Plaintiff v Defendant

EQUITY - Fiduciary obligations - Counterclaim for repayment of funds advanced to plaintiff in excess of funds expended on behalf of the defendant - Adequacy of evidence - Claim dismissed in respect of financial years for which defendant failed to discover financial records which may have assisted plaintiff's defence of claim - Claim upheld in respect of 2014 financial year - Civil Procedure Act 2010 s 7 - Supreme Court (General Civil Procedure) Rules 2015 r 48.03.

1 The Nauru Phosphate Royalties Trust ('NPRT') is a body corporate established under the Nauru Phosphate Royalties Trust Act 1968 (Nr) ('the Act'). The Act established the Nauruan Land Owners Royalty Trust Fund. The beneficiaries of the fund are landowners in Nauru. Phosphate mining in Nauru generated millions of dollars of income. This money was invested in assets, particularly real estate, in other countries, including Australia. A principal function of the NPRT is the administration and distribution of payments to beneficiaries of the fund.

2 Mr Bannon was employed by NPRT between October 1994 and 30 June 2014. From July 2003 until 30 June 2014 Mr Bannon was the Secretary of NPRT. In this position he was the most senior employee of the Trust. Throughout his employment NPRT's office was based in Melbourne. During the period relevant to the current proceedings there were four employees in the Melbourne office, including Mr Bannon.

3 The present proceedings arise out of the termination of Mr Bannon's employment on 30 June 2014. His principal claim is for damages for breach of contract in respect of fees he contends he is entitled to by reason of acting as Secretary and/or Director of 19 subsidiary companies of NPRT between July 2003 and 30 June 2014. In addition, Mr Bannon claims damages for unpaid accrued annual, long service and sick leave, unpaid superannuation, annual leave loading, payment in lieu of notice of termination and redundancy payments. He also claims unpaid salary for the period 22 May 2013 to 30 June 2014 in respect of a $60,000 per annum salary increase, which was approved by the Board, but which he never actually received. His total claim for damages is $4,020,733.01.[1]

4 I have dismissed Mr Bannon's claim for Secretary/Director fees. Throughout the period August 2007 to 1 March 2013 relations between Mr Bannon and NPRT were conducted on the basis that NPRT had no liability to pay Mr Bannon Secretary/Director fees. This course of conduct resulted in an estoppel by convention which precludes Mr Bannon claiming Secretary/Director fees.

5 I have dismissed Mr Bannon's claim for damages equivalent to 12 weeks' salary for notice of termination of employment. I have concluded that Mr Bannon was provided with 12 weeks' notice of termination on 31 March 2014. I have upheld Mr Bannon's claim for accrued annual leave, but have reduced the quantum of his leave entitlement from the 305.8 days claimed to 288.8 days. Mr Bannon is entitled to damages calculated on the basis of an annual salary of $200,000. I have rejected NPRT's contention that damages for unpaid accrued entitlements should be calculated on the basis of an annual salary of $140,000. Mr Bannon is entitled to damages in respect of his accrued annual leave entitlements of $222,153.62. I have rejected Mr Bannon's claim for 17.5 per cent leave loading. I have upheld Mr Bannon's claim for back pay of the $60,000 salary increase approved by the Board in May 2013. This translates to an entitlement of $71,045.18 inclusive of superannuation. Mr Bannon is entitled to damages of $46,153.80 for 12 weeks' redundancy pay.

6 As at 30 June 2014 Mr Bannon had accrued long service leave entitlements of 17.2 weeks. Based on his annual salary of $200,000 per annum at the time of termination of his employment, this translates to an entitlement to damages of $66,153.85.

7 Mr Bannon had a contractual entitlement to 50 per cent of accrued sick leave upon termination of employment. Based on an annual salary of $200,000 Mr Bannon is entitled to $105,769.13.

8 In its final form, NPRT's counterclaim was comprised of the following elements:

(a) 'Unauthorised payments' to Mr Bannon of $211,197 during the period 1 July 2011 to 30 June 2014. The sum of $211,197 is comprised of the difference between:

(i) The quantum of funds advanced to Mr Bannon for Trust related expenses; and

(ii) The amount of expenses actually incurred by Mr Bannon.

(b) $238,711, being the balance of Mr Bannon's 'debtor account' as at 30 June 2014;

(c) $295,475, being alleged unauthorised payments of back pay and taxation comprised of:

(i) A back payment to April 2003 of a $60,000 salary increase approved by the Trust Board on 17 October 2007; and

(ii) Superannuation contributions of $24,396 on the sum of $271,077;

(d) $77,500 being the amount of loans advanced to Romys Eobob which were approved by Mr Bannon.

9 I have upheld the Trust's claim that in respect of the 2014 financial year, Mr Bannon was advanced funds which exceeded the amount he expended on behalf of the Trust. The Trust is entitled to an order that Mr Bannon pay it damages in the sum of $141,052.91. I have rejected the remaining elements of the counterclaim.

10 On 3 October 1994 Mr Bannon commenced employment with NPRT as an administrative assistant. His annual salary was $28,000. In November 2000 his salary was increased to $40,000. In April 2003 Mr Bannon was appointed to the position of Acting Secretary. On 22 July 2003 Mr Bannon was appointed Secretary on an on-going basis. At the time he did not sign a written contract of employment.

11 On 2 July 2003, Mr Bannon was appointed to act as Company Secretary of Central Pacific (Downtowner) Pty Ltd. On 17 July 2003, Mr Bannon was appointed to act as Company Secretary of a further 22 companies.[2] On 26 August 2003, Mr Bannon was appointed as a Director of Randwick Nominees Pty Ltd.[3] As discussed below, there is an issue between the parties as to whether Central Pacific (Downtowner) Pty Ltd and Randwick Nominees Pty Ltd are subsidiaries of NPRT.

12 In April 2004 the Republic of Nauru Finance Corporation, Nauru Phosphate Royalties (Washington DC) Inc, and Ronsi Business Pty Ltd defaulted on loan repayments to GE Capital. On 8 April 2004 receivers were appointed to Ronsi Business Pty Ltd. On 16 April 2004 receivers were appointed to Randwick Nominees Pty Ltd, Spencer Investments Pty Ltd, Central Pacific (Downtowner) Pty Ltd and Ronsi Holdings Pty Ltd ('the Nauru entities'). The receivers assumed control of:

• Randwick Shopping Centre (owned by Randwick Nominees Pty Ltd as Trustee for the FPC Randwick Trust);
• The Savoy Park Plaza Hotel (owned by Spencer Investments Pty Ltd);
• Downtowner on Lygon (owned by Central Pacific (Downtowner) Pty Ltd); and
• The Mercure Hotel Sydney (owned by Ronsi Business Pty Ltd).

The companies referred to above, along with NPRT, continued in receivership until 27 June 2014.[4]

13 On 20 August 2007 Mr Bannon forwarded an unsigned draft contract of employment ('the 2007 contract') to the Chair of the NPRT, Alvina Aremwa. The covering email included the following:

I would therefore be appreciative if you would look to formalize the attached contract of employment via affixing your signature as the Chair of the Trust as well as the signature of another Trustee and faxing the signature page of the document to the Trust offices in Melbourne as soon as possible. The original (x2) should be sent to my attention from Nauru and upon receipt I will affix my signature, such that the Trust and I have an original of the document.

Madam Chair, I would also welcome the opportunity of the Board giving consideration to updating the terms and conditions to which I am currently employed. It can be seen from the contract the basis of my employment consists of a base salary of $80,000 per year, with superannuation at 9% and the use of a company car. Having reviewed the basis of my remuneration, I would like to highlight a number of issues for the benefit of the Board:

• The Terms of my employment have not changed since April 2003. During such time the Trust has approved wages increases to the other members of the Trust of (on average) 25% over the equivalent period.

...

Madam Chair, I appreciate the Trust needs to maintain a strong control over its expenditure to ensure the maximum protection is afforded the beneficiaries of the trust, however I also think it is within the authority of the board to address the terms and conditions provided to me in my capacity as Secretary to the Trust. It is my understanding similar positions within other Nauruan enterprises are paid well in excess of my current entitlements and whilst I am not looking to match the other terms and conditions paid, I consider my involvement with the Trust to be far superior in terms of commercial value, than the services provided to the other Nauruan instrumentalities.

Aside from the good work and value I consider I have and continue to provide the Trust, I must declare my personal circumstance have also changed with my family having recently increased and with the imminent burden of both primary and secondary school fees needing to be funded.

Therefore I would welcome your consideration to the following changes:

1. Increasing the base salary paid from $80,000 to $140,000 per annum
2. Ceasing the provision of the company car within the terms and Condition offered. Value reduction $24,000. The car could be sent to Nauru or offered for sale and would assist the Trust in reducing its Fringe Benefit obligations
3. No change in Superannuation

The aforementioned changes represent a monetary increase over that currently paid of $36,000.

14 On 24 August 2007 Mr Bannon signed the 2007 contract. It was signed on behalf of NPRT by the Chair, Alvina Aremwa and Board Member, Ruby Thoma. The recitals to the contract provided:

1. The Employee has been in the full time continuous employment of the Employer since 3 October 1994;
2. On 22 July 2003 (hereinafter called "the Commencement Date") the Employee was appointed by the Employer to act as Secretary to the Employer on and subject to the terms and conditions hereinafter contained and the Employee accepted such terms and conditions;

1. The Parties hereto agreed prior to the Commencement Date to record the terms and conditions of the Employee's said Employment by the Employer but had not done so and are now desirous to record all of the agreements and understandings made between the Parties hereto concerning such employment in this Contract of Employment with the intention that the terms and conditions hereinafter contained shall be legally binding on the Parties hereto and shall apply in respect of the Employees (sic) employment at all times from the Commencement Date.

Remuneration

The Employee's remuneration whilst employed by the Employer will consist of the following:

1. Yearly Salary: $80,000 to be paid on a Fortnightly basis;

1. The use of a company car for private and business use which at the time of this agreement is a 2001 Holden Commodore Acclaim. The provision of this car includes running expenses such as fuel, oil, maintenance and repairs as required;
2. Any entitlement at law to leave loading or other forms of salary loading or payment required by law to be made;
3. During each period that the Employee acts as a Director or Secretary of a subsidiary company of the Nauru Phosphate Royalties Trust, a Monthly Entitlement of $1,500 in respect of each such subsidiary company;
4. All unpaid entitlements from the Employee's previous employment with the employer will be carried forward;
5. The payment of such other payments and such other entitlements as is provided for in this Agreement;
6. Superannuation contributions equivalent to 9% of the Employee's base salary and the Employee's entitlements under paragraph 4 of this Schedule 2, pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth) to a superannuation fund selected by the Employee or, if no fund is chosen by the Employee, to an eligible fund nominated by the Employer;
7. At any time the Employee may request the Employer to pay part of the salary component into the Employee's nominated super fund. This is in addition the (sic) statutory requirement of the Employer's contribution under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992. Provided that there is no detriment to the Employer in so doing and such payment is permitted by law and deductible to the company then the company will comply with that request. The Employee's salary shall be reduced by the amount of such payment.

16 Subject to one qualification, Mr Millar, who appeared for NPRT, accepted that cl 4 of sch 2 conferred upon Mr Bannon an entitlement to be paid $1,500 per month in respect of each subsidiary of NPRT to which he had been appointed to act as Secretary and/or Director. The one qualification arises from the opening words of cl 4 '[d]uring each period that the Employee acts as a Director or Secretary of a subsidiary company.'

17 Mr Millar focussed attention on the words 'acts as'. He submitted that these words imposed a pre-condition upon Mr Bannon to establish not only that he had been appointed as Secretary/Director, but that he had also actually performed duties during any given month. I reject this submission. The Corporations Act 2001 (Cth) ('Corporations Act') equates 'acts as' Company Secretary with 'holding the office/position' of Company Secretary. S 204C, '[c]onsent to act as secretary' provides:

(1) A company contravenes this subsection if a person does not give the company a signed consent to act as secretary of the company before being appointed.

Part 1.5 of the Corporations Act, the Small Business Guide, at 1.5.5 provides:

...

A company secretary must consent in writing to holding the position of company secretary. The company must keep the consent and must notify ASIC of the appointment.

...

Further, the Corporations Act imposes numerous obligations upon a Company Secretary whenever he/she holds the office. See for example the potential liability of a Company Secretary for twelve discrete contraventions of the Corporations Act prescribed by s 188(1).[5]

18 The phrase 'acts as' in cl 4 of sch 2 is engaged in circumstances where Mr Bannon held the office of Secretary/Director in any given month. During the period July 2003 to June 2014 Mr Bannon 'acted' as Secretary/Director of the relevant subsidiaries, in the sense that he held the office of Secretary/Director during that period. His entitlement to be paid fees under cl 4 of sch 2 is not contingent upon him establishing that he in fact performed specific duties of Secretary/Director during any particular month during which he claimed an entitlement to receive fees. Mr Bannon had a prima facie entitlement to be paid $1,500 per month during the period July 2003 to 30 June 2014 in respect of each subsidiary to which he had been appointed to act as Secretary/Director.

19 When the 2007 contract was signed the base salary was $80,000 per annum. On 18 October 2007 Ms Aremwa, together with the three other Board Members of NPRT (Ruby Thoma, Doneke Kepae and Clarissa Jeremiah), signed a memorandum in the following terms:

The Trustees of the Nauru Phosphate Royalties Trust, in a meeting held on Wednesday 17 October 2007 have unanimously agreed to increase the base salary paid to Trust Secretary, Mr Paul Bannon, from $80,000 − $140,000 per annum a monetary increase over the currently paid of $36,000 since April 2003 up to present.

20 Shortly after 18 October 2007 Mr Bannon arranged for a payment to be made to himself totalling $295,475. This represented back pay for the period April 2003 to 17 October 2007 of the salary increase approved by the Board, plus superannuation, as recorded in the memorandum of 18 October 2007. In the current proceedings NPRT contends that this back pay was not authorised and seeks recovery of this sum.

21 Following the execution of the 2007 contract Mr Bannon never received any of the fees prescribed by cl 4 of sch 2. Nor did he seek recovery of the retrospective entitlement of the fees and superannuation in respect of the period 22 July 2003 to 24 August 2007. With two exceptions, Mr Bannon never made any reference in any of his dealings with the Board and/or the Minister with responsibility for NPRT, of the existence of his entitlement to receive Secretary/Director fees under sch 2. This silence occurred in circumstances where, as Secretary of NPRT, from April 2009 when s 32 was inserted into the Act, Mr Bannon had a statutory responsibility to prepare an annual administration budget. Section 32 provides:

(1) The Secretary to the Trust shall prepare an Annual Administration Budget for the Trust which shall be submitted before 30th June each year for consideration and approval by the members of the Trust.

(2) The Annual Administration Budget shall set out the projected administration costs and related expenses of the Trust (including taxes, rates, charges, duties and other like amounts, commissions and fees) likely to be incurred by the Trust on behalf of the funds administered by the Trust in the ensuing financial year.

(3) Following approval of the Annual Administration Budget by the Trust, the Secretary shall provide to the Minister responsible for the Trust a copy of the Annual Administration Budget.

No administration budget prepared by Mr Bannon ever made any reference to his accrued or ongoing entitlement to receive payments pursuant to cl 4 of sch 2.

22 The exceptions to Mr Bannon's silence regarding his entitlement to payments under cl 4 of sch 2 are a letter which he forwarded to the then Chair of NPRT, Mr Alexius Namaduk, on 1 March 2013 and an email on 19 March 2013. The letter included the following:

Dear Chairman,

Re: Secretary to the Trust - Salary review/increase

The purpose of this paper is to seek your approval to grant an increase in the annual salary paid to myself in performance of the role of Secretary to the Nauru Phosphate Royalties Trust.

Background

• I have been in full time employment with the Trust since October 3rd 1994.
• On July 2nd 2003, I was appointed to the position of Secretary to the Trust.
• The current employment contract between the Nauru Phosphate Royalties Trust Board and myself was executed on August 24th 2007.
• Details specific to my remuneration are found in Schedule 2, items 1−4.
• Further, on October 18th 2007, the Board unanimously agreed to increase the annual salary paid to me from $80,000 to $140,000.
• By agreement, the Trust has not had to outlay the expense of a company car as this represented part of the justification behind the salary increase that occurred on October 18th 2012.
• Although payable under my contract of employment, I have not sought payment of the fees payable to myself under Schedule 2 item 4, as a result of the continued receivership of the Trust and the associated tight financial liquidity associated with it.
• No review of my salary has occurred since October 2007.

• Mr Chairman, I would welcome your consideration to the following variations of my contract:
  • An increase in the Annual base salary from $140,000 to $200,000 pa. Given the financial assets of the Trust amount to approximately $100m, a salary of $200,000 represents a cost of 0.02 of 1% of the total funds under management. This is on the low side of similar financial institutions remunerations, where 2.5% (on average) of funds under management is paid as a base salary.
  • The provision of a fully funded company car to a maximum of $40,000. In this regard I propose my current car be purchased from me by the Trust at an agreed rate.

Mr Chairman, I realise the increases sought represent a significant increase over and above the current level paid, however in my opinion they are reflective of the fact that no increase has been forthcoming for in excess of 5 years. The increase of $60,000 represents an increase of approx. 43% or 8.5% for each of the five years no increase was provided.[6]

23 On 19 March 2013 Mr Bannon sent an email to Mr Namaduk:[7]

I realise the timing may well be inappropriate, however I attach for your kind consideration a letter from myself seeking your consideration for an increase in the annual salary paid. I further attach a copy of my employment contract as well as the variation to it dated October 185th (sic) 2007.

I would welcome the opportunity of discussing this matter with you further should you desire.

I had wanted to discuss this matter with you in Fiji or whenever we were due to meet next.

24 The letter of 1 March 2013 was signed under a notation 'Approved' by each of the four members of the Board. The letter also contained a handwritten notation 'From PPE 22/5/2013'. It is agreed that this is a reference to the Board approving the salary increase with effect from the pay period ending 22 May 2013. Although the salary increase had been approved, Mr Bannon did not seek to implement the increase until 24 June 2014. In an internal memorandum to Romys Eobob, NPRT's finance manager, Mr Bannon stated:

Romys,

For your kind information and action, would you please refer to the attached wages letter dated March 31st 2013 duly signed by the former Chairman of the Trust Mr Alex Namaduk. The wages letter was ratified by the board at a meeting in Melbourne on May 13th 2013.

I have elected not to give effect to the increase as yet as a means of implementing an enforced savings program upon myself as the speculation concerning the Trust and its future was subject to increased speculation and uncertainty.

With the closure of the Trust scheduled for Monday June 30th 2014, would you kindly:

1. Refer to the attached worksheet and arrange for payment of my back pay adjustment in the amount of $46,400 (net).
2. Ensure the back pay adjustments are included within the 2013/2014 wage records summaries.
3. The final pay from 18 June to 30 June 2014 is calculated at the new rate.
4. My superannuation adjustments are calculated and paid accordingly.

25 As events unfolded, Mr Bannon did not receive the requested back pay prior to the termination of his employment on 30 June 2014. NPRT contends that any liability which it has to pay Mr Bannon damages based upon his accrued entitlements as at 30 June 2014, is to be determined by reference to the base annual salary of $140,000 which he was paid up to 30 June 2014. Mr Bannon submits that his accrued entitlements should be paid on the basis of the $200,000 per annum base salary which he submits was agreed to by the Board in May 2013.

26 On 9 November 2012, the receivers, Stephen James Parbery and Mark Julian Robinson paid into the New South Wales Supreme Court the sum of $85,215,466.21. This sum was paid into Court pursuant to provisions of the Trustee Act 1925 (NSW). The amount represented a surplus arising from sales by the receivers of properties of the various Nauru entities for the purpose of repayment of loan facilities granted by GE Capital to Ronsi Business Pty Ltd and Republic of Nauru Finance Corporation on securities granted by the Nauru entities. During the course of the receivership of each of the Nauru entities, the receivers realised assets which secured the loan facilities and, from the proceeds of sale of the securities, discharged the debts owing under the facilities. They held the surplus proceeds of sale as Trustees of the Nauru entities.

27 On 3 May 2013 Lindsay J ordered that the amount of $85,215,466.21 paid into Court on 9 November 2012, and any interest accrued on that amount, be paid out of Court (net of any expenses payable in the ordinary course) to Messrs Baker & McKenzie as solicitors on the record for the Nauru entities. The funds paid out of Court were ultimately released to NPRT by Baker & McKenzie on or about 1 November 2013.[8]

28 On 31 March 2014 Mr Bannon, together with the three other employees of NPRT, received an email from Andrew Jacobson, the principal of a Melbourne based law firm, Black & White Legal. The email was copied to Mr Shadlog Bernicke, the Minister responsible for NPRT. The subject of the email was 'Notice of Redundancy'. The email stated in part:

Dear Paul, Mary, Kham & Romys,

I confirm as has been made known previously, that Nauru Phosphate Royalties Trust (NPRT) will be closing down its Melbourne Branch office on Monday 30 June 2014 and that the current employment positions of all staff of the Melbourne office shall be made redundant on 30 June 2014.

...

29 Mr Bannon disputes that this email constituted valid notice of termination of his employment contract. He contends that he was an employee of NPRT and that Mr Jacobson had no authority on behalf of the Trust to provide him with notice of termination. Mr Bannon's employment was in fact terminated on 30 June 2014. He was told by Mr Jacobson on the afternoon of 30 June 2014 that his employment would be terminated with effect from that day. Mr Bannon contends that he is entitled to damages equivalent to 12 weeks' notice of termination, in accordance with his contract. He contends that the notice given on 31 March 2014 was of no legal effect. In addition to damages equivalent to 12 weeks' notice of termination, Mr Bannon seeks 12 weeks' redundancy pay in accordance with the provisions of his contract.

30 When Mr Bannon's employment was terminated he was not paid accrued annual and long service leave entitlements. Whilst NPRT accepts that Mr Bannon is entitled to accrued leave entitlements it disputes the quantum of the annual leave claimed and the rate at which Mr Bannon is to be paid.

31 The annual leave records of NPRT disclose that Mr Bannon had 291 days of accrued annual leave as at October 2013, which translates to an entitlement of 305.8 days as at 30 June 2014.

32 Mr Bannon had a contractual entitlement to be paid 50 per cent of accrued but untaken sick leave as at 30 June 2014. He claims damages in the sum of $105,807.69 being 50 per cent of his accrued sick leave as at 30 June 2014.

The meaning of 'subsidiary company' in sch 2 of the 2007 contract

33 Mr Bannon's claim for damages based on his entitlement to Secretary/Director fees in the sum of $3,111,000 relates to 19 companies. There is an issue as to whether two of those companies are subsidiary companies within the meaning of sch 2 of the 2007 contract. The two companies are Central Pacific (Downtowner) Pty Ltd and Randwick Nominees Pty Ltd. The following matters are not contentious. First, of the five million shares in Central Pacific (Downtowner) Pty Ltd, all but one share is owned by the Nauru Superannuation Board. Second, the sole shareholders in Randwick Nominees Pty Ltd are Theodore Moses and Kenneth Walker. Third, Mr Bannon claims $18,000 in unpaid fees in respect of Central Pacific (Downtowner) Pty Ltd. Fourth, Mr Bannon claims $195,000 in unpaid fees in respect of Randwick Nominees Pty Ltd.

34 Mr Bannon submits that the objective common intention of the parties to the 2007 contract was not to have regard to the strict legal definition of 'subsidiary' but to regard all relevant companies within the Nauruan government's effective control as 'subsidiary companies' of the defendant. Mr Bannon submits that 'subsidiary company' in the context of the 2007 contract should be read and understood as being similar to an 'associated entity' as defined in s 50AAA of the Corporations Act.[9] Mr Bannon submits that both Randwick Nominees Pty Ltd and Central Pacific (Downtowner) Pty Ltd were subsidiary companies of NPRT in this sense.[10]

35 The phrase 'subsidiary company' has an unambiguous meaning in accordance with s 46 of the Corporations Act. Neither Randwick Nominees Pty Ltd nor Central Pacific (Downtowner) Pty Ltd is a subsidiary of NPRT within the meaning of s 46. Mr Bannon's submission that 'subsidiary company' should be read as being similar to an 'associated entity' is an invitation to rewrite cl 4 of sch 2. I reject this submission. Neither Randwick Nominees Pty Ltd nor Central Pacific (Downtowner) Pty Ltd is a subsidiary company of NPRT within the meaning of cl 4 of sch 2 of the 2007 contract.

Is Mr Bannon estopped from claiming the Secretary/Director fees?

