//
[2017] WASC 377
General information, not legal advice.
Supreme Court of WA
2017-12-20
Smith J
Original judgment source is linked above.
1 The plaintiffs, Wayne Ryder and Leonas Reisgys, are former directors and employees of the defendant, Aphrodite. They each claim to have outstanding employee entitlements due to them. The amount of any entitlements depends upon the terms of their employment and the circumstances of its termination.
2 Both Mr Ryder and Mr Reisgys were employed by Aphrodite under written contracts signed 23 June 2010 for a term expiring 6 July 2012. After the term expired they continued to work for Aphrodite. No formal contract of employment was executed for the period from 6 July 2012 and the parties dispute the terms of their continued employment.
3 In summary, Mr Ryder and Mr Reisgys say that particular terms and conditions of employment were agreed by communications in two stages. First, there were terms agreed for an interim period pending new formal contracts (interim period). Second, there were terms agreed by way of new contracts which took effect from 1 March 2013. Aphrodite denies such agreements and says their employment continued on a monthtomonth basis.
4 On 19 July 2013, Aphrodite terminated the employment of both Mr Ryder and Mr Reisgys without notice. They seek termination payments in lieu of notice. Aphrodite says they are not entitled to such payments because it was entitled to terminate their employment summarily. Whether summary dismissal was justified is in dispute.
5 Aphrodite brings a counterclaim against Mr Ryder and Mr Reisgys relating to an alleged overpayment for overtime to Mr Ryder, said to have been authorised by Mr Reisgys.
6 There are various ways in which the issues overlap or, depending upon assumptions, become redundant. I have dealt with the issues in five parts. Part A deals with the plaintiffs' initial terms of employment and the board meeting of 2 July 2012 at which those terms are said to have been varied. Part B deals with issues about the term of any notice period to which the plaintiffs say they are entitled on the assumption there was no right of summary dismissal. Part C deals with the issue of whether any new contract of employment was agreed effective 1 March 2013 (or at all). Part D deals with claims made for overtime payments by both plaintiffs. Part E deals with the summary dismissal claim.
7 Aphrodite was incorporated in August 2009 as a vehicle to hold and exploit gold mining tenements located north of Kalgoorlie and known as the Aphrodite project.
9 Mr Ryder was one of three founding directors of Aphrodite. He is a chartered accountant with over 40 years experience working in the mining industry. When he was the finance director of another company, he identified the Aphrodite project as having potential and was instrumental in taking steps to incorporate Aphrodite in order to raise funds to acquire and develop the project.
10 Mr Reisgys was appointed a director of Aphrodite in April 2010. He is a geologist with around 40 years experience in the mining industry, including in gold mining. He has been a managing, technical and exploration director and a chief executive officer of various ASX listed companies for a total of some 15 years.
11 Both Mr Ryder and Mr Reisgys gave evidence. Both reside in Perth.
12 Peter Buttigieg and Roger Mitchell gave evidence on behalf of Aphrodite.
13 Mr Buttigieg is its chairman and has been a director since May 2012. He is a systems analyst. He is also the owner and managing director of a privately owned company that develops hotel property management software and employs some 70 staff. He resides in Victoria.
14 Mr Mitchell is an accountant by profession. He is an independent director of Aphrodite and was appointed on 7 January 2013. He was appointed on the recommendation of one of Aphrodite's significant shareholders, GRP Ltd (GRP). He also resides in Victoria.
15 Contracts were agreed between Aphrodite and each of Mr Ryder and Mr Reisgys, executed on 23 June 2010 and took effect on 7 July 2010 (Employment Agreements).[3] Mr Ryder was employed as the finance director. Mr Reisgys was employed as the exploration and development director. Each had different prescribed duties, reflecting those different roles.
16 Most of the terms of the respective Employment Agreements were the same.
17 By cl 3, each Employment Agreement was for a two year term expiring on 6 July 2012.
18 By cl 5, each Employment Agreement provided for a base salary of $20,000 per month ($240,000 per annum) inclusive of the compulsory superannuation contribution, together with use of a motor vehicle to a particular value (when read with cl 7).
19 By cl 5.2, each provided for a 10% increase in the remuneration package after the first year (or by such greater amount as shall be determined by the board). Those increases took effect from 7 July 2011, after which the plaintiffs' base salaries were $22,000 per month ($264,000 per annum) inclusive of superannuation, exclusive of motor vehicle entitlements.
20 One significant difference is that Mr Ryder's Employment Agreement did not provide for overtime, whereas by cl 5.1(c), Mr Reisgys' provided as follows:
In addition to the Base Salary remuneration for additional work undertaken with the prior written agreement of both parties will be paid at the rate of $200 per hour (inclusive of the statutory 9% superannuation contribution).
21 By cl 5.2 of Mr Reisgys' Employment Agreement, as with his remuneration, the hourly rate for the additional work would be reviewed annually, to be increased by 10% at the end of the first year of the term (or by such greater amount as shall be determined by the board).
22 There were also differences in the termination regimes. By cl 12, each Employment Agreement was terminable by Aphrodite on four weeks notice, with provision for additional termination pay (subject to any right of summary termination).
23 In the case of Mr Ryder, the defendant could terminate his employment at any time during the term on four weeks notice together with payment of his base salary and the value of the motor vehicle for the balance of the two year term (subject to, relevantly, s 200B of the Corporations Act 2001 (Cth)).
24 In the case of Mr Reisgys, cl 12.1 provides as follows:
12.1 Termination by Notice
In addition to the rights of the Company referred to in clause 12.3 [summary termination] the Company may terminate this Agreement at any time by providing the Employee with four (4) weeks written notice of termination in which event;
(a) if the Company so elects, the Employee shall continue to work and be paid for the four (4) weeks and the Company will pay to the Employee an additional 4 months Base Salary at the end of such four (4) week period; or
(b) if the Company does not so elect, the Company shall pay to the Employee 5 months' Base Salary as at the date of giving the written notice of termination.
In the event the Employee is removed or not reappointed or not re-elected as a Director of the Company such an event shall be deemed to be a termination by the Company of this Agreement pursuant to this subclause, and all rights and obligations pursuant to this subclause shall then apply.
25 As appears below, the parties dispute the proper construction of cl 12.1 of Mr Reisgys' Employment Agreement.
26 Annual leave entitlements (cl 8) were different. Mr Ryder was entitled to take annual leave at the rate of 75% of the statutory minimum (in addition to public holidays) at a time or times to be approved by his direct manager or other nominee of the company. Mr Reisgys was entitled to take 15 days annual leave (in addition to public holidays) at a time or times to be approved by his direct manager or other nominee of the company.
The requirement for approval of directors' remuneration
27 According to Aphrodite's 2012 Annual Report prepared by Mr Ryder and approved by the directors, the company does not have a remuneration committee. Remuneration is considered and determined by the board of directors of the company with any relevant affected director not participating in the vote on his remuneration.[4]
28 Aphrodite's Constitution provides that the remuneration of directors shall not be increased except pursuant to a resolution passed at a general meeting where notice of the suggested increase has been given to members in the notice convening the meeting.[5]
Events leading up to expiry of Employment Agreements
29 The events during the term of the Employment Agreements are only relevant in a general sense in that they provide context to an important meeting of 2 July 2012. The following chronology paints a picture of a company actively undertaking exploration work but also continually pursuing finance in order to maintain its rate and cost of work and achieve the milestone of a prefeasibility study.
30 Upon listing, Aphrodite had cash of over $8.8 million.[6] It then embarked on an aggressive exploration program, exceeding the work program that had been outlined in the prospectus. In its 2011 Annual Report, it reported to shareholders that it had completed over 30,000 m of drilling, had updated JORC Resource[7] estimates of over 1 million ounces of gold, had undertaken a major metallurgical program that demonstrated positive results, had farmed into adjoining tenements and had established a clear path to gold production that was targeted to commence in 2013.[8]
31 In March 2011 Mr Reisgys reported to the board that the intensified exploration program would result in further funding requirements and it would be prudent to have them in place by the end of 2011.[9]
32 As at 30 June 2011 Aphrodite had cash of $3 million.[10]
33 As at 30 September 2011, Mr Ryder reported to the board that Aphrodite had cash on hand of some $900,000, with exploration work for the next quarter expected to average $400,000 per month.[11] Clearly, funding was urgently required to meet such costs.
34 Looking beyond the prefeasibility study, the board considered that an estimated $12 million or more would be required to take Aphrodite to the completion of the feasibility stage. The board resolved to explore funding options with a view to first funds being received by November 2011. It also resolved to pursue a scoping study.
35 On 15 November 2011 Aphrodite raised $900,000 before costs through a placement of 10 million shares and options.[12]
36 At a board meeting of 21 November 2011, the board resolved to follow up a further nonrenounceable entitlements issue to raise $5 million before costs.[13]
37 At the same meeting, Mr Reisgys was appointed managing director of Aphrodite.
38 The scoping study commissioned by Aphrodite was received by 8 February 2012. Aphrodite indicated that the prefeasibility study was planned to start in the first quarter of 2012.[14]
39 The further entitlements issue had been pursued and by February it had raised $2.858 million.[15]
40 At the board meeting of 12 March 2012, exploration budgets for the next eight months were tabled. Mr Reisgys reported that activity over that period would likely take the project to the completion of its prefeasibility study.[16] A core drilling programme was proposed for further metallurgical studies for the prefeasibility study. The costs to the end of the prefeasibility study were estimated at $6.22 million made up as follows: Stage 1 (March 2012 to 30 June 2012) $2.75 million; Stage 2 (1 July 2012 to 31 October 2012) $2.75 million; administrative costs $720,000. The board resolved to approve those estimates and to proceed with Stage 1 but to 'slow the burn rate as far as practicable', a reference to expenditure.
41 At that stage, Aphrodite held cash from the entitlements issue of $2.06 million. Further funding was required to be well advanced in the following six to eight weeks.
42 It is apparent that there was friction between some of the directors as to the source of future funding and who was responsible for funding.[17] At that time, the directors of the company were Warren Staude (chairman), Mr Reisgys, Mr Ryder, Ken Jackson and Heath Sandercock. The friction was to the point that Mr Ryder obtained legal advice and his lawyers wrote to Mr Staude outlining some of his concerns.[18]
43 At a board meeting of 23 April 2012, Mr Reisgys reported that there had been a slowing of the exploration work where possible to restrain costs. The time for completion of the prefeasibility study was still estimated to be the end of 2012.
