation other than a payment, as detailed below, shall be payable.

41 The contract of employment therefore provides for ongoing employment pursuant to its terms unless and until terminated by one of two means: by giving the period of written notice specified in the table under clause 22.1 or by the employer terminating the employee's employment for reasons of redundancy/retrenchment under clause 22.4.

42 The contract of employment does not define 'redundancy/retrenchment'. However, clause 7 contains the following definition of 'Redundant Employee':

An employee whose employment is terminated as being surplus to existing requirements by reason of the closing down or reorganisation of the whole or part of the employer's operation or by amalgamation of the employer's operations with the operations of another employer.

43 Curiously, the expression 'Redundant Employee' appears nowhere else in the contract of employment.

44 As to the status of company policies and procedures, the alleged incorporation of which underlies the Disciplinary Procedures Claim and is a part of the Ceramics Redundancy Claim, clause 6.1 provides as follows:

The employee shall comply with the employer's policy and procedures as displayed or advised from time to time and as amended from time to time, at the employer's discretion. The employer's policy and procedures are deemed to be included in and form part of this contract, as do any subsequent policy and procedures and/or amendments.

45 Mr Zafiriou contends that the following company procedures must be treated as part of the employment contract: the Saint-Gobain Pacific Companies Disciplinary Procedure HR-101 (Revision No 4 of 14 November 2005) (the 'Disciplinary Procedure') and the Saint-Gobain Pacific Companies Termination of Employment procedure HR-104 (Revision No 6 of 21 May 2007) (the 'Termination Procedure').

46 The Termination Procedure is expressed to apply to all employees in the company. It describes the policy of the defendant to be 'committed to ensuring that termination of employment will be lawful, fair and just. Employees are to be treated with respect, in a courteous and professional manner and in accordance with the principles of natural justice'. However, the Termination Procedure is scant on detail: it refers to the Disciplinary Procedure for details regarding the process to be followed when dismissing 'staff'.

47 The Disciplinary Procedure contains 'the guidelines to be followed when disciplinary action is required' and is expressed to apply to 'all employees in the organisation'. The procedure to be followed is prescriptive. It involves a series of meetings in which the unsatisfactory performance or unacceptable behaviour is detailed, the employee is given the opportunity to respond to the allegations, a determination is made as to whether a warning should be issued, remedial action with timeframes for review is recommended, and the employee is advised that dismissal may result if the behaviour is continued. It requires the completion of a disciplinary action report. These steps[15] are to be repeated no less than three times, save in the case of 'gross/serious misconduct' where, if the allegation can be substantiated, the disciplinary process may move to the final warning stage and termination proceedings initiated.

48 Furthermore, there is dispute as to the defendant's power under the contract of employment to change Mr Zafiriou's title or position.

49 Clause 8 of the contract of employment concerns the position, position description and duties of the employee. Clause 8.1 defines the employee's 'position' to be the position stated in Schedule A and as comprising the duties and responsibilities contained in the position description attached as Schedule B. Clause 8.2 provides that following reasonable consultation with the employee, the position description may be amended from time to time, at the employer's discretion, to reflect the changing requirements of the position. The 'position' of the employee, however, is not to be amended in this fashion. Clause 3 generally provides that any variation to the contract of employment shall be agreed by the parties and shall be in writing.

50 What the 'position' of the employee is, as opposed to his or her 'position description' is not entirely clear. However, in Mr Zafiriou's case, Schedule A covered matters that might to regarded as the fundamental terms of his employment: his salary (including a range of benefits), his entitlements to holiday and sick leave, as well as the period of notice required for termination. Schedule A also contained the title of his position at any given time.

51 Schedule A to Mr Zafiriou's employment contract was amended from time to time (pretty much annually), essentially to provide for increases in salary. His position is described as 'General Manager - Commercial Operations' or as 'General Manager, Commercial' in each of the discovered Schedules A.

52 Schedule B, at least as at 26 October 2006, described Mr Zafiriou's position generally as being responsible for 'the commercial operations of the company within established policies'. Specific responsibilities and authorities included controlling operations in the management of logistics and IT, reviewing and appraising the results of commercial activities, planning and developing the structure of the commercial operations and IT to ensure appropriate staffing, organising the details of insurance, taxation and legal and company matters and the handling of agreements, assisting in the administration of the company's business affairs and supervising statistical records, credit and stock control.

When is a termination 'for reasons of redundancy/retrenchment'?

53 The contract of employment does not define the circumstances in which employment will be terminated for reasons of 'redundancy/retrenchment'. However, a 'Redundant Employee' is, relevantly, an employee whose employment is terminated as being surplus to existing requirements by reason of the reorganisation of the whole or part of the employer's operation.

54 Mr Zafiriou sought to adduce evidence about what the parties meant by 'redundancy/retrenchment' by having the person responsible for drafting the contracts of employment within Abrasives describe what the parties intended when the employment contracts were being drafted. That evidence was ruled inadmissible, because it amounted to evidence of the subjective intentions of the parties. In Codelfa Construction Pty Ltd v State Rail Authority of NSW[16], Mason J (with whom Stephen and Wilson JJ concurred) stated 'the true rule' that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning, but it will not be admissible to contradict the language of the contract which has a plain meaning. To the extent that prior negotiations tend to establish objective background facts which were known to both parties and the subject matter of the contract, evidence of them will be admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable.

55 In this case, evidence was given by the former HR manager of Flexovit and Abrasives, Ms Kathy Hobbs, about the circumstances in which employment contracts were originally prepared by Flexovit. Ms Hobbs gave evidence that when she joined Flexovit in 1997, there was little in place in the way of human resources policies or procedures and there were no written employment contracts; employees simply entered into oral arrangements with Mr Freeman. Ms Hobbs said that she set out to formalise the existing arrangements.[17] She prepared a standard contract with variations to the redundancy clause. The contracts were known as contracts A, B, C and D. Contract A was the clerical contract that had the same entitlements as the enterprise bargaining agreement, Contract B was for supervisors and Contract C was for middle managers and State managers. Mr Zafiriou was on Contract D, which was for senior managers and executives.

56 Ms Hobbs gave evidence that the standard form contract was presented in draft to the management committee and then subsequently given to all employees for discussion. The HR department held information sessions to explain the contracts and make sure that the employees were happy to sign them. For this purpose, she prepared a series of overhead slides to use in training sessions. A set of slides apparently based on the original slides prepared by Ms Hobbs was in evidence. In relation to 'Redundant Employee', the relevant slide contains three dot points each followed by a single word: 'Surplus', 'Reorganisation' and 'Amalgamation'. The slide for 'Redundancy' is equally unhelpful: it contains four dot points: 'Notice', 'Severance', 'Annual Leave Long Service Leave' and 'Sick Leave'.

57 In my view, Ms Hobbs' evidence, while explaining some of the objective background facts which were known to the parties at the time the original contracts were entered into between Flexovit and its employees, is of little or no assistance. The contracts to which she referred in her evidence pre-dated the contracts between the defendant and its employees, although she gave evidence that she recalled there being few differences between the older and newer contracts. Ms Hobbs' evidence sheds no light on how the terms 'redundancy' and 'retrenchment' in the contract of employment are to be understood. This must be ascertained by reference to the terms of the contract of employment as a whole, and to the commonly understood meaning of those words. In construing the relevant clauses, the Court must determine what a reasonable person would understand by the language in which the parties have expressed their agreement.

58 The concept of redundancy does not have a fixed meaning. However, in Fosters Group Ltd v Wing,[18] the Court of Appeal held[19] that a clear guide to the meaning of redundancy was to be found in the judgment of the Full Court of the Supreme Court of South Australia in The Queen v Industrial Commission of South Australia; ex parte Adelaide Milk Supply Co-operative Limited,[20] in which Bray CJ said:

[T]he concept of redundancy in the context we are discussing seems to be simply this, that a job becomes redundant when the employer no longer desires to have it performed by anyone. A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or on any consideration peculiar to him but because the employer no longer wishes the job the employee has been doing to be done by anyone.[21]

59 To similar effect, Bright J opined that the question of the redundancy of an employee was linked to the continued utility of the job he is performing and does not relate to the personal competence of the employee in that job.[22]

60 In Wing, the Court of Appeal was concerned with a re-allocation of duties following a restructure. The Court referred with approval to the joint judgment of Spender, Dowsett and Allsop JJ in Dibb v Commissioner of Taxation,[23] in which their Honours considered the 'employer's prerogative' to rearrange the organisational structure by breaking up the functions, duties and responsibilities attached to a single position and to distribute them among the holders of other positions. Their Honours referred in turn to the analysis of Ryan J in Jones v Department of Energy and Minerals,[24] in which Ryan J identified the critical feature in such a circumstance to be 'whether the holder of the former position has, after the reorganisation, any duties left to discharge.'[25]

61 In Hodgson v Amcor; Amcor v Barnes & Ors,[26] Vickery J reviewed the authorities on what constituted a redundancy,[27] including those referred to above, to derive the following general propositions:

(a) A job becomes redundant when the job of the employee ceases to exist because the employer, for whatever reason, whether by way of reorganisation, mechanisation, change in demand or other reason, no longer desires to have it performed by anyone;

(b) This can occur either when the role no longer exists or the duties have so changed that for all practical purposes the original role no longer exists;

(c) However, redundancy is not limited to the circumstances where the employer no longer desires to have the work previously performed by the terminated employee done by anyone;

(d) A redundancy may also arise upon the redistribution of job functions, where the duties performed by an employee are redistributed among other employees. In this case the employer still requires the duties to be performed, but the reorganisation may give rise to a redundancy. In this event, although the duties remain to be performed, 'for all practical purposes the original role no longer exists' because the duties are divided and assigned amongst others. In such a case the question is whether any function or duty remains to be performed by the employee. A redundancy will occur if, after the reorganisation, the employee in question is left with no duties to discharge;

(e) Redundancy will not arise where the termination of employment is carried out solely because of any personal act or default of the employee terminated or for any consideration peculiar to that employee.[28]

62 In this case, the (otherwise superfluous) definition of 'Redundant Employee' in the contract of employment indicates that a redundancy will occur where the employment or position is 'surplus to the requirements of the company by reason of a closing down, reorganisation or amalgamation'. The concept of the employment or position being surplus to the requirements of the employer is a critical feature of a redundancy under the contract of employment.

63 This is consistent with dictionary definitions of 'redundant' and 'redundancy'. The Macquarie Dictionary (5th ed, 2009) relevantly defines 'redundant' to mean:

... denoting or relating to an employee who is or becomes surplus to the needs of the employer

64 The Oxford Dictionary of English (3rd ed, 2010) relevantly defines 'redundancy' as:

The condition of having more staff in an organisation than is necessary. Hence, the state or fact of losing a job because there is not further work to be done; a case of unemployment due to reorganisation, mechanisation, loss of orders, etc

Of a person: no longer needed at work; unemployed because of reorganisation, mechanisation, change in demand, etc

65 'Retrench' is variously defined as to cut down, reduce, curtail and to sack or dismiss as part of an effort to economise.

66 Mr Zafiriou submits that the term 'retrenchment' refers to a different concept from that of redundancy and that it provided support for a liberal approach to be taken as to the circumstances which would enliven an entitlement to redundancy payments. I disagree that 'retrenchment' in the context of the contract of employment means something different from 'redundancy'. Although 'redundancy' often applies to a position or role and 'retrenchment' to a person whose position or role is made redundant, the contract of employment refers to a 'redundant employee', thus conflating the two terms. In my view, the term 'retrenchment' adds nothing to the term 'redundancy' in the contract of employment. In either case, the employment or position of the individual is surplus to the needs of the company and the individual's employment is terminated for that reason.

67 It is therefore necessary for Mr Zafiriou to establish, on the balance of probabilities, that his employment or position became surplus to the requirements of Abrasives by reason of a 'closing down, reorganisation or amalgamation'. The 'closing down, reorganisation or amalgamation' must have been the cause of Mr Zafiriou's employment or position becoming surplus to requirements, not its consequence.

68 It is common ground that once Mr Zafiriou's employment was terminated, his duties and functions were redistributed among other employees and Mr Freeman. As a result, no single employee carried out the particular combination of duties or functions that Mr Zafiriou performed as at 26 October 2010. Mr Zafiriou's position at Abrasives as the person ultimately responsible for the supply chain was taken up by his former subordinate, Mr Mihailidis, who took on the role of GM - Supply Chain in addition to his existing role as 'supply chain manager' for a time, and Mr Zafiriou's role at Ceramics was performed by Mr Freeman until the closure of that business. It is not clear exactly where what Mr Zafiriou saw as the commercial parts of his job went, but I infer that they were distributed to other employees.

69 The end point is that following Mr Zafiriou's departure, Mr Zafiriou's duties were not performed by a single employee, but distributed among a number of persons. The redistribution of duties involved a 'reorganisation' of roles and functions at Abrasives. So much is not in dispute. The principal controversy between the parties is whether the reorganisation was a consequence of Mr Zafiriou's termination or whether the reorganisation was the reason for Mr Zafiriou's termination.

Was the reorganisation the cause (or one of the causes) of Mr Zafiriou's termination?

70 Mr Zafiriou opened his case on the basis that his position was made redundant by the 100 day plan and 'dressed up' as a termination on performance grounds. He contended that Mr Chaur had decided to get rid of him from the outset, because Mr Chaur did not have any use for a person performing the collection of functions making up the role of GM - Commercial Operations, which was a 'mini CEO' position, and that the position that he held when his employment was terminated had little to do with the role that he occupied before Mr Chaur started. According to Mr Zafiriou, the redundancy was presented as a dismissal on performance grounds so as to avoid having to make a large redundancy payment because his job was no longer required.

71 In final submissions, however, Mr Zafiriou submitted that even if the plan to make Mr Zafiriou's position redundant could not be sourced in the 100 day plan, it was likely that once Mr Zafiriou's role had been redefined as GM - Supply Chain, Mr Chaur realised that this (lesser) role was essentially the role already being performed by the by supply chain manager, Mr Mihailidis, and that Mr Mihailidis could be drafted to perform the role of GM - Supply Chain much more economically than Mr Zafiriou, Mr Chaur decided to get rid of Mr Zafiriou altogether. In this sense, so it is contended, Mr Zafiriou became surplus to requirements and was made redundant.

72 On this version of events, in the last few days of Mr Zafiriou's employment Mr Chaur implemented a plan to make Mr Zafiriou's termination appear to be a performance based dismissal. However, the 100 day plan continues to be relevant in that it gives an insight into what changes Mr Chaur was thinking of making and where he was headed. Importantly, the 100 day plan contained the proposed change from the position of GM - Commercial Operations to GM - Supply Chain.

73 According to Mr Zafiriou, the change of title from GM - Commercial Operations to GM - Supply Chain was not simply a re-naming process: it reflected the fact that Mr Chaur had identified a need for a specialist supply chain person and Mr Zafiriou's position as GM - Commercial Operations was not of that nature. That was the reason for his termination.

74 Mr Zafiriou's final position is, therefore, that the termination of his employment was the culmination of a restructuring process which began soon after Mr Chaur's appointment and ended with Mr Chaur concluding that there was no longer a need for Mr Zafiriou's position. According to Mr Zafiriou, Mr Chaur simply did not want a single person performing the collection of duties that made up Mr Zafiriou's position. These were a collection of odd responsibilities that added up to a 'mini CEO' position, and Mr Chaur did not want a 'mini CEO' in the company. Mr Chaur decided to abolish the 'mini CEO' position and replace it with a position that was one of a series of equal direct reports focused upon supply chain management without the Ceramics responsibilities, the ACCC responsibilities and the corporate functions. Abolishing the 'mini CEO' position amounted to a redundancy.

75 This is supported, so Mr Zafiriou contends, by Mr Chaur's evidence that what he needed at the time 'with all the issues with the customers and the angst that [the company] was facing'[29] was somebody to focus on supply, distribution and procurement, which were the areas in which the business was falling down. As a result, according to Mr Zafiriou, Mr Mihailidis' job as GM - Supply Chain was 'at least 50% different' from the role that he had performed, because the components involving Ceramics, ACCC compliance, legal compliance and so forth were not included. In addition, it was transparently not to be a position that would be perceived by the incumbent or by other managers as the 'number two' or the 'mini CEO' position.

76 When asked whether Mr Zafiriou's termination was the result of restructuring or the restructuring the result of Mr Zafiriou's termination, Mr Zafiriou's counsel answered as follows:[30]

The answer is that the restructuring meant that the job was no longer required. There was a period of ongoing restructuring leading up to 25 October, the scaling down of the role over that period. But on 25 October, Mr Chaur decided he wanted to replace the current role, the mini-CEO role of accumulated functions with a simpler, cleaner and manifestly lesser position within the structure and he started to take steps to fill that role. That much is evident from his email of 25 October and the following day the termination occurred.