36 The principal component of Mr Bannon's claim for damages is a claim for $3,111,000 for unpaid fees under cl 4 of sch 2 in respect of his acting as Company Secretary/Director of 19 subsidiary companies of the Trust. In addition, he claims a further $282,028.13 by way of superannuation entitlement in respect of those fees pursuant to cl 7 of sch 2. NPRT submits that Mr Bannon is estopped from claiming these sums. Its primary contention is that Mr Bannon represented to the Trust that he had no entitlement to the fees. It submits that the Trust relied upon this representation and that if Mr Bannon is permitted to depart from it, it will suffer detriment. It relies upon the doctrine of equitable estoppel. In addition, the Trust invokes common law estoppel by convention. It submits that throughout the period August 2007 to 30 June 2014 relations between Mr Bannon and the Trust were conducted on the basis of an assumption on the part of the Trust, acquiesced in by Mr Bannon, that he had no entitlement to be paid Secretary/Director fees by the Trust.

37 NPRT sought leave during the trial to amend its defence to plead estoppel by convention. The application was opposed. I granted NPRT leave to amend for the following reasons. First, Mr Bannon did not point to any prejudice arising from the amendment. No submission was advanced to the effect that he would have conducted his case differently if estoppel by convention had been pleaded from the outset. Second, the amendment to the pleading did not impact adversely on the hearing of the proceeding. Save for legal submissions, no additional hearing time was required as a result of the amendment. Third, I considered that the amendment facilitated the just resolution of the real issues in dispute and was therefore consistent with the overarching purpose prescribed by s 7 of the Civil Procedure Act 2010.

38 The terms of the 2007 contract are unambiguous. Clause 4 of sch 2 conferred upon Mr Bannon a monthly entitlement of $1,500 (plus 9 per cent superannuation) for acting as Secretary/Director of a subsidiary of NPRT. He had done so for the four years preceding August 2007 without receiving any additional remuneration. Mr Bannon does not have any entitlement to fees in respect of Randwick Nominees Pty Ltd and Central Pacific (Downtowner) Pty Ltd. In respect of the 17 subsidiary companies for which he does have an entitlement, there is some variation in respect of the period he acted as Company Secretary. There are 12 companies to which he was appointed Company Secretary for the entire period July 2003 to 30 June 2014. These 12 companies gave rise to an entitlement to $18,000 per month and $216,000 per annum. He was Company Secretary of the remaining five companies for disparate periods of time.

39 In August 2007 his fee entitlement was over two and a half times his base salary of $80,000. Further, the 2007 contract records the parties' agreement that the fees entitlement operated retrospectively to 22 July 2003. Upon execution of the contract on 24 August 2007 NPRT was immediately liable to pay Mr Bannon a sum of approximately $1.15 million.[11] There was no discussion between the parties, let alone any agreement, that either Mr Bannon's retrospective or prospective monthly entitlement would be deferred until such time as the Trust was no longer in receivership. The 2007 contract created an immediate liability for NPRT to pay Mr Bannon a sum of approximately $1.15 million. Due to the receivership and the liquidity situation which it created, the Trust could not have met this liability. Mr Bannon gave evidence that the reason he never made a claim for payment of the outstanding fees prior to the termination of his employment was that he did not wish to create a situation which would have placed the Trust in liquidation.[12] Whatever Mr Bannon's motivation for not making a claim, the 2007 contract conferred upon him an unqualified entitlement to be paid forthwith a sum which, in all likelihood, would have triggered the liquidation of the Trust.

40 Mr Millar submitted that Mr Bannon's prima facie entitlement was defeated on two alternative basis. First, he submitted that Mr Bannon was estopped from claiming the entitlement prescribed by cl 4 of sch 2. In the alternative, he submitted that if Mr Bannon was not estopped, any claim for fees was statute barred prior to June 2009.

41 NPRT's estoppel defence invoked both equitable promissory estoppel and common law estoppel by convention, which precludes either party from denying an assumption which has formed the conventional basis of a relationship between them.[13] The foundation of NPRT's reliance upon both equitable estoppel and conventional estoppel is Mr Bannon's conduct during the period 24 August 2007 to 30 June 2014. NPRT submits that the relationship between NPRT and Mr Bannon was conducted on the basis that he had no entitlement to receive the fees prescribed by cl 4 of sch 2. NPRT relies upon Mr Bannon's failure to have made any claim for payment prior to the termination of his employment. In addition, it points to Mr Bannon's repeated failure to include in any of the financial documents which he prepared for the Trust any reference to the existence of his accrued or ongoing entitlement to receive fees.

42 As to Mr Bannon's silence regarding his entitlements under cl 4 of sch 2, there is no dispute between the parties that at no time prior to 30 June 2014 did Mr Bannon make any claim for such fees. The only occasion he made any reference to the existence of any entitlement was the letter which he sent to the Chairman of the Board on 1 March 2013 in support of his claim for a $60,000 salary increase. The same letter, together with the 2007 contract, was emailed to the Chairman on 19 March 2013.

43 As to the second matter, Mr Bannon repeatedly failed to make any reference to the existence of his accrued and/or ongoing entitlement to fees in any of the administration budgets which he prepared. He accepted that his failure to do so for the year ending 30 June 2010 meant that the document which he had produced was 'materially misleading'.[14] This concession applies equally to all of the administration budgets prepared by Mr Bannon for the financial year ending 30 June 2009 and thereafter. Whilst Mr Bannon did not prepare an administration budget for the year ending 30 June 2008, he did prepare unaudited accounts. Those accounts included an entry for the accrued entitlements of employees in the sum of $278,530. That sum did not include Mr Bannon's accrued entitlements under cl 4 of sch 2.

44 Earlier in this judgment I have set out the terms of s 32 of the Act which operated post-April 2009. Mr Bannon's entitlement to the fees prescribed by cl 4 of sch 2 was an administration cost which Mr Bannon, as the Trust's Secretary, was required by s 32 to include in the annual administration budget. Further, s 32 imposed an obligation upon Mr Bannon to report to both the Board of the Trust and the Minister responsible for the Trust. I reject Mr Bannon's contention that the Trust's liability to make payment of the Secretary/Director fees did not crystallise until he submitted an invoice in September 2014. The liability to make payment crystallised at the conclusion of each month in respect of each subsidiary to which he had been appointed to act as Secretary/Director.

45 In addition to the statutory obligation imposed upon him by s 32, there was a significant practical consideration that from the time s 32 commenced operation in April 2009 until 30 June 2014, no audited accounts of the Trust were finalised. Throughout this period, the Board of the Trust, and the government of Nauru, were entirely reliant upon the administration budgets and unaudited accounts prepared by Mr Bannon as the source of information regarding the financial position of the Trust.

46 From 2002 until the end of his employment no audited accounts were tabled. Initially, the Trust did not have funds to continue its existing engagement with PKF, and then receivers and managers were appointed.[15] The Trust had no working capital to fund the appointment of auditors and accountants.[16] Auditors were eventually appointed in 2008.[17] There were significant delays and a 'litany of problems' in relation to the timely production of the Trust's accounts.[18] The annual report of the Trust required the consolidation of 'upwards of 19 entities' and before the Trust's accounts could be finalised, all of the subsidiaries needed to be brought 'current'.[19]

47 Post 2008, the auditors working on the accounts relied upon Mr Bannon for the provision of information regarding contingent liabilities.[20] Despite such reliance, Mr Bannon never gave the accountants any information in relation to his accrued entitlement to Secretary/Director fees.[21] He did not do so because at the time his employment ended no draft set of accounts had been produced to him, or the Board, for discussion, alteration or amendment.[22]

48 Immediately upon executing his contract of employment in August 2007, the Trust became liable to pay Mr Bannon a sum of approximately $1.15 million. With each passing year this liability, inclusive of superannuation, increased by more than $250,000. Mr Bannon's failure to include any reference to this accrued and ongoing liability in the financial records which he prepared meant that those records were misleading. The records seriously misrepresented the extent of the Trust's liabilities.

49 Mr Bannon prepared unaudited accounts for the Trust for the year ending 30 June 2008. Those accounts made provision for employee entitlements of $278,530.[23] Mr Bannon accepted that the accounts were inaccurate in failing to disclose his entitlement to Secretary/Director fees, which at that time was an amount of approximately $1.8 million.[24] His evidence was that the failure to include any reference to his $1.8 million entitlement 'was an omission rather than an intentional lack of inclusion'.[25]

50 Mr Bannon's evidence was that the accrued and ongoing liability was not included in annual administration budgets 'on the basis that the Trust did not have the capacity to pay the claim as it would have been valued at that particular time.'[26]

51 Mr Bannon sought to draw a distinction between the requirement to include in the annual budget items of expenditure such as annual and long service leave which were likely to be incurred during the forthcoming year, and his claim for fees, which was not:

The budget, again is an attempt obviously to include the expenditure that is likely to be incurred in the next 12 months. I did not anticipate the receivership of the Trust - sorry, the receivership of the Trust may or may not have concluded during that particular period of time and, if it did, it was then my intention obviously to raise the director and secretarial fees, but because of the uncertainty I limited the budget inclusion to just the statutory amounts that were payable by the Trust in the event that the office closed. But, as I said, the budgets were prepared in this manner since 2004, and actually - and we worked within this environment that may or may not be the case.[27]

52 Notwithstanding the evidence set out above, Mr Bannon conceded that the accumulated value of the Secretary/Director fees entitlement should have been included in the annual administration budget.[28] He agreed that by reason of the omission the annual budget he prepared for the year ending 30 June 2010 was 'materially misleading'.[29]

NPRT administration budget for the years ending 30 June 2010 and 30 June 2011

53 Mr Bannon agreed that the administration budgets for the years ended 30 June 2010 and 30 June 2011 did not provide for the Secretary/Director fees he now claims.[30] However, he did not agree that there should have been provision for the prospective Secretary/Director fees, as the Act governing the Trust required the budget to include 'expected expenditure for the next 12 months,' and whilst the Melbourne office was expected to close, he had not submitted, and nor had the receivership 'concluded' for him to submit, an invoice in respect of those fees.[31]

54 Mr Bannon agreed the administration budget for the year ending 30 June 2010 included provision for 'Salaries - Expatriate' at $720,000, intended to include provision for accruing entitlements such as annual leave, long service leave, sick leave, and should have included his claimed Secretary/Director fees.[32] However, he explained the claimed Secretary/Director fees were not included on the basis the Trust did not have the capacity to pay the claim as it would have been valued at that time (approximately $2.3 million).[33] According to him, the budget was an attempt to include expenditure likely to be incurred in the next 12 months, and the receivership of the Trust may or may not have concluded during that particular period of time.[34] If it did, it was his intention to raise the Secretary/Director fees.[35]

55 Given the uncertainty regarding the Melbourne NPRT office closure, Mr Bannon limited the budget to the 'statutory amounts' that were payable by the Trust in the event the office closed.[36] Mr Bannon stated that if he anticipated the receivership was going to conclude during the year ending 30 June 2010, he should have included his claim for Secretary/Director fees in the budget.[37] He conceded that if he was approaching the framing of the budget with the need to include provision for employee expenses upon closure of the Trust, he should have included the accumulated value of Secretary/Director fee entitlement, and as he did not, the document was materially misleading.[38] Mr Bannon agreed that the budget for the year ending 30 June 2011 suffered from the same deficiencies in failing to include his Secretary/Director fee claim.[39]

56 The administration budget for the year ending 30 June 2011, together with a note to the Trustees in respect of agenda item number 4 for the Special Meeting of the Board of Trustees of the NPRT on 25 June 2010, were prepared by Mr Bannon.[40] The note included the following:

The 2010/2011 Administration Budget of the Nauru Phosphate Royalties Trust endeavours to encapsulate all potential liabilities facing the Nauru Phosphate Royalties Trust for the financial year in question.[41]

Mr Bannon presented this note and the administration budget to the Trustees, and confirmed it included no mention of his Secretary/Director fees claim.[42] He agreed that he could have presented to the Trust, at any time, a claim for Secretary/Director fees, and the potential liability associated with those fees would have turned into an actual liability.[43] Mr Bannon had no intention of submitting the liability to the Trust, or exercising the liability, whilst the receivership was ongoing, and for that reason he did not include it in the budget.[44] However, Mr Bannon conceded the reality was that it was a potential liability and it should have been included.[45]

57 The note to the Trustees prepared by Mr Bannon also included the following regarding expatriate salaries:

Salaries expatriate (14 - 203) has been prepared on the basis of a worst case scenario in which staff entitlements are not utilised during the financial year in question - that is no annual leave is utilised during the financial year.[46]

58 Mr Bannon explained that he was presenting the worst case scenario of what the Trust would be liable for if it ceased operations during that year insofar as the statutory obligations that would be immediately payable.[47] Secretary/Director fees were not included on the basis that the receivership had not concluded, and once the receivership had concluded and the money returned to the Trust, the fees would then be negotiated.[48] The residual from the receivership was returned to the Trust on or about 1 November 2013. No discussion took place between Mr Bannon and the Board regarding his fees entitlement between November 2013 and 30 June 2014.

59 When Mr Bannon presented the budget for the financial year ended 30 June 2011, his covering email to the Chair, Mr Keke, included the following:

I consider the Budget submitted to be an accurate portrayal of the anticipated expenditure likely to face the Trust during the next 12 month period.[49]

Mr Bannon agreed that this was an assurance to the Board that it was an accurate portrayal of the anticipated expenditure likely to face the Trust during the next 12 month period, with the proviso that if the Board knew something that he did not, they were free to change and amend the budget as they wished.[50] Mr Bannon disagreed that he was the only person who knew about the prospective exposure to his Secretary/Director fee claim, and stated that the people aware of the entitlement within his contract, being himself and the Board, knew the clause was in there, even though it had not been exercised or disclosed in the budget.[51] He reiterated that it was not disclosed within the budget because the receivership continued and there was no expectation that whilst it continued he was going to be placing that type of invoice before the Trust.[52]

...we have a quantifiable liability due to the Trust auditors, PKF, with regards to the preparation and finalization of the Trust's Annual Reports... .[53]

Mr Bannon agreed that a quantifiable liability should have been included in the budget, on the proviso the liability is exercisable within the next 12 months.[54] Expenses expected to become 'real' within the next 12 months should be allocated within the budget, and expenses that are not, that are contingent, should be included as liabilities within the balance sheet.[55] So far as the Trust was concerned, Mr Bannon said the 'statutory requirements' had been included since 2004 as the risk existed that the office would be closed at any point, the receivership would come to a conclusion and the monies paid back to the Trust and landowners.[56]

61 Mr Bannon attempted to explain the distinction he made between 'statutory entitlements' included in the budget, and his Secretary/Director fees not included in the budget, as follows:

I have not included the directors and entitlement fees on the basis that the receivership was ongoing and the forecast date of its conclusion was unknown. Whereas the statutory fees have been included because, as I said, if the officer was - if the Trustees and/or a creditor came along that was unable to be satisfied the office could be closed tomorrow but the Nauru office could continue, and therefore the staff that were within the Melbourne office by way of their accrued entitlements that were payable to them under law would receive - would - at least there's been an allocation within the budget of those particular costs. That's the distinction. I'm sorry, I can't give Your Honour more qualified advice in relation to the accountancy, because I'm sure that more qualified accountants than I would maybe answer perhaps differently.[57]

62 Mr Bannon's evidence was that liability for annual leave and long service leave was included in the budgets, on the basis that it would be payable if the Trust closed.[58] He conceded this was no different from his claim for Secretary/Director fees, which would also be payable if the Trust closed, save for a difference in quantum.[59] He explained the different treatment of his fees entitlement as being that the Trust did not have access to sufficient funds whilst the receivership continued to address the Secretary/Director fees, and for that reason he withheld them until the receivership concluded.[60] On the other hand, the Trust had the funds available to meet the 'statutory demands' of the employees' immediate entitlements (including annual leave, sick leave, leave loading and long service leave).[61]

63 Mr Bannon believed his entitlement to 50 per cent of his sick leave balance upon termination of employment was included in the budget calculations.[62] He believed this entitlement was accounted for in the budget within the provision made for employee entitlements.[63]

64 It was put to Mr Bannon that if the budget provision for employee entitlements extended to a contractual entitlement, like his entitlement to 50 per cent of his sick leave balance upon termination of employment, the budget should have also included the Secretary/Director fee liability.[64] Mr Bannon stated that contractual entitlements of staff, readily expected to be received by an employee if 'sacked tomorrow' were included in the budget.[65] Mr Bannon agreed his claim for Secretary/Director fees was a quantifiable liability, and he could have at any time worked out exactly what was owed, however, he did not go through that exercise until after the termination of his employment on 30 June 2014.[66]

Administration budget for the year ending 30 June 2012

65 When presenting the administration budget for the year ending 30 June 2012 to the Trustees, the note Mr Bannon prepared for the Special Meeting of the Board of the Trustees included the words 'the administration budget endeavours to encapsulate all potential liabilities within the Trust.'[67] Mr Bannon said those words were designed to communicate to the Trustees, to the best of his knowledge, that the budget had been prepared and if they had any changes he was not aware of, to incorporate them.[68] Mr Millar put to Mr Bannon that he went further by stating the budget 'endeavours to encapsulate all potential liabilities,' thereby saying the Trustees had every reason to have confidence and be comforted by the diligence with which he had prepared the records.[69] Mr Bannon expected the Trustees to be of the opinion that the budget was as comprehensive as possible, but he did not assume the budget was 100 per cent complete unless the Trustees resolved to support it.[70] However, he agreed the Trustees should have confidence in what he presented, as the Secretary of the Trust.[71]

66 In an email to Mr Bannon from the then Chairman, Leo Keke, regarding the 2011/2012 budget, a query was raised by the Trustees 're the redundancy of 12 weeks for continuous service after 10 years in Note 3 to Sub-Head 203.'[72] Mr Bannon agreed that this showed the Trustees had reviewed the budget in considerable detail, and this was an employment-related query about which the Trustees needed reassurance.[73]

67 During cross-examination, Mr Bannon was taken to a document labelled 'Budget Working Papers 2012-2013,' which he believed was a draft for the 2013/2014 year, and had not been formally presented to the Board.[74] However, he agreed a budget for the 2012/2013 financial year was put before the Board and approved.[75]

68 Mr Bannon agreed the document included provision for Trustee fees of $2,400 for the three non-chair Trustees, that was the 'going base rate', and in some years the Trustees made decisions to include additional fees, approved by a Board resolution.[76] He confirmed that on an annual basis he was presenting the Board with a budget which provided a base remuneration of $2,400 per Trustee, save for the Chair, unless otherwise known, which equated to $7,200.[77] At the time of presenting those figures, Mr Bannon never said he was entitled to approximately $300,000 per annum in fees, or that he was owed back pay for Secretary/Director fees.[78] Mr Bannon agreed that during the process of establishing the budget for any financial year he did not disclose his Secretary/Director fees claim.[79]

69 There was no agreement between Mr Bannon and the Trust that payments of his entitlements under cl 4 of sch 2 would be deferred until the receivership had concluded. The issue of deferral of payment was never discussed between Mr Bannon and any member of the Board. Further, if the Trust office had closed down during any of the years in respect of which Mr Bannon produced administration budgets, his Secretary/Director fees would have been no different than the statutory leave entitlements which would have been payable by the Trust. Therefore, the basis upon which Mr Bannon contends that he did not include his Secretary/Director fees entitlement in the annual administration budget has no rational foundation. However, of greater significance to the current proceeding is the fact that at no stage prior to Mr Bannon's correspondence to the Chairman dated 1 March 2013 was there any reference by Mr Bannon to the existence of an entitlement for him to be paid fees by the Trust under cl 4 of sch 2.

70 In the letter of 1 March 2013 Mr Bannon stated that he had not sought payment of the fees payable under cl 4 of sch 2 'as a result of the continued receivership of the Trust and the associated tight financial liquidity associated with it.' Two aspects of this statement are noteworthy. First, the statement that Mr Bannon had not sought payment of fees under cl 4 of sch 2 was a matter he relied upon in support of his claim for a $60,000 per annum salary increase. Mr Bannon was not contending that he was entitled to all of the fees which had accrued since July 2003. Such a contention would have undermined his claim for a $60,000 pay increase. Second, it is implicit in Mr Bannon's identification of the reason for him not having sought payment of the fees (the continued receivership of the Trust and the tight financial liquidity associated with it) that he reserved the right to seek payment of fees once the receivership was concluded and the Trust's financial position improved.

71 When it was put to Mr Bannon that he was the only person who knew about the Trust's prospective exposure to a Director's fee claim he replied:

No. The only person that was - sorry, the people that were aware of the directors fee entitlement being within my contract, being the Board and myself, knew obviously that the clause was in there. Had it been exercised? No, it didn't (sic) been exercised. Had it been disclosed within the budget? No, it hadn't been disclosed within the budget because the receivership continued and there was no expectation that while the receivership had continued that I was going to be placing that type of invoice before them.[80]

72 As to Mr Bannon's evidence that there was no expectation that whilst the receivership continued he was going to place an invoice before the Board, there is no evidence, save for Mr Bannon's letter of 1 March 2013 and email of 19 March 2013, of there being any basis for the Board to have shared that expectation.

73 Mr Bannon contends that there is no basis upon which the Board could have assumed that he did not have an entitlement to the fees prescribed by cl 4 of sch 2. As set out in his evidence above, he contends that 'obviously' the Board was aware of the existence of the entitlement because the contract had been signed by the Chair, Alvina Aremwa, and a Trustee, Ruby Thoma. I reject this contention. Although the 2007 contract was duly executed by them on behalf of the Board, Ms Aremwa and Ms Thoma assumed that the Trust was not liable to pay Mr Bannon $1,500 per month in respect of each subsidiary company to which he had been appointed Secretary/Director.

74 In Krakowski v Eurolynx Properties Ltd[81] the High Court approved the following statement of Bright J in Brambles Holding Ltd v Carey:[82]

Always, when beliefs or opinions or states of mind are attributed to a company it is necessary to specify some person or persons so closely and relevantly connected with the company that the state of mind of that person or those persons can be treated as being identified with the company so that their state of mind can be treated as being the state of mind of the company.[83]

75 A corporation cannot know or believe two contradictory things at once. It is rational belief, not schizophrenia, which is to be attributed to the company.[84]

76 The 2007 contract was signed on behalf of NPRT by Alvina Aremwa and Ruby Thoma. Ms Aremwa was the Chair of the Board between 20 November 2006 and 16 January 2008, 2 March 2012 and 22 June 2012, and 17 June 2013 and 31 March 2014.[85] At all other times between 1 November 2004 and 31 March 2014 Ms Aremwa was a Board Member.[86] Ms Thoma was a Board Member continually between 1 November 2004 and 30 June 2014.[87]

77 The other two members of the Board at the time the contract was signed on 24 August 2007 were Doneke Kepae and Clarissa Jeremiah. Ms Jeremiah gave evidence in the current proceeding. Mr Kepae did not.

78 Ms Aremwa was the Chair of the Board when the 2007 contract was signed. Mr Bannon dealt directly with Ms Aremwa in the lead up to the execution of the contract. He provided her with drafts of the contract prior to 24 August 2007. Ms Aremwa was 'closely and relevantly connected' with the execution of the contract on behalf of the Board. Her state of mind can properly be treated as the state of mind of the Board.

79 Ms Aremwa was questioned regarding the unaudited financial accounts prepared by Mr Bannon for the year ending 30 June 2008. She relied on the accuracy on the information that was presented to the Board by Mr Bannon.[88] When she made decisions for the Trust she assumed that the information that Mr Bannon had presented was accurate.[89] Ms Aremwa was questioned regarding the entry in the unaudited accounts of 30 June 2008: Employee Entitlements - $278,530. Mr Bannon never made any reference in any meetings to the existence of an accrued or ongoing liability to pay him Secretary/Director fees.[90]

80 Ms Aremwa was aware that Mr Bannon was working for subsidiaries of NPRT '[a]nd then there's all these entities under NPRT that he works with, a lot of them.'[91]

81 When asked whether Mr Bannon had told her how much he was receiving for that work or was entitled to receive, Ms Aremwa answered:

I don't know. I think I knew but those - those entities, they were all - they're not - there's nothing to them, only the names and the accounts and all that.[92]

82 Ms Aremwa knew that Mr Bannon would be getting something for working for the subsidiaries but did not know how much he was getting.[93] She thought that he was working for less than ten subsidiaries.[94] She 'knew he was entitled to something' in relation to working for the subsidiaries.[95] However, Ms Aremwa did not think that the payments were coming from NPRT but rather from the subsidiaries themselves.[96]

83 Ms Aremwa gave evidence regarding a discussion which she had with Mr Bannon regarding fees for work done for Randwick Nominees Pty Ltd. She was aware that Mr Bannon was 'getting something from the Randwick Nominees, which he was working for.'[97] Mr Bannon had spoken to her by telephone and told her that he had done the accounts for Randwick Nominees Pty Ltd. Ms Aremwa was the Chair of Randwick Nominees Pty Ltd at the time. Mr Bannon told her that she had been paid $40,000 'or something like that...because you're the chairman...'.[98] Mr Bannon also told her that a government Minister, 'Roland', was to be paid '60,000 or 80,000'.[99] Ms Aremwa then had a discussion with the Minister who told her he did not wish to be paid the money. She gave the following evidence:

So I went back to Bannon and I told him, 'Roland doesn't want to be paid' and I'm like Roland, I won't get paid either, so you just get your own pay, 'we're not getting paid', so we didn't get paid.[100]

84 The following exchange also took place with Ms Aremwa:

The evidence that you gave before concerning the subsidiaries and you thought he was entitled to something regarding subsidiaries, that was payments that you thought he might get from the subsidiaries like Randwick Nominees?---Yeah.