44 The minutes of that meeting reflect the level of dispute over fundraising. Mr Staude tabled a funding proposal of which neither Mr Reisgys nor Mr Ryder had prior notice. The board resolved to proceed with that proposal. Mr Ryder voted against the resolution. Mr Sandercock then moved a vote of no confidence in Mr Ryder and that his employment contract not be renewed in July 2012, again without notice. The motion was passed with three directors abstaining from voting (Mr Ryder, Mr Reisgys and Mr Jackson).[19]
45 Mr Jackson resigned as a director the following day.
46 On 16 May 2012 Mr Buttigieg, a substantial shareholder of Aphrodite, was appointed a director. His brother, Paul Buttigieg, was appointed as his alternate director (references to Mr Buttigieg are to Peter Buttigieg).[20]
47 The first board meeting in which Mr Buttigieg was involved was that of 18 May 2012. He attended by telephone. Management accounts had been circulated the previous day. It was agreed at the meeting that the accounts be considered in more depth over the following week and that any queries could be directed to Mr Ryder or Mr Reisgys.[21]
48 At that time, Aphrodite's cash on hand had reduced to some $1.7 million and it was resolved that fundraising options needed to be in place by the time those funds were reduced to $800,000.
49 In June 2012, Mr Reisgys provided cash flows to all directors that indicated that at the end of that month Aphrodite would have about $900,000 but that around $4 million would be needed to continue operations and complete the prefeasibility study by the end of 2012. Drilling was suspended pending a placement of shares although other work necessary for the prefeasibility study continued.[22]
50 That was the financial positon of Aphrodite as at June 2012 and July 2012, when Mr Ryder was attempting to position himself for the inevitable discussion about his employment come July 2012.
51 By email of 6 June 2012 to Mr Reisgys and each of Paul and Peter Buttigieg, he circulated survey information about remuneration paid by junior mining and exploration companies to executive directors, the chairperson, and non-executive directors.[23]
52 On 26 June 2012, he was in email contact with those he presumably perceived to be supportive of him (Mr Reisgys, Paul and Peter Buttigieg and proposed director, Paul Weston) ahead of a scheduled conference call with them and a board meeting scheduled for 2 July 2012. He attached to the email a detailed agenda for the proposed conference call that included the makeup of the board, governance issues, the current financial position, marketing steps and responsibilities and targets for potential fundraising.
53 There were also references to Mr Reisgys' contractual position, being 'Contract expires 7 July. Renew'. Mr Ryder's contractual position was described as 'Contract terminated 7 July. New'.[24]
54 On 28 June 2012, the agenda for the meeting was circulated to all directors.[25] Item 9 said, 'Directors' Employment Contracts and Directors' fees'.
Note 6, Item 9. Directors' Remuneration.
Proposed that Executive Directors Wayne Ryder, CEO, and Paul Weston, Marketing, be offered 2 year Employment Contracts on normal commercial terms to be negotiated with the Remuneration Committee assisted by an independent remuneration consultant if they consider necessary.
Proposed that Leon Reisgys, Managing Director, be offered a 2 year extension of his existing Employment Contract on normal commercial terms as above, including the carryover of accrued entitlements. Proposed that non-executive Directors' fees be considered and proposed for approval at the same time as the executive Contracts are settled. In this regard consideration will be given to the requirement for Alternate Director Paul Buttigieg to provide assistance to the Company's marketing and fund raising programs.
56 On 29 June 2012, Mr Ryder circulated a fundraising and marketing report to the directors.[26]
57 The meeting of 2 July 2012 is a critical event insofar as the ongoing employment of Mr Ryder and Mr Reisgys is concerned.
58 The meeting was attended by Mr Ryder, Mr Reisgys, Mr Buttigieg, Mr Staude and Mr Sandercock. It was held in Melbourne. During the course of the meeting, Mr Weston was appointed a director and he then joined the meeting (prior to the discussion about employment). None of Mr Weston, Mr Staude or Mr Sandercock gave evidence.
With his current contracted position as Finance Director about to expire and it having been previously resolved that it not be renewed, it was RESOLVED by a vote of 3 to 2 that Wayne Ryder be offered the new position of Chief Executive Officer on terms to be negotiated, and that he act as CEO until his new Contract terms were agreed, with such Contract to become effective as from when the Company's financial position becomes secured as planned. In the meantime he would be employed on an uncontracted basis and be remunerated on the same terms and conditions per his current Contract. Wayne Ryder advised that he would be pleased to take up the appointment with the Company on that basis. Warren Staude and Heath Sandercock voted against the Motion, and Wayne Ryder abstained from voting.
With his current contracted position as Exploration and Development Director of the Aphrodite Gold Project about to expire, it was UNANIMOUSLY RESOLVED that Leon Reisgys be offered an extension of his Contract in the new position of Managing Director, on terms to be negotiated, including that accrued entitlements be carried forward into his renewed Contract. In the meantime his current Contract of Employment will continue on the same terms and conditions, and that he act as Managing Director until his new Contract terms are agreed, with such Contract to become effective as from when the Company's financial position becomes secured as planned. Leon Reisgys abstained from voting.
RESOLVED by a vote of 3 to 2 that Paul Weston be offered the position of Marketing Director on terms to be negotiated, with his Contract to come into effect from when the Company's financial position becomes secured as planned. In the meantime he would be employed on an uncontracted basis on terms and remuneration to be agreed with Peter Buttigieg and Executive Directors Leon Reisgys and Wayne Ryder. Warren Staude and Heath Sandercock voted against the Motion and Paul Weston abstained from voting.
60 Mr Ryder prepared the minutes. Drafts passed between Mr Ryder and Mr Reisgys and Mr Reisgys requested amendments to the draft insofar as it concerned his remuneration position.[28] A version with Mr Reisgys' amendments was copied by Mr Reisgys to Mr Buttigieg and Mr Weston on 25 July 2012.[29] The final versions include the amendments inserted by Mr Ryder and Mr Reisgys. There is no evidence that other directors requested changes or challenged the accuracy of the minutes when they were received. Mr Staude, for example, clearly reviewed the draft minutes but in an email to Mr Buttigieg in which he made various criticisms of Mr Ryder he made no comment about the employment resolutions.[30] According to draft minutes of the board meeting of 7 September 2012 the board resolved to approve the 2 July 2012 minutes and have them signed as a true and correct record.[31] There is no evidence the minutes were actually signed (and Aphrodite takes no point about that). I consider they stand as a relatively contemporaneous record of events.
Context different as between Mr Ryder and Mr Reisgys
61 There is no question that both Mr Ryder and Mr Reisgys continued to be employed by Aphrodite and perform work for it after the expiry of the terms of their respective Employment Agreements.
62 As the above background makes clear, it was likely the positions of Mr Ryder and Mr Reisgys after 6 July 2012 would be different. The vote of no confidence in Mr Ryder of April 2012 was telling. There was no indication he would continue to be employed, although that was clearly his desire. Mr Reisgys, on the other hand, had no reason to believe that his employment would not continue one way or another. Both the agenda for the meeting and the note to Item 9 (referred to above) distinguished their positions.
63 Mr Ryder contends that what was agreed as evidenced by the minutes was that until new contract terms were agreed when Aphrodite's financial position was secured:
(a) he was to be employed on the same salary as under his soontoexpire Employment Agreement, but otherwise the express terms of his Employment Agreement did not apply;
(b) therefore, the terms in the Employment Agreement as to termination did not apply, and there was an implied term that he was entitled to reasonable notice of termination; and
(a) Mr Ryder's employment after 6 July 2012 was on a monthly basis and so terminable on one month notice;[32]
(b) if not, he was only entitled to one month notice because the provision in the Employment Agreement continued to apply;[33] and
(c) in any event, if he was entitled to reasonable notice, then the reasonable period was one month.
65 Mr Reisgys contends that what was agreed as evidenced by the minutes was that until new contract terms were agreed when Aphrodite's financial position was secured:
(a) his employment was to continue on the same terms and conditions as before, that is, on the express terms of his Employment Agreement;
(b) therefore, he was entitled to five months notice;
(c) in the alternative, he was entitled to reasonable notice; and
(a) Mr Reisgys' employment after 6 July 2012 was on a monthly basis and so terminable on one month notice;
(b) his Employment Agreement conferred a right to no more than four weeks notice; and
(c) in any event, if he was entitled to reasonable notice, then the reasonable period was one month.
67 Each of Mr Ryder, Mr Reisgys and Mr Buttigieg gave evidence about the 2 July 2012 meeting.
68 Mr Ryder recalled that he said he was happy to continue on an 'uncontracted' basis. He recalled that word being used and said he did not really know what it meant but that he understood he would not have a signed contract but he would be paid the same as previously. He understood that Mr Buttigieg did not want to give him a two year term at that stage but wanted to see how the company's finances went. He said Mr Buttigieg did not want the company entering into any long term contracts until the financial position was clear, and that his position was not aimed at Mr Ryder personally. He said he understood from the meeting that negotiations would commence about the terms of a new contract but that no terms would come into effect until the company's financial position was secured. He denied ever hearing the expression 'monthtomonth' used during the meeting.[34]
69 Mr Ryder said he understood the position of Mr Reisgys was different. He understood that Mr Reisgys had a contract and it was being extended.[35] When he first drafted the minutes, the resolution as to Mr Reisgys' employment was in similar terms to that relating to his own. Under crossexamination, he accepted that was the case and explained that as an error. He said he would have copied the words from when he drafted the resolution for his employment, as he drafted that first. He said that as soon as Mr Reisgys corrected the draft, he immediately saw that he had made an error and he accepted Mr Reisgys' changes.[36]
70 I accept Mr Ryder's evidence as to the first version of the resolution being in error insofar as it related to Mr Reisgys. The evidence is consistent with all the other evidence on their part about the meeting. It is perhaps to be expected that Mr Ryder and Mr Reisgys each focussed on the wording of the resolutions that related to them, and so Mr Reisgys picked up on the error.
