53 It was the appellants' case on the question of leave to appeal, that the decision demonstrated serious errors of law, with wider implications for the jurisprudence of the Court, which warranted leave being granted, as a matter of public interest. These included the failure to apply principles of mitigation as provided by the Full Bench in Aradlay; whether an employee who has been given notice of termination and who takes up other full-time employment during the notice period is in fundamental breach of contract; whether a person who has sold a business for a substantial sum is thereafter entitled to rely on service in that business, for the calculation of long service leave and redundancy pay when employed by the purchaser; whether the provisions of the sale agreement which provided for an indemnity in favour of the purchaser for such claims, could leave open the claim by the vendor against the purchaser as a former employee in the business; and whether it was appropriate to increase a notice period on account of redundancy, when redundancy pay was also ordered.
54 It was argued that Mr Squires' employment did not terminate on 2 August. He was given notice of termination that day. It was in those circumstances that taking up full-time employment with Cardlink on 5 August and not informing the appellants of that fact amounted to a fundamental breach of his employment contract, which negated any entitlement to notice, redundancy pay or long service leave. It was submitted that Haylen J had erred in the 'primary view' that he had come to, that the employment had ceased on 2 August. In particular, his Honour erred in not coming to a final conclusion as to the date on which the employment ceased, which led him into other error.
55 Even if the letter of 2 August was ambiguous, it was submitted that Mr Squires' contemporaneous record of what had occurred, in an email written on 7 August, confirmed that he too understood that he had been given notice and that his employment was not to come to an end for a further three months. Haylen J had failed to pay regard to this evidence. Other documents in evidence also confirmed that understanding, which was also supported by evidence given in the proceedings, including answers given by Mr Squires in cross examination.
56 Given the fundamental error into which his Honour fell, proper consideration was not given to the consequences of Mr Squires' conduct in taking up employment with Cardlink on 5 August. Mr Squires' services had been provided to Cardlink at a rate of $750 per day. Cardlink terminated the arrangement, preferring to employ someone directly in the position. The appellants sought to retain the contract, by offering to reduce the fee to $575 per day, but that was refused by Cardlink and their contract came to an end on 29 July. While there was some evidence of the possibility of his employment by Cardlink being discussed between it and Mr Squires in July, when on 2 August Mr Squires was advised of the redundancy, he immediately contacted Cardlink and was offered a position, which he accepted and he commenced work for Cardlink on 5 August.
57 The evidence showed that Cardlink required an immediate start. Mr Squires initially provided his services as a contractor. On 7 August, Mr Squires sought, unsuccessfully, to have Powerlan agree to end his employment immediately. He did not inform Powerlan of the position he had taken with Cardlink, or seek a release.
58 Powerlan became aware of the position later in August. Mr Squires was then being paid both by it and Cardlink. Powerlan sought an explanation and having received no satisfactory explanation, acted to terminate the contract for breach.
59 In concluding that taking up this position involved no breach, Haylen J took into account an irrelevant consideration - namely, that earlier in July Powerlan had indicated that it would not object to Mr Squires taking up employment with Cardlink, or one of its other clients, after his employment came to an end. That discussion occurred in a context where Mr Squires' employment was to end with only one month's actual notice, that involving him agreeing to a lesser notice period than that to which he was contractually entitled. The result of Mr Squires' conduct was to deprive Powerlan of revenue from his services during the notice period.
60 It was further argued that his Honour had erred in varying the contract to provide for a 6 month notice period. The contract provided for a 3 month notice period in circumstances where Powerlan had acquired the business for $1.25 million, which included over $1 million for goodwill. Mr Squires had been advised by Gilbert and Tobin solicitors, on the terms of the sale and the employment contract. The contractual terms agreed struck a fair balance between the parties, given the totality of their agreement.
61 It was also argued that given the approach adopted by his Honour in fixing a 6 month notice period on account of redundancy, as well as providing for redundancy pay, double counting had resulted.
62 It was also argued that his Honour had erred in having regard to Mr Squires' prior employment in the business sold, in calculating the various entitlements dealt with. Mr Squires had already been rewarded by the sale price negotiated, for the work he had put into developing the business. The purchase agreement did not contemplate such service being taken into account in his future employment with Powerlan. It indemnified Powerlan against such claims.
63 As to mitigation, it was submitted that despite citing the authorities which bound him, his Honour failed to apply them to the circumstances of this case. Mr Squires mitigated any loss he may have suffered in relation to notice, by the employment he took up with Cardlink. During the 6 month notice period ordered, Mr Squires earned more than he would have earned in his employment with Powerlan, if given such a period of notice by it. It followed that no money orders should have been made in his favour on that account.
64 Mr Squires' case was that Haylen J had not concluded that the employment had terminated on 2 August and that his conduct had not repudiated the contract. The 'primary view' expressed by his Honour, that the employment had been terminated on 2 August, was submitted to be available, on the ambiguous terms of the letter itself. The appellants' reliance on the subjective views of the parties, did not demonstrate that his Honour's view was erroneous. The incoherent nature of the letter understandably resulted in some confusion on Mr Squires' part. There was no appealable error in the conclusions reached.