77 Despite the shift in when he says the plan to make him redundant was devised, Mr Zafiriou placed considerable importance on the change to his title that first appeared in the 100 day plan. He submitted that whether Mr Chaur intended to make his position redundant sooner or later was of little moment, as the change to his title itself gave rise to a redundancy. Mr Zafiriou contended that despite Mr Chaur's intentions, there was no change to Mr Zafiriou's position as GM - Commercial Operations prior to his termination, as a change of position could only have taken place with the written consent of Mr Zafiriou, having regard to the terms of clause 8.1 of the contract of employment. There was no such consent in writing. Mr Zafiriou therefore remained the GM - Commercial Operations right up until his termination. Because Mr Mihailidis was appointed as the GM - Supply Chain upon Mr Zafiriou's termination, the position of GM - Commercial Operations was made redundant.

78 The redundancy case is therefore put on the basis that:

(a) Mr Chaur had no need for a person performing the combination of functions and duties that were performed by Mr Zafiriou and, in particular, no need for a 'mini CEO' or 'MD in waiting'. That role was made redundant either by the 100 day plan or subsequently; and

(b) When Mr Zafiriou was dismissed, he still occupied the role of GM - Commercial Operations. That position was not replaced. The GM - Supply Chain position was a different and lesser role. Mr Zafiriou's termination made redundant the role of GM - Commercial Operations.

79 In his evidence, Mr Chaur described the 100 day plan as a summary of his observations in his first 100 days with Abrasives.[31] He said he made the plan alone and sought to record his unbiased and objective view of what he saw within Abrasives upon arrival. Among other things, the 100 day plan was his opportunity to obtain approval from Paris to refocus and restructure the company, and to create the new positions and make the redundancies necessary for the changes he wished to effect.

80 One of Mr Chaur's early observations was what he described as 'a strong silo culture' within Abrasives. He said that when he joined Abrasives he was shocked how 'oppositional and hostile' the culture was. He had been used to working in management teams where there was a high level of collaboration and where people treated each other with dignity and respect. In his first couple of meetings at Abrasives people swore at one another, dismissed suggestions and opportunities, reinforced territorial claims and warned others off. He said he found it a very difficult culture to come to terms with. As a result, he sought to create stronger, clearer functional groups, to foster collaboration and to create stronger team unity in what he described as a 'results-driven' culture. [32]

81 The 100 day plan proposed a management restructure, which was to be completed prior to the end of August 2010. The rationale for the restructure was 'to streamline the SGAP senior management group and re-allocate job responsibilities to best match areas of functional control'.[33] The 100 day plan was directed to the creation of clear functional groups to replace 'the current silo lead organisation'.[34]

82 The organisational chart in the 100 day plan representing the existing management team shows ten direct reports to the managing director, including Mr Zafiriou as GM Commercial Operations.[35] A number of managers (in addition to general managers), including a 'Commercial Manager', were also direct reports. The proposed management team, by contrast, consisted of only six direct reports, including Mr Zafiriou.[36]

83 As a result, of the ten individuals reporting to the managing director under the existing arrangements, only the four most senior were to remain as direct reports to the managing director under the proposed new arrangements. One of them was Mr Zafiriou.[37]

84 The proposed management team comprised four general managers - GM Manufacturing, GM Supply Chain, GM Sales and GM Marketing - along with the CFO and HR Manager.[38] The new structure therefore reflected the functional areas of the business - manufacturing, supply chain, sales and marketing - and was intended by Mr Chaur to be a 'more effective and clear organisational structure', to create 'defined functional roles', to 'eliminate any cross role confusion and boost decision making performance', and to 'focus on sales and marketing disciplines to drive the business forward with customers'.

85 When he was asked why he proposed to change Mr Zafiriou's title from GM - Commercial Operations to GM - Supply Chain, Mr Chaur said that he did not understand what 'commercial operations' meant, that it did not define the real duties that Mr Zafiriou had to perform and that when he deconstructed Mr Zafiriou's role, the significant part of it was procurement, warehousing and logistics. His objective was to 'call a spade a spade', so if the role was one related to supply chain, it should be called 'supply chain'. This would make it was easier to understand, not only within the organisation, but in its global context and among affiliates and suppliers outside of the organisation.[39] Mr Chaur explained that his definition of 'supply chain' was all-encompassing: it was 'everything from the procuring and planning for the procurement of goods to the logistics and supply of those goods into [the] organisation, production planning and also the supply of goods on time and in full to [Abrasives'] customers'.[40]

86 Mr Chaur told the Court that he did not regard the change in title as a demotion. He said he was not changing Mr Zafiriou's role in any way, other than in respect of IT. The new title was cleaner and reflective of what the company needed. When asked what he intended to change regarding Mr Zafiriou's seniority, Mr Chaur said:

Look, at that point in time there was absolutely no intention to do anything with Mr Zafiriou other than to relocate IT.[41]

87 I find that the 100 day plan did not make significant change to Mr Zafiriou's duties. It provided for Mr Zafiriou to lose responsibility for IT and the small New Zealand manufacturing operations (referred to as 'New Zealand conversion') and to gain procurement and demand planning. As Mr Chaur pointed out in his evidence, under the 100 day plan, Mr Zafiriou still had the same people reporting to him, and he retained responsibility for Ceramics, ACCC compliance, company secretariat and so on. Mr Zafiriou was taken in cross-examination through the so-called 'commercial' functions that he performed at the time Mr Chaur joined Ceramics (company secretariat, ACCC compliance, insurance, car fleet management and so on) and conceded that they took up small amounts of time relative to his other responsibilities and /or that he continued to perform the function up until the time of his termination.[42] The 100 day plan did not contemplate that any of these functions would be taken away from Mr Zafiriou.[43]

88 Nonetheless, Mr Zafiriou contended that the 100 day plan contained the seeds of his redundancy, having regard to the following:

(a) references to a 'modern organisational structure' and to aligning the organisational structure 'to a simpler and focussed functional organisation' reflect an intention to make structural changes;

(b) references to the capable management of the procurement team 'led by George Mihailidis';

(c) the 'lengthy' listing of Mr Zafiriou's functions and what is described as the proposal of a 'significantly changed set of responsibilities';

(d) the acknowledgement that Mr Zafiriou's proposed new role was 'down scaled' and positioned him less as the 'MD in waiting';

(e) the acknowledgement that Mr Zafiriou would not be pleased about losing IT but that 'the redefinition of the wider leadership structure was more important';

(f) the reference to Mr Zafiriou filling 'odd fit job functions' over time and to the defendant realigning job tasks to other roles.

89 I do not accept that these matters reveal a plan or intention to make Mr Zafiriou's position redundant. For the reasons that I have given, I reject the proposition that the 100 day plan gave Mr Zafiriou a 'significantly changed set of responsibilities', or that the 'core' part of Mr Zafiriou's duties, which he described as 'commercial', was effectively stripped away from him and that he was required to perform a logistics role for which he was not specifically qualified as an accountant. The evidence was that Mr Zafiriou retained all of his 'commercial' duties other than IT. Furthermore, he conceded that that procurement, warehousing and logistics made up the bulk of his duties in July 2010 prior to any changes being made.

90 As to the 'down scaling' of Mr Zafiriou's role, Mr Chaur told the Court that by changing Mr Zafiriou's title and making modifications to his responsibilities, he intended to focus Mr Zafiriou's attention on his important supply chain duties and to have him work within a coordinated team of senior managers. Hence, under the heading 'Other Impacts', the impacts of the 100 day plan on the role 'GM Commercial' are described as follows:

GM Commercial - role is down scaled to have a clearer focus on Supply Chain. This also clarifies Arthur's role in the new structure and positions him less as the 'MD in waiting'. Arthur won't be pleased about losing IT but redefinition of the wider leadership structure is more important.[44]

91 Mr Zafiriou gave evidence that under Mr Freeman, he had 'reach' across the whole Abrasives business. The fact that Mr Zafiriou's 'reach' may have been restricted by the requirement to focus his attention on the supply chain does not, in and of itself, support Mr Zafiriou's case for a redundancy. It is not unusual for the duties of senior executives to change, depending on the company's requirements and changes in the market place. As a senior executive of Flexovit and subsequently Abrasives, Mr Zafiriou was well accustomed to changes in his duties from time to time. He gave evidence that throughout his employment his duties and his involvement in different parts of the business had changed. When it was put to him that his involvement in various aspects of the business had 'ebbed and flowed' over the years, Mr Zafiriou's agreed that this description was 'reasonable'.[45] He also agreed that he could not be described as 'surplus to requirements' based on the 100 day plan and that there was no proposal in the 100 day plan to make him redundant.[46]

92 Nonetheless, Mr Zafiriou described the role of GM - Supply Chain as 'a major step down from being General Manager - Commercial Operations'[47] and as a 'lesser role'.[48] He said that as part of his role in commercial operations, he was involved in 'the actual procedure, the legal, the projects, cost and benefit and analysis of major projects ... it was more of a general role' and that he saw his role as being 'slimmed down and specialised'.[49] He said:

While you could recruit a supply chain specialist to do this role, you couldn't recruit somebody [like that] to do my role.[50]

93 Mr Zafiriou relied heavily on Mr Chaur's statements that Mr Zafiriou was not to be a 'mini CEO' or 'MD in waiting'. He argued that this showed an intention to make Mr Zafiriou's position redundant. According to Mr Zafiriou, there was ample evidence that Mr Chaur didn't want someone 'swanning around as number 2', which was what Mr Zafiriou did as GM - Commercial Operations and, as a result, Mr Chaur moved to make the position of GM - Commercial Operations redundant.

94 In the 25 October email, Mr Zafiriou referred to Mr Zafiriou as having 'built himself a company role that far outweighs the requirements of our current company', and stated that he had built his role into that of a 'mini CEO' and seemed unaccountable to anyone but himself. However, as Mr Chaur pointed out in cross-examination, the term 'mini CEO' was coined by him, as was the description of Mr Zafiriou as 'MD in waiting'. In fact, there was no position of 'mini CEO' or 'MD in waiting' either under Mr Freeman or subsequently. Explaining his use of the term 'mini CEO', Mr Chaur said that that was the way he saw Mr Zafiriou portraying himself around the organisation, in that Mr Zafiriou did not want to get his hands dirty, and did not want to get too involved in a lot of the day-to-day activities. According to Mr Chaur, Mr Zafiriou was more comfortable directing people, but this presented a problem for Mr Chaur in that he needed Mr Zafiriou to be hands-on in the business and 'down in the detail' like the rest of the managers, including Mr Chaur himself.[51]

95 When Mr Chaur was asked in cross-examination whether he no longer wanted someone in the 'mini CEO' role, he responded that what he did not want was somebody who saw himself as being at the top of the heap in an impenetrable silo and not wanting to be collaborative and engaging across the organisation. He expected Mr Zafiriou to be collaborative and engaging, but that was not what he saw.[52] When Mr Chaur was asked about the statement in the 25 October email explaining his decision to dismiss Mr Zafiriou that he, Mr Chaur, could 'not operate under this regime' and whether he agreed that he found a mini CEO with an accumulation of responsibilities to be untenable, Mr Chaur said:

No, the untenable part of it was that Mr Zafiriou was quite - he operated in a manner that he was a controlling centre of his domain and I just found over time that, that ... he was quite oppositional in terms of taking on working with other departments within the organisation, particularly across projects. He was quite dismissive of me as the MD in terms of my requests and the timings and the weight that I put towards things that I asked him to do and I actually needed someone who was going to be a little more collaborative across the organisation.[53]

96 Mr Chaur emphasised that the role that he wanted Mr Zafiriou to perform in the new structure was predominantly the role that he was already performing: Mr Zafiriou would still look after Ceramics, warehousing and logistics, along with company secretariat and all of his other duties.[54] Mr Chaur continued:

There's no correlation to the fact that I didn't want a mini CEO. What I didn't want is the attitude that Mr Zafiriou displayed.[55]

97 I accept this evidence. It is apparent from the context in which Mr Chaur made reference to Mr Zafiriou acting as 'mini CEO' and 'MD in waiting' that these terms were used by Mr Chaur to describe what he regarded as problematic and dysfunctional about the way that Mr Zafiriou operated within the organisation. They did not describe Mr Zafiriou's formal position with the company.

98 As to the loss of the 'number 2' position in the company, Mr Chaur disputed that Mr Zafiriou held the 2-IC position when he joined the company. Whatever the de facto hierarchy, the organisational charts show Mr Zafiriou to have been one of ten direct reports to Mr Freeman and to have become one of six direct reports to Mr Chaur under the 100 day plan. Mr Zafiriou retained his position as a direct report to the managing director in a streamlined leadership group. Mr Chaur said:

What I wanted was clarity in the organisation as to the functional responsibilities that each of my line managers held and I wanted to develop a collegiate culture where people worked together in a leadership group, and I wanted to have six senior people who were responsible to me to act as my 2-ICs.[56]

99 It may well be that the sharper focus required by the 100 day plan on supply chain management diminished Mr Zafiriou's influence within Abrasives, and that Mr Zafiriou was very important to Mr Freeman in practice but was destined to be less important to Mr Chaur. That is not to the point. The question for the Court is whether Mr Zafiriou is able to establish a contractual entitlement to a redundancy payment based on having been made redundant or retrenched. The fact that changes were made to his role that he found unpalatable, and which might be said to involve a loss of influence, does not assist Mr Zafiriou in this case, for he does not seek to enforce the term in the contract of employment governing dismissal. Rather, Mr Zafiriou seeks to enforce the term in his contract that entitles him to a special payment if he is made redundant or retrenched. Under the contract of employment, a redundancy would occur if his employment or position became surplus to existing requirements by reason, relevantly, of a reorganisation in the company. Mr Zafiriou must establish, not that he was asked to perform lesser duties or that his job title was changed so as to amount to a constructive dismissal, but that the role that he previously performed was no longer required to be performed by anyone or, if it was required to be performed, that its components were distributed among other employees as part of a reorganisation or restructure, leaving him with no further duties to perform.

100 Pursuant to the 100 day plan devised by Mr Chaur, Mr Zafiriou retained nearly all of the functions and duties that he had under Mr Freeman. His role as GM - Supply Chain put him at the head of one of the four functional areas of the business. With the exception of IT and the small New Zealand operations, Mr Zafiriou continued to have the same responsibilities under the 100 day plan as he had previously. He managed the same staff and he retained the same salary and other benefits.

101 Although there is a dispute about whether Mr Zafiriou was told about the change to his title - Mr Chaur says he was, but Mr Zafiriou says he only learned of the title change in on 8 October when changes to the sales and marketing division resulting from the 100 day plan were announced - it is common ground that important parts of the 100 day plan affecting Mr Zafiriou were made known to him at the August meeting, notably the removal of IT from his area of responsibility. Although he was not happy about losing responsibility for IT, Mr Zafiriou made no specific complaint about any other aspect of the proposal and continued to carry out his duties for Abrasives as before, including after 8 October 2010.

102 The reorganisation in the 100 day plan did not have the effect that the work that Mr Zafiriou previously performed was no longer required to be performed by anyone or that it was required to be performed but distributed among other employees as part of the reorganisation. It follows that I do not accept that Mr Zafiriou was made redundant as part of the 100 day plan or that his redundancy was foreshadowed in or facilitated by the 100 day plan. Mr Zafiriou continued to be actively engaged in a very senior position in Abrasives right up to 26 October 2010 and his employment or position was not, in any sense, surplus to the company's requirements.

103 In final submissions, Mr Zafiriou contended that a plan to make his position redundant was devised in the last days of his employment. On the final day of evidence, the defendant produced an email from Mr Chaur to the HR Manager, Ms White, dated 20 October 2010, in which Mr Chaur said he would get back to Ms White with a 'plan' for Mr Zafiriou's termination. Mr Zafiriou submits that this speaks of Mr Chaur applying himself to the task of developing a strategy for terminating his employment as part of a restructure.

104 Mr Zafiriou says that by October 2010, Abrasives no longer required a person to be employed in Mr Zafiriou's position and that the stage was effectively set for a reorganisation of responsibilities under which Mr Zafiriou's position could be merged with the position of supply chain manager. At the heart of Mr Zafiriou's case is the allegation that Mr Chaur came to realise that the role of GM - Supply Chain overlapped so completely with the supply chain management role already performed by Mr Mihailidis that it would be cheaper to make Mr Zafiriou's position redundant and leave Mr Mihailidis with complete responsibility for supply chain management.