71 Mr Reisgys' evidence was also to the effect that Mr Ryder and he were to be treated differently. He recalled that there was more discussion about Mr Ryder's contract at the meeting than his own. He recalled that Mr Staude had raised that Mr Ryder's contract was to end, but that Mr Buttigieg and Mr Ryder had said that it was to be a new position as CEO and with a new contract.[37] He recalled that Mr Ryder said he would be 'uncontracted'. He recalled that Mr Ryder would be on the same remuneration. He said he recalled certain words, critical words and the context of what was proposed.[38]
72 As to Mr Reisgys' own position, he said there was little discussion. He recalled that Mr Ryder put forward that the contract was to be extended, that the company was to negotiate a new contract, and that in the meantime his existing contract which was about to expire on 7 July 2012 was extended.[39] He said that the new contract was to be negotiated 'in the meantime' but that it would come into effect when the finances of the company became secure. He did not purport to recall the precise words in the order they were said but he recalled the statements and proposals made about the contracts.[40] He said the terms were important to him as he could have obtained work elsewhere on a contract and probably at a higher salary. He would not have proceeded on the basis he was 'uncontracted'.[41] He did not recall any use of the expression 'monthtomonth'.[42]
73 There is arguably some ambiguity in the wording of the resolution and Mr Reisgys was crossexamined on it at length. On the one hand, the resolution refers to an extension of his contract 'on terms to be negotiated'. On its face, that seems to be a reference to the anticipated new contract to be agreed when the financial position of the company was secured. However, arguably, it could be a reference to the arrangements to be put in place in the interim period. But the resolution also refers to his current contract continuing in the meantime 'on the same terms and conditions'. It does not expressly say the existing contract is to be extended, although Mr Ryder's evidence was that such word was used at the meeting. Rather, the expression that the contract is 'continuing' is used.
74 There is no doubt the resolution could have been better drafted. There is also no doubt that Mr Reisgys had checked the draft and suggested changes which were incorporated. Mr Reisgys said that he considered that 'continuing' meant that his current terms and conditions would continue and that meant the same in effect as them being 'extended'.[43] In my view, even taking into account some minor inconsistencies in Mr Reisgys' evidence,[44] the resolution is consistent with the evidence of Mr Ryder and Mr Reisgys as to what was said at the meeting, and the resolution does not record any agreement that the terms of Mr Reisgys' employment during the interim period until the new contract were still to be negotiated. The reference to negotiation is in the context of the new contract to take effect in the future.
75 Mr Buttigieg's evidence as to what was said at the meeting about the employment contracts was to the following effect:
(a) he recalled the question of their employment contracts coming up;
(b) the bulk of the discussion was about whether Mr Ryder would be kept on or not:[45]
And, to cut a long story short, we got to the point where we said, 'Okay, we keep him on and then get into contract bid,' because we were done just discussing whether he would be staying on or not. We just agreed that we - given the contract was expiring we would both - Leon and Wayne, we would move to a monthtomonth situation to keep them on and when things settled and we knew where we were from a financial point of view we would go back and renew them. That's pretty much it.
(d) as to the separate positions of Mr Ryder and Mr Reisgys:[46]
[T]he part that was different between the two was whether there was debate as to whether we would keep Ryder on or not, with Ryder. But with Leon, that wasn't debated. Everybody agreed that Ryder would - sorry, Leon would stay on. So there was no debate around Leon as far as keeping him on. But there was a lot of debate about Ryder. So that part was different. But when it came to the contract or the contracts, because they were both expiring, they were both dealt with - in my mind, everything I can remember about it, they were both dealt with the same way because it was the same situation. They were both expiring. We didn't have any money to look at renewing contracts, but we didn't want to get rid of them either, so we went monthtomonth.
And is that the extent of your recollection about that subject discussed at the meeting?Yes. We didn't really even go into what the terms and the conditions of the contract were. It was just whatever they were. Everybody was happy to go - continue on under the same - under the same payment conditions, etcetera, of the original contracts.
(e) he did not know what was in the Employment Agreements at the time of the 2 July 2012 meeting.[47]
76 At this point I must say something about Mr Buttigieg's evidence. He admitted to not having a good memory. He said he tends to forget things 'within a day or two'.[48] He admitted to not reading documents carefully when preparing for the trial. He missed details and admitted to potentially omitting to read pages.[49] He gave the impression that it was an imposition on his time to give evidence and he often rushed to provide dismissive answers.[50] For example, he claimed that headings in his witness statement referring to Mr Ryder's witness statement meant 'absolutely nothing' to him and did not remind him that he must have read Mr Ryder's statement at some point. He claimed to have no recollection at all of reading the plaintiffs' witness statements or receiving lever arch files of documents despite commenting upon the statements in his own.[51] He said he had 'no idea' what he was currently paid by Aphrodite.[52] Nor could he recall what fees he was paid in 2012 although he agreed he was paid fees. He said he had 'no idea' whether the board approved those fees.[53] He could not recall reading letters of termination to Mr Ryder and Mr Reisgys before he signed them.[54]
77 The impression I formed of him as a witness was that he jumped to conclusions, did not pay attention to detail, was not careful about his recollections, was impatient and dismissive of others and was keen to criticise Mr Ryder and Mr Reisgys rather than listen to and address the particular questions he was asked. I have taken these matters into account in rejecting his evidence where specified below because in my view they undermine its reliability. I say something further about the evidence of Mr Ryder and Mr Reisgys where relevant below.
Determination - the agreement as to interim employment contracts
78 I consider agreements were reached at the meeting of 2 July 2012 in the terms as claimed by the plaintiffs. The weight of the evidence supports that finding. In particular:
(c) the different wording reflects the different circumstances of Mr Ryder and Mr Reisgys at the time;
(d) the different wording is consistent with the agenda and the note to the agenda, both circulated prior to the meeting;
(e) the resolution for Mr Ryder referred to the term as to remuneration continuing;
(f) the resolution for Mr Reisgys referred to all terms and conditions continuing;
(h) there is a useful contrast in the resolution for Mr Weston: he was not under any contract at the time and a manner for negotiating his immediate terms was provided for, in contrast to the position of Mr Ryder and Mr Reisgys;
(i) whilst not a term of art, the repeat reference to Mr Ryder being 'uncontracted' is consistent with the terms of his Employment Agreement being no longer relevant, save as to the express exception of remuneration; and
(j) as to what occurred at the meeting of 2 July 2012, I prefer the evidence of Mr Ryder and Mr Reisgys over that of Mr Buttigieg. Their evidence was consistent with the agenda and the notes to the agenda. It was consistent with the minutes, upon which Mr Buttigieg had made no relevant comment. In the main, their evidence was consistent with each other's. Neither recalled a mention of 'monthtomonth' and their response when asked if they recalled those words being used appeared to me to be genuine. To the extent Mr Buttigieg said that the contracts would just continue on the same terms, his evidence in fact supports Mr Reisgys' position. That Mr Buttigieg did not know what those terms were is not to the point. It was open to him to inquire before voting in favour of the resolution. Mr Buttigieg's recollection of events was unconvincing and unreliable for the reasons set out above. I do not accept his evidence that he said the contracts were to continue 'monthtomonth': even if those words were said, the fact that there is no evidence that anyone else remembers them suggests there was no agreement to such a term.
79 Finally, I note that Aphrodite submitted that in light of its declining financial resources as at July 2012 it would be highly unlikely that Aphrodite intended that all terms and conditions of Mr Reisgys' Employment Agreement were to continue, particularly cl 12.1 with its potential payout entitlement of five months salary. There is no suggestion in the evidence that there was any regard given to that potential entitlement in the negotiations. Mr Buttigieg apparently did not know about the specific term.
80 In any event, the resolution was passed unanimously and Aphrodite is, in my view, bound by the agreement reflected in the resolution.
81 Both Mr Ryder and Mr Reisgys claim to be entitled to payment of salary in lieu of notice. It is assumed for the purpose of this section that Aphrodite fails in establishing grounds for summary termination and that the plaintiffs fail to establish a variation of the position that I have found applied from 3 July 2012.
82 The finding that Aphrodite is bound by the agreement reflected in the resolution directs attention to cl 12.1 of Mr Reisgys' Employment Agreement, because in accordance with my finding it continues to apply in the interim period until any agreement of a new contract.
83 The relevant construction principles are well known. Construing a contract requires attention to the language used by the parties, the circumstances which the document addresses, and the objects which it is objectively intended to secure. Where words used are susceptible to more than one meaning the court may have regard to the surrounding circumstances against which the contract was entered into and which were known to both parties at the time.[55]
84 Clause 12.1 is set out above. Aphrodite contends:
(a) the clause provides for four weeks notice only. That there is an entitlement to (potentially) five months pay does not convert the provision to an entitlement to five months notice;
(b) the right is a limitation on what would otherwise have been a right to payment of the balance of a two year term;
(c) it caps liability at five months base salary; and
(d) on its proper construction, Mr Reisgys would be entitled to be paid only for the unexpired balance of the term up to a maximum of five months salary. Termination within five months of the end of the term would result in a lesser payment.
(a) the clause, like any other in the Employment Agreement, continues to apply in the interim period and can sensibly apply; and
(b) it is analogous to a 'change of owner' clause that guarantees a company executive payment if employment is terminated by a change of control of a company.
86 I accept Aphrodite's submission that on its proper construction, the clause provides for a notice period of four weeks. The termination payment is not equivalent to a notice period. I also accept that it operates as a cap on liability. However, I do not accept that the payment it is to be reduced in the event the remaining term is less than five months. Put simply, that is not how the clause reads. The clause makes sense and is unambiguous without the implication of any such qualification. It can be applied where the end date is not known (as in the case of the interim period).
87 There may be various reasons why Aphrodite agreed to such a clause when it secured Mr Reisgys' employment. For example, it provides Mr Reisgys with a smoothing period in terms of cash flow pending reemployment and on its face is part of the price Aphrodite was willing to pay to secure his services. It is not clearly uncommercial.
88 Reference to a 'change of ownership' analogy does not assist Mr Reisgys. The clause is not drafted so as to apply only in such circumstances. Further, issues such as the application of s 200B of the Corporations Act and ASX Listing Rule 10.18 might come into play if the termination were in such circumstances.[56] In this case, Mr Reisgys' employment was not terminated because of a change of ownership or retirement. Despite that submission, I consider that any entitlement to payment under cl 12.1 subsisted in the interim period.
Notice of termination during the interim period
89 Mr Reisgys' pleas as to notice of termination is in the alternative: he says he is entitled to payment in accordance with cl 12.1 of the Employment Agreement or, if such term does not apply in the interim period, then it is an implied term of the agreement in place that either party could terminate on reasonable notice, and that the period of such reasonable notice is 12 months.
90 Mr Ryder says it is an implied term of the agreement in place during the interim period that either party could terminate on reasonable notice, and that the period of such reasonable notice is 12 months.
91 I have found that the terms of cl 12.1 apply with respect to Mr Reisgys in the interim period. In case I am wrong as to that, I will consider the alternate argument and proceed on the basis that there is no express provision relating to termination in the agreements with either Mr Ryder or Mr Reisgys that operated in the interim period.
92 Where there is no such express provision, as summarised in RoganGardiner v Woolworths Ltd,[57] it is settled that a term will be implied that the parties must give reasonable notice of termination except in circumstances justifying summary termination. Whether or not there should be any notice and its purpose are determined as at the date of the contract.[58] What is a reasonable period of notice is to be determined as at the date of notification having regard to all relevant circumstances.
