Roohizadegan v TechnologyOne Limited

KERR J: 1 On 2 October 2020, the Court delivered judgment in Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407. 2 The Court ordered, inter alia, that - subject to any pre-judgment interest to be awarded in respect of each amount - the Applicant be awarded $756,410.00 as compensation in respect of forgone share options and $1,590,000.00 for breach of contract. I ordered that the parties confer with the aim of providing the Court with agreed proposed orders as to the amounts that should be awarded by way of pre-judgment interest in respect of those awards. The parties were to provide separate written submissions in the event that agreement could not be reached. They have done so. 3 Save in one regard, the parties have reached common ground. 4 The Respondents accept the Applicant's statement of the relevant principles that the Court is to apply, which is as follows: 2. Section 51A(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) provides for the mandatory award of simple prejudgment interest on a money sum unless good cause to the contrary is shown. Good cause will be shown "rarely" and only in "exceptional circumstances". Although the rate of interest is in the discretion of the Court, the recommended and usual practice is to adopt the rate specified in the Court's Interest on Judgments Practice Note (GPN-INT) issued on 18 September 2017, being 4% above the cash rate. 3. Section 547 of the Fair Work Act 2009 (Cth) (FW Act) provides similarly in respect of an order (other than a pecuniary penalty order) under Pt 4-1 Div 2 of the FW Act in relation to an amount that a person was required to pay to, or on behalf of, another person under the Act or a fair work instrument. Relevantly, s 547 applies to the order awarding the Applicant damages for breach of contract, given the term breached was a safety net contractual entitlement which, by s 542 of the Act, took effect as an entitlement of the Applicant under the Act. (Footnotes omitted). 5 The Respondents do not advance a contention that there is good cause why an award of pre-judgment interest should not be made in respect of either the award for forgone share options or the award for breach of contract. Nor do they submit that the Court should do otherwise than adopt the rate specified in the Court's Interest on Judgments Practice Note (GPN-INT) as referred to therein. I accept that I am entitled to proceed on those bases, and do so. 6 The parties are agreed that, applying those principles, the Applicant should be awarded $35,370.90 in pre-judgment interest on his forgone share options for the period from 7 October 2019 to the entry of judgment on 2 October 2020. I will order accordingly. 7 However, the parties are in dispute as to the amount of pre-judgment interest that the Applicant is entitled to be awarded in respect of the Court's award of damages for breach of contract. 8 The Respondents submit that the sum of $1,590,000.00 awarded as damages in that regard reflects an agreed compromise between the parties, as they reached and communicated to the Court on 31 October 2019. The Respondents submit that accordingly the Applicant is entitled to be awarded pre-judgment interest on that sum from the date on which that agreement was communicated to the Court (31 October 2019) to the date of judgment on 2 October 2020. The amount so accepted as appropriate for the Court to award is $68,862.09. 9 By contrast, the Applicant observes that the outcomes provided by the accounting experts in their joint report in respect of the contract claim had ranged from a minimum of $1,306,081.00 to a maximum of $2,050,937.00: exclusive of pre-judgment interest in respect of the Applicant's entitlements which they had assessed as accruing almost entirely in FY2010-2015. The Applicant submits that from this it must be inferred that that the amount of $1,590,000.00 which the parties mutually advised the Court they had agreed should be awarded as damages necessarily and objectively did not include pre-judgment interest applied from the beginning of that period: and not simply from 31 October 2019. Unless that was so, it is submitted, the Applicant would have agreed to receive an amount less than the minimum figure provided for in the accounting experts' joint report. 10 In support of that submission, the Applicant relies on the affidavit of Ms Amelia Dowey affirmed on 25 November 2020. Ms Dowey appends to that affidavit calculations based on the experts' joint report as evidence that on the proposition advanced by the Applicant, he would be entitled to an award of $805,604.69 in pre-judgement interest. That amount is calculated by utilising proportions from Exhibit J3 to allocate the agreed damages of $1,590,000.00 across FY2010-2015, and then aggregating pre-judgment interest at the rates in GPN-INT based on that allocation. 11 The difficulty I have with the Applicant's submission is not that it is inherently implausible that Mr Roohizadegan might have made good his claim to such an entitlement, had the parties not advised the Court that they had agreed the sum to be awarded in respect of such damages without any reference to such a qualification. 12 However, I accept the Respondents' submission that the damages the parties advised the Court they had agreed were to be awarded to compensate the Applicant for unpaid incentives (if the Court were to find in the Applicant's favour) were not presented in the manner on which the Applicant's calculations depend. I am satisfied that the Respondents are correct to submit that: … the contract claim alleged a failure to pay contractual incentives at different points over a number of years. The Agreed Damages were not, however, broken down by references to specific breaches at different times. They were, instead, jointly presented by the parties as an indivisible lump sum. To calculate pre-judgment interest on the Agreed Damages, for the period prior to the Agreement, it would be necessary to identify the point in time at which different parts of the Agreed Damages could be said to have accrued for the purposes of calculating the damages. However, the Agreed Damages are a lump sum and therefore not structured in this way. It is not permissible now for the applicant to attempt to unpick the Agreement and allocate parts of the Agreed Damages, in an ad hoc way, to different points in time for the purposes of a further claim for pre-judgement interest on those amounts. This would be arbitrary and without a proper evidentiary basis. It requires a degree of precision in identifying the particular losses, and the time that those losses arose, that is wholly artificial. And it is inconsistent with the Agreement that - at the election of both parties - structured the quantum for the applicant's loss for his breach of contract claim in the form of a lump sum. 13 I also accept that the Respondents' submission that at no point did the Applicant seek to reserve his position with respect to internal interest on the elements which he now submits went into his acceptance of that compromise amount. 14 Notwithstanding any intended but unexpressed reservations held by the Applicant, the parties jointly advised the Court on 31 October 2019 in terms objectively referrable to their having reached agreement as to the net present value of the Applicant's loss as at that date. The Court proceeded on that basis. It is not now open to the Court to second guess its award on an entirely different, and not previously articulated, premise. 15 Having regard to that conclusion, I am satisfied that the Applicant is entitled to $68,862.09 as pre-judgment interest on that sum from 31 October 2019 to the date of judgment: 2 October 2020. 16 I will order accordingly. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kerr.