105 Mr Zafiriou submits that while Mr Chaur may have had his doubts about the position of GM - Commercial Operations from the outset, it would have been overplaying his hand to act on those doubts in the early days. As time went on, however, Mr Chaur 'was in a position to remove the position that was perceived as being next below him in order to implement a management structure of equal general managers in the second tier below him'.[57] According to Mr Zafiriou, the old collection of roles and responsibilities making up his role of GM - Commercial Operations was no longer required. The ongoing role was for a logistical role that was quite different from Mr Zafiriou's role when his employment was terminated. Thus, when Mr Mihailidis was appointed as Acting GM - Supply Chain, he was given no 'commercial' functions and no role with Ceramics. His was, according to Mr Zafiriou, 'a manifestly different role' from the role that Mr Zafiriou had performed.[58]

106 In this context, Mr Zafiriou points to the fact that many components of his role had ceased to exist or were coming to an end as 2010 progressed as a result of the completion (or imminent completion) of Project Cooper, Project Spartan and High Jump. Furthermore, he says that as part of the 'scaling back' of his role, various components of his job were taken away, such as responsibility for IT, his company secretariat responsibilities and those for the New Zealand manufacturing operations. In addition, the conclusion of Mr Zafiriou's role with Ceramics was imminent. Mr Zafiriou gave evidence that he had a conversation with Mr Chaur in about September 2010 in which he alerted Mr Chaur that Abrasives would have to budget for his return to Abrasives on a full-time basis. This, according to Mr Zafiriou, provided an incentive (or a further incentive) to remove him from Abrasives altogether.

107 Mr Zafiriou urges the Court to closely examine the events leading up to the termination of his employment on 26 October 2010. These events, he says, show Mr Chaur to have applied himself to the task of developing a strategy for terminating Mr Zafiriou's employment, giving cause for scepticism about the genuineness of the alleged supply chain issues that were cited as the reason for his sacking. According to Mr Zafiriou, the termination did not proceed as a performance-based termination, which would have required no planning.

108 Mr Zafiriou refers in particular to the following chain of events:

(a) Mr Zafiriou's prospective termination was referred to by Mr Chaur in an email to Ms White dated 18 October 2010 (the '18 October email') which addressed various items of unfinished business from a proposed 'restructure' to be completed by the beginning of November;

(b) Mr Chaur emailed Ms White on 20 October 2010 (the '20 October email') to say that he would develop a 'plan' to remove Mr Zafiriou;

(c) Mr Chaur was given two figures representing the cost of removing Mr Zafiriou: the first was a figure for the termination he had asked for (a performance based termination); the second, Mr Zafiriou's entitlement upon a redundancy. Mr Chaur considered the latter figure to be very 'big';

(d) the 25 October email contains a number of signs that what was really involved was an attempt to avoid having to pay Mr Zafiriou for redundancy, including the statement that redundancy was not an option because of the cost;

(e) Mr Freeman, who also received a copy of the 25 October email, referred to the circumstances of Mr Zafiriou's termination as a 'restructuring in Abrasives';[59]

(e) On 28 October 2010, Mr Chaur emailed Ms White referring to a 'severance', which was language suggestive of a redundancy.

109 Moreover, Mr Zafiriou submits that Mr Chaur was at pains to repeat that the termination was not a redundancy, in circumstances where, when he was given the figure that Mr Zafiriou would be paid upon a redundancy, Mr Chaur commented on the size of the redundancy payment. In substance, Mr Zafiriou contends that Mr Chaur's vigorous denials that his termination was a redundancy show that that was what it really was.

110 I propose to deal with the first four of these matters in a preliminary fashion. The events in question cannot be assessed in a vacuum. Ultimately, they must be assessed as part of the larger picture that includes findings as to whether Mr Chaur held genuine performance concerns prompting him to dismiss Mr Zafiriou.

111 As to the final two matters, I find them to be of no consequence. Mr Freeman's reference to a 'restructuring at Abrasives' is a reference to an event following Mr Zafiriou's termination. As to Mr Chaur's use of the word 'severance', while that word may have a specific meaning in certain contexts, it is unlikely that Mr Chaur used it in any strict sense. He was otherwise at pains to ensure that Mr Zafiriou's termination was not characterised as a redundancy.

112 I turn to consider the first four matters in the context of the events in the period immediately leading up to Mr Zafiriou's termination.

Mr Chaur's conduct in the week prior to termination

113 Mr Zafiriou relies on communications between Mr Chaur and Ms White in the final week of his employment to show there was a plan to make him redundant and to 'dress up' the redundancy as a performance-based dismissal. He also relies on the contents of the 25 October email and the 'façade' he says Mr Chaur created by asking him to prepare and present a report on the Blackwoods DIFOT issue and then sacking him soon afterwards.

114 The relevant events appear to have commenced in early October, when Mr Chaur had a discussion or meeting with Ms White in which he asked her for advice about the termination clause in Mr Zafiriou's contract of employment.[60] Mr Chaur followed this up with the 18 October email in which he referred to some urgent matters that needed to be dealt with 'to complete the restructure by the end of November'. In the 18 October email, the third of 'the couple' of matters on which Mr Chaur seeks advice relates to Mr Zafiriou's contractual termination clause.[61] Mr Chaur gave evidence that Ms White subsequently gave him the payout figures for a termination under cl 22.1, along with an (unsolicited) 'value' for a redundancy . He said that he had a number of discussions with Ms White about the termination of Mr Zafiriou's employment, and that when he was told the value for a redundancy, he exclaimed, 'Wow, that's a big amount'.[62]

115 The 20 October email[63] is part of the chain commencing with the 18 October email. It appears that Ms White had responded to the former by forwarding Mr Zafiriou's contract of employment and referring Mr Chaur to clause 22. On 20 October, Mr Chaur replied:

OK, that's good news in relation to clause 22. Let me come back to you with a "plan". Rgds, Steven

116 Mr Zafiriou submits that this reveals the termination of his employment to have been discussed having regard to its cost and, importantly, that a 'plan' was being developed for the purpose of terminating his employment. He contends that a termination for performance grounds does not call for the development of a plan; it would simply unfold in accordance with standard dismissal procedures. According to Mr Zafiriou, a lot of planning went into his termination, as is evidenced both by Mr Chaur's dealings with Ms White and by the 25 October email. The Court should therefore be sceptical of any performance concerns raised by Mr Chaur, certainly from this point onwards, and should infer that the 'plan' was a plan to conceal the fact of redundancy by masking the redundancy with spurious performance concerns.

117 I am not persuaded that the 18 October email reveals Mr Chaur's intention to terminate Mr Zafiriou's employment as part of a restructuring proposal or that the 'plan' referred to in the 20 October email was a plan to 'dress up' a redundancy as a performance-based termination.

118 In the 18 October email, Mr Chaur asks Ms White for advice in relation to three matters so as to be able to 'complete the restructure by the start of November'. All three matters involved employees leaving or potentially leaving the company, but only one of them was identified in the 100 day plan as a redundancy. Item 2 did not involve a termination at all, but a threatened resignation over the merging of two sales teams and issues of seniority. Mr Zafiriou is Item 3. Like the person mentioned in Item 2, it was not proposed that he be made redundant as part of the restructure in the 100 day plan. Unlike the persons in items 1 and 2, he was not caught up in the restructuring of the sales teams. In answer to a question about the significance of the November date for the completion of 'the restructure', Mr Chaur commenced with the observation that the 'sales organisational restructure' had already been announced and explained the need to provide certainty to employees before the commencement of the Saint-Gobain financial year in January. I infer that 'the restructure' referred to in the opening words of the 18 October email is the 'sales organisational restructure', not a restructure requiring the removal of Mr Zafiriou from his role or position.

119 This is supported by the fact that Mr Zafiriou appears as the third and last item on the list. As Mr Zafiriou was the most senior of the three employees named in the 18 October email, one would expect him to have been named first if his termination was part of the restructure referred to in the introductory sentence. Aside from the introductory words, there is nothing to suggest that the request for advice on Mr Zafiriou's contractual termination clause was a part of the restructure involving the two other employees mentioned in the email.

120 As to the 'plan' in the 20 October email, Mr Chaur gave no evidence about what he meant, as the email in question was discovered after he had finished giving his evidence. However, I do not accept that the 'plan' referred to must necessarily be a plan to make Mr Zafiriou's position redundant and to disguise the redundancy as a dismissal. It is not the case that a dismissal on performance grounds simply unfolds and does not require a plan. The dismissal of a senior, long serving employee might also call for a plan. In this case, Mr Chaur decided to offer an ex gratia payment to Mr Zafiriou, apparently in recognition of his long years of service and the tightness of the market for executives looking for work at the time. However, there was also evidence that Mr Chaur considered Mr Zafiriou to be 'quite an aggressive man'[64] and that he was concerned that Mr Zafiriou would malign the company following his dismissal. In these circumstances, Mr Chaur turned his mind to how best to deal with Mr Zafiriou's likely response to being dismissed and the desirability of removing him from the company premises as quickly as possible.

121 It was further contended by Mr Zafiriou that in requiring him to prepare a report on Blackwoods over the weekend prior to his termination, Mr Chaur was setting about creating a façade of performance concerns to give himself a basis to dismiss Mr Zafiriou. This, presumably, is put forward as an expression of the 'plan'.

122 Again, apart from its timing (Mr Chaur having already taken steps to inform himself of Mr Zafiriou's contractual entitlements upon termination), there is nothing to suggest that Mr Chaur's request for the Blackwoods report was anything but an endeavour to resolve what were significant and ongoing problems with one of Abrasives' major customers, Blackwoods. Early on Friday, 22 October 2010, Mr Chaur sent an email to a number of his senior managers convening a 'Supply Performance Meeting' in order to 'have a clear and detailed review of our current supply chain performance'.[65] Mr Zafiriou was asked to come prepared to discuss a number of points, including plans to resolve the order entry backlog, a back-order action plan and DIFOT. The purpose of the meeting was to devise a 'clear and understandable action plan' to address those issues before December 2010.

123 The genesis of the meeting was explained by Mr Chaur in the following way:

I returned from annual leave at the end of September ... to a barrage of complaints from our customers, quite angry complaints about our service levels, and I called a snap meeting at the beginning of October with a number of people, including Mr Zafiriou, to discuss basically what was going on. I wasn't satisfied at that meeting that we had the full facts, and I also found that meeting lacked any clarity from Mr Zafiriou in terms of what the details were around our back-orders and our DIFOT issues and our performance. I wasn't very satisfied with Mr Zafiriou's performance at that meeting, so I called another meeting on the 25th of September as basically an opportunity for me to see what Mr Zafiriou could do given two weeks , with some very clear instructions.[66]

124 Viewed in context, the request for the Blackwoods report and the convening of the supply performance meeting on 25 October was, in my view, unremarkable.

125 Mr Zafiriou worked all weekend on the Blackwoods report. He reported to his colleagues that it was well received. However, Mr Chaur took a different view. His evidence was that he was 'very unimpressed and very disappointed'[67] with Mr Zafiriou's explanation of the data, which made clear his lack of understanding of what the data meant, and with his inability to come up with a meaningful strategy to fix things.

126 There was some attempt during the course of the trial to show that Mr Zafiriou's Blackwoods report formed the basis for or contributed to the solution that was eventually reached with Blackwoods in December 2010. However, even if it was the case that the Blackwoods report was used in reaching a solution with Mr Rutter, this would not undermine Mr Chaur's evidence about the quality of the report itself, as it would not be inconsistent with Mr Chaur's evidence that Mr Zafiriou did not sufficiently understand or analyse the data to devise a clear and understandable action plan, as requested.

127 More importantly, however, I find it difficult to reconcile the proposition that the Blackwoods report was requested in order to give Mr Chaur a spurious reason to sack Mr Zafiriou with the fact that the 25 October email, which lists the reasons for Mr Zafiriou's dismissal, makes no mention of the Blackwoods report. Although the Blackwoods report and the quality of Mr Zafiriou's presentation was mentioned at the termination meeting, it was only in response to Mr Zafiriou's assertion when criticised for not having completed a weekly back-order report that he hadn't finished the back-order report because he had been working on and presenting the Blackwoods report.

128 I am not persuaded that the request for the Blackwoods report was a 'façade' that was put in place to justify Mr Zafiriou's termination as performance-based. It appears to me to form part of the ordinary course of business, given Mr Zafiriou's responsibilities and the problems that were then being experienced with supply to Blackwoods.

129 Mr Zafiriou contends that Mr Chaur's repeated assertion that the termination was not a redundancy pointed to it being precisely that. The 25 October email is given as an example of allegedly false and self-serving denials and contrivances to make a redundancy appear to be a dismissal. In articulating all of the performance issues that Mr Chaur claims to have had with Mr Zafiriou, Mr Zafiriou contends that he created evidence of complaint, when in fact, on Mr Chaur's own evidence, he did not complain to Mr Zafiriou about his performance in any kind of formal or systematic way prior to Mr Zafiriou's dismissal.

130 Mr Chaur sent the 25 October email to his superiors in France and the US to explain why and how he proposed to terminate Mr Zafiriou's employment. It listed his reasons for the decision, including Mr Zafiriou's alleged lack of customer focus, lack of 'pro-activity' (initiative) and attention to detail, casual participation in meetings, consistent failure to supply weekly project updates, abuse of company credit card, lack of availability, and lack of responsiveness to the broader business needs of the company and to specific requests made of him.

131 The 25 October email set out a 'termination plan' as follows:

• Under the terms of his Contract (attached - S22.1), I am legally able to terminate his employment (and without express reason) by simply giving him one month's notice of my intent to do so. Either party can give this notice and it is not reliant on any performance management process.
• Given his level of remuneration (> $100k pa), he is not able to pursue SGA for unfair dismissal. However, recognising the seniority of his role and the tight job market for senior executives, my intention is to give him notice plus an ex gratia payment of five months' pay, bringing the total termination payment to six months (this excludes sick leave accruals). The value of this is around AUD$140,000.00 (Pam and I are still calculating). I think this is reasonable given his length of service and fits our SG Principles.
• The role is not being made redundant and will be re-filled prior to December 2010. I have already commenced a confidential market search for a new GM.
• AZ has a very generous contract in terms of redundancy - the last numbers provided to me were around $750,000 in redundancy if we chose to go that way. This is not an option to consider.
• I will ask George Mihailidis to take care of the role until a new incumbent is found. George will also no doubt apply for the role.
• Roger will coordinate from me with Laurent regarding AZ's role at Ceramics once I have enacted the termination. Roger has also offered assistance with the SGIC team until the remainder of 2010.
• Arthur will exit the business upon advice of his termination (ie immediate exit). Pam will coordinate the recovery of any IP and other company materials. This strategy is most appropriate so that AZ does not malign the operation.

132 The 25 October email does not generally support Mr Zafiriou's case that he was terminated for reasons of redundancy/retrenchment. To the contrary, it supports the defendant's case that Mr Zafiriou's employment was terminated because Mr Chaur was dissatisfied with his performance. The 25 October email refers, among other things, to Mr Chaur having found Mr Zafiriou's performance to be well below his expectation for the senior role he held and records Mr Chaur's opinion that Mr Zafiriou did not like to be accountable to a manager, did not seem to want to be a part of a formal business regime and was unlikely to improve in his general attitude or performance. These are plainly matters that support a dismissal, rather than a redundancy.

133 Of course, Mr Zafiriou submits that these complaints were invented to justify his dismissal, and were never communicated to him. While it is necessary to carefully consider whether Mr Chaur's performance concerns were genuinely held - and this task is undertaken in detail below - I observe that Mr Zafiriou put his case on the basis that he was the 'mini CEO' and the managing director's 'main man' and that the loss of this position amounted to a redundancy. It rings true that Mr Zafiriou had difficulty accepting that he was accountable to Mr Chaur as but one of a number of direct reports and that he resisted the imposition of formal lines of accountability and reporting.

134 I accept that making Mr Zafiriou's position redundant would have been an expensive proposition for Abrasives. The redundancy provision in the contract of employment is generous, particularly to employees with long service. I also accept that the expense involved in making Mr Zafiriou redundant could have provided a motivation for Mr Chaur to seek to find other ways to deal with Mr Zafiriou. However, Mr Chaur gave evidence that he had the opportunity to make such redundancies as he considered necessary in the 100 day plan. Moreover, the reference in the 25 October email to the 'option' of making Mr Zafiriou redundant followed the advice that Mr Zafiriou's role was not being made redundant and would be re-filled prior to December 2010, and that Mr Chaur had already commenced a confidential market search for a new general manager. Mr Chaur gave evidence that he had commenced such a search and that it was not his intention to make Mr Zafiriou's role redundant. In my view, the reference to redundancy being not being an 'option' on the grounds of expense was directed to pre-empting consideration being given to facilitating Mr Zafiriou's departure in this fashion. It would not be unprecedented for an employer that wished to remove a poorly performing senior employee to consider 'dressing up' the dismissal as a redundancy in order to smooth the path to the exit.