93 It seems to me that in the case of persons such as Mr Ryder and Mr Reisgys occupying executive positions in a mining company, it is entirely appropriate that there be a notice period, both to cushion them against a sudden loss of employment and to cushion the company against the impact of their sudden departure and the effect on its business and operations.
94 In RoganGardiner, Newnes JA referred to the list of considerations that may be relevant to the determination of the period of reasonableness as collected in an earlier edition of Macken's Law of Employment as follows:[59]
[T]he authors state that the considerations which may be relevant to the determination of the period of reasonable notice include the 'high grade' and importance of the position; the size of the salary; the nature of the employment; the employee's length of service; the professional standing, age, qualifications, experience and job mobility of the employee; the expected period of time it would take the employee to find alternative employment; and the period that, apart from the dismissal, the employee would have continued in the employment. The authors note that the factors which are relevant in any particular case must, of course, depend upon the particular facts of the case.
95 The current edition of Macken's Law of Employment[60] lists those matters and adds: what the employee gave up to come to the present employer; and the employee's prospective pension or other rights.
96 The plaintiffs referred to the relevant texts and authorities on point but did not address the matters that they say are relevant in assessing the length of a reasonable notice period.
(a) the entitlement of both Mr Ryder and Mr Reisgys to notice of termination under the Employment Agreements was four weeks. Therefore, in the absence of any evidence about an increase in any notice period, it is highly unlikely the parties would have reasonably expected that the period of notice would increase;
(b) as at July 2012, the parties were intending to enter into what was hoped to be a short interim arrangement pending entry into new formal contract;
(c) it would be 'perverse' to then expect a 12 month notice period, particularly when the company was not in a positon of financial stability;[61]
(d) the agreements for the interim periods were for 'acting' roles;
(e) although they had commenced working for Aphrodite earlier, the relevant period for the assessment of reasonable notice is the period after the expiry of the term under the Employment Agreements in July 2012;
(f) the period of employment under the interim arrangement was not long (assuming it continued until termination in July 2013, then 12 months);
(g) Mr Ryder and Mr Reisgys were both highly paid executives; and
(h) Mr Ryder was about 72 years old as at July 2013.
98 I accept all of those matters are relevant. All but the last two matters support an argument that a relatively short notice period is a reasonable period. There was no relevant evidence as to any difficulties Mr Ryder or Mr Reisgys might face in obtaining different employment or any steps they had undertaken in that regard since the termination of their employment by Aphrodite. There was no relevant evidence about the market or options available to them. There was no evidence that on its face supports the plaintiffs' plea that a reasonable period was 12 months.
99 I am cognisant of the fact that the time for determining the reasonableness of the notice period is at the time notice was given, being July 2013.[62] Therefore, the events of July 2012 to July 2013 are relevant. Accordingly, I will return to the determination of the notice period issue after other issues relating to that period have been discussed in Part E.
**Part C
Dispute as to new employee agreements - introductory**
100 The plaintiffs' case is that new employment agreements were reached commencing 1 March 2013 which provided for, relevantly, salary increases from $264,000 per year ($22,000 per month) to $324,000 per year ($27,000 per month). Although the claim was pleaded more broadly, the plaintiffs did not contend at trial that other terms and conditions were agreed: the evidence related to increases in salary only. For example, there was no evidence of any agreement as to the term of employment, notice periods or termination pay.
101 Whilst the negotiation of the new agreements was said to take place during the period January 2013 to March 2013, the plaintiffs' case is that there were three critical stages in the formation of the agreements: a meeting of 3 July 2012; the events during the period 3 July 2012 to November/December 2012 when two particular fundraising objectives were met; and communications between about late December 2012 and 1 March 2013. The plaintiffs assert that at the 3 July 2012 meeting, an agreement was reached as to what would trigger 'financial security' so that new contracts could then be given effect. Each stage is addressed below.
102 Aphrodite accepts that the two fundraising objectives were met by December 2012.[63] It denies that there was any agreement made on 3 July 2012 or otherwise that meeting those objectives would place Aphrodite in a position of financial security. It denies there was any agreement as to an increase in salary during the period January 2013 to 1 March 2013 or otherwise. It suggests that during the course of these proceedings the plaintiffs have identified that it would bolster their case to assert an agreement about financial security was made based on those objectives being met and contend that the plaintiffs have retrospectively elevated discussions at the meeting of 3 July 2012 to the status of an agreement.
103 The real question in terms of relief is whether or not any new agreement as to respective salaries was made in the period January 2013 to March 2013. Whether or not there was an agreement made 3 July 2012 as to what funding would comprise a secure financial position is relevant only because it might add weight to the plaintiffs' contention about the new salary agreements. The parties agree that is the relevance of the evidence about the 3 July 2012 meeting (although Aphrodite also relies on it more generally as to the credibility of the plaintiffs).
104 Aphrodite admits that a meeting took place in Melbourne on 3 July 2012 (the day after the 2 July 2012 board meeting) at which Mr Ryder, Mr Reisgys, Mr Buttigieg and Mr Weston were present.[64] It was not a board meeting. Two directors were absent (Mr Staude and Mr Sandercock).
105 An important agenda item at the board meeting the day before was a fundraising and marketing report prepared by Mr Ryder,[65] reflecting the ongoing requirement for Aphrodite to secure funding in order to pursue its operations. That report listed some 15 potential targets or options for fundraising, together with recommendations as to who should follow up each item. The board resolved at the meeting to approve the report and that the matters be followed up by the executive directors, with Mr Staude to follow up a particular Hong Kong lead. The minutes state that, 'The aim is to have firm fund raisings in place in the short term with medium and longer term options also well advanced ASAP'.
106 The plaintiffs plead that it was agreed that Aphrodite's financial position would be secured if it could achieve two particular fundraising objectives referred to in the fundraising and marketing report that would raise approximately $3.5 million to $4 million, being:
(a) placement of 30 million Aphrodite shares at $0.06 to raise $1.8 million (before costs) (GPR share placement); and
(b) granting royalty rights to Franco Nevada Corporation to raise $2.5 million (Franco Nevada royalty agreement).
107 The plaintiffs' case is that the two fundraising objectives were reached by December 2012 and that they reached agreement as to their new salaries between January 2013 and 1 March 2013, to take effect as of 1 March 2013.
108 Mr Ryder and Mr Reisgys gave relatively consistent evidence about the 3 July 2012 meeting.
109 Mr Ryder said the meeting was held at Mr Buttigieg's office. Mr Buttigieg started the meeting by saying that it was to determine the sources of funding available to the company, to see what could be arranged in the short term. Mr Buttigieg suggested they work through the funding alternatives one by one. They all agreed $3.5 million to $4 million was needed in order to get to the next stage. They had in front of them the fundraising and marketing report. Mr Buttigieg wrote comments about each option on a whiteboard. They would discuss an initiative and then sometimes rub it out as the meeting progressed. There were three initiatives left on the board at the end of the meeting. One was a placement of 40 million shares at $0.06 to a Singaporean listed company. Mr Buttigieg told him to follow that up as that would be a wonderful achievement with the share price at that time at less than $0.05.[66] The second was the Franco Nevada royalty purchase proposal of $2.5 million to $3 million for a royalty of 2.5% to 3% of gold produced. Mr Ryder knew the managing director for Australia who was based in West Perth. Mr Buttigieg said it was a strong potential initiative and Mr Ryder should follow it up. The third item left on the whiteboard was a joint venture over the project. Mr Weston said he had several Chinese companies interested but that it would take some considerable time.[67]
110 Mr Ryder's evidence was that Mr Buttigieg said as follows:[68]
He said that if we can get the share placement away at six cents and we can get a sale of a royalty interest to Franco-Nevada, in a perfect world, that would see the company through to the next stage of development and we would secure its financial position for the time being going forward. He also said that he agreed that the initiative to sell an interest in the project to the Chinese by way of a joint venture would take some time to complete. But he said that Paul Weston and myself should get on with it.
111 In crossexamination he said the criteria for achieving financial security was achieved on that day but was the subject of conversations almost on a daily basis from thereon.[69] Mr Ryder did not suggest the employment contracts were discussed at the meeting of 3 July 2012.
112 Mr Reisgys said that he had mentioned the figure of $3.5 million to $4 million and that everyone at the meeting agreed with that, including Mr Buttigieg.[70] He recalled two items being left on the whiteboard, being the share placement proposal and the Franco Nevada proposal.[71] He said he had a recollection of Mr Buttigieg using the words 'financially secure' or 'secure the financial position of the company' or something similar, and that Mr Buttigieg said, 'If we achieve these two things the company will be financially secure'.[72] Mr Reisgys said he was not thinking about his employment contract on 3 July 2012 and that the focus was on capital raising.[73]
113 Mr Reisgys kept a diary. His diary has entries for both 2 and 3 July 2012 meetings. The diary entries were of a general nature, recording that meetings were attended, some items discussed and time spent on Aphrodite matters. They read more as Mr Reisgys' manner of recording for his personal use the hours he spent working for Aphrodite rather than a means of recording outcomes in any detail.[74]
114 Mr Buttigieg said he had no recollection of a separate meeting on 3 July 2012 that dealt specifically with fundraising, although he agreed there may have been one.[75] He denied anything was agreed on 2 or 3 July 2012 about those two particular objectives.[76] He said that he recalled meetings in which the two options were discussed and he recalled discussions about pursuing those particular options, but he did not rule out any fundraising proposals. As at 3 July 2012 he had been a director for only a short period and he was still assessing the financial position of the company. He was not in a position as at 3 July 2012 to say whether if those two objectives were met then the financial position of the company would be secured.[77]
115 On 16 July 2012, Mr Weston wrote to Mr Reisgys asking for a broad estimate of costs to complete for each of the prefeasibility work, full feasibility work and defined ore targets. He also asked Mr Reisgys whether he had been able to 'assess the likely annual cost of giving a, say, 3% royalty' for a capital contribution of $3 million.[78]
116 Mr Reisgys replied with expenditure estimates, noting they were in line with those previously provided to the board. The estimate to complete the pre-feasibility study was $4 million. As to the royalty, he said the terms need to be clearly defined by Franco Nevada before he could determine the impact on the project.[79] Mr Reisgys also replied to Mr Weston (copied to Mr Ryder and Mr Buttigieg) stating that the cash position was close to as presented at the last board meeting and noting the need for funds by August. Mr Buttigieg acknowledged the update.[80]
117 On 9 August 2012, Mr Buttigieg wrote to Mr Staude noting, relevantly, that the directors were working hard on further investments, that they had initiated numerous meetings and that they were confident some firm proposals would be put to the company. He referred to two or three other potential investors being 'developed'.[81]
118 On 20 August 2012, Mr Ryder wrote to Mr Buttigieg and Mr Weston (and apparently copied to Mr Reisgys) reporting on a good meeting with them the previous week and saying that:[82]
Aiming for a perfect world result, if successful the below would put Aphrodite in great shape:
Bobby buys another 19.9M AQQ Shares in the market to give him 47.9M out of approx total of 240M = 19.9%.