65 An appeal under s 191 of the Act was an appeal stricto senso. The Court was confined to correcting error and in the case of inferences to be drawn from established facts, was constrained to circumstances where the findings at first instance were erroneous, through 'incontrovertible facts or uncontested testimony' or where the decision was 'glaringly improbable' or 'contrary to compelling inferences.'
66 It was submitted that the finding that there had been no misconduct or repudiation of the contract when Mr Squires accepted employment with Cardlink, was a finding open on all of the evidence, including the express terms of the contract itself and the letter of 2 August. Mr Squires had obeyed all of the appellants' directions. There was no implied term known to law which prohibited an employee from undertaking alternate employment otherwise compatible with the discharge of their obligations to the first employer. "[T]he touchstone for ascertaining whether an employee has breached his or her implied duty of fidelity and good faith to an employer so as to amount to a repudiation of the employment contract is the question whether the conduct of the employee itself involves an incompatibility with the fulfilment of his or her duty to the employer, or a conflict between his or her interest and his or her duty to the employer, or an impediment to the faithful performance of his or her obligations, or is destructive of the necessary confidence between employer and employee (Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81-82; Hivac Limited v Park Royal Scientific Instruments Limited [1946] 1 Ch 169, [1946] 1 ALL ER 350 at 354; Cementaid (NSW) Pty Ltd v Chambers (NSWSC, unreported, Spender J, 29 March 1995). "
67 The appellants referred to Mr Squires as being on 'gardening leave'. It was argued that the fact that he earned supplementary income by taking up alternative work during such leave, did not result in any conflict with his obligations to the appellant. It was open to his Honour in that regard, to pay attention to the earlier discussions in July, in which the appellants had indicated it had no objection to Mr Squires working for Cardlink or any other customer.
68 The allegation that Mr Squires diverted to his own account work which otherwise would have been done in the name of the appellants, was not argued below and thus could not now be raised on appeal. The allegation was made by Mr Baker in cross examination, but not pursued in submissions.
69 In any event, the appellants sold the division in which Mr Squires worked on 7 August, so in taking up work with Cardlink, Mr Squires was not taking on work within the sphere of the appellants' business operations.
70 As to the challenge to the exercise of the discretion to award six months' notice, it was argued that Haylen J properly took into account the business arrangement under which Mr Squires came to work for the appellants and the fact that he had received legal advice. There was no double counting in the conclusions reached, even if there were common factors contributing to or manifesting the unfairness of the contract, in relation to both redundancy pay and notice. It is well settled that termination of employment on the ground of redundancy attracts special consideration and separate and additional benefits to that of fair notice - see Westfield Holdings at 275; Newton v Goodman Fielder Mill Ltd (1997) 81 IR 227 at 238. There was no serious challenge to the conclusion that prior service in the business ought to be taken into account and that conclusion was supported by s 102 of the Act.
71 As to mitigation, it was submitted that Haylen J exercised a permissible discretion to reduce the amount of notice otherwise deemed fair. Notice was reduced by 2 months, a conclusion open and consistent with the approach in Westfield Holdings.
72 In reply, it was submitted that the respondent had not refuted the submission that he had fully mitigated any loss flowing from the failure to be given six months' notice of termination. No mathematical basis to support the money order of four months' pay was advanced. It was not open to argue that his Honour was entitled simply to ignore that the loss was fully mitigated, given the work taken up with Cardlink. It followed that the exception discussed in Westfield Holdings at [146] did not apply - as that was confined to circumstances where alternative employment was found, but not taken, because it was not reasonable. His Honour did not properly take mitigation into account as s 106(6) required and as the Full bench in Aradlay discussed at [36] to [38]. Had he done so, he would have dealt with the fact that there was no actual loss, during the 6 month period.
73 The respondent's submissions also failed to deal with the other evidence which confirmed that employment did not cease on 2 August. The suggestion that Mr Squires was confused, was contrary to the evidence, in which he expressed his very clear understanding that his employment remained on foot.
74 As to the constraints on an appeal bench dealing with findings of fact, the position here was that Haylen J made no findings on crucial questions. Rather he proceeded on a 'primary view', which was erroneous and contrary to compelling evidence.
75 It was submitted to be well settled that taking on a second full-time job amounted to a fundamental breach of contract, because the employee was no longer ready, willing and able to perform full-time work for the employer; failed to act in accordance with their duty of fidelity and good faith and acted in a situation of conflict of interest, by taking salary secretly from someone else, destructive of the necessary confidence required between an employer and an employee. In this case, it was inconsistent with an express term of the contract, which was not affected by the letter of 2 August, because that letter required the respondent to remain available to perform his duties. The negotiations in July did not assist the respondent, showing that it did not wish Mr Squires to work for Cardlink while still employed by it.
76 Submissions as to repudiation were advanced in broad terms at first instance, contrary to the respondent's submissions. The respondent also did not answer the submission that there had been double counting for redundancy, in the money orders made. The exercise of the discretion miscarried and was not assisted by the provisions of s 102 of the Act.
77 The parties filed further written submissions as to the money sums actually paid to Mr Squires by Powerlan and Cardlink after 2 August and how the making of money orders ought to have been approached, in the light of that evidence. Further submissions were also filed in relation to the question of a managerial employees' obligations to disclose misconduct.