That's right?---Yes, that's right.[101]

85 This evidence supports a finding that Ms Aremwa believed that any payments received by Mr Bannon for the work he performed for subsidiaries was not sourced from NPRT, but rather from the subsidiary he worked for. Mr North criticised Mr Millar's questioning as being misleading.[102] I do not accept this criticism. The reference to 'subsidiaries like Randwick Nominees' was simply a reference to an entity separate from, but associated with, the Trust. The point of the question, plainly understood by Ms Aremwa, was whether Ms Aremwa believed Mr Bannon was being paid by NPRT or by the subsidiaries themselves for the work he performed. Having closely observed Ms Aremwa give the evidence I have no doubt that she clearly understood the point of the question. Her evidence that the payments were not coming from NPRT was consistent with the absence of any reference to Mr Bannon's accrued or ongoing liability in any of the accounts prepared by him post August 2007.

86 This conclusion is not altered by Ms Aremwa's evidence '[w]ell, I know (sic) Trust owes him a lot but I don't know how much.'[103] Immediately following this evidence Ms Aremwa stated 'I could have known but I can't remember.'[104] Ms Aremwa then gave evidence that she had not been told by Mr Bannon in October 2007 that he had already accrued Secretary/Director fees of approximately $1.5 million.

87 Ms Aremwa believed that the contents of the financial reports prepared by Mr Bannon were accurate and relied upon those reports when making decisions as a Board Member. Those reports never included any reference to Mr Bannon's accrued or ongoing entitlements to Secretary/Director fees. Ms Aremwa believed that Mr Bannon was entitled to be paid something for the work which he was undertaking for subsidiaries. However, she thought there were less than ten subsidiaries. There was 'nothing to them, only the names and the accounts and all that.' She believed that any liability to pay Mr Bannon the fees for Secretary/Director duties he undertook rested with the subsidiary companies themselves. Ms Aremwa's evidence supports a finding that between August 2007 and March 2013 (being the date of Mr Bannon's letter of 1 March 2013 requesting a pay increase) NPRT assumed that Mr Bannon had no entitlement to be paid Secretary/Director fees by NPRT.

88 The other signatory to the 2007 contract on behalf of NPRT was Ruby Thoma. Ms Thoma was a Board Member from 24 July 2003 to 13 August 2003 and 1 November 2004 to 30 June 2014. Although Ms Thoma was a signatory to the contract, I do not consider that she was as closely connected with the making of the contract as Ms Aremwa. Thus, for the purposes of determining the state of mind of the NPRT, I place greater weight on the evidence of Ms Aremwa.

89 Ms Thoma was aware that Mr Bannon worked not only for NPRT, but that the Nauruan government also used him for their entities, such as the Superannuation Board.[105] Ms Thoma 'knew about the entities, I knew they were paid money, but I didn't ask to be exactly how much.'[106]

90 Throughout the period Ms Thoma was a Board Member, Mr Bannon provided financial accounts and budgetary information which she relied upon when making decisions as Trustee, such as decisions relating to the eventual return of capital to landowners.[107] During the period she was a Trustee, Mr Bannon never mentioned that he had a large and growing claim for Secretary/Director fees that were owing to him.[108] Ms Thoma had no recollection of ever being informed by Mr Bannon that the Trust should include in the employee costs of the business from one year to next an extra amount for his remuneration for his Secretary/Director fees.[109]

91 Ms Thoma agreed that by mid-2013 when Mr Bannon's total accrued fees were in the vicinity of $3 million, there would have been $3 million less to be distributed to the beneficiaries of the fund managed by NPRT.[110] She considered that it was 'very right' that:

What has happened with the distribution of monies to the beneficiaries is if Mr Bannon's claim is valid, and let's say it's $3 million, then $3 million too much has gone back to the land owners in Nauru.[111]

I infer from Ms Thoma's evidence that she assumed that Mr Bannon did not have an entitlement to be paid Secretary/Director fees by the Trust.[112] Any belief to the contrary would have been at odds with the reliance she placed upon the financial accounts and budgetary information prepared by Mr Bannon when making decisions as a Board Member, which contained no reference to any liability of the Trust to pay Mr Bannon's fees.

92 In addition to Ms Aremwa and Ms Thoma three other Board Members gave evidence: Clarissa Jeremiah, Elvin Brechtefeld and Sharain Hiram. Ms Jeremiah was one of four members of the NPRT Board in August 2007 when Mr Bannon's contract was executed, and October 2007 when he received approval for a $60,000 pay increase. Ms Jeremiah had no knowledge of the 2007 contract having been entered into.[113] Ms Jeremiah had no knowledge of Mr Bannon having an entitlement to receive Secretary/Director fees.[114]

93 Mr Brechtefeld was first appointed to the Trust Board on 22 June 2012. He continued to be a Board Member until 30 June 2014 when Mr Bannon's employment was terminated. Ms Hiram was first appointed to the Board on 31 March 2014. Neither Mr Brechtefeld nor Ms Hiram had any knowledge of Mr Bannon having an entitlement to receive Secretary/Director fees under his contract of employment. However, I do not consider this evidence to be of any weight for the purpose of determining the state of mind of the corporation as to the existence of Mr Bannon's entitlement to receive Secretary/Director fees. By reason of their having signed the 2007 contract on behalf of the Board, Ms Aremwa and Ms Thoma were the individuals most closely and relevantly connected with the Trust's state of mind as to whether Mr Bannon had an entitlement to be paid Secretary/Director fees by NPRT.

94 Mr North submits that NPRT has suffered no detriment by reason of the delay in Mr Bannon making his claim for Secretary/Director fees. He relies upon the judgment of Smith J in Aufgang v Kozminsky Nominees Pty Ltd[115] where Smith J, in reference to an employee's failure to claim his legal entitlements stated:

[Aufgang] merely deferred the liability of the defendant to [pay] him. His actions did not create a loss or detriment. Arguably it was in fact a bonus because the defendant had the use of its money.[116]

95 Whether detriment arises from an obligation to pay a lump sum in respect of accrued entitlements involves a question of degree. In the present case, immediately upon signing the 2007 contract, NPRT was indebted to Mr Bannon for a sum of approximately $1.15 million. That sum was comprised of a retrospective entitlement to fees in respect of the period July 2003 to August 2007. Post-August 2007 the Trust's indebtedness grew at a rate of $1,500 per month (plus 9 per cent/9.25 per cent superannuation) for each subsidiary Mr Bannon was acting as Company Secretary. By 30 June 2014 the Trust's liability had grown to approximately $3 million.

96 In May 2013, $85,215,466.21 which had been paid into the New South Wales Supreme Court by the receivers of the Trust and a number of associated entities, was released to the Trust's solicitors, Baker & McKenzie. The funds ultimately came under the control of the Trust in late 2013. Of the $85,215,466.21, an amount of $60 million was made available for distribution to beneficiaries of the Trust.[117] The distribution of the $60 million had been underway for more than six months when Mr Bannon made his claim for payment in September 2014 from NPRT.

97 I do not accept that Mr Bannon's failure to claim his fees between August 2007 and September 2014 conferred any benefit on NPRT. First, the size of the accrued claim is significant. Second, in September 2014 the Trust had for more than six months been undertaking a final distribution of capital and income to beneficiaries. If NPRT had been placed on notice at an earlier time of Mr Bannon's claim, the Trust would have been able to make appropriate provision. No such provision was made, with the inevitable consequence that if Mr Bannon's claim is valid, landowners have received distributions in excess of what would otherwise have been available for distribution.[118] Mr Bannon's letter of 1 March 2013 did make reference to the existence of an entitlement to be paid fees. However, the letter did not quantify the entitlement. Also, to the extent it was implicit in the letter that Mr Bannon would seek the fees once the receivership was over, he did not do so. He made no claim for payment between November 2013 and 30 June 2014. This occurred notwithstanding Mr Bannon had been given written notice of termination of employment on 31 March 2014. As discussed later in this judgment I reject Mr Bannon's evidence that he believed that he would continue as an employee post 30 June 2014 notwithstanding the notice of termination.

98 The present case does not simply involve detriment by reason of the size of the lump sum claimed by Mr Bannon and no allowance for the claim having been made when distributing funds to landowners.[119] If the Trust is liable to pay the lump sum claimed by Mr Bannon, the annual administration budgets prepared by Mr Bannon for the financial years 30 June 2008 onwards fundamentally misrepresented to the Board and the Minister responsible for the Trust the true state of the finances of the Trust.

99 Estoppel by convention is 'a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of affairs, which both will be estopped from denying.'[120] The assumed state of affairs 'takes as a given the terms of the contract between the parties, but from which the parties have departed in the course of furthering their relationship under the contract.'[121]

100 A regularly cited[122] Australian authority on estoppel by convention is the judgment of Brereton J in Moratic Pty Ltd v Gordon.[123] In Sze Tu v Lowe[124] Gleeson JA, with whom Meagher and Barrett JJA agreed, summarised Brereton J's reasoning as requiring five elements to be satisfied before an estoppel by convention can arise, precluding a denial of the assumed state of affairs:

(iii) The plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;

(iv) The defendant has adopted the same assumption;

(v) Both parties have conducted their relationship on the basis of that mutual assumption;

(vi) Each party knows or intends that the other will act on that basis; and

(vii) Departure from the assumption will cause detriment to one of them.[125]

As to the second and third elements, an estoppel by convention may also arise where parties to a transaction act on an assumed state of facts or law, where the assumption is made by one and acquiesced in by the other.[126] Mr North accepted this.[127]

101 The assumption must be proved by evidence. This does not mean that inferential reasoning is unavailable to prove the assumption.[128] It is not necessary that the parties believe the assumption to be true and the parties may adopt as the conventional basis of a transaction between them, an assumption which they know to be contrary to the actual state of affairs.[129] Unconscionability is not an element of estoppel by convention.[130] It must be proved by the plaintiff that there is a connecting link between some action or inaction taken and the assumption. This will be established by the plaintiff proving reliance upon the assumption to act in a way which it would otherwise not have done.[131]

102 From 24 August 2007 until 1 March 2013 (the date of Mr Bannon's letter to Alexius Namaduk seeking a $60,000 salary increase) relations between Mr Bannon and NPRT were conducted on the basis that, notwithstanding cl 4 of sch 2 of the 2007 contract, Mr Bannon had no entitlement to be paid Secretary/Director fees by NPRT. Between 24 August 2007 and 1 March 2013 Mr Bannon never made any reference, either verbally or in writing, to the existence of his fees entitlement. He was the senior employee of the Trust's Melbourne office. He had the authority to facilitate payment of his accrued and ongoing fees. In October 2007 he facilitated a payment to himself of $295,475. This represented 4.5 years back pay of the $60,000 salary increase approved by the Board on 17 October 2007. Mr Bannon did not facilitate payment to himself of his accrued and ongoing fees entitlement. Further, he made no reference to his accrued entitlements in the annual administration budgets which he prepared post-2007.[132] He was aware that Board Members relied upon the accuracy of the administration budgets when making financial decisions regarding the Trust's operation.

103 Mr Bannon advanced two explanations for his failure to claim fees during the course of his employment. First, he decided not to pursue the fees because NPRT lacked the capacity to pay and he did not wish to be the creditor who would place the Trust into liquidation and cost the jobs of the people that he worked with.[133] Second, Mr Bannon did not include any reference to his accrued fees entitlement in annual administration budgets on the basis that he did not anticipate that in any of the years he had prepared an annual budget that he would be making a claim for payment of his accrued fees. He therefore considered it unlikely that the Trust would actually incur any liability to make the payment in any given year. As to this explanation, it is inconsistent with Mr Bannon's evidence that since the appointment of receivers in 2004 the Melbourne office of the Trust had constantly operated under a threat of closure upon the release of the receivership funds.[134] Further, the explanation is underpinned by an assumption, which I reject, that the Trust's liability to make payment did not crystallise until Mr Bannon made a demand for payment.

104 For the period 24 August 2007 to 1 March 2013 there is no evidence of Mr Bannon explaining his reasons for failing to facilitate payment to himself of his fees entitlement under cl 4 of sch 2 of the 2007 contract. During this period relations between Mr Bannon and NPRT were conducted on the basis that he did not have any entitlement to be paid Secretary/Director fees by NPRT.

105 As set out earlier in this judgment, I have concluded that NPRT assumed during the period 24 August 2007 to 1 March 2013 that Mr Bannon had no entitlement to be paid by NPRT the fees prescribed by cl 4 of sch 2 of the 2007 contract. Mr Bannon acquiesced in NPRT's assumption. He did so by never making any reference to the existence of an entitlement to be paid between 24 August 2007 and 1 March 2013. He presented administration budgets to the Board and the Minister for the Trust which included no reference to any liability to pay his accrued and ongoing entitlements. The present case is not one where the Trust has acted on an assumption independently of any conduct by Mr Bannon. Mr Bannon's failure to include any reference to a very substantial accrued and ongoing liability in the administration budgets 'crossed the line' between Mr Bannon and the Trust, thereby manifesting his assent to the Trust's assumption that he had no entitlement to be paid Secretary/Director fees by the Trust.[135]

106 Mr North submitted that NPRT's reliance upon Mr Bannon's failure to claim fees prior to September 2014 is 'remarkable as it flies in the face of the express contractual entitlement.'[136] Mr Bannon's express contractual entitlement to fees does not preclude the operation of estoppel by convention. Estoppel by convention allows the parties to a transaction to depart from an express contractual entitlement and to conduct their affairs on a contrary basis.[137]

107 Mr North also submitted that for an estoppel to arise in circumstances where Mr Bannon had an express contractual entitlement to fees, 'there would have to be an express statement that a contractual provision would not be enforced or relied upon.'[138] I reject this submission. First, there is no requirement of unconscionability in estoppel by convention.[139] Second, in any event, it may be unconscionable for a party to seek to depart from an assumption which provided the basis for their relationship with the other party, even if that assumption was not based on a representation made by the party sought to be estopped.[140] Third, there was express conduct by Mr Bannon consistent with the contractual fee entitlements not being relied upon. In particular, his failure to include any reference to his accrued and ongoing fees entitlement in administration budgets, which was a failure he accepted to be materially misleading.

108 Mr North submitted that absent the 2007 contract, Mr Bannon would have been able to successfully argue that an estoppel by convention operated to preclude the Trust from denying his entitlement to fees. He submitted that:

(a) Mr Bannon adopted an assumption as to the terms of his legal relationship with NPRT;[141]

(b) Both Ms Aremwa and Ms Thoma were aware that he was doing work for 'other entities';[142]

(c) That NPRT was aware of the existence of Mr Bannon's entitlement, as evidenced by Exhibit S, an email exchange between Mr Bannon and Ms Aremwa between 30 March 2007 and 23 May 2007, resulting in agreement to pay Mr Bannon $43,000 at the rate of $1,000 per month for the work he performed for Randwick Nominees Pty Ltd as Secretary/Director;[143] and

(d) A departure from the assumption would cause detriment to Mr Bannon.[144]

109 There is no basis for concluding that, absent the 2007 contract, NPRT would be estopped from denying Mr Bannon's entitlement to be paid fees up to 30 June 2014. The Trust did not share an assumption with Mr Bannon that the Trust was liable to pay fees for work which he performed for subsidiaries.

110 Exhibit S does not support the common assumption contended for. Exhibit S evidences a claim made by Mr Bannon for fees to be paid by Randwick Nominees Pty Ltd. In his email to Ms Aremwa of 30 March 2007 he stated:

Madam Chair,

Kind (sic) find attached to this email, a report concerning the indebtedness of Randwick Nominees to various past officeholders and the position I believe the company should adopt.

The report contains two recommendations for your kind consideration:-

1. the non approval of all claims made by past officeholders of Randwick Nominees; and
2. the adoption of a position in regard to the current officeholders of Randwick Nominees.

The second issue is obviously more contentious than the first given that it directly affects the former Chairman of the Trust, yourself and myself and I welcome the opportunity of discussing the report and its contents with you further once you have had the opportunity of reviewing the report.

The attached letter was addressed to Ms Aremwa in her capacity as Chair of Randwick Nominees Pty Ltd. The letter contained a claim by Mr Bannon that he be paid $86,000 by Randwick Nominees Pty Ltd. Ms Aremwa's response, by email dated 23 May 2007, was as follows:

Paul,

I've just been in a meeting with the Minister and amongst other things, we discussed Randwick nominees.

We both agreed that 43 months @ $1,000 per month be paid to Paul Bannon - current Director/Secretary.

The Minister and myself did our duties as Chair of NPRT while you took on the job separate from your role as Secretary to the Trust. You did your job well and your claim is justifiable. We will ratify this at the next board meeting.

Kind regards,

Alvina.

This email is consistent with Ms Aremwa's evidence that she believed that liability for the work undertaken by Mr Bannon for subsidiaries rested with the subsidiaries, rather than with NPRT. As to whether Mr Bannon and NPRT conducted their relationship on the basis that he had an entitlement to be paid fees by NPRT, this must be answered in the negative because:

(a) NPRT never paid Mr Bannon his monthly entitlement;

(b) NPRT never put money aside or budgeted for any accrued or ongoing liability;

(c) Mr Bannon never made a claim for his monthly entitlement;

(d) Mr Bannon failed to make any reference to this entitlement in any budgets or reports he prepared;

(e) There was never any discussion or agreement between the parties that Mr Bannon's entitlement would be deferred until such time as the Trust was no longer in receivership; and

(f) There was no mention of the existence of Mr Bannon's entitlement until his letter of 1 March 2013.

111 Mr Bannon's written closing submissions cite Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd[145] as authority for the proposition:

A course of dealing explicable by reference to some other equally plausible assumption will not suffice to establish a basis for estoppel by convention on the ground that the parties accepted the particular assumption contended for as the basis of their relationship.[146]

This submission raises the question of whether an 'equally plausible assumption' is that throughout the period of 24 August 2007 to 1 March 2013, Mr Bannon was deferring payment of his accrued entitlement until the financial position of the Trust improved. I do not accept that this assumption is as equally plausible as the assumption that the Trust had no liability to pay Mr Bannon's Secretary/Director fees entitlement. The administration budgets prepared by Mr Bannon post August 2007 never made any reference to his accrued and ongoing entitlements. Through the period of 24 August 2007 to 1 March 2013 no other financial information was being provided to the Board. The Board was entitled to, and did, rely on the administration budgets as an accurate account of the Trust's liability to pay accrued entitlements of employees, including Mr Bannon. In circumstances where no reference was ever made to the existence of his fee entitlement, an assumption that Mr Bannon was deferring making a claim until the financial position of the Trust improved is not as equally plausible as the assumption that Mr Bannon did not have an entitlement to be paid fees by the Trust.

112 I have set out earlier in this judgment my conclusion that NPRT would suffer detriment if Mr Bannon was permitted to depart from the basis upon which relations were conducted between himself and the Trust during the period 24 August 2007 to 1 March 2013 in respect of his entitlement to be paid fees. Further, NPRT has proved reliance upon the assumption that Mr Bannon had no entitlement to be paid fees by NPRT. It never paid Mr Bannon his monthly entitlement or made any provision for payment. It proceeded to distribute the receivership residual to landowners without making any allowance for Mr Bannon's claim for approximately $3 million.[147] It conducted its financial affairs and reported to the Minister on the basis that it had no liability to pay fees.

Is the effect of estoppel by convention suspensory or permanent?

113 A question arises as to whether Mr Bannon's letter of 1 March 2013 terminated the estoppel by convention which operated subsequent to 24 August 2007.

114 The letter of 1 March 2013 referred to, for the first time since 24 August 2007, Mr Bannon's entitlement to be paid fees by the Trust pursuant to cl 4 of sch 2 of the 2007 contract. However, no claim was made for payment of accrued or ongoing fees. To the contrary, Mr Bannon relied upon his non-receipt of the fees payable under cl 4 of sch 2 as a matter supporting his claim for a substantial salary increase. Any assertion on his part that he had an accrued entitlement to approximately $3 million in fees, as well as a significant ongoing entitlement, would have undermined his claim for a $60,000 per annum salary increase.

115 The 1 March 2013 letter, in the context of Mr Bannon's request for a $60,000 salary increase, did not constitute an assertion by Mr Bannon of an entitlement to be paid fees. Mr Bannon did not, in the immediate aftermath of the 1 March 2013 letter, facilitate payment to himself of accrued or ongoing fees. However, if not expressly stated, it is implicit in the 1 March 2013 letter that Mr Bannon would claim payment of fees on an ongoing basis once the financial position of the Trust improved. On 3 May 2013 Lindsay J ordered $85,215,466.21 together with accrued interest be paid to Baker & McKenzie, NPRT's solicitors.[148] Those funds were released to NPRT on or about 1 November 2013. Between late 2013 and 30 June 2014 Mr Bannon made no demand for payment of any accrued or ongoing fees entitlement. This occurred notwithstanding the fact that Mr Bannon had been placed squarely on notice by the email he received on 31 March 2014 that his employment would be terminated on 30 June 2014.

116 In Mineralogy Pty Ltd v Sino Iron Pty Ltd (No. 6),[149] Edelman J concluded that if an estoppel by convention is established it applies permanently according to its terms:

Thirdly, the elements for an estoppel by convention described by Brereton J do not dictate whether the effect of the estoppel is suspensory (and limited) or permanent. The parties proceeded on the basis that if the estoppel were established it would apply permanently according to its terms.

On the other hand, it has been suggested that where estoppel by convention involves promises concerning private legal rights then the estoppel might operate only to suspend those rights not to extinguish them: Feltham P, Hochberg D and Leech T, Spencer Bower Estoppel by Representation (4th ed, LexisNexis, 2004) pp 181-182 [VIII.2.3].

This argument of the editors of Spencer Bower was not made by Mineralogy. I consider that Mineralogy was right not to do so. The argument, in the terms put by Spencer Bower, is advanced upon two premises which, at the very least, are doubtful in Australia.

One doubtful premise is that an estoppel by convention is not a separate species of estoppel but instead is either a promissory estoppel (where the convention is the making of a binding promise) or an estoppel by representation or proprietary estoppel (where the convention concerns a representation or an entitlement to rights over property).

Another doubtful premise is that where the convention is a binding promise the estoppel would be suspensory because promissory estoppel does not operate as a cause of action. It is not yet finally resolved in Australia whether promissory estoppel can operate as a cause of action. In New South Wales it has been said that it is not: eg Saleh v Romanous [2010] NSWCA 274; (2010) 79 NSWLR 453, 462 [74] (Handley AJA; Giles JA and Sackville AJA agreeing). However, as Bathurst CJ said in Ashton v Pratt [2015] NSWCA 12; (2015) 318 ALR 260, 287 [138], "it must be acknowledged that there is significant dicta contrary to this limitation on promissory estoppel".[150]

117 As to the first premise referred to by Edelman J, his Honour's conclusion that it is 'doubtful' that estoppel by convention is not a 'separate species of estoppel' is consistent with the judgment of the Court of Appeal in LCY Pty Ltd v Ma.[151] In its judgment, the Court of Appeal referred with approval to a passage in Estoppel by Conduct and Election,[152] in which the author 'treats estoppel by convention as a distinct entity, with its own characteristics'.[153]

118 As to the second doubtful premise, the Court of Appeal's judgment in ACN 074 971 109 Pty Ltd v The National Mutual Life Association of Australasia Ltd[154] is authority for the proposition that promissory estoppel does operate as a cause of action. Relevantly, the Court of Appeal stated:

By standing by and allowing the appellants to act on the assumption that the contracts would continue to be administered in the same manner as the other [Coneview] investors' policies, the respondent in effect represented that it would not enforce its contractual rights under the policy. The appellants' reliance upon that state of affairs gave rise to an equity in favour of the appellants. But in accordance with Brennan J's exposition of principle in Waltons Stores, the equity was subject to the qualification that the respondent could resile from its "promise" (which is to say the assumed basis of dealing), on giving reasonable notice, unless the appellants could not resume their position. In this case the appellants could resume their position. As his Honour observed, they could have redeemed their policies and repaid their loans an any time; and they still can. The orders which his Honour made will restore them to their original positions with, in effect, the benefits, for a reasonable period following the respondent's departure from that assumed basis of dealing, of the terms which the appellants' assumed would apply.[155]

119 This case has been cited in academic literature as authority for the proposition that promissory estoppel is capable of operating as an independent cause of action.[156]

120 I agree with Edelman J that where an estoppel by convention is established it operates permanently. It follows that the 1 March 2013 letter did not bring the estoppel to an end. Mr Bannon is estopped from claiming fees until 30 June 2014.