We elect Bobby to the Board and have Warren and Heath resign.
As part of this, consider a second board Singapore listing and how that may tie in with ASX and Hong Kong.
119 Mr Ryder says that in early October 2012 he had a conversation with Mr Buttigieg in which he showed Mr Buttigieg the 2012 Annual Report which indicated different remunerations for himself and Mr Reisgys;[83] that he said that he considered that they should be on the same remuneration; that both should be on fixed salaries rather than as at present by which Mr Reisgys is entitled to charge $220 per hour for hours above 120 per month; and that he was not being paid for the considerable overtime he was putting in with his hours averaging at least 10 per day.[84] He did not suggest he asked at that time to be paid overtime. His emphasis was on equalising his and Mr Reisgys' salaries and he had concerns about the level of Mr Reisgys' overtime.[85] The Annual Report discloses Mr Ryder's salary as $266,201, an amount close to 12 times his then $22,000 per month salary. The Annual Report was circulated prior to the 10 October 2012 board meeting.
120 Mr Buttigieg denies in his evidence in chief having any such conversation with Mr Ryder then or at any other time, although under crossexamination there was a suggestion on his part that it was possible but he did not recall.[86]
121 On 8 October 2012, Mr Ryder prepared and circulated to Mr Buttigieg, Paul Buttigieg, Mr Weston and Mr Reisgys a draft email to Mr Lim, the agent for GPR. The draft reported on the verbal approval of the Aphrodite directors to two placements of shares to GPR and referred to the involvement of Franco Nevada. It noted that Mr Buttigieg, Mr Reisgys and he were reviewing cash flows and would be looking at savings wherever suitable. The email stated:[87]
123 There was a board meeting on 10 October 2012 where it was noted that the 2012 Annual Report as previously circulated was approved (which included the statement about the manner of approval of directors' remuneration and noted Mr Ryder's and Mr Reisgys' current salaries). The board resolved to issue the relevant shares to GPR and resolved to approve the funding from Franco Nevada against a future 2.5% royalty, subject to documentation.[90]
124 However, at that meeting, Mr Reisgys referred to a revised schedule to complete the pre-feasibility study, indicating a provisional completion date of the end of June 2013.[91]
125 Aphrodite made an announcement to the ASX about the GPR placement of 30,000 shares at $0.06 ($1,800,000) on 15 October 2012.[92]
126 On 14 November 2012, Aphrodite's internal accountant, Janet Northey, provided an updated cash flow and fixed expenses schedule to Mr Buttigieg, copied to Mr Ryder and Mr Reisgys, inviting feedback from Mr Buttigieg. It was three pages long. The first page listed fixed costs of administration and exploration. It disclosed Mr Ryder's salary at $24,000 per month (being $22,000 plus $2,000 per month car allowance). It also disclosed Mr Reisgys' salary of $22,000 per month and variable costs for Mr Reisgys' 'extra hours' at $10,000 per month (based on an average for the previous four months).[93] Pages two and three comprised the updated cash flow, and it incorporated figures from the fixed costs schedule. Mr Buttigieg said he looked at the second and third pages but had no recollection of looking at the second.[94]
127 On 15 November 2012, Mr Buttigieg forwarded a draft cash flow for the months November 2012 to June 2013 to the other directors. It is apparent from the format and content of that spreadsheet that Mr Buttigieg had seen the schedule provided to him by Ms Northey the previous day.[95]
128 On 26 November 2012, Aphrodite announced to the ASX that the Franco Nevada royalty agreement advance was concluded and the $2.5 million and the $1.692 million raised by the GPR share placement would be employed to advance the prefeasibility study for Aphrodite already in progress.[96] Mr Buttigieg told the shareholders that Mr Reisgys and Mr Ryder had worked tirelessly during this period.[97]
129 Therefore, assuming the GPR placement and Franco Nevada royalty agreement funding objectives were the conditions enabling entry into new contracts, they were met by the end of November 2012, although the anticipated date for completion of the prefeasibility study was by then pushed out into the middle of 2013.
Third stage - communications about new agreements
130 On 12 December 2012, Mr Ryder wrote to the company's lawyers about new employment agreements for each of Mr Reisgys, Mr Weston and him. He set out various requested terms, including a commencement salary for each Mr Reisgys and him of $324,000 ($27,000 per month).[98] In context, there had clearly been some communications about the agreements with the lawyers prior to that date.
131 On 14 December 2012, Mr Ryder circulated a draft agenda for a board meeting on 7 January 2012. One of the agenda items was noted as employment contracts.[99]
132 On 20 December 2012, Mr Ryder received a draft employment agreement from the company's lawyers, who noted the terms should be discussed with Mr Buttigieg as a nonexecutive director in due course.[100] It included a base salary of $324,000 inclusive of the superannuation guarantee charge.
133 On 27 December 2012, Mr Buttigieg wrote to Mr Ryder and Mr Reisgys.[101] He wrote:
Since we started putting the cash flow spreadsheet together, back in November, we have had all the Franko-Nevada/AGM stuff and I have been a little tied up, leading up to Christmas, so I haven't progressed this as much as I would have liked to.
Now that all of that is out of the way, along with getting our next round of funding sorted, I see reporting our exact financial position/forecast as critical to the [company's] success.
...
In the spread sheet, there was a sheet created for the fixed expenses. For November and December, could you also detail the exact expenditure, broken up by Fixed and Variable, in both Exploration and Admin. We need to also complete the forecast for the coming months to better get an understanding of when the current round of funding will run out.
134 He attached the earlier spreadsheet[102] which referred to Mr Ryder's and Mr Reisgys' salary of $24,000 and $22,000 respectively and Mr Reisgys' overtime of $10,000 per month. I note that Mr Buttigieg also said in the email he was available most days to 7 January 2013 and invited updates on the schedule.
135 On 27 December 2012, Ms Northey provided Mr Buttigieg with an updated version, which separated Mr Ryder's $24,000 into $22,000 salary and $2,000 vehicle allowance. Mr Reisgys' salary remained at $22,000 per month and his overtime at $10,000 per month.[103]
136 On 28 December 2012, Mr Ryder replied to Mr Buttigieg, again referring to Mr Reisgys' overtime. Mr Buttigieg said he would have skim read it.[104] Mr Buttigieg made the point in evidence that the word 'overtime' is not used:[105] the expression actually used is 'Leon's variable charges for work done in excess of 30 hours per week charged at $220 per hour'. In my view, that is clearly a disclosure that the payment is in addition to the hours for which he is otherwise paid. Mr Ryder states in the email that he has discussed the variable charges with Mr Reisgys and he is amenable to a cut back once the proposed employee share plan is introduced as an incentive, which should save around $8,000 per week.
137 On 31 December 2012, Mr Ryder sent the lawyers a marked up version. There were changes marked up to, for example, add a reference to his role as company secretary, delete a reference to provision of a credit card and to provide for a 12 month termination payment rather than six months, as had been suggested by the lawyers. The start date for the employment in the draft was 1 March 2013. He states in the email to the lawyers that he would like the suggested changes made that day because, 'I would like to send off to Peter Buttigieg today, so that he is well up to speed when he discusses with you'.[106] It had been suggested that Mr Buttigieg might meet with the lawyers the following week when he came to Perth for the scheduled 7 January 2013 board meeting. The lawyers were unable to deal with the changes that day but suggested the draft go to Mr Buttigieg as is and to be discussed later.[107]
138 The same day, Mr Ryder sent an email to Mr Buttigieg, expressly dealing with remuneration.[108] He attached the draft prepared by the company's solicitors with Mr Ryder's changes accepted, and says, relevantly:
Attached is a first pass suggested remuneration package for Aphrodite's employees and Directors.
I am suggesting that Leon and I, both currently out of contract, have very similar 2 year Contracts and are paid the same.
A draft is attached, using me as the example.
As independent Chairman you should privately discuss the Contract legal terms with our lawyers. You should, of course, also discuss the remuneration involved with me and Leon.
As part of the package, everyone should be offered participation in the Share Plan - draft legal documents sent separately, still working on the tax implications advice with our tax accountants.
139 A copy of the draft employee incentive scheme was also attached.
140 Mr Ryder says he had a conversation with Mr Buttigieg a few days later and asked him if he had looked at the agreements. He recalls Mr Buttigieg was away on leave. Mr Buttigieg told him he had not had a careful look and to place them on the agenda for the 7 January 2013 meeting.[109]
141 Mr Buttigieg said in evidence that he did not read or open the attachment to the email of 31 December 2012 because there were more important things to look at and he did not have time.[110]
142 Mr Ryder said the agreements were discussed at the 7 January 2013 meeting. That is reflected in the minutes:[111]
Wayne Ryder advised that he was working with the Company's lawyers to draft a detailed remuneration plan for employees, which would include Employment Contracts and an Employee Share Acquisition Plan. He was requested to follow up in consultation with Chairman Peter Buttigieg to prepare a remuneration plan for Directors' consideration.
143 Mr Mitchell was appointed at the meeting 'as a Director representing [GPR]'.
144 Mr Ryder said he had further conversations with Mr Buttigieg in relation to remuneration arrangements on a couple of occasions (most likely in February 2013). He said that after the meeting he followed up the issue with Mr Buttigieg again and reminded him that he thought there would be a saving to the company if the steps were put in place by reducing Mr Reisgys overtime. He recalled one detailed conversation and other conversations when it might have been touched on. He said Mr Buttigieg told him that the numbers looked fine but he had not had a chance to review the detail of the agreements.[112]
145 Under crossexamination Mr Ryder accepted that any proposed saving was as to Mr Reisgys' potential overtime, rather than by any change in his own salary as that comprised an increase for the company.[113]
146 Mr Ryder also gave evidence of a discussion about a commencement date. As to any start date, he responded to counsel during evidenceinchief as follows:[114]
Was there any discussion about a commencement date for increased remuneration?---Yes, 1 March 2013.
How did that come about?---Sorry?
How did that come about? What was discussed on that topic?---Okay. I reminded him that the draft contracts I had forwarded him in December showed a commencement date of 1 March, that date being set to allow time between the time he received the contracts and had time to follow up my suggestion to talk to the company's lawyers and to the employees involved to come to an agreement on the contracts.