135 Further references to Mr Zafiriou's dismissal not being a redundancy were contained in Mr Chaur's 'script' for the termination meeting[68] and were repeated at that meeting. Mr Zafiriou also points to these as evidence that Mr Chaur was at pains to make his redundancy appear not to be a redundancy.

136 Mr Chaur wrote a script in preparation for the termination meeting. It records what he planned to say to Mr Zafiriou at that meeting. After stating that termination would occur under the provisions of the contract of employment, Mr Chaur proposed to say, 'This is effective immediately and is not a redundancy as your role will be refilled'.

137 However, Ms White's notes of the termination meeting record redundancy being first raised by Mr Zafiriou. According to Ms White's notes, Mr Zafiriou asserted that the termination was a redundancy. Mr Chaur is recorded as having replied, 'This is not a redundancy, you are being fired, your role is being recruited as we speak.' Mr Zafiriou's notes confirm this exchange. Both sets of notes have Mr Zafiriou again asserting later in the meeting that the termination was a redundancy because there was no basis for it. Mr Zafiriou's notes record Mr Chaur repeating that it was not a redundancy.

138 In my view, the script shows Mr Chaur to have anticipated that Mr Zafiriou would seek to have his termination characterised as a redundancy, and he was right to do so. Mr Zafiriou had a significant financial and emotional interest in such an outcome. Having regard to the way in which Mr Zafiriou would naturally seek to characterise his termination, I do not accept that Mr Chaur's references to the termination not being a redundancy were self-serving or that they reveal the termination to have been, in fact, a redundancy.

139 As to the alleged performance concerns, whether they are self-serving and not what they appear to be on their face will depend on whether Mr Chaur held genuine concerns about Mr Zafiriou's performance. I turn now to consider that question.

Were there performance reasons for Mr Zafiriou's termination?

140 Mr Zafiriou submits that Mr Chaur's performance concerns do not withstand scrutiny and that they provided an unconvincing basis upon which to abruptly terminate his employment as a senior executive of 23 years standing. He contends that the performance concerns were contrived to establish grounds to bring about the termination of his employment without triggering the redundancy clause.

141 According to Mr Zafiriou, it is clear upon the evidence of Mr Chaur that there were no performance issues of any substance in the period up until at least August 2010. Indeed, in the period before the final weeks of October 2010, Mr Chaur made many positive statements about Mr Zafiriou's performance. However, something happened in the course of October which changed Mr Chaur's attitude towards Mr Zafiriou's continued employment, and he contends that the Court should infer that there was a desire to terminate Mr Zafiriou's employment and to build a case that supported a performance-based termination.

142 The question for the Court is not whether Mr Zafiriou's performance justified his dismissal, but whether Mr Chaur's concerns about Mr Zafiriou's performance were contrived in order to justify a performance-based termination. The question then is whether there was a basis for Mr Chaur to hold performance concerns so as to displace or negate the suggestion that the concerns he identified were contrived.

143 The 25 October email describes, in brief compass, the difficulties that Mr Chaur claimed to experience with Mr Zafiriou. In his evidence, Mr Chaur repeated these complaints. Although Mr Chaur's dissatisfaction with Mr Zafiriou's performance related more generally to his attitude and unwillingness to embrace Mr Chaur's management initiatives, Mr Chaur identified three specific performance failings:

(a) failure to manage DIFOT effectively, including failure to proactively engage with the customer to identify and resolve delivery issues;

(b) failure to meet Mr Chaur's expectations regarding the quality and timing of reports; and

(c) an alleged willingness to engage in email communications critical of other managers.

144 Performance issues relating to DIFOT compliance revolved around, but were not limited to, complaints made by Mr Brian Rutter as sourcing manager for Blackwoods. Blackwoods was Abrasives' biggest customer and, according to Mr Chaur, by far the biggest contributor to its profitability in the region. Mr Chaur described Mr Rutter, as the head of sourcing, as 'a pretty important man within our life in selling our products'.[69] It was Mr Chaur's view that Mr Rutter's concerns had to be dealt with in a manner satisfactory to Mr Rutter, whether or not there was substance to them and whether or not the problems were of Blackwoods' making rather than the fault of Abrasives.

145 The Court was taken to a number of email chains generated by Mr Rutter's complaints about Abrasives' ability to deliver stock on time to Blackwoods.

146 On 21 July 2010, Mr Rutter sent an email to Abrasives' Sales and Marketing Manager, Mr Nick Law, noting that DIFOT performance had fallen from 91% in July 2009 to just 85% in June 2010 and seeking an explanation. Mr Law asked for a report he could look over.[70] On 28 July 2010, Mr Rutter sent to Mr Law and Mr Zafiriou a spreadsheet showing the June DIFOT with the comment that he looked forward to getting some information as to what had happened.[71]

147 Almost a month later, on 27 August 2010, Mr Zafiriou responded,[72] apologising for taking so long and reporting that Abrasives was still investigating DIFOT performance and was in the process of obtaining 'PODs' from transport suppliers. Mr Zafiriou asserted that the overall DIFOT measurement for June was 94% (significantly higher than Blackwoods' number) and reported having identified some problems with the measurements. He gave examples of Blackwoods' trading date being significantly later than Abrasives' invoice date and concluded that there appeared to be 'an issue between us shipping the product and Blackwoods receiving the product.' He said that once Abrasives had the 'PODs' it could address the delivery problem with its transport partners. He observed that the Blackwoods and Abrasives needed to work closely to better understand each other's systems.

148 Mr Rutter's response[73] was as follows:

Arthur,

I appreciate your response but it is over 4 weeks now since I sent this report and I would like to see where the problems may be. I understand they may not necessarily be Saint-Gobain but this is the best way to start. I am surprised a company the size of SGA cannot access POD's quicker, we are now into September.

149 Mr Zafiriou replied,[74] explaining that he had had to manually sort through the data because there was difficulty 'getting a common point of reference from the original spreadsheet'. He gave examples of deliveries showing differences between the 'POD' date and Blackwoods' trading date of up to six days, suggested that the companies work together to arrive at a common reference point to make the investigative task easier and asked for invoice numbers to be provided. Mr Rutter wrote[75] that he would see if invoice numbers could be attached in future. He again asked for the DIFOT measurement for June. Mr Zafiriou advised him that it was 94.08%.[76]

150 It is clear from this exchange that Mr Zafiriou thought the problem to lie in the different ways in which the companies measured DIFOT and that he communicated as much to Blackwoods. However, it is not clear from the evidence before the Court what steps were taken to align the way in which the companies measured delivery.

151 In any event, the issue of late or non-deliveries was not resolved at that time. A further email chain commencing on Friday, 24 September 2010, conveys Mr Rutter's rising frustration at what he perceived to be Abrasives' failure to respond to his requests. On that day, Mr Rutter asked Mr Law to investigate the non-delivery of an order of 'about 2,500 wheels'. This request was forwarded to Mr Zafiriou and Mr Patrick Portier, who was in charge of 'thin wheels' manufacturing. Mr Rutter followed up on Tuesday, 28 September 2010, expressing his concern 'that a strategic supplier such as Saint-Gobain can let a situation like this occur without any communication advising there is an issue, and where there is a quantity of 2,500 units involved that is a very serious issue'. He requested full details of all back orders 'asap'. Later that day, Mr Rutter again emailed Mr Portier and Mr Zafiriou to say that he had received advice from Western Australia that the part (wheel) in question had not been available since July 2010, and that he had had this line on back order since that date for three different construction customers. According to Mr Rutter, this was not acceptable and he expressed himself to be very concerned about how long the back-order problem had been going on. He continued:

I look forward to hearing back from Arthur Z very soon and I would hope with an acceptable resolution and considering the length of time these have been out of stock I would suggest these, and any other back orders, be air freighted at SGA expense as quickly as possible.

152 Mr Zafiriou emailed to confirm that the parts would be air freighted as requested. The remainder of Mr Zafiriou's response referred to the despatch of back-ordered products to locations in Western Australia. Mr Rutter responded that he was not just looking to get back-order details from Western Australia and said that he wanted this information 'relating to all branches of all companies within the WIS [Blackwoods] businesses'. He asked when he would see such a report, as he had 'concerns as to the extent of it at that time'. Mr Zafiriou explained that he had started looking at the Western Australian situation first and that he would complete the rest of the information by the following day.

153 There is no record of the remaining information being provided the following day.

154 In the meantime, Mr Chaur emailed Mr Zafiriou, Mr Law and Mr Portier as follows:

Hi guys can someone give me a clear and concise heads up/action plan on this issue as Brian has now contacted me and is not a happy camper. How should I respond?

155 Mr Chaur gave evidence that Mr Rutter was ringing him directly with complaints about DIFOT performance. He told the Court that Mr Rutter was very hostile and abusive to him and other managers about the declining performance over a period of about six to eight months. However, whenever Mr Chaur spoke to Mr Zafiriou about the problem, Mr Zafiriou would say, 'Look, everything is OK, we are under control, our DIFOT is actually not too bad'. According to Mr Chaur, Mr Zafiriou would refer to overall DIFOT for a particular month being, say, 94%, but this did not address Mr Rutter's issue, which was that his branches had problems with stock. Mr Chaur said that Abrasives was not providing answers for individual distribution outlets and why they were not receiving stock, and that this was the issue troubling Mr Rutter.

156 On 1 October 2010, Mr Rutter sent an email to Mr Zafiriou, setting out a table with Abrasives' DIFOT performance for the years 2007-8, 2008-9, 2009-10 and for July and August 2010-11.[77] Mr Rutter requested a DIFOT report for September because he said he was very concerned with Abrasives' performance. He said that 'as a Strategic Supplier to WIS [Blackwoods], it should not be unreasonable for the DIFOT to be 95% to 96%, especially if communication is maintained re out of stocks and back orders.'[78]

157 Clearly, whatever further information Mr Zafiriou had provided or was proposing to provide had not assuaged Mr Rutter's concerns.

158 On 11 October 2010, Mr Chaur sent a lengthy email to Mr Rutter directly, referring to a conversation the previous week and to the fact that he had pursued the matter internally. Mr Chaur's email sets out a series of 'key actions' he proposed to take in respect of DIFOT, communications between Abrasives and Blackwoods, back-order control and the situation in Western Australia generally.

159 On 18 October 2010, Mr Chaur emailed Mr Zafiriou to remind him that he needed to send Mr Rutter a DIFOT report and a back-order status report every Monday. Mr Chaur stressed that this needed to be done 'until such time as Brian [Rutter] is satisfied that we are on top of our supply performance issues. It is important that Brian sees us as being responsive.'[79]

160 In my view, this email clearly signalled Mr Chaur's dissatisfaction with Mr Zafiriou's responsiveness to Mr Rutter's complaints.

161 On 22 October 2010, Mr Chaur requested the Blackwoods report, which was to include a plan to deal with the Blackwoods' complaints.

162 On 25 October 2010, the day before Mr Zafiriou's termination, Mr Rutter emailed Mr Zafiriou and Mr Law complaining that September DIFOT results were still low at 84%. He asked for Abrasives' DIFOT for the month of September, attached a region/branch order receipt for that month and asked for a response indicating how they viewed these results. He requested a response by the following day.[80] The tone of the email is peremptory. It reveals a marked dissatisfaction not only with Abrasives' DIFOT performance, but with its responsiveness to Mr Rutter's concerns.

163 It appears that the DIFOT issue with Blackwoods was finally resolved (or at least largely remedied) after Mr Zafiriou's departure following a meeting in December 2010 in Sydney attended by senior personnel from Blackwoods and all of the senior people from Abrasives. Mr Portier gave evidence that the meeting was an initiative of Mr Chaur and Mr Rutter because the communications that were coming back from Blackwoods were 'quite negative'. While it is true that in responding to Mr Rutter's concerns, Mr Chaur also suggested that a problem might lie in the difference in way that the companies measured DIFOT compliance, it seems that it was not until Mr Chaur's intervention that a solution was found that was acceptable to Mr Rutter.

164 From the course of events described, it is open to infer that Mr Zafiriou did not consider himself bound to respond promptly and fulsomely to Mr Rutter. Mr Zafiriou was tardy in responding to requests from Mr Rutter: in at least two responding emails, he apologises for delay in providing the information requested.[81] The delay in question is significant in the context in which it occurred. Moreover, there is evidence that Mr Zafiriou had communicated to his staff that he considered Mr Rutter to be a trouble-maker: in an internal email to one of his subordinates, Mr Zafiriou says, 'This guy [Mr Rutter] is looking for trouble'.[82] This does not suggest that Mr Zafiriou was keen to sort out the problem in a manner acceptable to Mr Rutter, but rather that he considered that Mr Rutter's concerns had no substance and that his behaviour was unreasonable.

165 However, in cross-examination, Mr Zafiriou acknowledged that keeping Blackwoods happy was a key priority for the management of Abrasives and that managing the supply chain was one of the key components associated with keeping Blackwoods happy. He agreed that Mr Chaur was entitled to be concerned if Abrasives was not dealing with issues to the Blackwood's satisfaction and that losing Blackwoods as a customer would be a 'nightmare scenario' for Mr Chaur.[83]

166 Nonetheless, in his written submissions, Mr Zafiriou describes the situation with Blackwoods as 'much ado about nothing', with the issue being attributable, at least in part, to different measure of DIFOT performance used by Blackwoods. He submits that the statistical analysis shows little in the way of marked differences with historical rates and that, furthermore, there is no evidence that this issue had any impact upon sales or profitability. Indeed, sales actually increased in 2010.[84] According to Mr Zafiriou, managing customer expectations concerning DIFOT had been a longer term issue with Blackwoods - Mr Chaur and Mr Freeman had attended a meeting several months earlier on the topic - and the matter of DIFOT compliance was resolved in a meeting with Blackwoods in December 2010 without blame being attributed to any particular person. As for 'blaming the customer', Mr Zafiriou submits that this is not evidence of poor performance and appears to have been 'entirely true and a reasonable point for Mr Zafiriou to make'. Mr Chaur himself used much the same reasoning after Mr Zafiriou's departure in dealing with the client.

167 There may well have been a number of explanations for Abrasives' indifferent or poor DIFOT performance at various times, such as the effects of Project Spartan or the resignation of the Western Australian state manager, but the problem was clearly a longstanding one. Mr Zafiriou's response, as he acknowledged, was that the problem had been blown out of proportion and, insofar as there was a problem, its genesis lay with Blackwoods.

168 I do not accept that Mr Rutter's dissatisfaction with Abrasives' DIFOT compliance was 'much ado about nothing' or that it did not represent a serious problem for Abrasives, having regard to the importance of Blackwoods as a customer. The healthy sales figures for 2010 referred to by Mr Zafiriou might not have been so healthy had Abrasives lost Blackwoods' business. Whether or not Mr Zafiriou was correct about the different measures of DIFOT, he patently failed to address Mr Rutter's concerns or to find a solution that was satisfactory to Mr Rutter.

169 The fact that Mr Rutter's complaints were sorted out later with no attribution of blame does not diminish the seriousness of Mr Zafiriou's apparent failure to deal with the complaints at a much earlier point in time.

170 The Blackwoods report and email correspondence in the courtbook shows that there were similar supply problems and complaints involving another major customer, BOC.[85]

171 As GM - Commercial Operations or as GM - Supply Chain, Mr Zafiriou ought to have been the key player in resolving problems with DIFOT, yet he seemed reluctant to acknowledge that customer concerns were legitimate and needed to be responded to promptly and comprehensively.

172 I therefore accept Mr Chaur's evidence that he was very concerned that Mr Rutter was not being properly managed and that he believed that this could have serious consequences for Abrasives' business. Whatever the rights and wrongs of the DIFOT situation, Mr Chaur had a reason to feel dissatisfied with Mr Zafiriou's attitude to the DIFOT complaints and with his preparedness to respond constructively to them. I find that Mr Chaur's performance concerns in this regard were well founded and genuine.

173 Mr Chaur gave evidence that he placed great store on good and timely reporting. He considered monthly and weekly reporting to be important both as an analytic tool and as a means of building a cohesive management team. Mr Chaur explained that he was trying to get the entire company to spend a lot more time on analytics and data and in understanding how the organisation worked. As a result, he was very specific in asking each management group to report on certain things and as to the format in which he wanted the information presented.

174 Thus, in an email to his senior managers on 30 July 2010, Mr Chaur described the monthly report as his 'informal bible', and proposed a number of changes to its format so that it would stand as a summary of how the business was performing rather than taking the form of a very long sales report.[86] Each department was asked to include specific information and, in the case of Supply Chain, generate comparative tables and commentary on monthly supply performance and KPIs. According to Mr Chaur, the monthly report was required by overseas management as part of the reporting to the Saint-Gobain group and was not something that could be treated with disrespect.