121 I have concluded that NPRT has established an estoppel by convention which precludes Mr Bannon from making any claim for fees up to 30 June 2014. This finding disposes of Mr Bannon's claim for damages for unpaid fees. However, if I am wrong in reaching this conclusion it is necessary to consider NPRT's submission that Mr Bannon is precluded from claiming fees by equitable promissory estoppel.

122 In order to establish Mr Bannon's claim for Secretary/Director fees is precluded by equitable promissory estoppel NPRT must establish:

(viii) It assumed that a particular legal relationship existed or would come to exist between it and Mr Bannon;

(ix) Mr Bannon induced it to adopt that assumption or expectation;

(x) It acted or abstained from acting in reliance on the assumption or expectation;

(xi) Mr Bannon knew of NPRT's action or intended NPRT to act in that way;

(xii) NPRT's action or inaction will cause it to suffer detriment if the assumption or expectation is not fulfilled;

(xiii) Mr Bannon has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.[157]

123 Mr Millar submits that NPRT assumed that Mr Bannon had no entitlement to be paid by NPRT the fees prescribed by cl 4 of sch 2 of the 2007 contract. He submits that Mr Bannon induced NPRT to adopt this assumption. First, he points to the failure of Mr Bannon to make any mention of the existence of the fees entitlement between 24 August 2007 and 1 March 2013. Second, he points to the failure of Mr Bannon to include any reference to his accrued and ongoing fees entitlement in the annual administration budgets which he prepared subsequent to 24 August 2007. He submits that by this failure Mr Bannon positively encouraged NPRT to accept the assumption that there was no accrued or ongoing liability on the part of NPRT to pay Mr Bannon's fees. I accept this submission.

124 As Secretary of the Trust Mr Bannon was responsible for providing the annual administration budget to the Minister responsible for the Trust. Section 32(2) of the Act provides that the budget is to set out the projected administration costs and related expenses of the Trust likely to be incurred by the Trust on behalf of the funds administered by it in the ensuing financial year. Mr Bannon's annual entitlement to Secretary/Director fees and superannuation was an administration cost of the Trust likely to be incurred in the ensuing financial year. His failure to include his fees entitlement in the annual budget was not merely an act of acquiescence or silence. It was a positive representation to the Trust and the Minister that the Trust would not incur any liability to pay Secretary/Director fees in the forthcoming year.

125 NPRT acted on the basis of Mr Bannon having no entitlement to be paid fees by:

(a) Not making any payment of fees;

(b) Not making any provision for payment;

(c) Providing administration budgets to the Minister which included no reference to Mr Bannon's accrued and ongoing entitlements; and

(d) Proceeding with the distribution of the receivership residual without making any allowance for Mr Bannon's fees entitlement.

Mr Bannon knew that NPRT was acting on the basis set out above.

126 Earlier in this judgment I concluded that NPRT had established that it would suffer detriment if Mr Bannon was permitted to depart from the conventional basis upon which relations between him and the Trust were conducted. That reasoning applies equally for the purposes of promissory estoppel.

127 I have concluded that once established, estoppel by convention applies permanently according to its terms. In this respect, estoppel by convention differs from promissory estoppel which is suspensory rather than permanent.[158] If I am incorrect in concluding that:

(a) NPRT has established an estoppel by convention; and/or

(b) The estoppel applies permanently to preclude Mr Bannon from claiming fees;

a question arises as to how long the promissory estoppel operates.

128 I have concluded that the 1 March 2013 letter, in the context of Mr Bannon's request for a $60,000 salary increase, did not constitute an assertion by him of an entitlement to be paid fees as at 1 March 2013. Rather, Mr Bannon was foreshadowing that once the receivership was over and the Trust's financial position had improved, he would seek payment of fees going forward. This reasoning applies equally to NPRT's reliance upon promissory estoppel. If I am wrong in concluding that the 1 March 2013 letter did not constitute an assertion by Mr Bannon of an entitlement to be paid fees as at 1 March, it does not follow that Mr Bannon is not estopped from claiming fees between March and November 2013. Depending upon the facts of a particular case promissory estoppel may extend until after the expiry of reasonable notice of intended departure from an assumed state of affairs.[159]

129 In the circumstances of the present case a reasonable period of notice for departure from the Trust's assumption that it was not liable to pay Mr Bannon's fees is until November 2013. During the period March to November 2013 there were 14 subsidiaries of which Mr Bannon was the Company Secretary.[160] Thus, he had a monthly entitlement to fees of $21,000 plus superannuation. Only when the funds were released would the Trust have been in a position to meet this significant additional cost.

130 Promissory estoppel ceased to preclude Mr Bannon from claiming fees from November 2013. Absent the permanent effect of estoppel by convention, Mr Bannon would not be estopped from claiming fees for eight months between 1 November 2013 and 30 June 2014, being $168,000. Mr Bannon also claims superannuation contributions equivalent to 9 per cent/9.25 per cent of his fees entitlement. This claim raises for consideration the application of the cap on superannuation contributions under the Superannuation Guarantee (Administration) Act 1992 (Cth) ('SGA Act'). This issue is relevant to a number of different aspects of Mr Bannon's claim and is dealt with later in this judgment.

The fees claim is statute barred prior to June 2009

131 If I am wrong in concluding that Mr Bannon is permanently estopped from claiming fees by estoppel by convention and for the period prior to November 2013 by promissory estoppel, a question arises as to whether any part of Mr Bannon's claim is statute barred.

132 The writ was filed on 29 June 2015. Mr Bannon's claim for unpaid fees is pleaded as a breach of contract. If the claim is subject to s 5(1)(a) of the Limitation of Actions Act 1958, any claim for fees in respect of the period prior to 29 June 2009 would be statute barred.

133 Mr North submitted that Mr Bannon's fees entitlement accrued during the course of his employment but that his cause of action crystallised in September 2014 when he served a demand for payment of fees on NPRT. Mr North submitted that Mr Bannon's fees entitlement is analogous to an employee's entitlement to long service leave. The long service leave entitlement accrues during the course of employment but no liability to pay arises until the employee satisfies the requisite qualifying period of employment and seeks payment. The practical consequence of Mr North's submission is that the six year limitation period in respect of Mr Bannon's fees entitlement dating back to July 2003, would not expire until six years after he made a claim for payment: September 2020.

134 I reject Mr North's submission that Mr Bannon's fees entitlement is analogous to an entitlement such as long service leave. Clause 4 of sch 2 confers a 'Monthly Entitlement' of $1,500 during each period that Mr Bannon acts as a Secretary or Director of a subsidiary company of NPRT, in respect of each subsidiary company. This entitlement accrues and is payable on a monthly basis. This conclusion is reinforced by the obligation under cl 7 of sch 2 to pay superannuation contributions of nine per cent of the monthly entitlement 'pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth).'

135 The entitlement conferred upon Mr Bannon by cl 4 of sch 2 constitutes salary or wages for the purposes of the SGA Act. Section 11(1)(b) includes in the definition of salary or wages:

Payment for the performance of duties as a member of the executive body (whether described as the board of directors or otherwise) of a body corporate.

Pursuant to s 11(1)(ba) the definition of salary or wages also includes:

Payments under a contract referred to in subsection 12(3) that are made in respect of the labour of the person working under the contract.

If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.

136 The SGA Act imposes an obligation upon an employer to pay superannuation contributions on a quarterly basis.[161] A failure to do so renders the employer liable to recovery proceedings under pt 4-15, sch 1 of the Taxation Administration Act 1953 (Cth). The requirement under cl 7 of sch 2 for NPRT to make quarterly superannuation contributions of nine per cent in respect of Mr Bannon's fees entitlement, points strongly to the conclusion that the fees entitlement under cl 4 accrued and was payable on a monthly basis.

137 In addition to the matters set out above there is authority for the proposition that, absent a term of a contract to the contrary, where the performance of work is governed by a contract, a cause of action for breach accrues upon the performance of the work, rather than when a demand for payment is made.[162] There is no provision in the 2007 contract, the effect of which is that a cause of action for non-payment of the monthly entitlement arises upon the service of a demand for payment. Mr Bannon's claim for breach of contract for non-payment of Secretary/Director fees is statute barred prior to 29 June 2009.

Mr Bannon's claim for 12 weeks' notice of termination

138 Mr Bannon's employment was terminated on 30 June 2014. He claims that he is entitled to damages equivalent to 12 weeks' notice of termination. NPRT denies this. It contends that Mr Bannon received valid notice of termination on 31 March 2014.

139 On 31 March 2014 Mr Bannon together with the three other employees of the Trust, received an email from Andrew Jacobson as follows:

Dear Paul, Mary, Kham & Romys,

I confirm as has been made known previously, that Nauru Phosphate Royalties Trust (NPRT) will be closing down its Melbourne Branch office on Monday 30 June 2014 and that the current employment positions of all staff of the Melbourne Office shall be made redundant on 30 June 2014.

I have requested Mr Bannon during the past couple of weeks to make available to me, full details of your employment with NPRT. I would be pleased to receive this information as soon as practicable to enable your entitlements up to 30 June 2014 to be ascertained.

Details I would be pleased to receive include:-

(i) A summary of the date you commenced employment (and start and finish dates if you have changed roles in the course of your employment);

(ii) Copies of any agreements regarding your employment;

(iii) Your job description (or descriptions if you have changed roles in the course of your employment);

(iv) Details of your leave taken and leave entitlements;

(v) Any other matters you consider pertinent.

I am pleased to confirm that the Honourable Minister Bernicke has kindly indicated that if the Melbourne Office has completed all its functions and duties prior to 30 June 2014 to the satisfaction of the Board and Cabinet, NPRT will release all staff from their employment duties upon such completion but will continue to pay staff their full salary and entitlement up to 30 June 2014.

If you have any queries at any time, please do not hesitate to let me know.

Kind Regards,

Andrew Jacobson.

140 Mr North submitted that this email did not constitute valid notice of termination because Mr Jacobson was not authorised by the Board to terminate Mr Bannon's employment. Mr North submitted that prior to 30 June 2014 Mr Bannon was never given notice of termination by, or on behalf of the Trust. He submitted that Mr Bannon is therefore entitled to damages equivalent to 12 weeks' salary pursuant to cl 18.1 of the 2007 contract.

141 Mr Bannon accepts that he received the email set out above. However, his evidence is that shortly after receiving the email he spoke to a number of Board Members to seek clarification of whether a decision had been made to close the Melbourne office and terminate the staff. His evidence is that after he received the email he was told:

Don't worry about that email, he's [Mr Jacobson] got no authority, and you will be continuing to be an employee of the Trust beyond 30 June 2014.[163]

142 Mr Bannon gave evidence that he spoke to Ms Aremwa shortly after 31 March 2014. He also spoke to Mr Brechtefeld, Ms Hiram, and Mr Depaune.[164] Mr Bannon's evidence is that the Board did not accept that valid notice of termination had been given to the employees by way of Mr Jacobson's email.[165]

143 Ms Aremwa resigned as a Board Member on 31 March 2014.[166] She was replaced as Chair by Charmi Depaune. Sharain Hiram was appointed as a Trustee with effect from 31 March 2014. Ms Aremwa had no recollection of any discussion with Mr Bannon between 31 March and 30 June 2014 regarding Mr Jacobson's email.[167] Ms Hiram gave evidence that Mr Bannon never made any contact with her between 31 March and 30 June 2014 regarding the email.[168] Ruby Thoma gave evidence that Mr Bannon did not contact her between 31 March and 30 June 2014 seeking clarification regarding the email.[169] It was not put to Mr Brechtefeld in cross-examination that he had any discussion with Mr Bannon post 31 March 2014 regarding Mr Jacobson's email. He was asked whether he had any discussion with Mr Bannon regarding him leaving the Trust. He denied he had any such discussion.[170]

144 The evidence of the four members of the Board set out above does not support Mr Bannon's evidence that he was told to ignore Mr Jacobson's email.

145 The critical issue is whether Mr Jacobson was authorised by the Board to give Mr Bannon notice that his employment would terminate on 30 June 2014. Mr Jacobson's email was sent at 6.11 pm on 31 March 2014. Earlier that day a meeting of Board Members took place at a restaurant in Nauru. The sole item for discussion was a proposal that Mr Bannon be replaced as Secretary of the Trust by Mr Jacobson. Initially the proposal was rejected with Ruby Thoma and Charmi Depaune voting against and Elvin Brechtefeld voting in favour.[171] However, the meeting was reconvened and Charmi Depaune changed his vote in favour of Mr Bannon being replaced by Mr Jacobson.[172] Ruby Thoma thought that as a result of the vote Mr Bannon would be terminated immediately.[173]

146 Ms Aremwa considered that Mr Jacobson was authorised by the Board to act on its behalf in March 2014 because he was the Trust's lawyer.[174] Ms Thoma also gave evidence that Mr Jacobson was authorised to act on behalf of the Board in March 2014.[175]

147 Mr Bannon gave evidence that although Mr Jacobson did not have the title, Secretary, in a practical sense he was running the Melbourne office from early 2014.[176] The Board's decision of 31 March 2014 to appoint Mr Jacobson as Secretary in lieu of Mr Bannon formalised what had been the position in practice since early 2014. In circumstances where Mr Jacobson had been appointed on 31 March 2014 to replace Mr Bannon as Secretary, Mr Jacobson immediately took steps to terminate Mr Bannon's employment by giving him 12 weeks' notice in accordance with cl 18.1 of the 2007 contract. The 31 March 2014 email was valid notice of termination.

148 Mr Bannon gave evidence that at no stage prior to 30 June 2014 did he accept or rely upon the email of 31 March 2014. His evidence was that he did not believe that he would be made redundant on 30 June 2014.[177] I reject this evidence. On 21 May 2014 Mr Bannon prepared a spreadsheet with the details of the final payments for all employees of the Trust calculated to 30 June 2014. On 22 June 2014 Mr Bannon emailed Mr Jacobson providing a response to a number of queries which had been raised by Mr Jacobson on 9 June 2014 regarding Mr Bannon's calculations. In his email Mr Bannon stated '[s]ubject to your direction, I would like to effect payment on Friday June 27th 2014.'

149 On 24 June 2014 Mr Bannon forwarded a memorandum to Romys Eobob, the Trust's Finance Manager. The memo included the statement '[w]ith the closure of the Trust scheduled for Monday June 30th 2014, would you kindly...'.

150 Mr Bannon's conduct during the period 31 March to 30 June 2014 was consistent with his acceptance that his employment would come to an end on 30 June 2014. Ultimately, however, Mr Bannon's subjective beliefs are of little, if any, legal consequence. As the 31 March 2014 email constituted valid notice of termination, its legal effect was to bring Mr Bannon's contract to an end on 30 June 2014, irrespective of any subjective belief that Mr Bannon may have had to the contrary.[178] Mr Bannon's claim for damages equivalent to 12 weeks' pay in lieu of notice is rejected.

151 Mr Bannon claims damages of $235,226.84 for breach of cl 7.1 of his contract. This claim is based on 305.8 days of untaken annual leave which Mr Bannon contends he had accrued as at 30 June 2014. Mr Bannon also claims an entitlement to 17.5 per cent leave loading totalling $41,164.70. He submits that this term is an implied term in his contract.

152 NPRT accepts that Mr Bannon had a contractual entitlement to be paid out any accrued annual leave. However, it disputes Mr Bannon's contention that he had accrued 305.8 days of leave as at 30 June 2014. NPRT denies that Mr Bannon's contract contained an implied term conferring an entitlement to annual leave loading.

153 Mr Bannon's sick leave and annual leave records were admitted into evidence. The records were maintained by Mary Boyd, an employee of the Trust.

154 Mr Bannon was employed by NPRT from 3 October 1994 until 30 June 2014, a period of 19 years, eight months and 27 days. He was entitled to 20 days annual leave per annum. As at Mr Bannon's anniversary date of 3 October 2013, he had accrued 291 days of leave.[179] Pursuant to cl 7.2 of the 2007 contract, annual leave accrues on a pro rata basis. Accordingly, his annual leave entitlement during his employment was 395 days. If the Trust's records are accurate, Mr Bannon took 89 days of leave throughout the period of his employment. This equates to little more than four days per annum.

155 The annual leave records commence with Mr Bannon having accrued 144 days of leave immediately prior to 3 October 2004. Thus, he utilised 36 days of leave during his first nine years: an average of four days per year. The records show that between 3 October 2004 and 3 October 2011 Mr Bannon took 50 days of annual leave: just over seven days per year. There is an entry for three days leave between 28 December 2011 and 30 December 2011. Thereafter, there is no record of Mr Bannon having taken any leave between 1 January 2012 and 30 June 2014. I do not accept that the records are accurate in this respect.

156 Mr Bannon gave evidence that in September 2012 he holidayed with his family at Disneyland, USA, for about one week.[180] Mr Bannon's evidence was '100%' that he submitted annual leave forms for the Disneyland trip and other trips he took whilst on annual leave.[181] The annual leave records contain no entry in relation to the leave he took when on the Disneyland trip. When it was pointed out to Mr Bannon that the annual leave records contained no entry for September 2012, he stated that he had been given time off in lieu by the Chairman of the Trust for the period he was in Disneyland.[182] He gave evidence that there were often times apart from the trip to Disneyland where he took leave where he had been given time off in lieu.[183] This evidence, which only emerged late in the trial, is inconsistent with Mr Bannon's earlier evidence that '100%' he had completed annual leave forms in respect of the Disneyland trip and other trips which he took when on leave.

157 Mr Bannon's evidence was that on average he took five days leave per annum.[184] During the period the records were maintained they are broadly in line with this evidence, albeit that he averaged seven days leave for the period 3 October 2004 to 3 October 2011. I infer that this pattern of leave taking would have continued between 3 October 2011 and 30 June 2014. The records include three days of leave for 28 December to 30 December 2011. I shall deduct a further 17 days for the period 1 January 2012 to 3 June 2014. This leaves Mr Bannon with a balance of 288.8 days leave, relative to the 305.8 days he claimed. NPRT is liable to pay an amount equivalent to 57 weeks and four days of Mr Bannon's salary as at the date of termination of employment.

158 NPRT puts in issue the applicable salary rate for calculating any accrued entitlements. In particular NPRT contends that any accrued entitlements should be calculated on the basis of an annual salary of $140,000. Mr Bannon contends that accrued entitlements should be calculated on the basis of an annual salary of $200,000.

159 On 1 March 2013 Mr Bannon forwarded a letter to Mr Alexius Namaduk. The letter sought an increase in salary of $60,000 from $140,000 to $200,000. Mr Bannon also sought the provision of a fully funded company car 'to a maximum of $40,000'.

160 The letter of 1 March 2013 was signed by each Board Member under a heading 'Approved'. The letter also included a handwritten notation 'from PPE 22/5/2013'. This is clear evidence of acceptance of Mr Bannon's proposal. Notwithstanding this acceptance, Mr Bannon never took steps to implement the salary increase. In a memorandum of 24 June 2014 to Romys Eobob, Mr Bannon requested Ms Eobob to:

• Action back payment to him in the sum of $46,400;
• Calculate his final pay for the period 18 June to 30 June at the new rate;
• Adjust his superannuation entitlements to reflect the new rate.

161 In the memorandum of 24 June 2014 Mr Bannon provided the following explanation for his failure to have implemented the salary increase at an earlier date:

I have elected not to give effect to the increase as yet as a means of implementing an enforced savings program upon myself as the speculation concerning the Trust and its future was subject to increased speculation and uncertainty.

162 The 'enforced savings program' was entered into by Mr Bannon of his own volition. It was a means by which he could save money.

163 The fact that Mr Bannon did not take any steps to implement the $60,000 pay increase until 24 June 2014 does not detract from his entitlement to be paid a base salary of $200,000 commencing from the pay period ending 22 May 2013. NPRT is liable to pay Mr Bannon's accrued annual leave entitlement of 288.8 days at a rate calculated on an annual salary of $200,000: $769.23 per day. NPRT is therefore liable to pay Mr Bannon damages of $222,153.62. Mr Bannon is also entitled to damages equivalent to the difference between a salary of $140,000 and $200,000 for the period 23 May 2013 to 30 June 2014. This equates to 57 weeks at $1,153.84, being $65,769. He is also entitled to $5,276.18 superannuation. The basis of this calculation is set out later in paragraph [180].

164 Mr Bannon claims damages equivalent to 17.5 per cent of his annual leave equivalent. As set out in the 'plaintiff's final particulars of loss', the claim is put as follows:

(ix) breach of leave loading implied term (course of dealing following on from term of initial contract dated 3 October 1994 providing for 17.5% leave loading (CB176)) - $41,164.70.

Mr Bannon's initial contract of employment dated 3 October 1994 contained the following provision in respect of annual leave:

Annual Leave accrues at the rate of four (4) weeks per annum for each year of service. This leave is subject to 17½% loading when being taken. There is no 17½% loading to leave owing at a future date of resignation or termination as based on the Clerk's Award Rate.[185]

1. A further term of the Contract of Employment entitled the plaintiff to payment of an annual leave loading of 17.5% (Leave Loading Term).

Particulars

The Leave Loading Term pleaded was implied into the Contract of Employment by the course of dealing of NPRT in paying all employees including the plaintiff a leave loading of 17.5 per cent.

165 It is not in dispute that whenever Mr Bannon took annual leave he received a 17.5 per cent leave loading. However, such payments were not pursuant to any contractual entitlement. Schedule 2 of Mr Bannon's 2007 contract provides:

The Employee's remuneration whilst employed by the Employer will consist of the following:

...

1. Any entitlement at law to leave loading and other forms of salary loading or payment required by law to be made;

Mr Bannon did not have an 'entitlement at law' to leave loading during the period Mr Bannon was employed pursuant to the 2007 contract. There is no basis for implying into the 2007 contract the term pleaded in paragraph [14] of the Statement of Claim. First, the implication of the pleaded term is inconsistent with cl 25 of the 2007 contract which provides that '[t]he Employment Agreement represents the whole agreement between the Employer and Employee.' Second, reliance upon the conduct of the parties based upon the terms of the October 1994 contract does not support the implication of the pleaded term. The October 1994 contract provided for an annual salary of $28,000. The annual leave clause makes express reference to the 'Clerk's Award Rate'. There is no reference to any industrial agreement or award in the 2007 contract. Third, the 1994 contract expressly provides that leave loading would not be paid on resignation or termination.

166 In order to succeed on this aspect of his claim Mr Bannon needs to establish an implied term in the 2007 contract that leave loading would be paid on accrued annual leave upon termination of employment. The fact that NPRT paid leave loading upon annual leave taken by employees during the course of their employment does not provide any foundation for implying a term, based on course of conduct, that leave loading would be paid on accrued leave upon termination of employment. There is no evidence that when the 2007 contract was entered into there was a practice whereby, upon termination of employment, the Trust paid leave loading on an employee's accrued leave entitlement.[186] In particular, there is no evidence to support a finding that it is reasonable to assume that Mr Bannon and the Trust entered the 2007 contract on the basis of such a practice, such that it is reasonable to import into the contract a term conferring an entitlement to be paid leave loading on accrued leave upon termination of employment.

167 Clause 9.1 of the 2007 contract provides that Mr Bannon was entitled to 15 days of paid sick leave for each year of completed service. Clause 9.2 provides that sick leave accrues on a pro rata basis and is credited on an annual basis, and unused sick leave is cumulative from year to year. Clause 9.4 provides '[u]pon termination fifty (50%) of sick leave days accrued will be payable. Such payment will not attract any additional loadings.'

168 Mr Bannon's sick leave records disclose that as at 3 October 2013 he had accrued entitlements of 264 days.[187] As sick leave accumulates on a pro rata basis, Mr Bannon's entitlement on 30 June 2014 was 275 days.

169 No issue was taken by the Trust as to the accuracy of the sick leave records. The only matter put in issue by the Trust was whether Mr Bannon's entitlement should be calculated on the basis of annual salary of $140,000 or $200,000. For the reasons set out above, the entitlement is to be calculated on the basis of an annual salary of $200,000. This translates to a daily rate of $769.23. Mr Bannon is therefore entitled to be paid 50 per cent of the accrued balance of 275 days as at 30 June 2014. 137.5 multiplied by $769.23 is $105,769.13.

170 Clause 20.1 of Mr Bannon's contract of employment conferred upon him an entitlement to 12 weeks' redundancy pay once he had completed 10 years of service. NPRT does not dispute that Mr Bannon is entitled to 12 weeks' redundancy pay. The only point of contention is the applicable rate for calculating the entitlement. The same reasoning set out above in respect of Mr Bannon's claim for annual and sick leave applies to his claim for redundancy pay. He is entitled to damages equivalent to 60 days at $769.23 per day: $46,153.80.

171 The 'plaintiff's final particulars of loss' include claims for damages based upon superannuation entitlements of:

(a) $282,028.13 in respect of Mr Bannon's fees entitlement of $3,111,000; and

(b) $4,384.62 in respect of 12 weeks' pay of $46,153.85, in lieu of termination.