And how did he respond to your comment about 1 March?---He - the best I can say is that he said that the numbers were fine but he hadn't had an opportunity to fully review the contracts. He never commented about a specific start-up date.
147 Mr Buttigieg denied any such conversation with Mr Ryder, saying again that he never opened the draft contract Mr Ryder had provided.[115]
148 It should be noted that fundraising efforts were continuing during this period. Prior to January 2013 the company had budgeted for an additional $3.8 million to be received in March 2013.[116] A fundraising report circulated by Mr Ryder before the 7 January 2013 meeting was approved and he was asked to follow up initiatives as a matter of priority. Those funds were not received in March 2013 and Mr Ryder accepted that there was no expectation that they would be received.[117] By February 2013 the company had net cash of only $338,000.[118]
149 Further, the anticipated prefeasibility completion date continued to be pushed back, Mr Reisgys reporting at the 7 January 2013 meeting a new date of August 2013.
150 On 1 March 2013, Mr Ryder wrote to Ms Northey as follows:[119]
As from 1 March 2013 I am to be paid $27,000 per month plus car allowance $2,000, as per my new Contract that came into effect then.
I have agreed to defer some of my salary for payment later.
So for the time being please pay me on the old rate of $22,000 per month, and I will provide a statement showing the amount deferred and owing to me.
Leon Reisgys is entitled to the same as myself, except that he receives a company vehicle supplied plus running expenses rather than a car allowance as in my case.
151 At trial he said that he had discussions with Mr Reisgys and they agreed not to draw the full new salary until such time as they had written formal approval of the contracts.[120] Under crossexamination about the 1 March 2013 letter, he said that he believed Mr Buttigieg had approved the new contracts but that he was not positive and 'that was why we never drew any amounts out against those contracts'.[121]
152 The relevance of events after 1 March 2013 is twofold. The plaintiffs say it is relevant as to whether or not an agreement was formed as at 1 March 2013. Aphrodite relies on the events (and other matters) for the purpose of its summary dismissal claim.
153 On 7 March 2013, the company's lawyers wrote to Mr Ryder referring to a meeting that had been held and setting out an allocation of tasks.[122] Mr Ryder accepted there must have been a meeting between himself and the lawyers between 26 February 2013 and 7 March 2013.[123] Action items were forward sale of gold documentation, a consulting agreement with funding advisers, executive directors' remuneration contracts, employees' share plan and a share purchase plan, and directors' entitlements to commissions. Next to the executive directors' remuneration contracts item the lawyers have inserted the words, 'Wayne to send GTP [lawyers] the revised agreement. GTP will then send the agreement to Peter Buttigieg and arrange a conference with Peter to discuss'. On 12 March 2013 Mr Ryder replied to the email inserting comments. His comment next to that item is, 'Not urgent just yet'.[124]
155 Another board meeting was held on 26 March 2013. The emphasis was on short term funding options, including negotiations for a further share placement and a proposed share purchase plan for shareholders. All other business was deferred.[127]
156 On 8 April 2013, Mr Ryder circulated to the other directors a budget for the three months from 1 April 2013 to 30 June 2013, and included in that budget his salary at $27,000 and Mr Reisgys' salary at $27,000.[128]
157 At a board meeting on 10 April 2013, the management accounts and cash flows were circulated and it was resolved that short term funding requirements were to take priority. Other fundraising initiatives were put on hold. There were to be no new expenditure commitments without board consent.[129]
158 On 16 April 2013, Mr Ryder wrote to the directors noting the effect on the company of the collapse in the gold price and suggesting a further meeting. He reported on a share issue option and on the fact Mr Reisgys had shut down any new spending. He said that Aphrodite was looking at further cost cuts, particularly in administration, wherever possible.[130]
159 Prior to 3 May 2013, there were clearly some discussions with Mr Buttigieg and Mr Mitchell about suggested deferrals of salaries. An email of 3 May 2013 from Mr Ryder to them comments on this. Mr Ryder provided a revised monthly budget and also suggested that the three directors meet to discuss on 6 May 2013.[131] He invited them to discuss any aspects with him at any time. The budgeted amount for his salary was $27,000 with a suggested deferral of $4,000. This was the first time a proposed deferral was referred to in budget documents.[132] There was also a deferral for Mr Weston noted but none for Mr Buttigieg or Mr Mitchell. Mr Ryder says Mr Buttigieg then contacted him and asked to meet to discuss and see if further savings could be made.
160 Mr Ryder says there was a meeting on 6 May 2013 between him and Mr Mitchell and Mr Buttigieg and they discussed the budget he had provided. He says they asked that he consider a further deferral of part of the $27,000 referred to in the budget.[133] On the same day Mr Reisgys circulated an email with adjusted project expenditure showing his budgeted salary of $27,000 with a deferment of $5,000.[134]
161 Mr Buttigieg agreed that there was a meeting on 6 May 2013 and that an option discussed was deferral of part of Mr Ryder's monthly payments. Mr Buttigieg said there was 'no relevance' to the number $27,000. He said there were general discussions about how to cut costs.[135]
162 There was a board meeting on 7 May 2013 at which Mr Reisgys was requested to provide a cash out exploration budget of around $70,000 per month for the directors' approval. Mr Reisgys circulated an exploration budget the following day. Mr Reisgys' salary was noted at $27,000 with $7,000 deferred.[136] Mr Reisgys was able to propose a monthly cash out budget of $67,350 by deferring and adjusting payments, including his own salary. Mr Buttigieg responded by thanking everyone for their cooperation during difficult times.[137]
163 There was another board meeting on 27 May 2013. Directors and staff employment positions were one of 27 items on the agenda.[138] Ahead of the meeting, Mr Ryder wrote to the directors about that agenda item, noting that the executive directors and Ms Northey were working on verbal contracts and asking the company to advise people whether they would be entering into formal employment contracts.[139] Although the minutes from that meeting may not have been formally approved,[140] the drafts are relatively consistent in indicating a resolution as follows:[141]
[O]nce the company has satisfactorily resolved its current financial problems, with creditors paid and reasonable working funds in hand, then all Directors and staff positions would be reviewed, with the aim of retaining all required personnel under new Employment Contracts, including an incentive scheme as had been previously proposed.
164 During June 2013, Aphrodite made announcements to the ASX about its new resources estimates and its plans to build a gold processing hub.[142] However, the company even if asset rich was at that time clearly continuing to struggle with cash flow.
165 On 18 June 2013, Mr Ryder wrote to Mr Buttigieg. On the face of the letter there had been some prior conversations about potentially restructuring the company to work through a difficult time. Mr Ryder said he had been looking for a cornerstone investor who would be compatible with Mr Buttigieg. He suggested one possibility was for Mr Buttigieg to lend to the company but on a secured basis by way of a convertible note proposal. He also noted that if the company were put in administration there may be further cost cutting measures, including a deferral of his and Mr Reisgys' monthly salary payments above $18,000 plus car allowances.[143] By email of 20 June 2013 Mr Ryder told Mr Buttigieg about other proposals for funding still being pursued (convertible note, share placement to investor, sale of some or all or project).[144]
166 Mr Ryder says that Mr Buttigieg telephoned him from overseas after receipt of that letter and said that he wanted him and Mr Reisgys to accept even greater deferrals but that if they agreed to do so they would be paid when the company was on a sound financial footing.[145] The company's lawyers prepared a draft convertible note. Mr Ryder emailed it to Mr Buttigieg, who was apparently on holiday.[146]
167 There is an email from Mr Buttigieg to Mr Ryder of 30 June 2013 in an objectively friendly tone that refers to a phone call.[147] Mr Buttigieg agreed under crossexamination that there had been a phone call. He recalled discussions about the convertible note and that they talked about ways of reducing costs:[148]
And you said to him that if he agreed to further deferrals you would ensure that the deferred amounts were paid back when the position was secured and you would lead the charge to see that there were bonuses as well?---Yes. If we could come to an arrangement with the new costs, yes, absolutely. There would be mutual benefit down the road.
168 On 27 June 2013, Mr Ryder wrote to Mr Reisgys with a draft budget, noting further deferrals such that he and Mr Reisgys would each be paid $12,000 per month and noting that Mr Buttigieg had said that the reduced cash pay does not mean they would not receive the pay but that it is deferred until the company is over its current financial hurdle.[149] That budget was then sent to Mr Buttigieg on 27 June 2013.[150] Mr Reisgys had separately sent an email to Mr Ryder and Mr Buttigieg setting out a long list of concerns for the project if the prefeasibility study were to be suspended, including matters such as storage of samples, the security of cores and drill samples, the suspension as a material event under continuous disclosure listing rules and the potential loss of a small, well trained and loyal staff.[151] He did not complain in the email about the deferral of his salary.
169 Mr Ryder says that on 15 July 2013 he received a call from Mr Weston and Mr Buttigieg asking to meet with him and Mr Reisgys. They met at Aphrodite's office. Mr Weston and Mr Buttigieg told them that GPR wanted them to resign immediately. They said they would be offered reemployment at $5,000 per month and on other terms to be agreed. Mr Reisgys and Mr Ryder gave consistent evidence that they said to avoid damage to the company they would do so if termination arrangements could be agreed.[152]
170 On 16 July 2013, Mr Buttigieg sent an email to all directors, not specifically addressed to Mr Ryder or Mr Reisgys, to the effect that in consideration of Mr Ryder's and Mr Reisgys' continued assistance with an orderly handover and fundraising, the company would negotiate a commission scheme with them, such that they would be paid a commission on funds raised by them but with no obligation on the part of the company to accept any funding proposal. It required resignations of their employment and directorships and a response that day.[153]
171 Mr Ryder said that he wanted to obtain legal advice, considered the same day deadline unreasonable and did not respond by the deadline.[154]
172 On the same day, Mr Mitchell circulated an agenda for a board meeting on 19 July 2013. Agenda items included the termination of the 'Executive Arrangements' with Mr Ryder and Mr Reisgys, and notice of an intention to move for their removal as directors at the next annual general meeting.[155]
174 At the meeting of 19 July 2013, Mr Buttigieg gave Mr Ryder and Mr Reisgys letters in similar terms terminating their employment effective immediately.[158]
175 The letter referred to the resolutions of the board made 2 July 2012 (and it referred to the consequent arrangements as the 'Interim Employment Arrangement') and stated:
Having recently considered the Company's future employment requirements, the Company has decided to forthwith discontinue any further negotiations in relation to your potential future employment.
As a consequence of the Company's decision, we advise that the term of the Interim Employment Agreement will expire with effect from 5pm WST, Friday 19 July 2013.