175 Mr Chaur also gave evidence that he aimed to foster collaboration in the management group by imposing some structure and to that end he convened the weekly 'hot spot' meetings, requiring each manager to come prepared with a summary of key issues, such as results for the previous week and activities for the coming week. He said that he expected to receive a list of bullet points prior to the meeting, along with some 'top line KPIs'. In late June 2010, Mr Chaur sent out an email[87] to 'hot spot' participants explaining their purpose and listing topics for each department.

176 Mr Chaur gave evidence that he was not impressed with either the quality or timeliness of the reports submitted by Mr Zafiriou. His evidence in respect of Mr Zafiriou's compliance with the requirement to provide 'hot spots' was that of 21 occasions on which they were required, Mr Zafiriou provided them on time once and on eight occasions not at all.

177 Mr Zafiriou did not contend that he provided 'hot spot' items to Mr Chaur prior to the Monday meetings. He gave evidence of his understanding that 'hot spot' items were only required to be provided in advance if he was unable to attend the Monday meeting. Recounting what his contribution to the Monday meetings was, Mr Zafiriou said:

I would turn up and inform people that we have had issues with this product or our safety suppliers still haven't come to the party, we had issues with our wire brushes. I would update on the progress of Spartan and the warehouse, the afternoon shift. I would update on the number of lines that were picked but I wouldn't come armed with a whole stack of reports because that wasn't the purpose of the meeting, it was an informal get together just to update everybody ...

I may add here that nobody else would turn up with reports either. The only reports that were discussed at that meeting, there was a daily sales report that was issued by the marketing department, so the sales guys would quote off the daily sales report, it wasn't like they would actually produce a special report for the meeting, the manufacturing manager would talk about issues that were raised on a weekly manufacturing report. So even though some people would talk off a report, they were general reports for circulation, it wasn't like people would spend time researching and preparing reports at [for] this meeting. What would also happen was if somebody wasn't attending the meeting there was emails that would go out and say ... these are my issues. My understanding of this whole sending out the hot spots was that if I was going to a meeting I wouldn't send it out because I would say what I had to say at the meeting, if I wasn't going I would send a summary out but I attended most if not all of the meetings.[88]

178 Although there is no documentary evidence that Mr Chaur required 'hot spot' items to be provided to him in advance, I do not accept Mr Zafiriou's evidence that he understood that he was required to give Mr Chaur 'hot spots' only if he was unable to attend the meeting in person. On at least one occasion, Mr Zafiriou did provide a list of 'hot spots' in advance.[89] He listed a number of topics or events under 'Warehouse', 'Inventory' and 'I/T'. Mr Chaur's response was to thank Mr Zafiriou and to inform him that he would appreciate seeing the 'data KPIs' behind the comments. This supports Mr Chaur's evidence that he required more detailed reporting than Mr Zafiriou described in his evidence and that Mr Zafiriou well knew this to be the case. It was not just a case of 'turning up' to 'an informal get together' and providing anecdotal information about 'issues'. In my view, the nature of the topics listed by Mr Chaur in his email to managers in late June is not consistent with a manager simply attending the 'hot spot' meeting to talk off the top or his or her head.

179 Furthermore, contrary to Mr Zafiriou's evidence, at least one other manager was apparently providing 'hot spot' items to Mr Chaur in advance. On 26 June 2010, one of the managers circulated his list of priority items for the impending 'hot spot' meeting. The list was not a long one. However, it prompted Mr Zafiriou to email his colleagues, Tony Marchitto and George Mihailidis, with the comment, 'What a busy boy'. Mr Marchitto responded sarcastically, 'And you think he has nothing to do ... Just the planning and preparation of this report would have taken at least a week to complete'. Mr Zafiriou replied, 'so much so that most of his stuff has carried over from last week'.[90] The tone of the exchange is disparaging; the manager is mocked for having complied with Mr Chaur's request. In the light of this exchange and Mr Zafiriou's own poor record of providing 'hot spot' items in advance, it is open to infer that Mr Zafiriou's view of Mr Chaur's reporting requirements was that they were not to be taken too seriously. Not surprisingly, Mr Chaur described Mr Zafiriou's attitude to Mr Chaur's new requirements as 'dismissive'.

180 There was also evidence of Mr Zafiriou's failure to comply, or tardiness in complying, with monthly reporting deadlines, in the form of email chains containing requests for him to provide information and reports as a matter of urgency. Mr Chaur described Mr Zafiriou's attitude to providing information when requested as 'fairly laissez faire' and gave evidence that he was continually chasing Mr Zafiriou for things, as were others in the organisation.[91] This is supported by documentary evidence that was before the Court.

181 I am satisfied that Mr Zafiriou did not respond as Mr Chaur wished to the new reporting requirements and that Mr Chaur held genuine concerns about the timeliness and adequacy of Mr Zafiriou's reporting. Again, I find that Mr Chaur's performance concerns were genuine and well founded.

182 In the course of the trial, much time was spent taking Mr Zafiriou through a large number of emails that he sent to his close colleagues (principally to Mr Mihailidis, Mr Marchitto and Mr Abbondio, all of whom worked for him in the supply chain area) in which he repeatedly used the Greek profanity 'malakes'[92] and/or in which he disparaged or denigrated his colleagues, most particularly those in sales and marketing, but also the head of manufacturing and, on at least one occasion, Mr Freeman.

183 The defendant submits that this evidence is relevant in a number of respects:

(a) it calls into question Mr Zafiriou's description of himself as a hard working and willing employee;

(b) it shows a lack of willingness to comply with and breaches of Abrasives' Code of Conduct;

(c) it raises doubts about the capacity of the company to manage Mr Zafiriou.

184 The defendant submits that Mr Zafiriou's responses in cross-examination, in which he generally defended the emails as being no more than robust banter, also demonstrate Mr Zafiriou's lack of insight into his own behaviour and raise very real questions as to the efficacy of any warning or counselling process.

185 Mr Chaur gave evidence that he did not know about the emails or their contents when he decided to terminate Mr Zafiriou's employment. He discovered them later while preparing for this proceeding. He told the Court that he spent about 'a thousand' hours trawling through Mr Zafiriou's emails after Mr Zafiriou had been dismissed.

186 The emails cannot therefore shed light on the reason for Mr Zafiriou's dismissal by Mr Chaur. They cannot be relied upon to establish that Mr Zafiriou's employment was terminated on performance grounds, as they were not known to Mr Chaur at the time the decision was made to terminate Mr Zafiriou's employment.

187 The defendant refers to authority that evidence of events or conduct that subsequently comes to light may be admissible to provide justification for a dismissal. However, this is not such a case. Here, what is in issue is whether Mr Chaur was motivated to invent performance concerns in order to conceal a redundancy. What Mr Chaur really knew or thought at the time he terminated Mr Zafiriou's employment is therefore relevant, not what he might have known had he taken the time to go through Mr Zafiriou's emails before dismissing him.

188 I will not have regard to the emails when assessing whether Mr Chaur's concerns about Mr Zafiriou's performance were genuine.

189 Although it was not identified in the defendant's submissions as a discrete reason for Mr Zafiriou's dismissal, perhaps the most significant of Mr Chaur's performance concerns was what he perceived to be Mr Zafiriou's resistance to the changes that Mr Chaur wished to make in the company. Mr Chaur's problems with Mr Zafiriou's performance were probably best expressed in his answer to the question as to why he was seeking advice in respect of Mr Zafiriou's contractual termination clause on 18 October 2010. He replied:

Because by 18 October I - my belief was that there was a fundamental breakdown in the relationship between Mr Zafiriou and the company. I believe that it was untenable to continue that relationship on the basis of Mr Zafiriou's lack of pro-activity and certainly his lack of collaboration and customer centricity, and without putting too fine a point on it, we were in a war. We had customers bombarding us left, right and centre with poor supply, with - you know, we're dealing with commodity products that can be bought anywhere, and you know, supply chain and delivering products in full on time is what makes someone buy from our company versus someone else and you know, I'd realised that over the period of September and October that Mr Zafiriou was not going to be part of the culture going forward. He wasn't demonstrating to me an attitude of pro-activity and collaboration with his fellow workmates nor his managing director, and at that point I'd started exploring with my HR manager what my options were.[93]

My decision to terminate Mr Zafiriou was based on my reading of the organisation and the issues that we were facing with our customers. It was a very, very difficult time. I found Mr Zafiriou's behaviour and performance in relation to his peers, and also in responding to customer needs quite poor, and based on his interactions with our customers and the lateness of reporting, and also the difficulties in working across the sales organisation, I decided upon myself that this man wasn't going to be fit for the organisation going forward to achieve the goals that I needed to achieve.[94]

191 I do not find these reasons to be contrived. To the contrary, I find them to be compelling. I accept that Mr Chaur's evidence that he formed the view that Mr Zafiriou did not respond adequately to his requirements or to the demands of Abrasives' customers and that Mr Zafiriou was not a good fit for the company in the future, having regard to the competitive pressures it faced. Given Mr Zafiriou's seniority and his influence in the company, this perception mattered. Whether he was right or wrong about the company finding itself in a 'war', and whether or not his management initiatives were a good idea, Mr Chaur was entitled to have working for him at a senior level managers who were not dismissive of his initiatives and who he could be confident would adapt to and embrace the changes that he thought needed to be made. Mr Chaur formed the view that Mr Zafiriou did not fall into this category.

192 Mr Zafiriou submits that had Mr Chaur held genuine performance concerns about him, he would have raised them with him. It was common ground that no formal disciplinary procedures were followed and Mr Chaur accepted that he did not formally raise his concerns with Mr Zafiriou.

193 However, Mr Chaur gave evidence that he had discussions with Mr Zafiriou over a number of months in relation to the timely provision of reports, about the way that Mr Zafiriou interacted with staff, his lack of attention to detail and the fact that he came to weekly meetings with no information. Mr Chaur said that he did not engage in any sort of formal performance management of Mr Zafiriou but spoke to him about performance issues 'on numerous occasions'[95] 'as one professional talking to another'[96] based on his view that such a discussion should be adequate to change the behaviour of a senior manager. He said that it was his expectation that an employee earning a quarter of a million dollars a year would act upon such a conversation.

194 Whether Mr Zafiriou was warned that his performance was in need of improvement is one of the few areas where the evidence of Mr Zafiriou and Mr Chaur is in conflict. Given the 'softly softly' approach favoured by Mr Chaur, it may be that Mr Zafiriou did not recognise that Mr Chaur was expressing serious concerns about his performance when he spoke to him about certain issues. Nonetheless, I consider it likely that Mr Chaur asked Mr Zafiriou to improve his performance in relation to timeliness and quality of reporting, and in relation to customer service issues arising from the DIFOT complaints. Mr Chaur was prescriptive about the new reporting requirements and it is unlikely that he would have remained silent in the face of non-compliance with or disregard for the new requirements. Mr Chaur struck me as a driven and punctilious person who would not let things slide. Moreover, Mr Chaur's emails to Mr Zafiriou regarding the Blackwoods situation made evident his growing frustration with Mr Zafiriou's failure to deal with Mr Rutter's concerns. Mr Chaur's dissatisfaction with the way in which the Blackwoods complaints were being handled was palpable in his emails to Mr Zafiriou and ought to have been apparent to him.

195 It was put to Mr Chaur that 'come the end of September' he was saying 'warm and supportive things' to Mr Zafiriou that gave no inkling of performance concerns. Mr Chaur responded that:

... things don't work in a linear fashion. Whilst I might be providing Mr Zafiriou with some degree of favourable feedback on particular items, there's a lot of things going on in the business simultaneously. ... in September and late August, and certainly over the month of October, we were in a bun fight with out major customers over DIFOT. And we were having a lot of serious issues with our customers, a lot of serious issues with supply, an inability as an organisation to provide information to those customers, and those responsibilities fell fairly squarely with Mr Zafiriou's department. Regardless of what [his title was], we've already identified that 40 per cent of his role was looking after warehousing and logistics and those areas were falling down significantly, and this is where I was losing faith and trust in Mr Zafiriou's ability to deal with those issues.[97]

196 I accept Mr Chaur's evidence that he had discussions with Mr Zafiriou about the matters that provoked his concern. As a result, I do not accept that a lack of complaint gives lie to the genuineness of Mr Chaur's performance concerns.

197 I find that Mr Chaur held genuine concerns about Mr Zafiriou's performance in managing DIFOT and about his willingness to participate constructively in the reporting and accountability regime that Mr Chaur had put in place. More generally, I find that Mr Chaur held genuine concerns about Mr Zafiriou's ability and preparedness to embrace Mr Chaur's management initiatives and to work collaboratively with Mr Chaur and the other senior managers to implement them. I have reached this conclusion notwithstanding Mr Zafiriou's submission that the Court should treat Mr Chaur's performance concerns with scepticism given the matters to which Mr Zafiriou refers as evidence of Mr Chaur's plan to make him redundant and to make the redundancy appear to be a performance based dismissal.

198 Mr Chaur acknowledged that Mr Zafiriou performed well in a number of respects. He agreed that Mr Zafiriou carried out the project work competently. He made no complaint about the delivery of Projects Spartan or Cooper, or about the implementation of the High Jump project. These were large and challenging projects. I note also that no complaint was made about Mr Zafiriou's performance of the duties that he described as his 'commercial' functions. It is plain that Mr Zafiriou performed competently in many areas. As he pointed out in submissions, Mr Zafiriou had been the subject of systematically positive performance reviews, including most recently for the 2009 calendar year. He had a broad skill set and long experience in Abrasives' business. He was capable of making an important contribution to the success of the company.

199 However, in the areas that Mr Chaur considered to be important for improving the performance of the company, Mr Zafiriou was a reluctant participant. Mr Chaur considered that he had a mandate to improve and modernise the management of the company. He was entitled to assess the performance of his senior managers based on their willingness and ability to participate constructively in that project. He assessed Mr Zafiriou as being unwilling - and possibly unable - to participate as required. In the 25 October email, Mr Chaur described the 'key' to the difficulties he experienced with Mr Zafiriou as follows:

Key to all this is just his general poor attitude to our new business direction, his stubborn arrogance in dealing with his peers/customers and his lack of proactive concern for our customer supply issues. In recent weeks I have had to drive him hard to even look at responding to/resolving sales or customer enquiries in regards deliveries, DIFOT, stock levels or customer service issues. He treats sales people and customers with obvious contempt and this is against my stated goal and vision to make SGAP [Abrasives] a 100% customer oriented business.[98]

200 I accept this as Mr Chaur's assessment of Mr Zafiriou's performance. Mr Chaur held genuine performance concerns about Mr Zafiriou and there was a basis for those concerns. Given Mr Zafiriou's seniority and influence within the company, and the important role that he occupied as the person responsible for one of the key functional areas of the business, those concerns were capable of supporting a decision that Mr Zafiriou should play no further role in the company and should be replaced.

201 Mr Zafiriou's claim for a severance payment in accordance with cl 22.4 of the contract of employment will be made out if the termination of his employment occurred for reasons of 'redundancy/retrenchment', that is, because his position or employment had become surplus to Abrasives' requirements. This will have occurred if the duties that he performed were no longer required to be performed by anyone or if they were required to be performed but redistributed among other employees as part of a reorganisation or restructuring. However, Mr Zafiriou will not have been made redundant if the termination of his employment resulted solely from of his own acts or default.

202 I have found that as at the date of his termination - 26 October 2010 - Mr Zafiriou occupied a position which, with the exception of responsibility for IT, New Zealand 'conversion' and company secretariat, involved the same responsibilities that he had when Mr Chaur commenced. He continued to have significant duties to perform. As Mr Chaur pointed out, right up until the date of his termination, Mr Zafiriou had a very large multi-country warehousing operation to run and a very large distribution network to oversee. He also remained responsible for customer service. These duties comprised the core of his responsibilities both prior to and post the 100 day plan. Moreover, he continued to perform the duties that he identified as his commercial functions, with the exception of IT and company secretariat. Although the special projects that had taken up much of his time at Abrasives had just come to an end or were about to come to an end, there was no suggestion that Mr Zafiriou would not be involved in special project work in the future.

203 I am not satisfied that there was at any time a plan to make Mr Zafiriou's position at Abrasives redundant as part of a restructuring or reorganisation. Although Mr Zafiriou was considered by senior management overseas to represent a potential problem for Mr Chaur,[99] there is no evidence that either Mr Chaur or the overseas leadership (or Mr Chaur in conjunction with or with the encouragement of the overseas leadership) had set upon a path of removing Mr Zafiriou from Abrasives once Mr Freeman retired. The 100 day plan did not make provision for Mr Zafiriou's position to be made redundant. It provided for Mr Zafiriou to retain his duties, with the exception of IT and the small New Zealand manufacturing operations. Otherwise, all of his duties, including those to which Mr Zafiriou referred in his evidence as giving his role its 'commercial' character, remained with Mr Zafiriou.[100] Mr Chaur gave evidence that when he prepared the 100 day plan, 'Mr Zafiriou wasn't on my radar for redundancy'[101] and the content of the 100 day plan bears this out.