172 I have concluded that Mr Bannon has no entitlement to 12 weeks' pay in lieu of notice of termination. His claim for $4,384.62 does not arise. As to his claim for superannuation in respect of his fees entitlement, I have concluded that the fees entitlement claim is precluded by estoppel by convention. If I am wrong in reaching this conclusion, Mr Bannon's claim for superannuation is relevant given my finding that promissory estoppel does not preclude his claim for fees totalling $168,000.

173 In his final written submissions, Mr Millar contended that Mr Bannon's entitlement to damages in respect of superannuation was subject to the maximum contribution base prescribed by ss 15 and 19 of the SGA Act. This argument was not foreshadowed in the Trust's defence. Nevertheless, I allowed Mr Millar to raise the issue. I did so for two reasons. First, the issue turns on a question of construction of cl 7 and 8 of sch 2 of the 2007 contract. Second, Mr Bannon was not prejudiced by the circumstances in which the issue was raised. Acceptance or rejection of the issue turns on the construction of the contract and the SGA Act. Thus, Mr Bannon has not been prejudiced by not having an opportunity to advance evidence which might have a bearing on whether Mr Millar's argument is accepted or rejected.

174 Clauses 7 and 8 of sch 2 of the 2007 contract provide:

The Employee's remuneration whilst employed by the Employer will consist of the following:

...

1. Superannuation contributions equivalent to 9% of the Employee's base salary and the Employee's entitlements under paragraph 4 of this Schedule 2, pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth) to a superannuation fund selected by the Employee or, if no fund is chosen by the Employee, to an eligible fund nominated by the Employer;
2. At any time the Employee may request the Employer to pay part of the salary component into the Employee's nominated super fund. This is in addition (sic) the statutory requirement of the Employer's contribution under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992. Provided that there is no detriment to the Employer in so doing and such payment is permitted by law and deductible to the company then the company will comply with that request. The Employee's salary shall be reduced by the amount of such payment;

175 Mr North submits that the phrase in cl 7 'pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth)' sets the contribution required, not the detriment that may have occurred under the SGA Act.[188] The detriment referred to by Mr North is the cap on contributions prescribed by the maximum superannuation contribution base.

176 For the year ending 30 June 2014, the maximum superannuation contribution base (ie. salary) was $48,040 per quarter.[189] Any salary received by Mr Bannon in excess of $48,040 was to be disregarded when calculating NPRT's statutory requirement to make contributions in accordance with the SGA Act. The prescribed superannuation contribution during this financial year was 9.25 per cent.[190] Therefore, the maximum superannuation contribution was $4,443.70 per quarter. For the year ending 30 June 2014, Mr Bannon was paid a salary of $140,000 (even though the Trust had agreed in May 2013 that he should be paid $200,000). Throughout the 2013/2014 financial year, Mr Bannon's quarterly salary was $35,000, which was $13,040 less than the maximum contribution base of $48,040. However, Mr Bannon's approved salary of $200,000 ($50,000 per quarter) is slightly in excess of the maximum superannuation salary base.

177 In August 2007 the maximum superannuation salary per quarter was $36,470.[191] Mr Bannon's base salary under the 2007 contract was $20,000 per quarter. Insofar as cl 7 of sch 2 referred to '[s]uperannuation contributions equivalent to 9% of the Employee's base salary and the Employee's entitlements under paragraph 4', the reference to superannuation contributions pursuant to the SGA Act on the fees entitlement was not otiose. Mr Bannon could have received $16,470 in fees per quarter on top of his base salary before reaching the maximum contribution base.

178 The phrase 'pursuant to' in cl 7 means 'in accordance with'.[192] Superannuation contribution rates prescribed by the SGA Act increase over time. Prior to 1 July 2013 the prescribed rate was 9 per cent. From 1 July 2013 the rate increased to 9.25 per cent. Thus, the reference in cl 7 to superannuation contributions equivalent to 9 per cent pursuant to the SGA Act, incorporated the prescribed rates in s 19(2) of the SGA Act. This is reflected in paragraph [19] of the Statement of Claim which pleads:

In accordance with section 19(2) of the Superannuation Guarantee (Administration) Act 1992 (Cth), for the financial year 1 July 2013 to 30 June 2014, the relevant superannuation charge percentage was 9.25%.

(a) NPRT was required to make superannuation contributions in accordance with the prescribed rates in s 19(2) of the SGA Act; and

(b) Such contributions were subject to the maximum contribution base prescribed by s 19(3) of the SGA Act.

179 My conclusion that the Trust's liability to make superannuation contributions under cl 7 of sch 2 is limited by s 19(3) SGA Act, is reinforced by cl 8 of sch 2. Clause 8 confers upon Mr Bannon the right to request NPRT to pay part of his salary into his nominated superannuation fund:

This is in addition (sic) the statutory requirement of the Employer's contribution under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992.

The 'statutory requirement of the Employer's contribution' is a reference to the maximum superannuation contribution base under ss 15 and 19 of the SGA Act. The fact that cl 8 operates by reference to the maximum superannuation base points strongly to the conclusion that the reference to the SGA Act in cl 7 refers to both the prescribed contribution rate in s 19(2) and the prescribed contribution base in s 19(3).

180 I have concluded that Mr Bannon is entitled to damages based upon back pay of $60,000 per annum for the period 23 May 2013 to 30 June 2014: $65,769. He is entitled to superannuation at the rate of 9 per cent for the period 23 May 2013 to 30 June 2013 and 9.25 per cent for the period 1 July 2013 to 30 June 2014. The total superannuation payable on $65,769 is $6,069.[193] However, this sum needs to be reduced to reflect the maximum superannuation salary cap of $48,040 per quarter for the 2014 financial year. When allowance is made for the $1,960 per quarter differential between Mr Bannon's actual salary entitlement of $50,000 per quarter and the maximum superannuation salary base of $48,040 per quarter, his superannuation entitlement is $5,276.18. When allowance is made for this superannuation payment, Mr Bannon has no further superannuation entitlement during the 2014 financial year. His quarterly salary entitlement of $50,000 exceeds the maximum superannuation contribution base of $48,040. Therefore, assuming that Mr Bannon does have an entitlement to Secretary/Director fees for the eight months between 1 November 2013 and 30 June 2014, he has no additional entitlement to superannuation.

181 During the course of the trial the counterclaim underwent significant amendment. In its original form, filed 13 November 2015, NPRT claimed damages totalling $363,510.95. In an amended counterclaim dated 12 August 2016, NPRT claimed $2,102,861 damages in respect of alleged 'unauthorised payments' made to Mr Bannon throughout his employment. It also claimed $286,010.95, said to be the balance of personal loans advanced to him but not repaid at the time of termination of his employment. NPRT also claimed $77,500, being the amount of a loan advanced to a Trust employee, Romys Eobob, with Mr Bannon's approval, and $271,077.70 in respect of an alleged unauthorised back payment of salary and $28,126.77 paid to the Australian Taxation Office as a consequence of the back payment.

182 To a large degree the amendments to the counterclaim reflected concessions made by Mr Thomas Fitzgerald, an accountant who gave evidence on behalf of the Trust. Ultimately, the quantum of NPRT's counterclaim was embodied in a second further amended defence and counterclaim, read in conjunction with Exhibit X: 'Defendant's recalculation of counterclaim on completion of expert evidence'.

183 In its final form, NPRT's counterclaim was comprised of the following elements:

(xiv) 'Unauthorised payments' to Mr Bannon of $211,197 during the period 1 July 2011 to 30 June 2014. The sum of $211,197 is comprised of the difference between:

(a) The quantum of funds advanced to Mr Bannon for Trust related expenses; and

(b) The amount of expenses actually incurred by Mr Bannon.[194]

(xv) $238,711, being the balance of Mr Bannon's 'debtor account' as at 30 June 2014;[195]

(xvi) $295,475, being alleged unauthorised payment of back pay and taxation comprised of:

(a) A $271,077 back payment to April 2003 of a $60,000 salary increase approved by the Trust Board on 17 October 2007; and

(b) Superannuation contributions of $24,396 on the sum of $271,077;[196]

(xvii) $77,500 being the amount of loans advanced to Romys Eobob which were approved by Mr Bannon.[197]

Jurisdiction to hear and determine the counterclaim

184 In closing written submissions, Mr North submitted that 'there is significant doubt as to whether the Counterclaim was properly authorised by the defendant when filed on 13 November 2015.'[198] Mr North submitted that if the claim was not properly authorised the jurisdiction of the Court has not been invoked. For the reasons which follow I consider this submission has no merit.

185 On 27 July 2016, NPRT filed an application seeking leave to amend its defence and counterclaim. The application was heard by Ierodiaconou AsJ on 12 and 16 August 2016. Her Honour's ruling was delivered on 21 September 2016. In resisting the application for leave to amend, Mr Bannon put squarely in issue the question of whether or not the counterclaim had been authorised by the Board of NPRT. Her Honour rejected this submission:

The plaintiff expended much time in his written and oral submissions suggesting that there was 'significant doubt as to whether the counterclaim was properly authorised' and submitted that the defendants 'do not have any specific current instructions at all'. It was inappropriate to raise these issues in an application by the defendant to amend pleadings. The proper course would have been for the plaintiff to bring his own application if he wished to agitate the issue.

In addition to being inappropriate, the plaintiff's submission about authority was also misconceived. It relied upon Nauruan legislation, namely s 6 of the Ronwan Consolidation (Amendment) Act 2016 (Nauru) ('Nauruan Amendment Act') to assert that the Cabinet of the Republic of Nauru had assumed all functions and powers of the defendant from 31 July 2016. On 16 August 2016, the defendant's counsel produced legislation from Nauru to the Court, being the Ronwan Consolidation (Amendment No 2) Act 2016 (Nauru) ('Nauruan Amendment No 2 Act'). Its veracity was not challenged by the plaintiff. The effect of ss 3 and 6 of the Nauruan Amendment No 2 Act is that the date in s 6 of the Nauruan Amendment Act is 31 July 2017, not 31 July 2016. Further, the defendant's solicitor also filed an affidavit sworn 15 August 2016, confirming that she is being instructed by the Chair of the defendant's board.[199]

186 There was no challenge to Ierodiaconou AsJ's ruling. Rather, having previously contended that the Court's jurisdiction had not properly been invoked, Mr Bannon subsequently made an application for summary dismissal of paragraphs [41], [42C], [42D] and [43] of the amended counterclaim. That application was rejected.[200] Mr Bannon's conduct in applying for summary dismissal in relation to various paragraphs of the amended counterclaim is inconsistent with the contention that he now advances that the Court, at no stage, had jurisdiction to hear and determine the counterclaim.

187 The trial commenced on 16 April 2018. Mr North made comprehensive opening submissions. At no point in these submissions did he foreshadow a submission that the Court had no jurisdiction to hear and determine the counterclaim by reason of absence of authorisation.

188 On 26 April 2018, the eighth day of the trial, the Court heard lengthy submissions on the admissibility of the report and supplementary report prepared by Mr Fitzgerald. NPRT sought to admit these reports into evidence in support of its counterclaim. The Court also heard an application by NPRT to amend its counterclaim to bring the amount claimed in conformity with the contents of Mr Fitzgerald's reports. The Trust's application to amend was opposed by Mr Bannon. A significant volume of material was filed by Mr Bannon in support of his opposition to the admissibility of Mr Fitzgerald's report. The length of the submissions and the volume of the material filed necessitated an adjournment to allow NPRT an opportunity to file material in reply. Both parties filed written submissions. A ruling was delivered on 14 May 2018.[201] The Court ruled that Mr Fitzgerald's reports were admissible. The Trust was granted leave to amend its counterclaim.

189 Both the ruling on the admissibility of Mr Fitzgerald's reports and the grant of leave to amend the counterclaim were premised upon the Court having jurisdiction to hear and determine the counterclaim. If the Court's jurisdiction had not been invoked by reason of an absence of authorisation to file the counterclaim, there would have been no occasion for the Court to be ruling on the admissibility of Mr Fitzgerald's reports or the application for leave to amend.

190 If Mr Bannon wished to put in issue the Court's jurisdiction he should have filed an application to strike out the proceeding as an abuse of process. Alternatively, he should have appealed the ruling of Ierodiaconou AsJ which rejected the same argument he now advances.

191 A further consideration arises in respect of the lawyers acting for the Trust. Ms Sarina Cowle was the Trust's solicitor on the record when the counterclaim was filed in November 2015. However, Ms Cowle ceased to act as the Trust's solicitor prior to the commencement of the trial. If the proceeding was commenced without the Trust's authority, Ms Cowle, as a solicitor responsible for initiating the proceeding, could be personally liable for the costs of the proceeding.[202] A finding that a legal practitioner commenced proceedings without proper authority entails a serious adverse finding. No such finding could be made without the practitioner being put squarely on notice that such a finding was sought. No notice was given to the Trust's lawyers that Mr Bannon was putting in issue the question of authorisation until the matter was raised on the sixth day of hearing during the examination in chief of Ms Thoma.[203] Mr Millar objected to the evidence on the ground that the issue of authorisation had not been raised on the pleadings.[204]

192 The question of notice is particularly relevant in respect of Ms Cowle. Ms Cowle was entitled to be given notice of an allegation that she initiated proceedings without having authority to do so. This is particularly so in circumstances where Ms Cowle had previously sworn an affidavit which was relied upon by Ierodiaconou AsJ, confirming that she was instructed by the Chair of NPRT.[205] Ms Cowle was not only entitled to be given notice of this serious allegation, but also to be separately represented in relation to the matter, given the potential adverse reputational and financial (costs) consequences of an adverse ruling on the point.

193 On 24 April 2018 following discussion with counsel on the question of authorisation, the following exchange took place:

HIS HONOUR: Thanks. I think the witness will need to come back at 2.15 on this issue of the authorisation.

HIS HONOUR: Mr North, do you still want to pursue that matter?

HIS HONOUR: There is, of course, Mr North, if I might say so, the practical consideration, whatever the answer. We have heard the evidence from the witness that he has a terrible memory.

HIS HONOUR: The number of times he says, "I have got no recollection". Frankly, if he gives an answer to the question, "I have got no recollection", I really don't think it's going to take the matter any further.

HIS HONOUR: Thank you. I think that's sensible.[206]

194 For my part, I understood Mr North to be indicating that he was not pursuing the authorisation point generally, not simply in respect of Mr Brechtefeld. If I was mistaken in this regard, I would, in any event, reject the submission now advanced. The question of authorisation is not properly before the Court, whether by means of the pleadings, an application to strike out the proceeding as an abuse of process, or by way of an appeal from the earlier ruling of Ierodiaconou AsJ. Further, if a party wishes to put in issue a question of jurisdiction, that party does not have the option to 'cherry pick' as to when it will do so. In the present proceeding, Mr Bannon has, throughout the course of the proceeding, actively taken steps premised on the Court having jurisdiction to hear and determine the counterclaim. Finally, to permit the authorisation issue to be raised and determined in the absence of Ms Cowle would involve a flagrant denial of procedural fairness.

Spoliation of evidence - failure to preserve documents relevant to the proceeding in Victoria and inadequacy of discovery

195 In final written submissions Mr North submits that '[t]he spoliation of documentary evidence by the defendant is central to this case.'[207] He submits that documents returned to Nauru by the Trust, and not subsequently discovered:

would undoubtedly assist in conducting the sort of audit that the defendant's counterclaim, on which it bears the onus, necessitates to show that anything paid into an account of the plaintiff was 'unauthorised' or 'unlawful'.[208]

He submits that the failure to provide the discovery of clearly relevant documents:

is in breathtakingly flagrant breach of the defendant's obligations, and those of its lawyers as officers of the Court, under the general law and the Civil Procedure Act 2010.[209]

196 Mr North submits that documents were shipped to Nauru at a time when the Trust was on notice that proceedings against it were contemplated.[210] He submits that the Trust's conduct in shipping documents to Nauru:

is a form of spoliation of evidence and is contrary to the Civil Procedure Act 2010 (Vic), ss 16, 20, 26 and 56(2). It may prejudice a fair trial, and may amount to "an attempt to pervert the course of justice or... contempt of court before the litigation was on foot": British America Tobacco v Cowell [2002] VSCA 197; (2002) 7 VR 524 at [175]; see also at [173]−[174].[211]

197 As to the inadequacy of the Trust's discovery, Mr North submits:

Further, the defendant has failed or refused to provide documents and particulars requested. This includes a copy of the hard drive referred to in its 18 April 2016 letter, which was requested by the plaintiff's solicitors by letter dated 27 April 2016. No response was given in the defendant's reply letter dated 6 May 2016 or thereafter, until 11 August 2016. At that time the defendant's solicitor said only, relevantly: "[W]e will provide relevant documents by way of discovery as ordered by the Court. We made that clear in our letter to you of 6 May 2016 ... If you have misplaced that letter please let us know and we will forward a copy." In relation to the documents in Nauru and the United States, Ms Cowle said: "If there is a need for off-shore document retrieval, this will be undertaken in the course of providing discovery." This never happened.[212]

198 As set out earlier in this judgment, Mr Bannon, along with all other employees of the Trust in Melbourne, was given three months' notice of termination of employment on 31 March 2014. Mr Bannon's employment was terminated on 30 June 2014, but other employees continued to work beyond this date. Thianekham Bouphasavanh ('Kham') was employed until late August 2014. The exact date of closure of the Melbourne office is unclear. However, the evidence supports a finding that the closure occurred sometime in late 2014 or early 2015.

199 In an affidavit sworn by Lawrence Cook on 22 April 2016, he deposes that he was contacted by Mary Boyd in or about November 2014 with a request that he help clean out the Melbourne office and arrange for items to be shipped to Nauru.[213] He organised a removalist and was present in the Melbourne office when items were removed from the office.[214] The items were stored in a temporary warehouse in Bayswater for three to five months.[215] Mr Cook was in Nauru between December 2014 and February 2015.[216] Upon his return to Melbourne in February 2015 he was told by Ms Boyd that NPRT was 'no longer working at the Melbourne Office'.[217] Mr Cook then engaged a transport company to arrange for shipping of the items moved from the Melbourne office back to Nauru.[218]

200 There was a direct nexus between the closure of the Trust's Melbourne office in late 2014/early 2015 and the shipping of the office contents back to Nauru. I reject the contention that the return of the documents, prior to the commencement of the proceeding, constitutes the spoliation of evidence in the sense of being an improper and/or unlawful interference with the administration of justice.

201 Proceedings were commenced by writ filed on 29 June 2015. Between 30 June 2014 and 29 June 2015 the four Board Members of the Trust were Charmi Depaune, Sharain Hiram, Ruby Thoma and Elvin Brechtefeld. Mr Depaune did not give evidence. The other three Board Members did. It was not put to any of the Board Members that the decision to return documents to Nauru was motivated by a desire to frustrate Mr Bannon's claim or his defence of the Trust's counterclaim.

202 As to the failure of the Trust to return documents which had been sent to Nauru, the issue is not one of spoliation of evidence. Rather, the issue concerns the adequacy of discovery.

203 On 21 March 2017, NPRT filed an affidavit of documents sworn 9 February 2017 listing 6,345 documents, in pt one of sch 1. On 9 August 2017, NPRT filed a further affidavit of documents which listed 69 documents. 56 of these documents had been returned to the Trust by Mr Bannon pursuant to a Court order made on 3 May 2017.

204 At no time between 9 February 2017 and the commencement of the trial on 16 April 2018 did Mr Bannon make any application for further discovery. However, as is recorded in the ruling of Ierodiaconou AsJ of 21 September 2016,[219] in response to the Trust's application for leave to amend its defence and counterclaim, Mr Bannon made submissions about the adequacy of discovery.[220] Those submissions were supported by a 14 page affidavit of Kate Louise Wilkinson with 49 exhibits. These exhibits included a letter to Andrew Jacobson dated 9 May 2016 from Lander & Rogers.[221] Under the heading 'Potential Spoliation of Evidence' the letter states:

Based on our understanding of the facts set out above, it appears that you may have conducted, orchestrated and/or had involvement in the removal of documents and/or records from the NPRT Warehouse and/or the NPRT Melbourne Office. This was in circumstances where you were, at the latest by 3 November 2014, aware of the dispute, and potential legal proceedings, between NPRT and our client.

Thereafter, the letter refers to s 254 of the Crimes Act 1958.

205 Under the heading 'Maintenance of NPRT documents and/or records' the letter states:

To the extent that you continue to have possession and/or control of documents and/or records of NPRT, or relating to NPRT, we remind you of your obligation to maintain the safe custody of those documents and/or records and not to take any steps to destroy them or remove them from the jurisdiction. Any such records that were removed to Nauru should be returned to Melbourne for the purposes of being available for use in our client's proceeding, forthwith.

206 If Mr Bannon considered the Trust's discovery inadequate by reason of failure to discover documents returned to Nauru, he could have filed a summons seeking further discovery. Well before the commencement of the trial, Mr Bannon's solicitors had expressed the view that documents which had been returned to Nauru should be returned to Victoria to be available for use in the litigation. There is no material before the Court which explains why no application for further discovery was made.

207 The obligation to make proper discovery is ongoing and rests with all parties to proceedings. Nevertheless, where, as in the present case, NPRT provided discovery of thousands of documents, and no complaint is made as to the adequacy of that discovery, a party is entitled to assume that the adequacy of discovery will not be put in issue.

208 A Form 48A Notice of Trial was signed by Lander & Rogers on 16 March 2018 and filed with the Court. What, then, is to be made of the statement 'discovery has been obtained and inspection had and it is not proposed to seek further discovery or further inspection of documents' included in the plaintiff's Notice of Trial?

209 A Notice of Trial serves the purpose of informing the Court that all interlocutory steps, including discovery, have been completed. The fact that a party has signed a Notice of Trial does not preclude that party from raising an issue as to the adequacy of discovery. There will be instances in which deficiencies in discovery only come to light during the course of a trial. This, however, is not such a case.

210 In August 2016 Lander & Rogers complained about the very same matters which underpin Mr Bannon's submissions as to the adequacy of the Trust's discovery. The question may be shortly stated: is it open to a party who has signed a Notice of Trial attesting to the adequacy of discovery, to then conduct a litigation on the basis that the inadequacy of discovery 'is in breathtakingly flagrant breach of the defendant's obligations, and those of its lawyers as officers of the Court, under the general law and the Civil Procedure Act 2010 (Vic)'?[222]

211 This question should be answered in the negative. It is not permissible for a party, having represented to the Court by way of a Notice of Trial that there are no outstanding issues regarding the adequacy of discovery, to then elevate the inadequacy of discovery to a central issue in a trial. However, this is an apt description of the conduct of the plaintiff and his lawyers in the present proceeding.

212 I reject the submission that spoliation of evidence is a central issue in the proceeding. Notwithstanding the contents of the Notice of Trial signed by Lander & Rogers, I have had regard to deficiencies in the Trust's discovery. I have concluded that the primary issue for determination in respect of the counterclaim is whether advances to Mr Bannon, although authorised, exceeded the amounts which he actually spent on behalf of the Trust. I am satisfied that in defending that claim Mr Bannon has been prejudiced by reason of the failure of the Trust to have discovered payment vouchers for the 2011 to 2013 financial years. In having regard to the Trust's failure to discover payment vouchers for these financial years, I have applied the well-established principle that uncertainty in the assessment of damages should weigh against the party responsible for such uncertainty.

213 During the period 1 July 2011 to 30 June 2014 NPRT deposited significant sums of money into Mr Bannon's bank account in respect of Trust related expenses. NPRT submits that as at 30 June 2014 it had deposited $211,197 in excess of the amount actually expended by Mr Bannon on behalf of the Trust between 1 July 2011 and 30 June 2014. It submits that Mr Bannon, as the most senior employee of the Trust, was subject to fiduciary duties to account to the Trust for funds advanced to him in excess of funds actually expended on the Trust's behalf. In reply, Mr Bannon contends that there is no proper evidentiary foundation for finding that as at 30 June 2014 he had been advanced funds in excess of money which he had actually expended on the Trust's behalf.

The system for reimbursement of Trust expenditure

214 Throughout the period of Mr Bannon's employment as Secretary of the Trust, Board Members and Nauruan government officials regularly travelled to Melbourne and Brisbane on Trust related business. This travel necessitated significant expenditure on airfares, accommodation, transport and miscellaneous expenses. At some point in the early 2000's the Trust's credit card facility was withdrawn. The reasons for this was that individuals with access to the credit card facility had abused it.[223] Following the withdrawal of the Trust's credit card facility, Mr Bannon offered the use of his personal credit card in relation to Trust expenses. Mr Bannon said that, perhaps, naively, having offered the Trust the use of his credit card 'it then grew to become a monster that was out of control'.[224]

215 Until about 2009/2010 Mr Bannon would incur expenses such as airfares and accommodation on his credit card and then be reimbursed by the Trust.[225] Thereafter, Mr Bannon received large upfront payments to meet anticipated expenses.[226] This change was brought about by the increased demand for urgent travel by Nauruan officials.[227] The way in which this system of 'upfront reimbursement' operated throughout the period 1 July 2010 to 30 June 2014 is demonstrated by a running sheet which was prepared by Mary Boyd which reconciled cash and credit card expenses incurred by Mr Bannon against upfront advances during the first six months of 2013.[228] During May and June 2013, $55,000 was transferred to Mr Bannon's bank account as follows:

• 6 May 2013: $15,000;
• 10 May 2013: $5,000;
• 15 May 2013: $5,000;
• 19 June 2013: $10,000; and
• 20 June 2013: $20,000.