(a) there was an agreement formed at the meeting of 3 July 2012 that if the two funding objectives of the GPR share placement and the Franco Nevada royalty agreement were met then Aphrodite's financial position would becomes 'secured as planned' and new employment agreements would be finalised;
(b) as those objectives were met, he engaged with Mr Buttigieg in order to finally agree terms;
(c) he was open about his current salary. It was referred to in the 2012 Annual Report. He showed the report to Mr Buttigieg. The current salary was referred to in the spreadsheets circulated by Ms Northey to Mr Buttigieg in November and December 2012, the issue of employment contracts was expressly included in the draft agenda circulated in December for the 7 January 2013 board meeting;
(d) Mr Ryder was open about the salary he wanted for himself and Mr Reisgys and Aphrodite was informed by his open reference to the increased salary in the email to Mr Lim and the terms of the draft employment contract;
(e) Mr Weston had received the draft email to Mr Lim which included the proposed salary and as to the email said 'that's fine'. Mr Buttigieg had seen the letter to Mr Lim and had received the draft contract and told Mr Ryder in discussions after 7 January 2013 that the numbers 'are fine' or 'look fine';
(f) there was therefore a 'verbal contract';[159] and
(g) the start date of 1 March 2013 was disclosed in the draft contract and noone demurred.
177 Therefore, he contends that an agreement that he (and Mr Reisgys) be paid a salary of $27,000 per month from 1 March 2013 was formed.
178 Mr Reisgys did not claim to have separate discussions with Mr Buttigieg for the purpose of agreeing the terms of his new contract. His source of knowledge as to the agreements was said to be Mr Ryder. Mr Ryder told him what Mr Buttigieg had said. He had discussions with Mr Ryder about his anticipated salary in late 2012 and also received a copy of the draft employment contract sometime after the 7 January 2013 meeting.[160]
179 However, at times Mr Reisgys reported discussions that were not consistent with Mr Ryder's own evidence. An obvious example was as to the terms of the alleged new contracts and whether those terms had been approved. For example, Mr Ryder said only the salary component was agreed (and that was the basis upon which the trial proceeded).[161] Mr Reisgys said he was told by Mr Ryder that Mr Buttigieg had agreed to the terms and remuneration in the draft contract and had agreed they would come into effect on 1 March 2013.[162]
180 He said that he understood from his conversations with Mr Ryder that Mr Buttigieg and Mr Ryder had agreed the remuneration and conditions of his new contract and he was positive it did not have to go back to the board. He accepted that he received no written confirmation from anyone about such agreement.[163] He said Mr Ryder gave him a copy of the letter to Ms Northey of 1 March 2013 sometime after that date, and he was not aware of it being given to any other board member.[164]
181 Mr Reisgys initially acknowledged under crossexamination that the reference to employment contracts in the agenda for the 13 March 2013 board meeting was a reference to contracts including his contract. When asked why the minutes indicated that employment contracts were a deferred item at that meeting he contended that he did not think the deferred item included a reference to his contract.[165]
182 Mr Reisgys also said that he continued to record the hours he was working after 1 March 2013 because he was uncertain as to whether or not the 'approved' contracts had become effective without being signed.[166] When challenged on this statement under crossexamination, he sought to explain it by saying it was ambiguous and he was sure the contract was effective but he was not sure of the effective date, and so there was some 'confusion'. He said he thought if the board signed it (the agreement) there might be a change of the effective date but otherwise he was sure it was 1 March 2013 based on what Mr Ryder had said, and it did not have to be signed.[167]
183 Mr Reisgys also referred to the collapse of the gold price and that he had shut down new spending as from April 2013.[168]
184 He professed uncertainty as to the start date of the new employment agreement during the period March 2013 and April 2013 as justifying his conduct in issuing invoices for overtime until a conversation with Mr Ryder in which he says Mr Ryder confirmed the start date was 1 March 2013.[169]
185 When taken to the minutes of the board meeting of 27 May 2013 and the resolution then passed as to a review of directors' positions, he said it did not apply to him. He said he still considered he had a concluded agreement at that time based on his conversations with Mr Ryder.[170]
186 Therefore, in summary, it is Mr Reisgys' position that a new contract was entered into effective 1 March 2013, and his knowledge of such agreement is based on Mr Ryder having told him on several occasions that Mr Buttigieg had approved the terms and condition of his new contract. The new salary was $27,000 per month.
Determination - no agreement about an increase in salary
187 I do not consider any agreement was formed about an increase in salary to $27,000. It was clearly something that Mr Ryder wanted to bring about. However, in the end I am not satisfied that there was sufficient certainty in the communications or conduct between Mr Ryder (on his own behalf and on behalf of Mr Reisgys) and Aphrodite to comprise an enforceable agreement.
188 I am not satisfied any agreement was reached at the meeting of 3 July 2012 as to what funding would comprise a secure financial position for Aphrodite. I am satisfied that a meeting occurred that day and that funding options were discussed. There is documentary evidence that supports a meeting of that day and there is logic to the directors meeting to discuss such issue whilst Mr Ryder and Mr Reisgys were still in Melbourne. However, in my view Mr Reisgys and Mr Ryder sought in this action to heighten the importance and status of the meeting and the nature of any outcomes. Neither the pleadings nor witness statements mentioned the meeting until 2016 (two years after the pleadings and original witness statements). Although Mr Reisgys said his memory of the meeting was refreshed only once he read his diary, it is surprising that a meeting where the vital trigger to new employment contracts was allegedly defined would be overlooked by both plaintiffs.
189 I do not accept that discussions reached the height of an agreement as to 'financial security'. Not all directors were present. Mr Buttigieg had only recently joined the board. His unchallenged evidence was that he did not have a good understanding of the financial position of the company at that time and such evidence is credible. It is inherently incredible that he would commit to numbers that would comprise financial security at some point in the future so soon after joining the company. He was clearly collecting financial information even after the meeting.[171]
190 There was also uncertainty before and after the meeting as to the amount of funding to complete the prefeasibility study at that time, the cost of any royalty agreement to Aphrodite and the number of shares that should be issued as part of a share placement.
191 For example, Mr Reisgys maintained as at 21 June 2012 and as at 17 July 2012 that $4 million was required to complete the prefeasibility study.[172] The figure of $3.5 million to $4 million is not explained. Mr Ryder said Mr Reisgys had given an oral report at the meeting that $3.5 million to $4 million was sufficient but that does not explain the reference to $4 million in the 17 July 2012 document. Further, at 17 July 2012 the cost to Aphrodite of a royalty agreement with Franco Nevada was still being considered by Mr Weston and Mr Reisgys, and Mr Reisgys expressed the need for caution about the terms of any such agreement.[173]
192 Such doubts are inconsistent with the suggestion Aphrodite was in a position on 3 July 2012 to agree or had agreed that meeting the two identified objectives would provide that the company's financial position would be secured. Nor was there sufficient certainty as to what was in any event meant by that expression. In any event, I do not consider it was capable of conveying a meaning that the company would enter into new contracts at that time without regard to the current or changing financial circumstances of the company.
193 Even if there were an agreement made on 3 July 2012, it is still clear that the terms of any new contract also needed to be agreed as between Aphrodite and each of Mr Ryder and Mr Reisgys upon satisfaction of those objectives.
194 I do not consider there was an agreement between the parties to vary the terms under which Mr Ryder and Mr Reisgys were employed from 1 March 2013.
195 I consider that Mr Ryder disclosed the terms upon which he wished to agree. There was no secrecy about the proposed increase to $27,000 per month, that figure being included in the email to Mr Lim and the draft contract. Whilst it may have been optimistic to assume Mr Buttigieg would look at the draft contract before 7 January 2013, I consider Mr Ryder was entitled to proceed on the basis that at some point during the period that the item remained an agenda item, Mr Buttigieg as a director had read it or at least looked at its main features.
196 However, I do not consider there is sufficient evidence to establish an agreement as to the increase in salary.
197 No nonconflicted director specifically confirmed that Mr Ryder's and Mr Reisgys' salaries were to be increased. Mr Weston's comment on the draft to Mr Lim containing estimates was no more than that - a comment that the draft looked fine. It cannot be elevated to an agreement as between Aphrodite and Mr Ryder that the salary component estimates were now agreed. Even assuming Mr Buttigieg said at some stage that 'the numbers are fine' or 'look fine' or words to that effect, I do not consider that was sufficient indication or external manifestation of acceptance to comprise acceptance of a contract by Aphrodite.
198 I find Mr Reisgys' explanation as to why the employment contracts remained on the agenda for board meetings after 1 March 2013 to be unconvincing. In my view, Mr Reisgys has retrospectively elevated the nature of discussions he had with Mr Ryder about whether the terms of new contracts had been agreed. Regardless, there were enough signs that there had been no such agreement such that I do not accept that Mr Reisgys had no doubts about agreement of his new contract. In my view, he had such doubts despite his attempts to explain away evidence that did not fit with that scenario.
199 The following support my conclusion that there was no agreement of new contracts:
(a) the issue of employment contracts remained on the agenda for board meetings after 1 March 2013;
(b) the issue of employment contracts remained on the action list with the company's lawyers after 1 March 2013;
(c) the circumstances of the company had changed since 2 July 2012 in that from October 2012 the date for completion of the prefeasibility study had been pushed back. As at 28 December 2012 it was estimated that a further $3.8 million would be required by the end of March 2013: those funds were not received by that time and accordingly the financial position of Aphrodite was not strong. By February 2013 the company had cash on hand of only $338,000, a position that objectively must cast doubt on whether a relatively significant salary increase would have been approved;
(d) budgets circulated after 1 March 2013 that referred to $27,000 salaries for Mr Ryder and Mr Reisgys were no more than estimates and were presented only as estimates;
(e) Mr Ryder's own evidence was that he was not positive that the numbers had been agreed, and that is why he did not in fact draw a salary of $27,000 per month after 1 March 2013;
(f) there was no evidence that Mr Buttigieg approved or agreed a start date of 1 March 2013;
(g) there was no evidence the salary increases had been taken to the board or approved by the nonconflicted directors. Even if it were to be accepted that Mr Buttigieg approved the increase in some manner, there is no suggestion the other directors at that time did so;
(h) both Mr Ryder and Mr Reisgys knew from the 2 July 2012 board resolutions that matters such as their employment contracts were voted on by the board;
(i) as is also apparent from the 2 July 2012 board resolutions, the board had expressly granted authority to Mr Ryder, Mr Reisgys and Mr Buttigieg to agree Mr Weston's remuneration (in effect a majority vote of the board). There was no suggestion of any similar resolution with respect to Mr Ryder or Mr Reisgys; and
(j) the minutes of the 7 January 2013 board meeting prepared by Mr Ryder refer to preparation of a remuneration plan 'for Directors' consideration'. In my view, Mr Ryder knew that it was not open to Mr Buttigieg alone to enter into an agreement as to his salary on behalf of Aphrodite, and to the extent his oral evidence was to the contrary, I do not accept it.