204 After his termination on 26 October, Mr Zafiriou's duties were redistributed among remaining employees. No-one was appointed to a position made up of the same duties that Mr Zafiriou performed until 26 October. His position at Ceramics was taken over by Mr Freeman. His position as GM - Supply Chain was given to a less senior employee, who performed a more limited form of the role (in that it did not involve the particular 'commercial' duties to which Mr Zafiriou referred in his evidence) and did so on a lower salary. The role of supply chain manager was replaced by a more junior position again, which was not filled until some 9 months after Mr Zafiriou's termination. These were significant changes that could be described as a 'restructure'.

205 This restructure may have resulted in cost savings to Abrasives in the longer term. However, the Court did not hear any evidence about the financial implications of the redistribution of roles or duties that followed Mr Zafiriou's departure. I observe that Mr Mihailidis was appointed to perform the role of GM - Supply Chain on a full-time basis, whereas Mr Zafiriou was engaged in running the Ceramics business two days' per week and therefore only worked three days per week for Abrasives. For this reason, there may not have been any real savings to Abrasives in replacing Mr Zafiriou with Mr Mihailidis, at least not in the short term.

206 In any event, the critical question is whether the redistribution or restructure was a function of an existing plan to restructure Abrasives in which Mr Zafiriou's duties would be redistributed to other employees and he would have no further role or whether his duties were redistributed to other employees as of necessity following his dismissal on performance grounds.

207 It is clear from the email correspondence involving Mr Chaur, Mr Tellier and Mr Freeman immediately following Mr Zafiriou's departure that there was no existing plan to replace Mr Zafiriou at Ceramics. The appointment of Mr Freeman to Mr Zafiriou's former role was a stop-gap measure to minimise the inconvenience to Mr Tellier of suddenly losing his general manager. Mr Tellier was not pleased that he was not given the opportunity to plan for Mr Zafiriou's replacement.

208 Despite the possible financial motive, there is no evidence of a pre-existing plan or proposal to replace Mr Zafiriou with Mr Mihailidis at Abrasives. The 100 day plan placed Mr Zafiriou in the role of GM - Supply Chain[102] and Mr Mihailidis in the role of manager of supply chain. The two positions were distinct, both conceptually and in practice. Mr Chaur gave evidence that the supply chain manager was responsible for production planning. By contrast, he role of GM - Supply Chain was a role with much greater responsibilities and reach: as Mr Chaur told the Court, it was to look after all the warehouses, the production planning, all of the procurement team and 'that side of the operation'.[103] Nonetheless, I accept that the role of GM - Supply Chain performed by Mr Mihailidis was not the same as the role performed by Mr Zafiriou (either under the title of GM - Commercial Operations or under the title GM - Supply Chain). That role was refashioned to some extent when Mr Zafiriou left and Mr Mihailidis took over. However, I find that the change was driven by Mr Zafiriou's departure, rather than the other way around.

209 Mr Chaur gave evidence that he dealt with the recruitment agency Six Degrees when looking to fill Mr Zafiriou's position. The agency presented him with a number of candidates. In the final draw there was one preferred external candidate and Mr Mihailidis as an internal candidate. Although Mr Chaur initially thought that Mr Mihailidis fell short of the preferred external candidate, Mr Mihailidis was asked to make a presentation and was put through 'a couple of extra hurdles'. Despite his initial views as to who was the best candidate for the position, Mr Chaur decided to give Mr Mihailidis the opportunity. Because Mr Mihailidis had been principally employed as a demand planner, a new person was recruited for that role.

210 Unless Mr Chaur's evidence is rejected, the proposition that he had a pre-existing plan to replace Mr Zafiriou with Mr Mihailidis and to consolidate the senior positions in supply chain management (effectively dispensing with Mr Zafiriou's role) cannot be made out. I accept Mr Chaur's evidence as to how the appointment of Mr Mihailidis as GM - Supply Chain came about.

211 I have considered at length the matters that Mr Zafiriou points to as evidence of a 'plan' conceived in October 2010 to make him redundant and elevate Mr Mihailidis to a more senior supply management role. In my view, for those matters to come together as evidence of such a plan, the Court would have to accept that Mr Chaur's performance concerns were not genuine, and were made up in order to justify a performance-based dismissal. However, Mr Chaur's evidence was unequivocal:

My decision to terminate [Mr Zafiriou] in October was purely based on the performance that he displayed in the business in September and October.[104]

212 I have found that Mr Chaur held genuine and well-founded concerns about Mr Zafiriou's performance. Although, when viewed in isolation, tardiness in responding to customer complaints and meeting reporting deadlines might not justify the summary dismissal of a long-serving employee, Mr Zafiriou's senior role in the company and the pressures the company was facing at the time transformed these issues into significant matters of concern. The perception that Mr Zafiriou was unwilling to work as part of a team and embrace the changes he was implementing led Mr Chaur to form the view that Mr Zafiriou was not a suitable senior manager and would not be a suitable senior manager for the company in the future. Whether Mr Chaur was right or wrong in this view, it was his job to make such a judgment and his prerogative to decide that he needed a different person leading one of the four major areas of the business.

213 In these circumstances, the events in the final week of Mr Zafiriou's employment must be understood to involve no more than a 'plan' to dismiss Mr Zafiriou because his performance was considered to be unsatisfactory. There were a number of ways in which this could be achieved, and Mr Chaur turned his mind to the question. In my view, the events to which Mr Zafiriou points as evidence of concealment or contrivance are explicable by a desire to terminate Mr Zafiriou's employment on performance grounds and to remove him from the company as quickly and seamlessly as possible once that decision had been made.

214 I find that Mr Zafiriou was dismissed because Mr Chaur considered his performance as a senior manager to be unsatisfactory. The reasons for his termination related specifically to him and his performance, not to any proposed restructure in which Mr Zafiriou would have no ongoing role. Mr Zafiriou's employment was not terminated because his role or position was surplus to requirements, there being no further need for his position or role, or because his duties were redistributed among other employees leaving him with no duties to perform. His employment was terminated because his performance in the senior position that he held was deemed to be unsatisfactory.

215 Mr Zafiriou submitted that even if Mr Chaur held genuine performance concerns about him, those concerns could feed in to a restructure and lead to a redundancy. He submitted that a person about whom there are performance concerns may be made redundant in the context of a restructure if the person is selected over other employees for redundancy because of poor performance.

216 In this case, however, there is no evidence of a proposal to eliminate the position of either GM - Supply Chain or supply chain manager. The two positions did not overlap to cause one of them to be surplus to requirements. On the evidence before the Court, there was no need to choose between Mr Mihailidis or Mr Zafiriou, as each of them had an separate role to perform. This is all the more so if Mr Zafiriou's position was, as he alleged, not a supply chain position at all, but essentially a commercial position as GM - Commercial Operations.

217 I find that Mr Zafiriou was dismissed because Mr Chaur no longer wished to have him perform the duties of a general manager. By the end of October 2010, Mr Zafiriou had lost the confidence of Mr Chaur.

218 In reaching this conclusion, I have accepted the evidence of Mr Chaur generally and specifically as to the reason for the termination of Mr Zafiriou's employment.

219 Mr Zafiriou's claim for a redundancy payment rests upon the Court rejecting Mr Chaur's evidence that Mr Zafiriou's performance was the reason his employment was terminated. Mr Chaur was the person charged with making the decision to restructure or not to restructure, to make or not to make redundancies and to remove or not to remove employees for other reasons. Mr Chaur gave direct evidence that Mr Zafiriou's employment was not terminated because of a reorganisation or restructuring, but because Mr Zafiriou was not performing his role to Mr Chaur's satisfaction. Mr Zafiriou asked the Court to find that this was a pretext or 'sham', that Mr Chaur constructed a 'façade' of performance concerns to conceal the real reason for Mr Zafiriou's termination and that his evidence about the reason for Mr Zafiriou's dismissal was a lie.

220 I found Mr Chaur to be a credible witness. His evidence was cogent and consistent. It was delivered thoughtfully, making concessions where appropriate and without seeking to make unnecessary criticism of Mr Zafiriou. Although Mr Chaur's recollection of events in the last weeks of Mr Zafiriou's employment was not confirmed in its entirety by Ms White (who could not recall a number of meetings or having given Mr Chaur a figure for redundancy), I found Mr Chaur's evidence to be credible and reliable. It was contended that that he lied about the reason for Mr Zafiriou's termination because it would save the company money if Mr Zafiriou were sacked rather than made redundant. I do not accept that Mr Chaur lied, and perjured himself in this court, in order to save the company money or, indeed, for any other reason.[105]

221 For its part, the defendant sought to impugn the credibility of Mr Zafiriou's evidence by reference to evidence given by Mr Zafiriou in Federal Court proceedings in 2006. The Federal Court did not accept Mr Zafiriou's evidence going to the matter that Abrasives had to prove on the balance of probabilities, which was that it did not target particular employees for redundancy. The Federal Court rejected Mr Zafiriou's evidence, although it did not need to find that what Mr Zafiriou said was not true.

222 Mr Zafiriou was cross-examined about the evidence that he gave in the Federal Court proceedings and documents were tendered permitting this court to determine whether what Mr Zafiriou told the Federal Court was true. I do not propose to have regard to those documents or to carry out the analysis that the defendant invites the Court to undertake. There is very little conflicting evidence in this case, and none that really matters. Furthermore, as I have found, the case turns largely on the evidence given by Mr Chaur, not on the evidence given by Mr Zafiriou. Mr Zafiriou has accused Mr Chaur of contrivance, concealment and of effecting a sham in order to deny him a redundancy payment. He has not made out that case.

223 There is a final argument that requires attention. Mr Zafiriou pleaded the Abrasives Redundancy Claim on the basis that since the date of his termination, the defendant:

(a) had reorganised its operations so that Mr Zafiriou's role as GM - Commercial Operations and as General Manager and Director of Ceramics is surplus to requirements;

(b) had not employed any person to carry out his role as GM - Commercial Operations and as General Manager and Director of Ceramics; and

(c) had not employed any person in the position of GM - Commercial Operations to work for Abrasives.[106]

224 Mr Zafiriou submitted that as no-one was appointed GM - Commercial Operations upon his departure, that position was made redundant. This argument was based on Mr Zafiriou having remained in the role of GM - Commercial Operations up until 26 October because there was no effective change to his position. Mr Zafiriou made much in final submissions of the fact that the contract of employment provided for changes to the employee's 'position' to be made by agreement in writing by the parties. It was common ground that no consent in writing was given to changing Mr Zafiriou's title from GM - Commercial Operations to GM - Supply Chain. Thus, according to Mr Zafiriou, he remained GM - Commercial Operations right up until the termination of his employment on 26 October 2010.

225 Insofar as Mr Zafiriou seeks to argue that the role of GM - Commercial Operations was made redundant when he ceased employment with Abrasives simply because no-one else was given that title, I find the argument to be entirely lacking in merit. What matters is the substance or content of the role or position, not its title. In any event, even if Mr Zafiriou remained in the role of GM - Commercial Operations right up until his employment was terminated and Mr Mihailidis was appointed thereafter to a new position with the title GM - Supply Chain, this does not shed light on whether the change reflected an existing proposal to restructure the company or whether it occurred because of changes necessitated or facilitated by Mr Zafiriou's dismissal. In my view, the change in title is insufficient to make out the case for a redundancy.

226 I have found that Mr Zafiriou's employment was not terminated because his employment or position was surplus to the company's requirements. He was dismissed for performance based reasons.

227 The Abrasives Redundancy Claim is not made out.

228 Clause 6.1 of the contract of employment provides:

The employee shall comply with the Employer's Policy and Procedures as displayed or advised from time to time and as amended from time to time, at the employer's discretion. The Employer's Policy and Procedures are deemed to be included in and form part of this contract, as do any subsequent Policy and Procedures and/or amendments.

229 Mr Zafiriou seeks to enforce the provisions of the Disciplinary and Termination Procedures as terms of the contract of employment. According to Mr Zafiriou, the contract of employment obliged the defendant to give him the series of warnings prescribed by the Disciplinary Procedure before his employment was terminated on performance grounds. He submits further that his dismissal was required to be effected 'in accordance with the principles of natural justice' referred to in the Termination Procedure. He submits that in breach of these requirements, he was given no hearing or opportunity to respond before the decision was made to terminate his employment and the termination occurred without any of the warnings and opportunities to improve that are contemplated by the procedures referred to in cl 6.1 of the contract of employment.

230 Given the absence of any performance management, Mr Zafiriou submits that he has been wrongfully dismissed and is entitled to damages for breach of the contract of employment. Damages are to be assessed by reference to the remuneration that he would have received for the period reasonably necessary to complete the mandated procedural steps, together with the lost opportunity to continue in employment had the Disciplinary Procedure been carried out and resulted in a decision not to dismiss him. In his Statement of Claim, Mr Zafiriou estimates the period to which he is entitled to be paid to be not less than 12 months. He claims additional damages to reflect the prospect that compliance with the contract of employment would have provided him with an opportunity to address and satisfy the performance concerns.

231 The defendant agrees that it did not formally raise and manage performance issues with Mr Zafiriou using the process set out in the Disciplinary Procedure, and denies that the terms of the Disciplinary and Termination Procedures were incorporated in the contract of employment.

232 The defendant's principal submission is that a term of a policy or procedure cannot be incorporated into a contract of employment if it is inconsistent with an express term of the contract itself. In this case, any requirement in a policy for protracted performance management before the employee can be dismissed is inconsistent with cl 22.1 of the contract.

233 Clause 22.1 allows either party to the contract of employment to terminate the contract with four weeks' notice to the other. As Mr Chaur pointed out in the 25 October email, cl 22.1 contains no express requirement that there be a reason, let alone a good reason, to give notice of termination.

234 Notwithstanding clear and unambiguous terms in which cl 22.1 is expressed, it must at times give way to statutory requirements governing the dismissal of employees. However, Mr Zafiriou does not call on the protection of statute. Instead, he claims the protection of the performance management process in the Disciplinary Procedure and/or the enjoinder in the Termination Procedure to accord fairness and natural justice to employees.

235 The difficulty with Mr Zafiriou's position is that, unlike statutory requirements, the requirements of the company's policies and procedures must give way to cl 22.1 if they are inconsistent with it. In terms, cl 22.1 permits either party to bring the employment contract to an end on the giving of four weeks' notice. It is not consistent with such a right to 'read in' a requirement that the employer engage in a protracted performance management process before the contract of employment can be terminated. To impose a requirement that the defendant undertake a such a process before giving notice under cl 22.1 would be to take away the right expressly conferred by the contract to bring the employment relationship to an end on the basis described.

236 In my view, therefore, no requirement for performance management expressed or implied in the Disciplinary or Termination Procedures could override or otherwise circumscribe the defendant's right to terminate Mr Zafiriou's employment by giving him four weeks' notice pursuant to cl 22.1.

237 It follows that the Disciplinary Procedure Claim is not made out.

238 Even if I am wrong about the inconsistency between cl 22.1 and the requirements for performance management in the Disciplinary Procedure, I have concluded that the Disciplinary Procedure Claim cannot succeed because the Disciplinary Procedure was not intended to apply and did not apply to an employee of Mr Zafiriou's seniority.

239 The incorporation of a policy or procedure into an employee's contract of employment will turn on the nature of the policy, the language in which it is expressed, and its practical operation to support the inference that the parties intended that it was to have contractual effect.[107]

240 Clause 6.1 is expressed in general terms and refers to the suite of policies and procedures displayed or advised by the defendant from time to time. However, not all of the defendant's policies and procedures will be applicable to all of its employees all of the time. Certain policies and procedures will apply to some employees but not to others. Thus, whether a policy is incorporated in a contract of employment will depend not only on whether it is expressed to apply to the employee or category of employee in question, but also on whether it is capable of applying to such an employee having regard to its terms. Thus, for example, while the Disciplinary Procedure is expressed to apply to 'all employees', it cannot apply to the managing director, because it requires steps to be taken by his 'supervisor' in the company. The managing director has no 'supervisor'. The question remains, however, whether the Disciplinary Procedure was intended to apply to senior managers like Mr Zafiriou.

241 The starting point for this inquiry is the Termination Procedure, for that is the gateway through which the Disciplinary Procedure becomes relevant to the dismissal of an employee. The Termination Procedure deals with a number of ways in which termination of employment may occur. It deals with dismissals under the rubric of 'staff dismissals', and refers to the Disciplinary Procedure for the process to be followed, warning that approval for a dismissal will only be given if all relevant procedures have been followed in order to ensure that the Workplace Relations Act 1996 has not been breached.