Mr Bannon incurred expenses on behalf of the Trust in April/May 2013 totalling $20,833.55. He incurred expenses on behalf of the Trust in June 2013 totalling $30,386.54. Thus, he incurred total expenses of $51,220.09 in respect of which he was advanced $55,000.

216 Anticipated expenditure would be estimated in the first instance and later substantiated by way of invoices and the running sheet prepared by Ms Boyd and Mr Bannon.[229] Mr Bannon's evidence was:

At the end of the day, the amounts would be reconcilable and at the end of the day, if there was any under and over and I think there's already been worksheets that have been placed before the court that EFTs, a multiple number of the EFTs had been applied against a multiple number of listings of expenses that show that at the end of the day, sometimes Nauru's in front and sometimes I'm in front.[230]

217 In the event that Mr Bannon was advanced more money than he actually expended on behalf of the Trust Mr Bannon would not physically remit the difference by way of payment to the Trust. Rather, the amount of the next advance would be reduced to reflect the fact that he had previously been advanced more than he had spent.[231]

218 There is no evidence to support a finding that the upfront reimbursement of funds to Mr Bannon was unauthorised. For many years prior to 2014, travel and accommodation costs for Nauruan officials were paid via Mr Bannon's credit card. I infer that it was well known to Nauruan officials, who benefited from this arrangement, that the payments were being made via Mr Bannon's credit card rather than the Trust's credit card.

219 The primary issue for determination in relation to the Trust's unauthorised payments claim is whether, and if so to what extent, Mr Bannon was advanced funds which exceeded the amounts he actually spent on behalf of the Trust. This issue consumed a significant proportion of the 18 days of hearing, particularly Mr Bannon's evidence in respect of Exhibit A which is discussed in detail below. I accept the criticism levelled at the form in which the unauthorised payments claim in paragraph [42A] of the counterclaim is pleaded. Paragraph [42A] does not clearly allege that Mr Bannon retained funds at the time of termination of his employment which exceeded the upfront reimbursement sums advanced to him. Nevertheless, Mr Bannon was placed squarely on notice by the way in which the case was conducted that a primary issue in the proceeding was whether he had been advanced funds in excess of amounts he had actually expended on behalf of the Trust. Mr Bannon was given a fulsome opportunity to address the case as conducted.[232]

220 Mr Bannon was the most senior employee of the Trust. As such, he owed fiduciary duties to act in the interests of the Trust.[233] Mr Bannon had authority to put in place and oversee a system whereby funds were advanced to him in advance of actual expenditure being incurred with the amount of such outlays to be reconciled against actual expenditure. If money was advanced to Mr Bannon which exceeded amounts actually expended by him on behalf of the Trust Mr Bannon was subject to fiduciary duties to repay to the Trust any excess funds. In this regard, it is not necessary for the Trust to establish that if Mr Bannon retained excess funds he acted dishonestly or with a lack of bona fides.[234]

Did Mr Bannon receive funds in excess of amounts expended on behalf of NPRT?

221 Mr North argued that there was no sound evidentiary foundation for a finding that Mr Bannon retained funds in excess of the amounts which had been advanced to him.

222 Mr North submitted that the only witness that had attempted to give 'evidence' to support NPRT's counterclaim was Mr Fitzgerald. This submission is correct. However, a significant volume of documentary evidence was tendered and that evidence is of significant probative value: credit card statements, bank statements, expense claim forms and Exhibit A: 'Mr Bannon's reconciliation of his reimbursable expenditure for the 2014 financial year'. Further, Mr Bannon was examined and cross-examined at length regarding all aspects of the counterclaim. Putting to one side the evidence of Mr Fitzgerald, there is a substantial body of probative evidence regarding all aspects of the counterclaim.

223 Mr North submitted that the reports of Mr Fitzgerald were inadmissible and/or of no evidentiary weight. Mr North sought to re-agitate the same arguments which he advanced on 26 April 2018. Those arguments were rejected. I ruled Mr Fitzgerald's reports admissible, the weight to be given to those reports to be a matter to be determined after he had given evidence.[235]

224 Mr Fitzgerald prepared a first report dated 8 February 2018. Section 1 of the report records its purpose as follows:

I have been instructed by Sarina Lea Cowle to report on transactions between Mr. Paul Bannon and the Nauru Phosphate Royalties Trust in the Supreme Court Matter No: S CI 2015 03354. I have been specifically instructed to:

• Identify payments made to Mr. Bannon,
• Identify payments to which Mr. Bannon was entitled, including expenditure reimbursement claims,
• Payments made to or on behalf of Mr. Bannon pursuant to an unauthorised payment of backpay,
  1. To comment upon the accounting procedures and controls for which Mr. Bannon was responsible.[236]

225 It is apparent from the stated purpose of Mr Fitzgerald's report that he was not requested to express an opinion on whether payments made to Mr Bannon were unauthorised. In respect of the payment to Mr Bannon by way of back pay, he was instructed to proceed on the basis that the payment was unauthorised.

226 The executive summary of the report is as follows:

Based upon the information currently available, I am of the opinion that Mr. Bannon remains accountable to N.P.R.T. for $1,600,044 resulting from transactions during 2011 and 2014, the balance of the loan account owing by him to N.P.R.T. and the correction of an unauthorised back payment of salary in 2008 financial year.

The is calculated as follows:

Section 4, Table 4.3

Section 5, Table 5.1

Section 7, Table 7.3

Section 11, Para 3

227 An 'accountable payment' is the difference between payments made to Mr Bannon and the amounts which he was entitled to have received, including expenditure reimbursement payments.[238]

228 On 1 May 2018, Mr Fitzgerald produced an amendment to his February report.[239] The amendment reduced the third line item in the executive summary '[v]ariance in cash deposits' by $656,510 from $104,160 to ($552,350). Mr Fitzgerald explained the background to the amendment as follows:

Prior to the commencement of Court on 26th April, it was brought to my attention that several of the items described as "Payments-Cash" appeared to correlate to EFT transfers that were made from Mr. Bannon's Classic Plus account. On this basis, I conducted a further review of all transactions for the 2011−2014 periods. In this process I have identified a significant number of transactions that also appear to correlate to EFT transfers from the Classic Plus account. I have attached the transactions that I have identified in this process.

As a consequence, I am obliged to report that I have been able to identify that deposits to the value of $746,729 appear to have been sourced from EFT transfers from Mr. Bannon's Classic Plus account or cheques from NPRT...[240]

229 The net effect of the adjustment referred to above was to reduce Mr Fitzgerald's assessment of the total level of Mr Bannon's alleged indebtedness to the Trust from $1,600,044 to $943,534. This included the reduction of the deficit between 'accountable payments' made to Mr Bannon and those to which he was entitled to $405,011. This figure appears in paragraph [42A] of the further amended defence and counterclaim filed pursuant to an order made on 14 May 2018.

230 Mr Fitzgerald was cross-examined at length regarding his reports. He made many concessions regarding inaccuracies in his revised report. The net effect of these concessions was to further reduce the 'accountable payment' sum of $405,011 to $211,197. The reason for this reduction is as follows. First, Mr Fitzgerald accepted that the figure of $957,361, being overpayment of EFT and cheques as per his 1 May 2018 amended report should be further reduced to $881,061. Second, that the variance in cash deposits should be increased from ($552,350) to ($669,864). The difference between the revised overpayment of EFT and cheques and the revised variance of cash deposits being $211,197. The concessions made by Mr Fitzgerald during the course of cross-examination may be summarised as follows:[241]

231 Ultimately, Mr Millar contended, by reference to Exhibit X ('defendant's recalculation of counterclaim on completion of expert evidence') that the sum of $211,197 was the quantum of damages payable under paragraph [42A] of the second further amended defence.

232 Mr Fitzgerald's evidence underwent significant revision by way of amendments to his report prior to and during the course of his evidence. In his February 2018 report, Mr Fitzgerald expressed the opinion that Mr Bannon's 'accountable payments' totalled $906,561. By the conclusion of his evidence this amount had been reduced to $211,197. I do not consider that this reduction reflects adversely on Mr Fitzgerald's credit as a witness. Having closely observed him give evidence, I do not consider that Mr Fitzgerald at any point was deliberately seeking to misrepresent the extent of Mr Bannon's alleged indebtedness to the Trust. Rather, the revisions in his evidence are attributable to his lack of understanding of the way in which the system of reimbursable expenditure operated, whereby upfront sums were deposited into Mr Bannon's Classic Plus account, of which a proportion was subsequently transferred to his credit card account. This lack of understanding is the basis of the 1 May 2018 amendment, which reduced accountable payments from $906,561 to $405,011, as well as Exhibit M,[248] which reduced accountable payments to $343,509.

233 Mr Fitzgerald prepared his reports without having spoken to any employee of the Trust or to Mr Bannon himself. The fact that he had not spoken to Mr Bannon placed him at a particular disadvantage.

234 For reasons which are set out below, I have concluded that the Trust's counterclaim in respect of the 2011−2013 financial years should be rejected, primarily, because of deficiencies in the Trust's discovery. This conclusion renders inconsequential the question of what weight should be attributed to Mr Fitzgerald's report in respect of the 2011−2013 financial years. As to the 2014 financial year, as discussed below, I have had regard to Mr Fitzgerald's evidence regarding the total payments which were received by Mr Bannon into his Classic Plus account and the proportion of those payments transferred to his credit card account.

235 In approximately April 2015 all of the Trust's records were shipped back to Nauru.[249] Included amongst these records were payment vouchers in respect of payments which had been made to Mr Bannon. The payment vouchers recorded the payee, the account allocation and the narration/description as to what the payment related to.[250] The evidence before the Court did not include payment vouchers in respect of the period 1 July 2011 to 30 June 2014. MYOB records for the period 1 July 2011 to 30 June 2014 were tendered in evidence.[251] These records evidence the payments which were made to Mr Bannon over and above payment of salary and allowances. In many instances, the MYOB records contain a notation indicating that the payment was in respect of travel expenses. However, where MYOB records relate to an upfront reimbursement payment to Mr Bannon, the records do not evidence how much of the payment was actually expended by Mr Bannon. The best evidence in respect of Mr Bannon's expenditure is to be found in his expense claim forms, his credit card statements and his bank statements.

236 In addressing the question of whether Mr Bannon was advanced funds in excess of expenses actually incurred, a clear delineation exists between the periods 1 July 2011 to 30 June 2013 and 1 July 2013 to 30 June 2014. I accept that for the period 1 July 2011 to 30 June 2013 Mr Bannon is hampered in defending NPRT's counterclaim by reason of the Trust's financial records, particularly payment vouchers, having been returned to Nauru.

237 Mr Millar submitted that there was ample evidence before the Court to make findings in respect of the totality of the period the subject of the counterclaim. I accept that in respect of the period 1 July 2011 to 30 June 2013 there are numerous expense claim forms which were prepared by Mr Bannon throughout the course of his employment.[252] I accept that these claim forms do contain evidence of the amounts actually expended by Mr Bannon during the period 1 July 2011 to 30 June 2013. Mr Bannon accepted the contents of the claim forms at Court Book pages 6594 to 6657 were a 'strong guide' as to the expenditure he had incurred.[253] Mr Millar submitted that the evidence contained in the claim forms, together with Mr Fitzgerald's analysis of the amounts advanced to Mr Bannon by way of upfront reimbursement, constituted a sound basis for quantifying the amount of the differential between the upfront reimbursement and the amount actually expended by Mr Bannon.

238 On the other hand, I accept Mr Bannon's evidence that the claim forms would have generated the production of payment vouchers. The payment vouchers would have provided Mr Bannon with additional source documentation to meet the Trust's claim. Where damages are uncertain because of a lack of available evidence, courts generally resolve difficulties of assessment against a party who could or should have provided the evidence.[254] I accept that Mr Bannon has been prejudiced by his inability to access payment vouchers in respect of expenses incurred during the period 1 July 2011 to 30 June 2013. I also accept Mr Bannon's evidence that payment vouchers would have been generated by the expense claims which he lodged during this period. These vouchers are included in the documents which were returned to Nauru in April 2015.

239 I consider that difficulties in assessing damages arising out of the Trust's failure to produce payment vouchers for the period 1 July 2011 to 30 June 2013 should be resolved against the Trust. The consequence is that I reject the Trust's claim for damages for the period 1 July 2011 to 30 June 2013 comprised of the difference between the funds advanced to Mr Bannon and the amount actually expended by him on behalf of the Trust.

240 The Trust's claim for the period 1 July 2013 to 30 June 2014 falls into a different category than for the preceding two financial years. I do not consider that Mr Bannon is prejudiced in meeting the claim by reason of any inadequate discovery on the part of the Trust. As noted above, Mr Bannon's evidence was that payment vouchers were generated by the expense claim forms which he submitted. During the financial year ending 30 June 2014, Mr Bannon did not submit any expense claim forms.[255] He did not do so because the work priority during this period was the distribution to landowners of funds returned to the Trust, post the conclusion of the receivership.[256]

241 Mr Bannon's failure to lodge expense claims throughout the 2014 financial year was symptomatic of a complete breakdown in the Trust's systems governing reimbursable expenditure. I have referred earlier in this judgment to a running sheet which was prepared by Mr Bannon and Mary Boyd which reconciled expenditure and reimbursement during April, May and June 2013.[257] The running sheet records that during that period Mr Bannon incurred a total of $51,220.09 in expenses and was advanced $55,000. Mr Bannon was, at least for this period, in credit in the sum of $3,779.91. The running sheet also contains a smattering of expenses incurred by Mr Bannon in cash totalling $697.87 during the period 10 July 2013 to 14 October 2013. However, the running sheet does not record any travel expenses incurred by Mr Bannon post 30 June 2013 (save for $130.50 recorded for two items in respect of 'V. Dowiyogo') or any upfront reimbursements advanced to him in respect of such expenditure. The inadequacy of the reconciliation post 30 June 2013 is consistent with Mr Bannon having stopped submitting expense claim forms.

242 Notwithstanding the absence of any properly maintained expense reconciliation running sheet post 30 June 2013, there is a substantial body of evidence which provides a sound evidentiary foundation for findings as to:

(xviii) The amount which was advanced to Mr Bannon by way of upfront reimbursement payments during the 2014 financial year; and

(xix) The amount which was actually expended by Mr Bannon on behalf of the Trust.

243 On 4 February 2015 Mr Bannon's solicitors, Lander & Rogers, forwarded to NPRT's solicitors a lever arch folder containing a summary of his reimbursable expenditure for the 2014 financial year. This document was tendered in evidence as Exhibit A. The covering letter from Lander & Rogers to NPRT's solicitors is Exhibit V. Mr Bannon prepared Exhibit A because NPRT had refused to pay his statutory and leave entitlements. The reason for the Trust's refusal to do so was Mr Bannon's General Ledger recording a debit balance in excess of $200,000. Mr Bannon received 'implied instructions' from Andrew Jacobson that he would be paid his statutory entitlements if he could reconcile the balance of his General Ledger account.[258]

244 Exhibit A is probative evidence for a number of reasons. First, the document was prepared by Mr Bannon. Second, the exhibit contains detailed expense reimbursement claims for each month of the 2014 financial year. Mr Bannon prepared these claim forms following the termination of his employment on 30 June 2014.[259] He did so using his credit card and bank account records together with receipts which he had retained. Third, Mr Bannon identified payments which he had received other than salary and allowances totalling $421,678.15. This accords with Mr Fitzgerald's evidence.[260] Fourth, Mr Bannon identified reimbursable expenditure for the financial year totalling $267,088.09. Thus, Mr Bannon's own reconciliation of his reimbursable expenditure resulted in a differential of $154,590.06. Mr Bannon then deducted from this amount a further $134,784.53 comprised of:

• Motor vehicle acquisition: $40,000;
• Salary adjustment - after tax: $52,148.80;
• Salary adjustment - pre-tax: $21,697.60;
• Unpaid superannuation contribution: $4,904.17; and
• Miscellaneous expenses: $16,033.96.

245 Mr Bannon abandoned any reliance upon the claim for $40,000 for motor vehicle acquisition.[261] The claims for salary adjustment and unpaid superannuation contributions relate to the $60,000 salary increase approved by the Board from the pay period ending 22 May 2013. This is the subject of a separate claim for damages which I have upheld and should therefore be put to one side. As discussed below, the claims for miscellaneous expenses are not confined to the 2014 financial year, but extend back as far as the 2011 financial year. A number of these claims are very tenuous. The true position is that Mr Bannon's own document, forwarded to the Trust's lawyers, evidenced a difference in excess of $160,000 between the money advanced to him by way of upfront reimbursement and the amount which he actually expended on behalf of the Trust.

246 During his cross-examination Mr Bannon gave evidence that he owed the Trust approximately $20,000.[262] This evidence was given prior to Exhibit A being tendered during Mr Bannon's re-examination. I granted Mr Millar leave to recall Mr Bannon to be cross-examined regarding the contents of Exhibit A. As events unfolded, Mr Bannon's further evidence in respect of Exhibit A consumed a considerable amount of hearing time.

It is a complete picture, I believe, of the amounts that were paid from the Trust into my account. In terms of the other way, I don't believe it is a full accounting of the reimbursable side of things...[263]

248 In summary, Mr Bannon's evidence in respect of Exhibit A came down to two points. First, that the Trust had shipped back to Nauru financial records in respect of expenses which he incurred which would have enabled him to further reconcile the deficit of $154,590.06 disclosed by Exhibit A. Second, but related to the first point, a significant component of the $154,590.06 deficit was explicable by reference to cash transactions which were not reflected in Exhibit A. For the reasons which follow, I reject both of these contentions. However, before setting out my reasons it is necessary to record my findings as to the quantum of Mr Bannon's reimbursable expenditure deficit evidenced by Exhibit A.

249 Exhibit A incorporates Mr Bannon's summary of the amounts which he received by way of upfront reimbursement, in the sum of $421,678.15.[264] Mr Bannon accepted that this figure does not include a payment of $7,500 which he received on 5 July 2013.[265] However, he also gave evidence, which I accept, that his summary incorrectly included a payment of a $3,000 travel allowance on 24 December 2013.[266] When these two figures are taken into account, the amount received in the form of upfront reimbursement in the 2014 financial year was $426,178.15. This analysis is supported by the MYOB records for the 2014 financial year. There are 52 separate entries detailing payments to Mr Bannon of $449,789.85. On this sum, six entries totalling $20,611.70 are wages. In addition, an entry for 24 December 2013 of $3,000 is a travel allowance. When these amounts are taken into account the MYOB records disclose the same figure of $426,178.15.

250 Annexure 1 of Mr Fitzgerald's report of February 2018 analyses EFT transfers from the Trust to Mr Bannon's Classic Plus bank account. His analysis discloses total deposits of $446,678.15. This includes a sum of $20,500 comprised of five salary payments and the travel allowance payment of $3,000 of 24 December 2013. When these amounts are taken into account Mr Fitzgerald's analysis also discloses upfront reimbursable payments to Mr Bannon of $426,178.15. Therefore, there are three separate sources of evidence which support a finding as to the exact quantum of upfront reimbursement advanced to Mr Bannon during the 2014 financial year.

251 In Exhibit A, Mr Bannon identified reimbursable expenditure totalling $267,088.09. This sum is based on expenditure claim forms which he prepared post the termination of his employment. It is apparent from the supporting documentation in respect of these claim forms that his credit card and bank statements were the primary source documents upon which he relied. The overwhelming majority of the entries in the expense claim forms are for legitimate items of expenditure such as airfares, accommodation and miscellaneous travel related expenses. However, two items of travel allowance claimed by Mr Bannon are not legitimate expense claims. Mr Bannon claims $600 in unpaid travel allowance for the period 24 and 25 November 2013 and $3,300 for the period 10 December to 20 December 2013. These amounts, totalling $3,900 should be deducted from sum of $267,088.09, leaving a balance of $263,188.09. The difference between this figure and the amount of upfront reimbursement of $426,178.15 is $162,990.06. Hereafter I shall refer to this sum as the 'reimbursable expenditure deficit'.

252 I now turn to consider Mr Bannon's evidence that his reimbursable expenditure deficit could be accounted for by reference to expenditure which he incurred in cash rather than by way of credit card.

253 Mr Bannon knew from looking at his credit card statements what expenditure was Trust related and what expenditure was his personal expenditure.[267] He was 'pretty confident' that his figure of reimbursable expenditure of $276,088.09 in Exhibit A picked up all of the reimbursable expenditure recorded in his credit card statements for the 2014 financial year.[268] His evidence was that the difference between the $426,178.15 advanced to him by way of upfront reimbursement and the $267,088.09 of identified reimbursable expenditure, was referrable to expenditure he incurred in cash.[269]

254 Mr Bannon's evidence was that 90 per cent 'if not slightly higher' of expenditure in respect of airline and associated travel expenses was placed on his credit card.[270] Mr Bannon was asked in cross-examination whether the expenditure deficit could be accounted for by cash expenditure on Trust expenses at the rate of $3,000 per week. He responded:

No, I don't accept that I was paying cash of $3,000 a week and therefore there is a window or there is a need for greater clarity to be obtained in relation to the - from the records of the Trust to support the claim behind the EFTs that were paid to me, otherwise I can't answer your question. I can answer your question based on, I have put together an exhibit A that I told you that exhibit A was undertaken under the scenario that it was in terms of without access to the full records and support. I have explained that there were additional cash resources expended by me. Were they expended at the rate of $3,000 a week? No, they weren't but were they expended? Yes, they were. Were they supported in terms of the ultimate destination being the recipient or the supplier of the service, being an hotel, airline or other, then my contention is that they are in the records of the Trust and without those, I can't give you a definitive answer.[271]

255 Mr Bannon accepted that the full amount of the reimbursable expenditure deficit could not be reconciled by reference to cash transactions:

I would agree that I don't believe it is $150,000 worth of cash transactions. Can I give you a definitive answer as to what those transactions are or what amount to? No, I can't but I do believe that they are materially significant enough to reduce the figure downwards from the $150,000 that is the gap between the two. Will it come to zero? Do I have a magic figure that would enable the figure to come to zero? No, I don't have substantiation documentation for that but I do believe it exists, in part, and that information is and was contained within the financial information kept for the Trust and/or within my records in the office which I wasn't allowed to get access to, or with Mary and my computers. I believe it exists, if it was to be made available for that to be supported.

...

I don't believe it would amount to $150,000, no, but I can't give you an answer as to what I believe it would amount to because I don't know but I know that there are numerous transactions over and above the 267 that would need to be added to that if I was to give you a complete picture.[272]

256 I reject the contention that the reimbursable expenditure deficit is explicable by reference to cash transactions and/or financial records not discovered by the Trust. Mr Bannon did not submit any expense claim forms throughout the 2014 financial year.[273] As such there would not have been any payment vouchers generated. Mr Bannon conceded this.[274]

257 All of the upfront reimbursement payments made to Mr Bannon during the 2014 financial year were by way of EFT transfers into Mr Bannon's Westpac Classic Plus account, a joint account which he held with his wife, Melissa.[275] Thereafter, Mr Bannon would transfer funds into his credit card account to cover credit card expenditure which he had incurred on behalf of the Trust.[276] The total deposits into Mr Bannon's credit card account for the 2014 financial year was $320,058 of which $299,658 was from the Classic Plus account.[277] The balance of $20,400 comprised of $5,300 from Mr Bannon's Cash Management account, $1,200 from his Home Loan account together with direct deposits of salary into his credit card account.[278]

258 For the 2014 financial year there was a deficit in excess of $160,000 between the $426,178.15 deposited in Mr Bannon's Classic Plus account by way of upfront reimbursement and the $263,188.09 in actual expenditure which has been identified. The question which arises is how much of this deficit can be reconciled by reference to cash expenditure.