242 The application of the Disciplinary Procedure to 'staff dismissals' is therefore a function of the requirements of the Workplace Relations Act 1996. The staff dismissal policies in the Termination Procedure, and therefore the processes in the Disciplinary Procedure prefiguring dismissal, are directed to employees who are able to bring an unfair dismissal claim under that Act. Senior managers at Abrasives, especially those earning close to a quarter of a million dollars per annum, do not fall into this category of employee.

243 The Disciplinary Procedure itself contains a number of indicators that it was not intended to apply to senior managers such as Mr Zafiriou. Like the relevant part of the Termination Procedure, it is grounded in the industrial framework governing the employment of less senior employees: it refers to the 'Appropriate Statutes' as the 'Relevant Awards' and the 'Workplace Relations Act 1996', and the 'Code of Conduct' is defined as 'Current Enterprise Agreements'. Industrial awards and enterprise agreements were not relevant to Mr Zafiriou's employment and the requirements of the Workplace Relations Act played no part in his termination.

244 Furthermore, the Disciplinary Procedure contemplates that the employee will have a 'supervisor/manager', who can manage the process up to a particular point, following which the process will be escalated to the HR Department and the HR manager. Mr Zafiriou had a 'supervisor/manager' in a technical sense in that he reported to Mr Chaur, but the management of the disciplinary process by the HR Department or HR Manager after the first warning would not have involved an escalation of the process so much as its downgrading.

245 In this case, adherence to the Disciplinary Procedure would have required Mr Chaur to sit down with Mr Zafiriou on the first occasion to detail 'the nature of the breach of [his] obligations', allow him to respond, determine whether a warning was necessary, recommend remedial action with timeframes for review and so on. Thereafter, Ms White would have been required to carry out these steps a further three times.

246 Insofar as the Disciplinary Procedure requires the 'supervisor/manager' or the HR manager to issue warnings, make recommendations for remedial action and set timeframes for review, it contemplates that there will be ongoing and intensive supervision of the employee. I consider it unlikely that the parties intended a senior manager to be subject to such intensive oversight. Mr Zafiriou held a position that required him to exercise a high degree of autonomy in carrying out his duties and to enjoy the trust and confidence of the managing director and his senior colleagues. He accepted that it would be unworkable to have someone looking over his shoulder while he performed his duties. In my view, his position and role within the company was incompatible with the type of oversight or supervision contemplated by the Disciplinary Procedure.

247 Furthermore, it is questionable whether the HR Manager would be qualified to carry out the supervision required. It is one thing for Mr Chaur to spell out to Mr Zafiriou his dissatisfaction with Mr Zafiriou's responsiveness to customer complaints, compliance with reporting requirements, the quality of analysis in his reports and, more generally, to criticise Mr Zafiriou's lack of initiative, his failure to embrace analytical and fact based management, his lack of collegiality and support for his colleagues. However, it would be quite another for Ms White to attempt to do the same. Ms White would be reporting second hand a set of complaints arising from the managing director's perception that he was not receiving the level of performance and support that he expected from a senior manager. Given Mr Zafiriou's seniority and the nature of the complaints made about his performance, a person in Ms White's position would struggle to manage the process.

248 In my view, the fact that the overarching problem for Mr Chaur was what he described as a 'fundamental breakdown in the relationship between Mr Zafiriou and the company' brings into stark relief the limitations of the performance management arrangements in the Disciplinary Procedure for senior management. Such arrangements are suited to relatively confined and measurable breaches of duty or failures of performance, but entirely unsuited to the management of problems in the leadership team where the 'unsatisfactory performance' is unlikely to be in the nature of a simple failure to obey a direction or comply with a prescribed process.

249 I have little doubt that Mr Zafiriou would have considered it both inappropriate and demeaning to be supervised in the manner contemplated by the Disciplinary Procedure by Mr Chaur, let alone by Ms White. To be subjected to intensive oversight by the HR Manager would not be commensurate with his seniority, or consistent with the complexity of the senior management functions that he was expected to perform. Mr Zafiriou's duties were not limited to routine and easily supervised and assessable tasks, but required him to deal with complex commercial, logistical and management issues demanding the deployment of skills, knowledge, experience and judgment.

250 I therefore consider to be fanciful the proposition that the parties to the contract of employment intended the managing director and the HR manager to closely supervise Mr Zafiriou for up to 12 months if he was not performing his duties satisfactorily. Apart from the difficulties involved in the supervision of an employee of Mr Zafiriou's seniority, the organisation could ill afford to have a senior manager performing at a sub-optimal level for that length of time. Having regard to the damage that could be inflicted on the business if senior managers were allowed to underperform for lengthy periods while they were being 'managed out' in accordance with the Disciplinary Procedure, I consider it very unlikely that it was intended to apply to them.

251 I have concluded that the Disciplinary Procedure did not apply to an employee of Mr Zafiriou's seniority. Whether it was not incorporated in the contract of employment because the parties cannot be taken to have intended to incorporate a policy that was inapplicable to the employee, or whether it was incorporated but had no effect because it had nothing to say about the employee's rights or the company's obligations to him, is of no moment. In either case, the defendant was under no obligation to give Mr Zafiriou the series of warnings mandated by the Disciplinary Procedure.

252 As to the Termination Procedure, it expressed the company's commitment 'to ensuring that termination of employment will be lawful, fair and just' and to treating employees in accordance with the principles of natural justice. In my view, none of these aspirations imposed a requirement for the formal performance management of Mr Zafiriou prior to dismissing him.

253 Mr Chaur gave evidence that he did not put in place any formal performance management process because Mr Zafiriou was the most highly paid executive on his management team and he expected matters to be resolved by discussion, 'as one professional talking to another'.[108] Mr Chaur said that he raised with Mr Zafiriou on numerous occasions his tardiness in providing information when requested. He tried to raise issues in a conciliatory sort of way by taking Mr Zafiriou aside after a weekly meeting and speaking to Mr Zafiriou 'maturely and professionally to remind him of the expectation that things be delivered in time'. He said he had many discussions with Mr Zafiriou over a number of months in relation to the provision of reports on time, the way in which he interacted with colleagues on a non-collegiate basis, about his lack of attention to detail and the fact that he came to weekly meetings with no information. Mr Chaur's evidence was, in substance, that he believed that having conversations with Mr Zafiriou in an informal way and on a non-confrontational basis was the appropriate way to manage him and to encourage him to improve his performance.

254 I have found that Mr Chaur had discussions with Mr Zafiriou about the matters that provoked his concern.[109] However, Mr Chaur did not specifically put Mr Zafiriou on notice that he would be dismissed if his performance did not improve and it might be argued that Mr Zafiriou was denied the opportunity to improve his performance as a result.

255 Where there are no prescriptive measures or guidelines to be followed, the content of an obligation to ensure that termination of employment be lawful, fair and just and that the employee be treated in accordance with the principles of natural justice, will depend on the circumstances. Mr Chaur said that he spoke to Mr Zafiriou as one professional to another. This would not usually involve dispensing threats. In my view, a senior employee like Mr Zafiriou would be expected to understand that consistent under-performance would place him at risk of losing his job and that he should, in any case, endeavour to improve his performance. If Mr Zafiriou did not appreciate the seriousness of Mr Chaur's complaints, that does not, in my view, give rise to a breach of natural justice or unfairness.

256 If the Termination Procedure required the defendant to engage in performance management and give Mr Zafiriou an opportunity to improve his performance as alleged, that obligation was satisfied by the discussions 'as one professional to another' that Mr Chaur had with Mr Zafiriou about his performance. There was, in my view, no breach of the Termination Procedure.

257 If I am wrong about the defendant's need to comply with the Disciplinary Procedure or in respect of its compliance with the obligation to act fairly towards Mr Zafiriou and accord him natural justice, I estimate that, given the need to resolve issues of under-performance by senior managers promptly in order to minimise damage to the company, the steps contemplated by the Disciplinary Procedure or required as a matter of fairness or natural justice would have been completed quite speedily, say, within four months or less.[110]

258 I consider the prospects of Mr Zafiriou improving his performance and regaining the confidence of Mr Chaur so as to be able to retain his position in the company to be poor. Given the nature of Mr Chaur's complaints, and what he identified as a fundamental breakdown in the relationship between Mr Zafiriou and the company, it is unlikely that Mr Zafiriou could have so modified his behaviour and changed the way in which he performed his duties to persuade Mr Chaur to set aside the doubts he harboured about Mr Zafiriou's willingness to work constructively with him. Mr Zafiriou struck me as an intelligent man, but also as a person who liked to do things his way. He had a long and apparently successful history with Abrasives, in that he had risen to a very senior position. He had developed a relationship with Mr Freeman that allowed him, as Mr Chaur said, to be the 'king of his domain' and to determine what he would and would not do in the company. He most likely had a deeper knowledge of the hardware business than the recently arrived Mr Chaur and was dismissive of some of the changes that Mr Chaur was trying to make. He was not, in my view, a person who was readily amenable to changing the way in which he operated in the company.

259 So much is apparent from the tone and content of the emails which, while not relevant to assessing the genuineness of Mr Chaur's performance concerns, are relevant to the Court's assessment of the likelihood of successful performance management of Mr Zafiriou. Those emails reveal a resistance to criticism, a willingness to find fault with others and the ready establishment of battle lines when crossed. In particular, they reveal a tendency to 'bunker down' with a small number of close colleagues and to criticise, often in colourful terms, other colleagues. Having regard to the content of the emails, I find it unsurprising that Mr Chaur found Mr Zafiriou to be confrontational towards his colleagues, defensive of his position and dismissive of Mr Chaur's initiatives.

260 Furthermore, although very little was made of it by either side in the course of the trial, there was evidence of a meeting between Mr Freeman, Mr Zafiriou and Ms White in September 2009,[111] in the course of which Mr Freeman complained about Mr Zafiriou's performance in terms that are strikingly similar to the complaints made by Mr Chaur a year later. Mr Freeman complained of tardiness in reporting, in providing information when requested and in performing necessary administrative tasks. He also complained about an inappropriate email, aggressive responses at meetings, Mr Zafiriou taking 'pot shots' at people and poor communication with the former sales manager. Mr Zafiriou's recorded responses show him not to have accepted these criticisms.

261 It is not the function of this court to determine whether all or any of these complaints were justified. I note that Mr Zafiriou received a positive performance appraisal thereafter. However, Mr Zafiriou's responses to the complaints are familiar. He does not acknowledge the substance or the seriousness of the complaints, particularly regarding his relationships with other managers, and points to his successes in a what he considers to be the more important areas of his responsibility.

262 In my view, Mr Zafiriou displays little insight into his behaviour. I find, as a result, that he was unlikely to modify his behaviour to accommodate Mr Chaur. I find, on the balance of probabilities, that formal performance management would not have resulted in Mr Zafiriou keeping his job.

263 The Disciplinary Procedure Claim is not made out.

264 In his statement of claim, Mr Zafiriou alleges breach of an implied term of trust and confidence in the employment contract arising from the fact that the defendant:

(a) did not give him reasonable warning of the termination, reasonable warning being 12 months;

(b) did not give consideration to any alternative positions Mr Zafiriou could have held;

(c) did not consult with Mr Zafiriou as to the termination;

(d) did not have regard to Mr Zafiriou's years of service with the defendant;

(e) did not advise or properly advise Mr Zafiriou that it had any concerns about his performance or the quality of his work;

(f) did not give Mr Zafiriou any opportunity to address any concerns it may have had about his performance or the quality of his work;

265 According to Mr Zafiriou, in moving directly to termination of employment and by-passing the contemplated process of warnings and opportunities to improve, Mr Chaur acted in a way that was destructive of the relationship of trust and confidence between the parties. He contends that Mr Chaur overlooked the prospects of consultation and redeployment to avoid the need for termination and that, with his years of service and dedication to the business of the defendant, Mr Zafiriou deserved to be treated better. These actions, so Mr Zafiriou contends, were in breach of its obligations under the implied term of trust and confidence.

266 Mr Zafiriou claims payment of 12 months' remuneration and damages arising from damage to his reputation and prospects.

267 This claim was only faintly pressed by counsel for Mr Zafiriou. It was barely touched upon in oral submissions and it was described in written submissions as another way of getting to the same point as the Disciplinary Claim. The allegation that the defendant breached the employment contract by failing to provide appropriate performance management and an opportunity to address concerns is common to this and the Disciplinary Procedure Claim. Although Mr Zafiriou claims further damages for damage to his reputation or prospects, he led no evidence and made no submissions in support of this part of his claim.

268 As a result of the cursory manner in which this claim was presented, the Court heard little or no argument on the application of an implied term of mutual trust and confidence to dismissals. However, the purpose of such a term is to facilitate the proper functioning of the contract, to preserve the relationship and protect the employee from oppression, harassment and loss of job satisfaction.[112] The term has been held to be inapplicable to dismissals, as the duty not to damage or destroy the relationship does not apply to the exercise of the power to terminate the relationship.[113]

269 It is unnecessary decide this question. Even if the implied term were applicable to dismissals, the Trust and Confidence Claim would fail for the reasons that the Disciplinary Claim failed.

270 The Trust and Confidence Claim is not made out.

271 Mr Zafiriou claims that had Abrasives complied with the Disciplinary Procedure, he would have been offered continuous employment with Ceramics under substantially the same terms and conditions that applied at the time of his dismissal, including the terms governing his remuneration. He submits that his employment with Ceramics would have continued until at least the time that Ceramics restructured its business in August 2011 and that his position with Ceramics would then have been made redundant and he would, by that time, have had the benefit of ten months remuneration, a redundancy payment, a further severance payment and the opportunity to seek suitable alternative employment, the loss of which also sounds in damages.

272 The Ceramics Redundancy Claim is based upon email from Mr Tellier to Mr Freeman dated 26 October 2010 in which Mr Tellier lamented the 'extremely complicated' situation for Ceramics as a result of Mr Zafiriou's dismissal and said:

Should I have been informed in advance, the solution I would have proposed would have been to have him [Mr Zafiriou] for a mission 100% for Ceramics for a few months in order to solve the on going subjects and then to find with this mission a satisfactory end for all parties involved (while preparing a transition locally).[114]

273 However, this claim, based as it is on Mr Zafiriou working full time for Ceramics until its eventual closure and then being made redundant, was not supported by the evidence given by Mr Tellier.

274 Mr Tellier was the general manager for Saint-Gobain Ceramics for Asia-Pacific. He gave evidence that in 2010, the Australian business represented about 5% of the Asia-Pacific Ceramics business. The Ceramics business was therefore quite small and, although it needed a general manager to take care of some issues, it could not afford a full-time general manager. Before Mr Tellier joined Ceramics, the arrangement was made that Mr Zafiriou would spend 30% of his time as general manager of Ceramics.

275 Mr Tellier explained that by the time he joined Ceramics in 2007, consideration was already being given to closing down Ceramics' manufacturing business in Australia. By 2009 and 2010, it was recognised that the manufacturing operation would have to be closed down quite soon. It had been agreed that when Ceramics no longer needed him, Mr Zafiriou would return full time to Abrasives.

276 Mr Tellier was taken to his email of 26 October 2010. The email was written after he had been informed by Mr Zafiriou himself that Mr Zafiriou's employment had been terminated. Mr Tellier had been given no warning that he was about to lose his managing director in Australia. Mr Tellier gave the following explanation for the email:

It was clear that not being informed about the termination of Mr Zafiriou's contract with Abrasives, I did not have any plan to manage the business on the very short-term basis. Myself being located in China, extremely busy, and the Australian operation not representing a very significant part of my turnover, I did not want, myself, to assume this role even for one week or even one month, this would not have been possible with my other responsibilities in China. The second reason was at the time I was still not totally clear if the contract of Mr Zafiriou was terminated already or not, so I wanted to check with Mr Freeman before we make any definitive move, as this would lead [leave] me in a dangerous situation. We could find a temporary position situation where Mr Zafiriou would help to manage the transition to find a successor and to train him because the second most senior guy we had in the team was a service guy, good in service but obviously not adequate to manage profit and loss accounts, business reviews, EHS and labour renegotiation.

277 In other words, Mr Tellier was not consulted about Mr Zafiriou's termination, he was 'caught short' without a manager, and he thought it might be possible for Mr Zafiriou to remain in his position a little longer to enable Mr Tellier to replace him.

278 Mr Tellier confirmed as much later in his evidence:

... if I was aware of the termination of Mr Zafiriou I would have probably discussed internally if we could have been able to find a mission for him for one, two or three months to be able to recruit his successor, to train his successor.[115]

279 Mr Tellier was asked whether Ceramics had the ability to fund Mr Zafiriou's salary and employment benefits if he was engaged full-time by Ceramics. He answered that Ceramics was bleeding money in 2010, and was not looking to add costs. Since 2005, the operating profit of Ceramics had been below $150,000 per year, so it did not have the money for a full-time general manager.