259 In the first instance it is necessary to note that the reimbursable expenditure identified in Exhibit A is not comprised solely of credit card expenditure. The expense claim forms prepared by Mr Bannon which are incorporated into Exhibit A include the following cash transactions totalling $6,575.37:

• 11/7/13: Rubber stamp: $40.70 (R)
• 11/7/13: Sundry food items: $149.20 (R)
• 5/8/13: Bank Charge $30.00
• 6/8/13: Officeworks: $149.96 (R)
• 7/8/13: Transportation $100.00
• 7/8/13: Trolley Hire $12.00
• 27/8/13: Sundry food items: $191.75 (R)
• 24/11/13: Yellow Cabs: $40.00 (R)
• 25/11/13: Yellow Cabs: $20.00 (R)
• 10/12/13: Taxi: $100.00 (R)
• 12/12/13: Room hire: $600.00
• 16/12/13: Kristya Gourmet: $220.00
• 19/12/13: Piggery Farm: $600.00 (R)
• 20/12/13: Menen Hotel: $500.00 (R)
• 20/12/13: Car hire: $1,100.00
• 6/1/14: Sundry food items: $238.45 (R)
• 9/1/14: 7-Eleven: $38.70 (R)
• 5/3/14: Officeworks: $52.46
• 11/3/14: Paramount Apartments: $200.00
• 9/4/14: China Bar: $514.00
• 1/5/14: Kmart: $200.00
• 19/6/14: Officeworks: $1,478.15

260 The total amount of cash reimbursable expenditure claims set out above is $6,575.37. Of that sum, $2068.76 is supported by receipts.[279] Mr Bannon included claims for reimbursable expenditure incurred in cash totalling $4506.61 unsupported by receipts. These claims are irreconcilable with the contention advanced on behalf of Mr Bannon that Exhibit A only included items of cash expenditure which were supported by documentation.[280]

261 In addition to the cash payments totalling $6,575.37, Mr Bannon also sought to reduce his liability to the Trust by miscellaneous expenses totalling $16,033.96. That sum included $8,000 in cash payments which Mr Bannon claimed he paid out of his personal bank account in 2010 in respect of costs related to the relocation of the Trust's warehouse. Mr Bannon's evidence was that he did not make any claim to be reimbursed this sum prior to the termination of his employment. When asked how he could afford to not make a $8,000 reimbursement claim for four years he responded:

I can't answer that question with any clarity. Sorry, I don't know why it wasn't claimed. The documentation exists, the amount was incurred and the amount was funded so that's all the answer I can give in relation to that question.[281]

262 I do not accept this evidence. It is not credible that Mr Bannon would have expended $8,000 of his own money on behalf of the Trust and then simply have forgotten to make a claim for reimbursement. There is evidence that Mr Bannon was actively making claims for reimbursement of work related expenses throughout 2010. Expense claim forms which he made during this financial year are in evidence.[282] Mr Bannon was not a highly paid employee. In 2010 his salary was $140,000. I do not accept that someone in Mr Bannon's position could simply have overlooked an entitlement to be reimbursed such a large sum of money.

263 The $8,000 cash expense claimed by Mr Bannon was said to have been incurred in the 2011 financial year. As such, it is not directly relevant to the analysis of whether in the 2014 financial year Mr Bannon was advanced, by way of upfront reimbursable funds, an amount in excess of that which he actually expended. Nevertheless, this aspect of Mr Bannon's claim is relevant to my assessment of his credit.

264 Mr Bannon's credit is in issue, particularly in respect of his contention that notwithstanding his failure to have lodged any expense claims during the course of the 2014 financial year, there exist documents in Nauru which would assist him in his defence of the NPRT claim in respect of the 2014 financial year. I do not accept this evidence. Mr Bannon accepted that he never submitted a document during the 2014 financial year which spelled out how he had expended funds advanced to him in anticipation of expenditure on his credit card. The following exchange took place between Mr Bannon and myself regarding the absence of expense claim forms:

HIS HONOUR: I'm struggling to understand, absent a document of that type, how can there be any document in the records of the Trust which would actually shed light on how you actually spent these cash withdrawals you said you expended on behalf of the Trust?

MR BANNON: Because they would be used to roll the moneys over again and again and again.

HIS HONOUR: Sorry, what would be? The premise of this question, Mr Bannon, is your evidence that you have not submitted anything to the Trust which spells out how you have spent this cash that you have withdrawn. So if you haven't submitted anything, what is there - what's the reference point for the people in the office?

MR BANNON: The answer to your question, your Honour, is there [is] no document reference to submit because the document does not exist because I have not had it available at my disposal to look at. In terms of existing, I believe that greater clarity would be obtained if the documentation was obtained from Nauru that would enable you to give you greater clarity in relation to that answer. The fact is, I have not seen those documents, therefore, I can't give you any greater clarity in relation to the cash transactions, other than to say, as I said yesterday, did I concede that $150,000 is unlikely to have been - yes, I don't think it was $150,000 but I don't think it was zero either. So it falls within that range, a level of expenditure of my cash that was utilised towards the payment of Nauru Trust expenditure that is otherwise unaccounted for because the records have not been made available to me.[283]

265 I do not accept Mr Bannon's evidence that documents exist in Nauru which would provide 'greater clarity' as to his expenditure in cash during the 2014 financial year.

266 Mr Bannon also gave evidence that even though he did not make any expense claims during the 2014 financial year:

The payment vouchers would have been provided by way of the running sheet in relation to Mary by way of support. The document is at the end, I think, of these documents here. 6678 as a rough guide, even though I know it's outside the years in question.[284]

267 The document at Court Book 6678 referred to by Mr Bannon was a running sheet prepared by Mary Boyd in 2005. It contains numerous entries for travel and miscellaneous expenses. The document shows a balance of $40,135.59 in terms of the amount received by Mr Bannon by way of reimbursement and the amounts he actually expended.

268 I asked Mr Bannon if he could identify a document which would have been relevant to the 2014 year which Ms Boyd would have been able to use for the purpose of preparing a payment voucher.[285] At no point did Mr Bannon refer me to any such document. The only running sheet in evidence for the 2014 financial year is the incomplete document referred to earlier in this judgment covering the period 1 July 2013 to 14 October 2013.[286] That document is plainly deficient in respect of the period 1 July 2013 to 14 October 2013. There is no evidence of any running sheets having been prepared for the balance of the 2014 financial year. The absence of any further running sheets is consistent with Mr Bannon's failure to have submitted any claim forms during the 2014 financial year. It also explains how Mr Bannon was able to receive by way of upfront reimbursements amounts significantly greater than the amounts he was actually spending. If a running sheet had been maintained it would have shown that Mr Bannon was receiving by way of upfront reimbursement much more than he was spending.

269 In respect of key issues Mr Bannon was prepared to give evidence which he thought would assist his case, even where such evidence was glaringly improbable. His contention that he did not believe or understand that his employment was to be terminated on 30 June 2014 is a clear illustration of such evidence. His evidence that he was owed $8,000 by the Trust in respect of cash which he outlaid in 2010 relating to the relocation of the warehouse but which he forgot to claim is another illustration. As discussed below, so to his evidence that at the time of the termination of his employment $8,000 of his personal cash was in the office safe.

270 There was a breakdown in the system of reconciling Mr Bannon's expense claims during the 2014 financial year. Whilst the system appears to have been working relatively effectively up until 30 June 2013, as evidenced by the running sheet maintained by Mary Boyd, the system broke down post 30 June 2013. Expense claims were not submitted with the result that office staff did not have supporting documentation which would have permitted a reconciliation of credit card and cash expenditure. Mr Bannon's evidence that, notwithstanding his failure to have submitted expense claim forms, the documentation exists and is located in Nauru which would enable him to reduce the expenditure deficit, is not credible.

271 Notwithstanding the findings set out above, it does not follow that the extent of Mr Bannon's liability to the Trust should only be reduced by the $6,575.37 in cash payments evidenced by Exhibit A. During the 2014 financial year, $426,178.15 was transferred into Mr Bannon's Classic Plus account. Annexure A to this judgment is a summary of all cash withdrawals from this account and Mr Bannon's MasterCard account during the 2014 financial year. The total cash withdrawals from the Classic Plus account were $55,446.10.[287] The total cash withdrawals from the MasterCard account were $3,618.76.[288] On 17 days throughout the financial year Mr Bannon made withdrawals of $1,000 or greater, totalling $23,280.

272 The total of all cash withdrawals from the Classic Plus account and the MasterCard account is $59,064.86. Assuming all of this money had been expended on Trust related expenses, after adding that sum to the $263,188.09 evidenced by Exhibit A, the total expenditure amounts to $322,252.95. This still leaves a shortfall of $103,952.20 relative to the $426,178.15 advanced to Mr Bannon during the 2014 financial year.

273 I do not accept that all of the cash withdrawals were for the purpose of Trust expenditure. Mr Bannon's evidence is that 90 per cent of expenditure which he incurred on behalf of the Trust in respect of airfares and accommodation was via his credit card. This is consistent with the evidence relating to Mr Bannon's Trust related expenditure during the 2013 financial year. In the 2013 financial year Mr Bannon submitted claim forms seeking reimbursement of $242,471.47. Of this amount, $214,905.39 was expenditure on credit card and $26,146.08 was by way of cash.[289] The remaining $1,420.00 was expenditure from Mr Bannon's other bank accounts. Therefore, 10.8 per cent of the total expenditure was by way of cash.

274 For the 2014 financial year Mr Bannon received more than $100,000 over and above the expenses he incurred on behalf of the Trust. It is not possible to precisely calculate what amounts by way of cash expenditure were expended by Mr Bannon in addition to the credit card expenditure and $6,575.37 of cash expenditure identified in Exhibit A. In large part these difficulties stem from Mr Bannon's failure to have submitted expense claim forms during the 2014 financial year and the associated breakdown in the system of reconciling his expenditure.

275 In assessing what additional amounts have been expended by Mr Bannon by way of cash in addition to the $6,575.37 identified in Exhibit A, I have had regard to the following matters. First, Mr Bannon's evidence that 90 per cent of expenditure on airfares and accommodation was on his credit card. Second, there were 17 days during the 2014 financial year when Mr Bannon withdrew $1,000 or more from his Classic Plus and MasterCard bank accounts. These withdrawals total $23,280. I infer that the withdrawal of sizeable cash sums is consistent with Mr Bannon having accessed cash for the purposes of incurring Trust related expenditure.[290] Third, during the 2013 financial year the percentage of expense claims for cash expenditure was 10.8 per cent of total claims.

276 The evidence permits a rational assessment, albeit with some uncertainty, as to the level of cash expenditure incurred by Mr Bannon over and above $6,575.37 recorded in Exhibit A.[291] Exhibit A evidences total expenditure of $263,188.09 comprising $256,612.72 on credit card and $6,575.37 by way of cash. Based on Mr Bannon's own evidence that approximately 90 per cent of expenditure was incurred on his credit card, supported by the evidence of expenditure during the 2013 financial year, I have concluded that Mr Bannon's cash expenditure during the 2014 financial year was 10.8 per cent of his total expenditure. Mr Bannon's credit card expenditure as evidenced by Exhibit A ($256,612.72) represents 90 per cent of total expenditure of $285,125.24. If 10 per cent of this total expenditure was by way of cash, this comprises $28,512.52 in addition to the $256,612.72 expended on his credit card. Giving credit for the $6,575.37 of cash expenditure evidenced by Exhibit A, Mr Bannon's expenditure deficit of $162,990.06 must be reduced by a further $21,937.15. This leaves a debit balance of $141,052.91.

277 Subject to two qualifications NPRT is entitled to damages in the sum of $141,052.91, being the difference between the amount advanced to Mr Bannon during the 2014 financial year by way of upfront reimbursement, and the amount he actually spent.

278 The assessment set out above assumes that at the commencement of the 2014 financial year the Trust was not indebted to Mr Bannon by reason of him having incurred expenditure during the 2013 financial year which was in excess of the sums advanced to him by the Trust by way of upfront reimbursement. No submission was advanced on behalf of Mr Bannon, that the assessment of Exhibit A should proceed from the premise that Mr Bannon was owed money by the Trust at the commencement of the 2013 financial year. The running sheet for the period 30 April 2013 to 30 June 2013[292] discloses that Mr Bannon had been advanced $55,000 by way of upfront reimbursement and had incurred actual expenses of $51,220.09. On the basis of this evidence, as at 30 June 2013 he had been advanced $3,779.91 more than he had spent. I therefore proceed on the basis that as at 1 July 2013 the Trust was not indebted to Mr Bannon.

279 The second qualification to the assessment set out above arises from Mr Bannon's evidence that when his employment was terminated on 30 June 2014 he had approximately $8,000 of his own cash in a safe located in the Trust's Melbourne office.[293] I place no weight on this evidence. It is not believable. The evidence was given on day 16 of the trial in the context of Mr Bannon seeking to reconcile the expenditure deficit by reference to cash expenditure not referred to in Exhibit A. Further, if Mr Bannon had $8,000 of his own cash in the office safe on 30 June 2014 he would have made an express demand for the return of the funds. No such demand was ever made.

280 Mr Bannon forwarded an invoice to the Trust on 25 September 2014 claiming $3,396,525. The covering email included the following:

In addition I sincerely hope arrangements can be made for me to retrieve personnel [sic] possessions and notes from within my office.[294]

I reject Mr Bannon's evidence that his reference to 'personal possessions' included his cash in the office safe.[295] Further, the statement of claim includes no claim for recovery of this money. Mr Bannon's evidence that he had $8,000 of his personal cash in the office safe on 30 June 2014 is a further illustration of his willingness to give evidence without any foundation if he considered it would assist his case.

281 NPRT is entitled to damages in the sum of $141,052.91 being funds retained by Mr Bannon as at 30 June 2014 in excess of amounts advanced to him during the course of the 2014 financial year by way of upfront reimbursement of expenses.

282 NPRT claims that Mr Bannon is indebted to it in the sum of $238,711.[296] It contends that this is the balance of Mr Bannon's general ledger account ('GL acc') as at 30 June 2014. Annexure B to this judgment is an eight page document which constitutes Mr Bannon's GL acc as at 30 June 2014.

283 There was considerable disagreement between the parties as to the nature of the transactions recorded in the GL acc. For his part, Mr Millar submitted that the account was a 'loan account' which recorded personal loans advanced to Mr Bannon during the course of his employment. On the other hand, Mr North submitted that the GL acc operated as a 'suspense account', operating in tandem with the Trust's system of reimbursable expenditure. He submitted that sums of money advanced to Mr Bannon by way of upfront reimbursement were debited to Mr Bannon's account. Thereafter, once Mr Bannon had established that he had spent the sums on Trust related expenditure, the amounts expended would be credited to his account.

284 The true position lies somewhere between the competing contentions set out above. Mr Bannon conceded that during the 2009 financial year he received personal loans totalling $83,127.[297] This sum was comprised of:

• A payment to the ATO of $28,127 on 21 July 2008;
• A payment to Mr Bannon of $15,000 on 16 October 2008; and
• A payment to Mr Bannon of $40,000 on 28 October 2008.

285 The credit column for the 2009 financial year contains 21 separate entries of $5,384.62. At this time, this represented Mr Bannon's gross fortnightly salary. Mr Bannon used his salary to pay down the loans advanced to him. Mr Bannon accepted that it was a 'fair assumption' that all of the salary transferred into his account was paying off personal loans.[298] On this evidence, Mr Bannon had received personal loans during the 2009 financial year totalling $113,077.02. Whether the amount of the personal loans advanced to Mr Bannon was $83,127 or $113,077.02, it is clear that, up until 30 June 2009, Mr Bannon's GL acc was operating as a loan account.

286 Mr Bannon's evidence is that post 30 June 2009 he never received any further advances from the Trust by way of personal loans.[299] At 30 June 2009 the balance in Mr Bannon's GL acc was $9,243.87 in debit. The final balance for the 2014 financial year was $286,010.95. It is to be noted, however, that no transactions are recorded post 5 December 2013. As will be discussed below, following Mr Bannon's termination, Kham undertook a reconciliation of Mr Bannon's account resulting in the reduction of the balance by $50,800. This reconciliation is recorded on the second page of Annexure B.

287 Post 30 June 2010 there is a significant increase in the number of debit entries in the account resulting in a corresponding increase in Mr Bannon's debit balance. Mr Bannon stated that this was a result of increased Trust related expenditure on his credit card.[300]

288 Post 30 June 2009 there was a breakdown of the reconciliation of Mr Bannon's GL acc. For example, during the 2011 financial year there were debit entries totalling $140,794.75 and credit entries of $8,986.84. Mr Bannon's debit balance increased from $20,492.17 to $160,136.92. For the 2012 financial year there were debit entries totalling $71,500 and credit entries of $17,836.84. For the period 1 July 2012 to 5 December 2013 there were debit entries totalling $64,622.53 and a single credit entry of $248.50.

289 It is apparent on the face of Annexure B that post 30 June 2010 the records were not properly maintained. I accept Mr Bannon's evidence that the significant increase in debit entries post 30 June 2009 reflects an increased use of his credit card. I have referred earlier in this judgment to Mr Bannon's evidence that around 2009/2010 the system of reimbursable expenditure changed such that he would be advanced significant lump sums, being an estimate of costs to be incurred on his credit card for Trust related expenses.[301] The large sums debited to his GL acc post 30 June 2009 are consistent with this evidence.

290 The fact that at least a proportion of the debit entries in the loan account related to expenses incurred by Mr Bannon on behalf of the Trust is evidenced by the note which appears on the front page of Annexure B:

Paul Bannon's personal credit card was used for work related expenses e.g. Travel, Accommodation, Office Expenses etc. Credit card statements/ paperwork are required to be supplied from Paul to enable the Trust to reconcile his debtor.

This note was written by Kham. During the period July/August 2014 she undertook a reconciliation of Mr Bannon's GL acc. She identified $50,800 of expenses which had been incurred by Mr Bannon between 30 April 2008 and 11 August 2011, but which had not been credited to his account.

291 Kham was called to give evidence in the proceeding. Kham undertook the reconciliation shortly before her employment with the Trust ended in August 2014.[302] Kham had not completed the reconciliation because she did not have enough information. She thought there were more documents available which would have further reduced Mr Bannon's debit balance beyond the $50,800 she identified.[303] In the second half of the 2014 financial year she was busy processing payments to landowners of the receivership residual and did not have the time to locate more supporting documents.[304] She believed that the supporting documentation for the period post August 2011 was located in the Trust's office but she did not have time to look for the documents.[305]

292 Kham was questioned by Mr Millar regarding the entry on the first page of Annexure B 'Personal Loans - Cash Advances'. Her response was that after she had gone through all of the entries in the general ledger she considered that Mr Bannon had received personal loans totalling $235,210.95 'at that point' of her reconciliation.[306]

293 Kham had a poor recollection of the details relating to the reconciliation which she undertook. She could not recall what documents she had accessed.[307] Kham's evidence was that the reconciliation showing the balance of $235,210.95 was a 'completed task' and she had finished doing what she needed to do to come up with the right figure.[308] However, she considered 'there could be more expenses coming down to reduce his debtor.'[309]

294 I have no doubt that Kham endeavoured to answer questions to the best of her ability. However, she had a poor recollection of the detail relating to the reconciliation process. Her evidence as to whether she had completed the reconciliation task was inconsistent. Nevertheless, three matters do clearly emerge. First, Mr Bannon's GL acc included $50,800 of reimbursement expenses which had not been credited to his account as at 30 June 2014. Second, post 11 August 2011 the only credit entry in the GL acc was for an amount of $248.50 on 23 November 2012. Third, between August 2011 and 5 December 2013 the debit balance increased from $170,136.92 to $286,010.95.

295 Prior to the reconciliation undertaken by Kham in July/August 2014 there had been no reconciliation of Mr Bannon's GL acc. Although Annexure B is a business record of the Trust, I am not satisfied that it accurately records the quantum of any, and if so, what level of debt was owed by Mr Bannon to the Trust. On the other hand, the evidence supports a finding that Annexure B does not adequately record and give credit for expenses which were incurred by Mr Bannon on behalf of the Trust. For example, Mr Bannon's account was debited with $7,000 on 22 November 2013 and $15,000 on 27 November 2013. No corresponding credit entries appear. However, MYOB records for these dates contain the notation: Paul Bannon/Expenses.[310] The MYOB records support a finding that $22,000 was advanced to Mr Bannon for the purpose of anticipated expenditure on his credit card. It is clear from the expense claim in Exhibit A that Mr Bannon incurred significant expenditure on his credit card in November 2013. The expense claim form which he prepared, which is incorporated in Exhibit A, for the period 8 November to 6 December 2013 records credit card expenditure totalling $16,654.13. For the period 10 December 2013 to 3 January 2014 he incurred expenditure of $33,176.70. It is highly likely that a significant proportion of the $22,000 advanced to Mr Bannon on 22 and 27 November 2013 was offset by Trust related expenditure on his credit card. In order for the GL acc to accurately reflect the level of Mr Bannon's indebtedness, it was necessary for his account to be credited with the expenditure which he had incurred.

296 Further examples, in line with those set out above, arise in respect of debit entries in the GL acc for the 2011 and 2012 financial years. The MYOB records for the 2011 financial year record the following payments to Mr Bannon:

(a) 29 July 2010 - $20,000;

(b) 26 August 2010 - $9,500;

(c) 23 September 2010 - $13,000;

(d) 18 October 2010 - $4,070; and

(e) 29 October 2010 - $2,108.70.

297 In each instance the notation in the MYOB records is: 'Paul Bannon/ Reimbursements'. This description is consistent with the payments having been made to Mr Bannon by way of upfront reimbursement of expenses he was to incur on behalf of the Trust. It is possible, as I have found to be the case for the 2014 financial year, that Mr Bannon did not actually spend all of the money which was advanced to him by way of upfront reimbursement. However, it is extremely unlikely that none of these funds would have been spent on Trust related expenditure. The absence of any credit entries in the GL acc during the 2011 financial year in respect of the advances referred to, points strongly to the conclusion that the accounts were not properly maintained.

298 The MYOB records for the 2012 financial year include records of payments to Mr Bannon of $9,000 on 22 September 2011 and $40,000 on 25 November 2011. The notation in respect of the $9,000 payment is: 'reimbursement of expenses by Paul Bannon (need supporting documents).' The narration in respect of the $40,000 payment on 25 November 2011 is: 'accountable allowance in repayment of costs re Dube, and Amwano, Detenamo, Bannon and Keke.' This description is consistent with the payment of $49,000 being in respect of work related expenses. There are no corresponding credit entries in the GL acc for the 2012 financial year in respect of these payments.

299 Mr Bannon bears some of the responsibility for the Trust's failure to properly maintain his GL acc. He was the senior employee of the Trust and supervised Romys Eobob who, together with Kham, was responsible for maintaining his account.[311] Mr Bannon was aware during the course of his employment that his account had a large debit balance but he was not concerned about this because he believed he would be able to account for the expenditure in due course.[312] The fact that Mr Bannon did not submit expense claim forms during the 2014 financial year would have been a significant impediment to the reconciliation of his account. His failure to take steps to ensure that the account was properly maintained does not provide a sound foundation, however, for imposing liability upon him for the debit balance recorded in the account.

300 The Trust bears the onus of establishing the extent of Mr Bannon's indebtedness as evidenced by Annexure B. The Trust has not established that the debit balance of $235,210.95 after Kham's reconciliation of the account in July/August 2014 represents personal loans advanced to Mr Bannon. There is evidence which points strongly to the conclusion that a proportion of this balance reflected advances made to Mr Bannon for the purposes of Trust related expenditure. Further, I am satisfied that at least a proportion of such sums would have been expended on behalf of the Trust. However, the evidence does not permit a rational assessment of the extent to which the balance of $235,210.95 records personal loans advanced to Mr Bannon prior to the termination of his employment. Accordingly, this aspect of the Trust's counterclaim must be rejected.

Unauthorised payment of back pay and tax in the sum of $295,475

301 On 18 October 2007 four Board Members signed a memorandum in the following terms:

The Trustee of the Nauru Phosphate Royalties Trust, in a meeting held on Wednesday 17 October, 2007 have unanimously agreed to increase the base salary paid to Trust Secretary, Mr. Paul Bannon from $80,000 - $140,000 per annum a monetary increase over the currently paid of $36,000 since April 2003 up to present.

302 Shortly after 18 October 2007 Mr Bannon arranged for a payment to be made to himself totalling $295,475. This sum was comprised of back pay for a period of 4.5 years to April 2003 together with amounts in respect of superannuation and taxation. Mr Bannon's evidence was that he facilitated this payment to himself because he believed that the memorandum of 18 October 2007 conferred upon him an entitlement to a retrospective payment.[313]

303 Alvina Aremwa was the chair of the Board in October 2007 and one of the signatories to the memorandum set out above. Her unchallenged evidence was that around 18 October 2007 she had a telephone conversation with Mr Bannon during which she told him that the $60,000 increase would be retrospective to April 2003.[314] This is direct evidence that the payment was authorised by the Board. It is therefore unnecessary to consider Mr Millar's contention that the Trust's claim for recovery of the sum of $295,475 is not statute barred by reason of s 27(c) of the Limitations of Actions Act 1958, that is, the back payment was made as a consequence of a mistake by Mr Bannon in misinterpreting the memorandum of 17 October 2007. No question of mistake arises in circumstances where the back payment was authorised by the Chair of the Trust. This aspect of the Trust's claim must be rejected.