280 Mr Tellier was asked specifically whether it was contemplated that Ceramics would continue employing Mr Zafiriou until September 2011. He said as follows:

No, the mission I had in mind was a transition mission to make sure that the transition was properly - and then while we were looking for a long-term solution for the operation. At the time the difficulties, I was not about to give the date at which the facility would be closed, because at the time one of the businesses which is owned by the Australian operation was being divested by Saint-Gobain, and it was not clear if this business could be finally divested or not, so until we had clarity on that it was impossible for me to make any final plan for closing of the plant. In terms of mission, what I had in mind was to find a successor or nominate somebody reporting to him passing him all the files all information and note the urgency and move on.

281 Mr Tellier was asked whether Ceramics had made any provision for a redundancy payment if it employed Mr Zafiriou. He replied that Ceramics did not have an employment contract with Mr Zafiriou, not only because Mr Zafiriou was not an employee of Ceramics, but also because Ceramics was not making any money and it 'was not supposed to' make a severance payment for Mr Zafiriou.

282 I take this answer to be that it was not intended that Ceramics would take on the responsibility for any redundancy payment.

283 Asked whether he would have been looking to retain Mr Zafiriou full time at Ceramics for a few months in order to solve ongoing issues, Mr Tellier said:

No, legally speaking, I don't know what form it would have been, it could have taken, probably he would have stayed an employee of Abrasives for one month during the duration because it would have been very complex to (inaudible) employment at Ceramics, but we never had occasion to work on it.

If I had known what Mr Chaur, the termination of Mr Zafiriou's employment, I would have studied an option to have the termination postponed for one month probably or several months to make sure the transition was being done correctly and so on. It would have been an option among other options.

285 Counsel for Mr Zafiriou pursued this by putting to Mr Tellier that he was talking about taking on Mr Zafiriou 100% for Ceramics until the role with Ceramics came to an end. Mr Tellier responded emphatically:

No, no, no, no, I never said that. If you look at my email it's quite clear, it's to solve the ongoing subjects and to find a transition locally. There is no mention in this email at all to have this mission until the eventual closure of Ceramics for the simple reason that at that time I was not sure if this would happen and when this would happen.

286 Mr Tellier agreed that it might have been an option to have Mr Zafiriou work full time for Ceramics a few months, but by 'a few', he meant 'one, two, three months'. He said that he would have proposed this but would have had to examine under what conditions, what costs would be incurred by Ceramics and so on. In this context, he said:

Let's say for example if Abrasives had asked me to take over the contract of Mr Zafiriou to Ceramics, obviously I would have not do that. The liability for my business would have been very huge.[116]

287 Indeed, Mr Tellier speculated that if Mr Zafiriou had gone to work full time for Ceramics, he would have kept his contract with Abrasives and would have recharged 100% of his costs to Ceramics for a 'few' months.

288 Counsel for Mr Zafiriou put to Mr Tellier that at the end of those few months, Mr Tellier would expect the Ceramics business to have come to an end and for there to be no further need for Mr Zafiriou's services. Mr Tellier said he could not agree with that because he was not aware at that time of the date for the closure of the plant. Furthermore, the closure may have taken a while (a year or a year and a half) and it was not a long-term solution to have Mr Zafiriou working within Saint-Gobain, given his feelings ('frustration') about his termination by Abrasives.

289 As to the proposal in the 26 October email that there would be 'a satisfactory end for all parties involved', Mr Tellier said he meant mainly for Abrasives and Ceramics. As for Mr Zafiriou, if Ceramics could have him working for a month or two and then leaving happy, Mr Zafiriou would also be included in the satisfactory ending.

290 Despite the best efforts of counsel for Mr Zafiriou in cross-examination, Mr Tellier would not agree that Ceramics would have been prepared to take on Mr Zafiriou for any length of time. He would not, in any event, agree that Ceramics would have taken on the liability for Mr Zafiriou's redundancy when the role of general manager was no longer required. In my view, it is quite clear from his evidence that Mr Tellier was looking to protect his business and interested only in managing the transition to another manager. On the basis of Mr Tellier's evidence, which I accept, the proposition that Mr Zafiriou would have moved to Ceramics on a full-time basis until made redundant when Ceramics finally closed its doors is unsustainable.

291 The Ceramics Redundancy Claim as pleaded[117] is based on implementation of the Disciplinary Procedure to give Mr Zafiriou some additional time with Abrasives before the termination of his employment. I have found that the Disciplinary Procedure did not apply to employees of Mr Zafiriou's seniority. Nonetheless, it could be argued that the same opportunity would have arisen for Mr Zafiriou to move temporarily to Ceramics had Mr Tellier been warned of Mr Zafiriou's impending dismissal.

292 It is difficult to say what might have happened in this circumstance, but it is clear that it could have resulted in no more than three months reprieve for Mr Zafiriou. However, there is a large question mark over Mr Chaur's willingness to keep Mr Zafiriou on Abrasives' books, having made up his mind to replace him and to ask him to leave the company straight away. Having regard to the way in which Mr Chaur went about dismissing Mr Zafiriou, I think it unlikely that Mr Chaur would have been willing to retain Mr Zafiriou as an employee of Abrasives in order to enable Mr Tellier to better manage the transition at Ceramics.

293 I have considered whether the Ceramics Redundancy Claim could be recast as a claim for three months' remuneration, being the time that Mr Zafiriou might have worked at Ceramics pending the appointment of his replacement. On balance, I have concluded that such an outcome was unlikely.

295 Mr Zafiriou held a senior position with Abrasives. Under Mr Freeman, by Mr Zafiriou's account, he had considerable influence and was involved in much of the important decision-making. When Mr Chaur took over as managing director, Mr Zafiriou was required to focus on the supply management part of his job and to defer to Mr Chaur's new requirements for reporting and accountability. Mr Zafiriou had difficulty in doing so, no doubt because he regarded it as an attempt to clip his wings. Eventually, Mr Chaur lost patience and decided that he would be better served by a different person in the role of GM - Supply Chain.

296 I have concluded that Mr Zafiriou was dismissed for performance reasons. His position was not made redundant and there was a continuing requirement for his duties to be performed. Mr Zafiriou was dismissed because Mr Chaur formed the view that he was not the right person to perform those duties or, indeed, any duties in a senior management position.

297 I have also concluded that the defendant was entitled to terminate Mr Zafiriou's contract of employment with four weeks' notice and that it was not required to carry out the performance management described in the Disciplinary Procedure or, indeed, any formal performance management.

298 Furthermore, the claim based on Mr Zafiriou being relocated full time to Ceramics until the demise of that company in August 2011 is not made out, having regard to the evidence of Mr Tellier.

299 None of the claims are made out. The proceeding will be dismissed.

[1] Or companies associated with or acquired by the defendant. Mr Zafiriou's employment relevantly commenced with a smaller company subsequently acquired by Saint-Gobain.

[2] Along with his accrued annual leave and long service leave.

[4] And accrued sick leave as well as accrued annual and long service leave.

[5] He holds a Bachelor of Business degree from Victoria College and is a Fellow of the CPAs. Mr Zafiriou began his career as an accountant at Craven Print and Pack before moving on to Pilkington ACI.

[7] Saint Gobain already had a presence in Australia in the form of Norton Abrasives in Sydney.

[8] Transcript of Proceedings, Zafiriou v Saint-Gobain Administration Pty Ltd (Supreme Court of Victoria, S CI 2011 490, Emerton J, 6 -- 10 August 2012; 12 -- 16 November 2012; 22 -- 23 November 2012) 852 ('Transcript').

[10] An email from the CFO, Mr Kevin Jessup, to Mr Freeman on 19 August 2010 records a request from Mr Gonzague de Pirey in Paris for Mr de Pirey to be appointed as a director of Abrasives, for Mr Freeman to remain a director, for Mr Chaur to be appointed as a director and for Mr Jessup to replace Mr Zafiriou as company secretary. The removal of Mr Zafiriou as company director was part of a global change that had nothing to do with the 100 day plan or Mr Chaur's plans for Mr Zafiriou's future role with Abrasives.

[11] I shall refer to these positions as GM - Commercial Operations and GM - Supply Chain.

[12] Otherwise known as 'web' (weekly executive briefing) meetings.

[13] Blackwoods is part of the Westfarmers Group, which includes Bunnings, also a customer of Abrasives.

[14] Upon retirement as Managing Director of Abrasives, Mr Freeman had taken on a role as a 'delegate' for Saint Gobain.

[16] [1982] HCA 24; (1982) 149 CLR 337, 352.

[17] She based the employment contracts on a contract that she had obtained from her previous employer, which was changed to reflect the practices of the company at that time.

[18] [2005] VSCA 322; (2005) 148 IR 224 ('Wing').

[20] (1977) 16 SASR 6.

[23] [2004] FCAFC 126; (2004) 136 FCR 388.

[24] (1995) 60 IR 304.

[26] [2012] VSC 94.

[27] Queen v Industrial Commission of South Australia; ex parte Adelaide Milk supply Co-operative Limited (1977) 16 SASR 6; Whittaker v Unisys Australia Pty Ltd (2010) 26 VR 668; Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327; Fosters Group Limited v David Kou Tien Wing [2005] VSCA 322.

[28] Hodgson v Amcor; Amcor v Barnes & Ors [2012] VSC 94, [371].

[31] He described '100 day plan' as a common business term to describe a plan formulated by a new CEO or managing director in his or her first hundred days in the new organisation.

[32] Hence, the goals of the 100 day plan refer to '[encouraging] a single, accountable, collaborative and achievement based local culture', '[moving] the local culture from a manufacturing lead to a customer lead organisation', '[driving] strong marketing/product management disciplines' and so on.

[33] Courtbook, Zafiriou v Saint-Gobain Administration Pty Ltd (Supreme Court of Victoria, S CI 2011 490, Emerton J, 6 - 10 August 2012; 12-16 November 2012; 22 - 23 November 2012) 1136 ('Courtbook').

[35] Courtbook 1137. Two of the six direct reports are designated 'General Manager Marketing' and 'General Manager Sales', with those positions yet to be filled. There were no equivalent positions under the arrangement that Mr Chaur inherited from Mr Freeman.

[36] Who is again named as the General Manager Commercial Operations in some of the versions of the 100 day plan.

[38] Courtbook 1140. There is some confusion as to whether the 100 day plan made a change to Mr Zafiriou's title. In the organisational charts in early versions of the 100 day plan, he is repeatedly referred to as 'General Manager Commercial Operations'. Organisational charts in later versions of the 100 day plan give Mr Zafiriou's title as 'General Manager Supply Chain/Ind Ceramics' (CB1419 and CB1412). However, outside the organisational charts, Mr Zafiriou's position in the proposed leadership team is consistently given as 'GM Supply Chain (Arthur Zafiriou)'. At least one of the discovered versions of the 100 day plan has the following annotation on the organisational chart for Commercial Operations - Future, which gives Mr Zafiriou's title as 'General Manager Commercial Operations & General Manger (sic) Industrial Ceramics Aust':

(SC) 5th Nov 2010 - note there was an error in the org chart as it was not updated before the Final document went to GdP in July 2010. However the titles reflected on slide 6 are correct in this original document. Subsequent documents after this final draft were updated to be correct. (CB1183)

Although Mr Zafiriou suggested that this annotation was evidence of the attempt to conceal his redundancy in that it was made after he had been dismissed in an attempt to cover up the fact that there had been no change to his title, or at least not one that he was told about and accepted, I do not find the annotation to be helpful in deciding the redundancy issue one way or the other. In his evidence, Mr Chaur said that as he produced the 100 day plan himself and, because he did not have advanced word processing skills, he used the organisational charts that were already in existence as the basis for his own. The (unamended) 100 day plan contained an error when it referred to Mr Zafiriou as the General Manager of Commercial Operations in the proposed structure. I accept this evidence.

[39] The restructure involved making redundant the Commercial Manager and the CPD Product Manager, and demoting two general managers to product managers.

[41] Transcript 859. However, (at Transcript 870) Mr Chaur explained that he wished to move IT out of Mr Zafiriou's area, first, because IT generally sits in Finance and, secondly, because Mr Zafiriou saw himself as a mini CEO and had created an impenetrable silo around his part of the organisation, and Mr Chaur felt that with all of the IT directives coming from Mr Zafiriou, there would be problems in implementing the proposed new IT system, which needed to have support across the organisation. It needed to be managed by somebody like him or the Financial Controller to be able to bring in all the other departments within the organisation.

[42] In his evidence, Mr Zafiriou was taken through each of the commercial functions in question and gave the following evidence:

Company secretariat: was only a small proportion of his total work (Transcript 170);

ACCC compliance: he retained that responsibility up to the end (Transcript 767);

Motor vehicles: it wasn't discussed to be taken away (Transcript 173);

OH&S: it wasn't ever suggested that it would be removed (Transcript 176);

Legal issues concerning intellectual property: only occasional and when the responsible person was not in a position to deal with them (Transcript 176).

[43] The role as Company Secretary was re-assigned to the CFO some time later, but not as a result of the implementation of the 100 day plan.

[60] Mr Chaur explained in cross-examination that he told Ms White he was a little bit concerned about where the business was heading and that he wasn't satisfied with Mr Zafiriou's performance. He asked Ms White to explore Mr Zafiriou's contract and give him some guide as to the termination options in the contract. (Transcript 1101)

[62] Transcript 961. Mr Chaur gave evidence in cross-examination that he was given a schedule of payments under cl 22.1 but was not given a precise figure for a redundancy. He was told it was in the range of $650,000 - $700,000. (Transcript 1098).

[63] Emails dated 20 and 25 October 2010 concerning Mr Zafiriou's termination (Exhibit D3).

[73] Courtbook 1821. Email dated 30 August 2010.

[74] Courtbook 1820. Email dated 1 September 2010.

[81] Ibid 1820, email dated 1 September 2010; Ibid 1821, email dated 27 August 2010.

[84] See PowerPoint Presentation to Blackwoods dated December 2010 (Exhibit P2) and Document concerning DIFOT measurements (Exhibit P3).

[89] Courtbook 1410. Email dated 27 July 2010.

[92] Loosely translated by Mr Zafiriou as 'wanker'.

[99] Due to the fact that he had thwarted ambitions to lead the company himself and was not considered to be particularly reliable or competent.

[100] As discussed, the company secretariat role was also re-allocated to the CFO, but not as part of the 100 day plan.

[105] Mr Chaur made the point in his evidence that the defendant had made $4.3 million worth of redundancies across Lidcombe (Project Cooper) and Project Spartan. He said that if he had wanted to make Mr Zafiriou redundant he could have done so as part of the 100 day plan. He chose not to. He chose to have Mr Zafiriou in the organisation. However, Mr Zafiriou didn't perform to his expectations. (Transcript 1121)

[106] Amended Statement of Claim dated 7 September 2011.

[107] In Riverwood International Australia Pty Ltd [2000] FCA 889; 177 ALR 193 and Nikolich v Goldman Sachs JB Were Services Pty Ltd [2006] FCA 784 certain company policies were held to have been incorporated in contracts of employment. In each case, the incorporation was founded on a term in the employment contract which referred in some way to the employer's policies. In each case, the courts sought to ascertain the intention of the parties, having regard to the facts surrounding entry into the employment contracts and to the terms of the policy itself. In ascertaining the parties' intentions, the full Federal Court in Riverwood endorsed the principles identified by the trial judge that the task is to ascertain the meaning of the parties' expressions from an objective point of view and that the parties may be bound by the meaning reasonably to be inferred in the circumstances, even though the meaning does not conform to the interpretation advanced by either of them.

[109] See above [196].

[110] Allowing approximately one month for each set of warnings under the Disciplinary Procedure.

[111] Also attended by the HR manager, Pam White, who took extensive minutes.

[112] Malik v Bank of Credit and Commerce International SA [1997] UKHL 23; [1998] AC 20, 36 - 8.

[113] See Mark Irving, The Contract of Employment (LexisNexis Butterworths, 1st Ed, 2012) 36 referring to Gillies v Downer EDI Ltd [2011] NSWSC 1055; Russell v Trustees of Roman Catholic Church (2007) 69 NSWLR 663; Rogan-Gardiner v Woolworths Ltd [2010] WASC 290; Johnson v Unisys Ltd [2003] 1 AC 518; Eastwood v Magnox Electric plc [2004] UKHL 35; [2005] 1 AC 503; Reda v Flag Ltd [2002] UKPC 38; [2002] IRLR 747.

[117] Not included in pleadings but in letter from Mr Zafiriou's solicitors to the Defendant's solicitors dated 7 June 2012.