304 NPRT seeks to recover $77,500 from Mr Bannon, being the amount of personal loans advanced by NPRT to Ms Eobob prior to 30 June 2014, with Mr Bannon's approval. This claim must be rejected. On 18 June 2014 the Chairman of the Trust, Charmi Depaune, agreed with a request from Ms Eobob that her debt to the Trust should be forgiven. This was recorded in a memorandum forwarded to Mr Bannon and the Minister for the Trust, Shadlog Bernicke. The memorandum states in part:

By the authority vested in me as Chairman of NPRT I have agreed to Mrs Romys Eobob's request to offset her Debtor's Account against the loss of salaries she suffered over the past ten (10) years by being underpaid while performing the various duties of Finance Manager of NPRT. I agree with her that her lower salary has contributed to her financial hardship.

...

The amount approved to offset her Debtor's Account at 21/05/2014 is $77,500.00.

305 Mr Millar did not submit that Mr Depaune did not have authority to forgive Ms Eobob's debt to the Trust. In these circumstances, there is no basis for holding Mr Bannon liable for Ms Eobob's failure to have paid to the Trust the amount advanced to her by loans, albeit with his approval. This aspect of the Trust's counterclaim must also be rejected.

306 The NPRT has succeeded in respect of five issues in the proceedings. First, it has successfully defended the claim for fees by reason of having established an estoppel by convention. Second, it has successfully argued that the Trust's obligation to make superannuation contributions is capped by the maximum superannuation contribution base in s 19(3) of the SGA Act. Third, it has established that the 31 March 2014 email from Andrew Jacobson constituted valid notice of termination of Mr Bannon's employment. Fourth, it has established that Mr Bannon's fees claim is statute barred prior to 29 June 2009. Fifth, it has established that for the 2014 financial year the amount of funds advanced to Mr Bannon for the purpose of the Trust related expenditure exceeded the amount actually expended by $141,052.91.

307 Mr Bannon submits that an adverse inference should be drawn against NPRT arising from the failure of the Trust to call a number of witnesses. Mr Bannon points to the fact that Charmi Depaune did not attend to explain his forgiveness of Romys Eobob's debt. I have dismissed this aspect of NPRT's counterclaim. As such, nothing turns on the failure to call Mr Depaune.

308 Mr Bannon submits that it is 'striking that Mr Jacobson has not been called by the defendant as a witness in this proceeding.' I do not consider that there is any basis for drawing an adverse inference against NPRT from the failure to call Mr Jacobson. The rule in Jones v Dunkel only applies where a party is 'required to explain or contradict' something.[315] Mr Bannon has not identified any matters in respect of the five issues upon which NPRT succeeded which required the attendance of Mr Jacobson as a witness.

No person with any accounting knowledge of the defendant was called by it. This includes Ms Boyd, any relevant Board member, any persons performing any audits of the Trust and Mr Javan Tamakin as the Finance Manager. Mr Tamakin could have provided relevant information and assistance to Mr Fitzgerald, but his services were not used. No existing annual accounts of the Trust Funds operated by the defendant were discovered or tendered in the trial.[316]

This submission may have had force if I had accepted NPRT's contentions that:

(a) the upfront reimbursement sums advanced to Mr Bannon were unauthorised; and

(b) the GL acc debit balance of $235,210.95 recorded personal loans to Mr Bannon.

I have rejected both those contentions. None of the five issues upon which NPRT succeeded required any of the individuals identified in the submission set out above to give evidence on behalf of NPRT.

310 Mr Bannon is entitled to damages in the sum of $511,275.58 made up as follows:

(a) Accrued annual leave: $222,153.62;

(b) 50 per cent of accrued sick leave: $105,769.13.

(c) $60,000 salary increase, approved but not received, for the period 22 May 2013 to 30 June 2014: $65,769;

(d) Superannuation on $60,000 salary increase: $5,276.18;

(e) Redundancy pay: $46,153.80; and

(f) Long service leave: $66,153.85.

311 NPRT is entitled to damages in the sum of $141,052.91. When allowance is made for this sum, NPRT is liable to pay damages to Mr Bannon of $370,222.67.

312 I shall provide the parties with an opportunity to make submissions on interest and costs, including reserved costs.

Cash Withdrawals for the 2013/14 financial year.[317]

Table 1: Cash Withdrawals from Westpac Classic Plus Account:

Table 2: Cash Withdrawals from Westpac Altitude Platinum (MasterCard) Account:

[1] Plaintiff's final particulars of loss 13 July 2018.

[2] Exhibit D Affidavit of Paul Bannon sworn 20 June 2016, [6], [10].

[4] Reconciliation of Director/Secretaries of NRPT Australian companies (CB 8432-8449).

[5] See also Corporations Act 2001 (Cth) ss 180-183.

[7] Exhibit T email Paul Bannon to Alex Namaduk 19 March 2013.

[8] See Order of Judd J, 25 October 2013, in Baker & McKenzie v Nauru Phosphate Royalties Trust (S CI 2013 03786).

[9] Plaintiff's closing submissions 13 July 2018, [7].

1. [11] Calculated on the basis of 49 months for each of the 13 subsidiaries for which Mr Bannon was Company Secretary for the entire period 22 July 2003 to 24 August 2007, 36 months for each of Central Pacific Holdings Pty Ltd and Southern Cross Properties Pty Ltd, 33 months for Central Pacific Securities Pty Ltd, and 29 months for Nauru House Maintenance Services Pty Ltd.

[12] Transcript of Proceedings (18 April 2018) 356.1-356.8.

[13] Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713 [30].

[14] Transcript of Proceedings (19 April 2018) 438.11-438.13.

[17] Transcript of Proceedings (17 April 2018) 245.15-245.20.

[18] Transcript of Proceedings (19 April 2018) 429.14-429.15.

1. [41] Agenda Item No 4 - Meeting No 2 of 2010 - 25th June - Special Meeting of The Board of Trustees of - Nauru Phosphate Royalties Trust - Consideration of the Nauru Phosphate Royalties Trust - Administration Budget For the Year Ending 30th June 2011 (CB 1507-1508).

[42] Transcript of Proceedings (19 April 2018) 439.6-439.13.

[46] Agenda Item No 4- Meeting No 2 of 2010 - 25th June - Special Meeting of The Board of Trustees of - Nauru Phosphate Royalties Trust - Consideration of the Nauru Phosphate Royalties Trust - Administration Budget For the Year Ending 30th June 2011 (CB 1507-1508).

[47] Transcript of Proceedings (19 April 2018) 440.4-440.27.

1. [49] Email from the plaintiff to Chair Leo Keke with subject header 'NPRT Administration Budget 2010/2011' (CB 1542).

[50] Transcript of Proceedings (19 April 2018) 442.12-442.21.

[53] Email from the plaintiff to Chair Leo Keke with subject header 'NPRT Administration Budget 2010/2011' (CB 1542).

[54] Transcript of Proceedings (19 April 2018) 444.22-444.26.

1. [67] Special Meeting of the Board of Trustees of Nauru Phosphate Royalties Trust, Agenda Item No. 4 for Meeting No. 3 of 2011 - 28 June (CB 1788-1790).

[68] Transcript of Proceedings (19 April 2018) 452.23-453.6.

[72] Emails between the plaintiff and Chairman, Leo Keke subject 'Re: FW: Agenda' (CB 1792).

[73] Transcript of Proceedings (19 April 2018) 452.25-453.30, 454.17-454.25.

[82] (1976) 15 SASR 270.

[84] Brambles Holding Ltd v Carey (1976) 15 SASR 270, 276; Pacific National (ACT) Ltd v Queensland Rail [2006] FCA 91 [61].

[85] Updated Schedule of Trustees (CB 8431A-G).

[88] Transcript of Proceedings (23 April 2018) 668.15-668.19.

[102] Plaintiff's short reply submissions to Defendant's outline of closing submissions, 17 July 2018, [16].

[103] Transcript of Proceedings (23 April 2018) 660.15-660.16.

[112] Cf LCY Pty Ltd v Ma [2017] VSCA 383 [46].

[113] Transcript of Proceedings (24 April 2018) 860.30.

[115] [2008] VSC 27.

[117] Transcript of Proceedings (17 April 2018) 256.11-12; Transcript of Proceedings (24 April 2018) 825.25-26.

[118] Je Maintiendrai v Quaglia (1980) 26 SASR 101, 107, 116.

[119] Cf Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713 [41]; Je Maintiendrai v Quaglia (1980) 26 SASR 101, 107, 116.

[120] Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226, 244.

[121] Strategic Property Reservoir Pty Ltd v Condec Pty Ltd [2012] VSC 634 [178]; Amcor Ltd v Barnes [2016] VSC 707 [379].

[122] See Mineralogy Pty Ltd v Sino Iron Pty Ltd (No. 6) [2015] FCA 825; (2016) 329 ALR 1, 120 [760] and the cases cited therein.

[123] [2007] NSWSC 5; (2007) 13 BPR 24,713.

[124] (2014) 89 NSWLR 317 [431].

[125] Mineralogy Pty Ltd v Sino Iron Pty Ltd (No. 6) [2015] FCA 825; (2016) 329 ALR 1, 120 [760].

[126] India v India Steamship Co Ltd; The Indian Endurance and The Indian Grace (No 2) [1997] UKHL 40; [1997] 4 All ER 380, 391; Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603, 645 [198]; Strategic Property Reservoir Pty Ltd v Condec Pty Ltd [2012] VSC 634 [179]; Amcor Ltd v Barnes [2016] VSC 707 [380]; Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106; (2017) 94 NSWLR 500, 511 [54].

[127] Plaintiff's closing submissions, 13 July 2018, [41].

[128] LCY Pty Ltd v Ma [2017] VSCA 383 [46].

1. [129] Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, 676; Taouk v Assure (NSW) Pty Ltd [2017] NSWSC 534 [86].

[130] Mineralogy Pty Ltd v Sino Iron Pty Ltd (No. 6) [2015] FCA 825; (2016) 329 ALR 1, 121 [764].

[132] LCY Pty Ltd v Ma [2017] VSCA 383 [45].

[133] Transcript of Proceedings (18 April 2018) 356.1-356.8.

[134] Transcript of Proceedings (19 April 2018) 416.8-416.10.

[135] Republic of India v India Steamship Co Ltd, The Indian Grace (No 2) [1996] 3 All ER 641, 652; Coghlan v S H Lock (Australia) Pty Ltd (1985) 4 NSWLR 158, 177; LCY Pty Ltd v Ma [2017] VSCA 383 [45].

[136] Plaintiff, 'Plaintiff's closing submissions', 13 July 2018, [37].

[137] Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, 676.

[138] Plaintiff, 'Plaintiff's closing submissions', 13 July 2018, [38].

[139] Mineralogy Pty Ltd v Sino Iron Pty Ltd (No. 6) [2015] FCA 825; (2016) 329 ALR 1, 121 [764].

[140] Equuscorp v Wilmoth Field Warne (a firm) (2007) 18 VR 250, 269-270 [77].

[141] Transcript of Proceedings (20 July 2018) 2076.1-2076.9.

[143] Ibid 2077.17-2077.25, 2079.27-2079.30.

[145] [1989] 2 Qd R 40.

[146] Plaintiff's closing submissions, 13 July 2018, [44].

[147] Transcript of Proceedings (24 April 2018) 826.4-826.8, 826.24-826.29.

[148] Parbery v Nauru Phosphate Royalties Trust [2013] NSWSC 489 [32].

[149] [2015] FCA 825; (2016) 329 ALR 1.

[150] Ibid 121 [765] - 122 [769] (emphasis in original).

[151] [2017] VSCA 383.

[152] K R Handley, Estoppel by Conduct and Election (Sweet & Maxwell, 2nd ed, 2016).

[153] LCY Pty Ltd v Ma [2017] VSCA 383 [41].

[154] [2008] VSCA 247; (2008) 21 VR 351.

[156] Andrew Robertson, 'Revolutions and Counterrevolutions in Equitable Estoppel' in Sarah Worthington, Andrew Robertson, and Graham Virgo (eds), Revolution and Evolution in Private Law (Hart Publishing, 2018) 161-176, 172 n 60; Allison Silink, 'Can Promissory Estoppel be an Independent Source of Rights?' [2015] UWALawRw 40; (2015) 40(1) The University of Western Australia Law Review 39, 39 n 3, 52.

[157] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 428−9.

[158] Commonwealth v Verwayen (1990) 170 CLR 394, 436; Forbes v Australian Yachting Federation Inc (1996) 131 FLR 241, 289; Pegela Pty Ltd v National Mutual Life Association of Australasia Ltd [2006] VSC 507; (2007) 14 ANZ Ins Cas 90-131, 86961−86963.

[159] Commonwealth v Verwayen (1990) 170 CLR 394, 436 and 442; Legione v Hately [1983] HCA 11; (1983) 152 CLR 406, 420; MP Investments Nominees Pty Ltd v Bank of Western Australia Ltd [2012] VSC 43 [128]; Loughridge v Lavery [1969] VicRp 112; [1969] VR 912, 928; Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713 [27]; Franks v Equitiloan Securities Pty Ltd [2008] NSWSC 33 [70].

[160] Plaintiff's Statement of Claim, 29 June 2015, [15].

[162] Coburn v Colledge [1897] 1 QB 702, 705−706; Swansea City Council v Glass (1992) 24 HLR 327, 333; Coshott v Barry [2012] NSWSC 850 [41]−[42]; Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd [2015] QDC 225 [128], [136].

[163] Transcript of Proceedings (19 April 2018) 465.5-465.10.

[166] Transcript of Proceedings (23 April 2018) 694.19.

[168] Transcript of Proceedings (24 April 2018) 830.3-830.6.

[169] Transcript of Proceedings (23 April 2018) 725.19-725.21.

[170] Transcript of Proceedings (24 April 2018) 800.15-800.17.

[171] Transcript of Proceedings (23 April 2018) 695.25-695.28.

[174] Ibid 696.16−696.17, 696.26−696.27.

[176] Transcript of Proceedings (18 April 2018) 293.19-293.20.

[177] Transcript of Proceedings (19 April 2018) 462.19-462.22.

[178] Birrell v Australian National Airlines Commission [1984] FCA 378; (1984) 5 FCR 447, 457−459.

[179] Paul Bannon - leave accruals (CB 8407-8409).

[180] Transcript of Proceedings (19 April 2018) 481.27-482.6.

[182] Transcript of Proceedings (27 June 2018) 1827.26-1828.3.

[184] Transcript of Proceedings (19 April 2018) 479.27-480.2.

[185] Plaintiff's employment contract with the defendant (3 October 1994) (CB 176-177).

[186] Cf Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 423.

[187] Paul Bannon - leave accruals (CB 8407-8410).

[188] Transcript of Proceedings (20 July 2018) 2066.27-2066.29.

[189] Superannuation Guarantee (Administration) Act 1992 (Cth) ss 15(3), 9.

[190] Ibid s 19(2).

[191] Ibid ss 15(3), 9.

[192] See J A Simpson and E S C Weiner (eds), The Oxford English Dictionary (Clarendon Press, 2nd ed, 1989), 887; Mercantile Mutual Life Insurances Co Ltd v Australian Securities Commission (1993) 112 ALR 463, 477.

[193] $5,550 calculated at the rate of 9.25 per cent on $60,000 for 1 July 2013 to 30 June 2014 and $519 calculated at the rate of 9 per cent on $60,000 for 23 May 2013 to 30 June 2013.

[194] Defendant's Second Further Amended Defence and Counterclaim, 6 June 2018, [42A]; Exhibit X Defendant's re-calculation of counterclaim on completion of expert evidence date 22 June 2018, 3.

[195] Defendant's Second Further Amended Defence and Counterclaim, 6 June 2018, [28A] and [42(b)]; Exhibit X Defendant's re-calculation of counterclaim on completion of expert evidence date 22 June 2018, 4.

[196] Defendant's Second Further Amended Defence and Counterclaim, 6 June 2018, [42C] and [42D].

[198] Plaintiff, 'Plaintiff's closing submissions', 13 July 2016, [67].

[199] Bannon v Nauru Phosphate Royalties Trust (No 2) [2016] VSC 558 [10]-[11].

[200] Bannon v Nauru Phosphate Royalties Trust (No 3) [2017] VSC 214.

[201] Bannon v Nauru Phosphate Royalties Trust (No 4) [2018] VSC 237.

[202] Bullfinch Surprise Gold Mining Co (N/L) v Butler (1913) 35 ALT 99.

[203] Transcript of Proceedings (23 April 2018) 713.28-713.29.

[205] Bannon v Nauru Phosphate Royalties Trust (No 2) [2016] VSC 558 [11].

[206] Transcript of Proceedings (24 April 2018) 815.24-816.8.

[207] Plaintiff's closing submissions, 13 July 2018, [87].

[210] Ibid [91] (citations omitted).

[212] Ibid [92] (footnotes omitted).

[213] Exhibit B Affidavit of Lawrence Gaure Cook affirmed 23 April 2016, [20].

[219] Bannon v Nauru Phosphate Royalties Trust (No 2) [2016] VSC 558.

[221] Affidavit of Kate Louise Wilkinson sworn 11 August 2016, exhibit 'KLW-33'.

[222] Plaintiff's closing submissions, 13 July 2018, [88].

[223] Transcript of Proceedings (20 April 2018) 597.2-597.13.

[224] Transcript of Proceedings (19 April 2018) 495.17−495.18.

[226] Transcript of Proceedings (20 April 2018) 516.17−516.26.

1. [228] Paul Bannon - Cash/Credit Card Expenses Excel spreadsheet (CB 4707−4708).

[229] Transcript of Proceedings (25 June 2018) 1625.29−1626.1.

[231] Transcript of Proceedings (27 June 2018) 1779.10−1779.15.

[232] Cf LCY Pty Ltd v Ma [2017] VSCA 383 [39].

[233] Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693, 697-698 [17]; Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 68, 96.

[234] Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544, 557; Vigliaroni v CPS Investment Holdings Pty Ltd [2009] VSC 428 [51]; Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134, 137.

[235] See Bannon v Nauru Phosphate Royalties Trust (No 4) [2018] VSC 237.

1. [236] Forensic Accounting Report of Thomas Fitzgerald with annexures dated 8 February 2018 (CB 8452).

[238] Transcript of Proceedings (4 June 2018) 1037.25-1038.3.

[239] Further accounting report of Thomas Fitzgerald dated 1 May 2018 (CB 8506-8517).

[241] See also Exhibit X Defendant's recalculation of counterclaim on completion of expert evidence and Exhibit M Mr Fitzgerald's reply to exhibit L.

[242] Transcript of Proceedings (6 June 2018) 1328.31-1330.2, 1330.12-1330.21; Transcript of Proceedings (7 June 2018) 1411.9-1412.7.

1. [243] Transcript of Proceedings (6 June 2018) 1322.25-1324.5, 1328.20-25; Transcript of Proceedings (7 June 2018) 1407.22-1407.28.

[244] Transcript of Proceedings (6 June 2018) 1352.20-1353.16, 1358.9-1359.16.

1. [245] Ibid 1375.26-1376.2; Transcript of Proceedings (7 June 2018) 1395.2-1395.11, 1398.26-1400.3.
2. [246] Transcript of Proceedings (6 June 2018) 1254.15-1254.20, Transcript of Proceedings (7 June 2018) 1395.2-1395.11, 1395.18-1396.23, 1397.27-1398.1, 1398.26-1399.26, 1400.24-1400.28.

[247] Transcript of Proceedings (6 June 2018) 1376.29-1377.2, Transcript of Proceedings (7 June 2018) 1397.19-1398.4.

[248] Exhibit M Mr Fitzgerald's reply to exhibit L.

[249] Transcript of Proceedings (18 April 2018) 312.25-312.27.

[250] Transcript of Proceedings (27 June 2018) 1773.28-1773.30.

[251] Exhibit H MYOB records relating to annexure 1 of Mr Fitzgerald's report.

[252] MFI: 'Millar Hand-up 27 June 2018'.

[253] Transcript of Proceedings (27 June 2018) 1795.1-1795.3.

1. [254] NCON Australia Ltd v Spotlight Pty Ltd [No 5] [2012] VSC 604 [291]; Amcor Ltd v Barnes [2016] VSC 707 [1046]; LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 [12]; Grainger v Williams [2009] WASCA 60 [170].

[255] Transcript of Proceedings (27 June 2018) 1796.15−1796.18.

[256] Transcript of Proceedings (25 June 2018) 1629.12−1630.4.

[257] Paul Bannon - Cash/Credit Card Expenses Excel spreadsheet (CB 4707−4708).

[258] Transcript of Proceedings (26 June 2018) 1692.6−1692.10.

[259] Transcript of Proceedings (25 June 2018) 1632.26−1632.31.

1. [260] Forensic Accounting Report of Thomas Fitzgerald with annexures dated 8 February 2018 (Annexure 1) (CB 8450-8505); Transcript of Proceedings (4 June 2018) 1051.2-1052.5.

[261] Transcript of Proceedings (26 June 2018) 1698.2-1698.11.

[262] Transcript of Proceedings (20 April 2018) 530.1−530.21

[263] Transcript of Proceedings (26 June 2018) 1671.26−1671.29.

[264] Exhibit A Mr Bannon's reconciliation of his reimbursable expenditure for the 2014 financial year, tab 3.

[265] Transcript of Proceedings (25 June 2018) 1642.7−1642.11.

[266] Transcript of Proceedings (27 June 2018) 1852.9-1852.20.

[267] Transcript of Proceedings (25 June 214) 1645.11−1645.14.

[270] Transcript of Proceedings (26 June 2018) 1660.1−1660.4.

[272] Ibid 1675.4-1675.18, 1675.22-1675.28.

[273] Transcript of Proceedings (27 June 2018) 1796.15−1796.18.

1. [275] See Forensic Accounting Report of Thomas Fitzgerald with annexures dated 8 February 2018 (Annexure 1) (CB 8450-8505); Statements for Westpac Classic Plus Account number 604356 in the names of the plaintiff and Melissa Anne Bannon (CB 5828−5879).

[276] Transcript of Proceedings (25 June 2018) 1637.16−1637.23.

[277] Exhibit L Plaintiff's correction to analysis of deposits handed up in Court on 6 June 2018, 10−12; Exhibit M Mr Fitzgerald's reply to exhibit L.

[279] These are the entries set out above which have (R) next to the entry.

[280] Transcript of Proceedings (26 June 2018) 1649.9-18, 1665.17-1666.6, 1672.8-1672.14.

1. [282] List of transactions during 2010 (CB 3602−3603); Table - Reimbursement Request: Expenses incurred on Paul Bannon's credit cards on behalf of Nauru Phosphate Royalties Trust (CB 3615−3619); Document titled 'Paul Bannon's Reimbursements (Receipts attached)', attaching various receipts (CB 3658); List of purchases/expenses (CB 3748).

[283] Transcript of Proceedings (27 June 2018) 1873.11-1874.9.

[286] Paul Bannon - Cash/Credit Card Expenses Excel spreadsheet (CB 4707−4708).

[288] Including ATM, cash advance and foreign transaction fees, and interest charges on cash.

1. [290] Transcript of Proceedings (25 June 2018) 1639.11-14, 1639.16-25, 1639.28-30, 1639.30-1640.4; Transcript of Proceedings (26 June 2018) 1660.18-1661.11, 1666.27-1667.2, 1668.11-18, 1669.1-9.

[291] Magill v Magill [2005] VSCA 51; (2005) 33 Fam LR 193, 219 [101]; NCON Australia Ltd v Spotlight Pty Ltd (No 5) [2012] VSC 604 [289]−[295].

[292] Paul Bannon - Cash/Credit Card Expenses Excel Spreadsheet (CB 4707−4708).

[293] Transcript of Proceedings (27 June 2018) 1859.17−1860.5, 1884.20−1884.28.

1. [294] Email from the plaintiff to the defendant, subject 'Outstanding Matters' attaching invoice dated 24 September 2014 (CB 377).

[295] Transcript of Proceedings (27 June 2018) 1884.11-1884.14.

[296] Exhibit X Defendant's recalculation of counterclaim on completion of expert evidence.

[297] Transcript of Proceedings (26 June 2018) 1707.12−1707.19, 1711.15−1711.20.

[298] Transcript of Proceedings (20 April 2018) 513.8−513.11.

[299] Transcript of Proceedings (18 April 2018) 298.21−298.27.

[302] Transcript of Proceedings (20 April 2018) 606.28−607.3.

[310] Exhibit H MYOB records relating to Annexure 1 of Mr Fitzgerald's report, Part 4, tabs 20 and 21.

[311] Transcript of Proceedings (25 June 2018) 1563.23−1563.24.

[313] Transcript of Proceedings (18 April 2018) 376.6−376.13.

[314] Transcript of Proceedings (23 April 2018) 659.10−660.6.

[315] [1959] HCA 8; (1959) 101 CLR 298, 321.

[316] Plaintiff, 'Plaintiff's closing submissions', 13 July 2018, [76] (footnote omitted).

[317] Shaded boxes indicate where the total cash withdrawn in a single day is ≥ $1,000.

[318] The total amount withdrawn on 13 January 2014 is >$1,000 when combined with the $700 withdrawn on this same date from the Westpac Altitude Platinum (MasterCard) Account: See Table 2.