200 Therefore, I do not consider Mr Ryder made an agreement with Aphrodite in the period December 2012 to 1 March 2013, either as to his salary or Mr Reisgys' salary.
201 Immediately prior to the trial the plaintiffs amended their pleading to allege that in the absence of signed contracts or a formal board resolution then Mr Buttigieg had the implied authority of the board to enter into agreements with Mr Ryder and Mr Reisgys that their salaries be agreed at $27,000 per month or that the board ratified such agreements. I do not accept the evidence establishes those claims. As I have found, Mr Buttigieg did not enter into any such agreements with Mr Ryder or Mr Reisgys in any event.
202 Mr Buttigieg was but one director of the company. There is no evidence he was authorised to enter into any agreements on behalf of Aphrodite and employment and remuneration of directors were matters for the board under the Constitution.[174] Leaving aside Mr Reisgys, there was no evidence of knowledge on the part of the other directors of Aphrodite at the time (Mr Mitchell, Mr Weston or alternate director Paul Buttigieg) such as to establish that Mr Buttigieg's conduct in making any such agreement was ratified or that there was implied authority. Mr Mitchell denied that he or the board approved or resolved to offer any new contracts of employment.[175] The mere fact that estimated budgets were placed before the board meeting of 10 April 2013 that showed monthly salaries of $27,000 per month (as pleaded) does not evidence any agreement or acknowledgment by the other board members that such estimates were approved or accepted as having any contractual effect. They were merely estimates. There is no evidence to suggest that Mr Buttigieg had in some manner approved them. Further, any suggestion that Mr Buttigieg had implied authority to bind the company to an agreement as to remuneration is negatived by the fact that the minutes of the 7 January 2013 meeting show that a detailed remuneration plan was to be prepared 'for Directors' consideration'.[176] It is also inconsistent with the fact that the issue of employment contracts was regularly included in agendas for board meetings.
**Part D
203 As noted above, as at February 2013, Aphrodite did not have funding for the anticipated $3.8 million in place. If it did not come in, Mr Ryder accepted the company would have no money.[177] It was anticipated that further funding would be needed by the end of April 2013, at which time the cash position would be estimated to be in deficit, at -$317,000.[178] Mr Ryder had been informed of so much by Mr Reisgys. Aphrodite needed to raise money to complete the pre-feasibility study. That was the most important issue.[179]
204 On 25 February 2013 Mr Ryder wrote a letter to Mr Reisgys as follows:[180]
While waiting for our new Employment Contracts to come into play, I request that I be allowed to charge overtime in light of the long hours I have been putting in.
According to my time sheets, I will have clocked up 75-80 additional hours over the 2 months to the end of February 2013. At $220 per hour this would amount to about $17,000, but I will keep it down well below that, suggesting $9,000 + GST.
Please discuss and advise if OK.
205 Mr Ryder also addressed a formal invoice and time sheets for the period 7 January 2013 to 17 February 2013 to Aphrodite.[181] As previously noted, Mr Ryder had no entitlement to overtime payments under his Employment Agreement. There was no agreement that he had such an entitlement during the interim period. He received the benefit of the payment by way of a set off that was applied against certain personal debts owed by Mr Ryder to the company. Aphrodite seeks to recover the payment by its counterclaim.
206 Mr Ryder said that he asked Mr Buttigieg if he could charge overtime:[182]
I said to Mr Buttigieg - and this was in the context of discussions over the employees' remuneration and incentives. I said, 'You're aware that this is going to bring about a fairly big saving, but at this point of time I'm working at least 10 hours a day until this comes into effect. I would appreciate it if I could charge some overtime.' He said, 'Well, the numbers on the remuneration plan look quite okay, but I'm not keen to approve any serious overtime. So if you're going to charge some, keep it down. Keep it down to as low as you can.'
Any discussion about the rate?---No.
207 When asked why he then asked for Mr Reisgys' approval, he said it was because 'The procedure in these companies was that the managing director would be responsible for receiving and approving requests for overtime'.[183] He said he told Mr Reisgys that he had Mr Buttigieg's approval.
208 Mr Ryder justified the overtime payment by saying he had been working such long hours that he felt he deserved some recognition for it and it was not a big amount.[184] He said for years the process for Mr Reisgys' overtime was that he would submit overtime forms to Mr Ryder who would approve them. On that basis he considered it was sufficient for Mr Ryder to sign his form. Mr Ryder had no record of sending the letter to Mr Buttigieg.
Well, [Mr Ryder] had had a conversation, he told me, with Peter Buttigieg, okay, where he had stated that he was working long hours over a period of - this is January and February, and he sought permission from Peter Buttigieg to do some overtime and be paid at the same rate I was being paid, and I was advised that the chairman of the company had agreed to it, and as a result of that, I agreed to that proposal as well.
210 Mr Reisgys said the letter of 25 February 2013 was handed to him. He said he received information about the overtime claim only from Mr Ryder.[186]
211 Mr Buttigieg was emphatic that no mention was made of overtime and that when he found out (about Mr Ryder's claim) he was livid. He said overtime did not enter his head, that he knew nothing about overtime. He also denied any knowledge of Mr Reisgys' entitlements to overtime. Whilst that does not deny such entitlements on Mr Reisgys' part (as discussed below), Mr Buttigieg's evidence was consistently that he had no knowledge that anyone was being paid overtime. He said that it was possible that people were entitled to overtime but 'we should have been informed' and if so they might have looked at 'alternate ways of getting around having to pay overtime'.[187]
212 I do not accept that Mr Buttigieg approved Mr Ryder's request for overtime. In my view Mr Buttigieg's evidence as to an absence of any conversation about approving Mr Ryder's overtime was credible and I accept it. In the context of a company that at the relevant time was closely watching costs and where Mr Ryder's remuneration was literally on the agenda, a first and oneoff request for overtime by Mr Ryder is something that might be remembered, even taking into account that Mr Buttigieg's memory on many other issues was not strong.
213 On the other hand, Mr Ryder's evidence appeared to me to be contrived in order to explain the reason why the letter had gone only to Mr Reisgys and in circumstances where Mr Ryder had never previously claimed over time, had never had a contractual entitlement to overtime, on his own case was not entitled to an increase in salary until 1 March 2013, and at the time the company was facing negative cash flow if it could not quickly raise additional funds. Only a few days later he referred to deferrals of payments over his usual $22,000 per month in his letter to Ms Northey and claimed that he was uncertain as to whether he was entitled to more than that:[188] that position is inconsistent with an assumption that he could be paid more by way of an overtime entitlement. Mr Ryder also said that if Mr Buttigieg had not approved the overtime, his request may have needed to go to the board.[189] Such evidence was inconsistent with his claim that Mr Reisgys was able to approve it.
214 Even if there was some process of acquiescence as to approval of Mr Reisgys' overtime claims (as claimed), the respective positions of Mr Ryder and Mr Reisgys were not identical. Mr Reisgys had a right to be paid overtime under his Employment Agreement, the terms of which subsisted, subject to written approval. Mr Ryder had no such right.
215 I have carefully considered the conflicting evidence but am not satisfied that Mr Ryder sought or obtained the approval of Mr Buttigieg for an overtime payment in January 2013 or February 2013 or any relevant time.
216 On the assumption that he continued to be employed on the terms of his Employment Agreement, Mr Reisgys seeks overtime payment in the sum of $22,110, being 100.5 hours at $220 per hour, for the period March to June 2013.[190]
217 It is common ground that Mr Reisgys did not have the prior written agreement of the company to undertake work in excess of 120 hours per month for any of those months, as required under cl 5.1(c).
218 Mr Reisgys pleads in his reply that because of waiver or estoppel, Aphrodite cannot assert that compliance with the requirement of prior written agreement was required.
219 The estoppel plea comprises an allegation that in August 2010 Mr Reisgys and Mr Ryder had a conversation during which Mr Reisgys said he was doing many hours in excess of the 120 hours per month provided under his Employment Contract and he wanted Mr Ryder to approve payment for extra hours. It is alleged that Mr Ryder said that would be fine and that Mr Reisgys should submit timesheets to Aphrodite.
220 It was then pleaded that 17 invoices were issued up until April 2013 and that each time Mr Ryder submitted a claim he had a conversation with Mr Reisgys about the invoice and told him that the claim would be approved, and then signed a payment authority to Ms Northey who arranged payment.
221 It was said that by Mr Ryder's statement in August 2012, Aphrodite represented that it did not require written agreement with Mr Reisgys prior to carrying out work and claiming payment. It was said that Mr Reisgys relied on that representation in failing to obtain prior written approval, which would have been given by Mr Ryder on behalf of Aphrodite, and accordingly Mr Reisgys suffered detriment.
222 Counsel for Mr Reisgys submitted the estoppel was by representation and cited Owen J's summary of the principles in The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9][191] and the summary in Silovi Pty Ltd v Barbaro[192] (distilled from the High Court decision in Waltons Stores (Interstate) Ltd v Maher).[193] Counsel did not analyse the elements of clarity of representation, intention or reliance.
223 In any event, in my view the estoppel argument fails because it was not reasonable for Mr Reisgys to rely upon the alleged representation at least by 1 March 2013. There are various reasons for this:
(a) Mr Reisgys knew that the company had insufficient funds and was revising and pruning expenditure heavily;[194]
(b) the board resolved on 10 April 2013 that there be no expenditure commitments without board consent;
(c) in April 2013 Mr Ryder had informed the directors of the effect on the company of the gold price collapse and reported that Mr Reisgys had shut down any new spending;[195] and
(d) in the budget of expenses prepared for the purpose of the budget circulated by Mr Ryder in April 2013, Mr Reisgys did not budget for any overtime. His estimated salary component continued to reduce during the period to June 2013 as part of the reduction in the monthly expenses budget and there remained no budgeted item for overtime.[196]
224 As to the issue of waiver, it was pleaded as a waiver of the right to reject claims for payment if there had not been prior written agreement between the company and Mr Reisgys for the work to be carried out.
225 There was no consideration of whether it was the type of clause that could be waived in the context of the arrangements between the parties. Arguably, the prior approval clause was of significance for both parties in that it would prevent Mr Reisgys undertaking work for which he might not be paid and it permitted Aphrodite to monitor the nature of work undertaken and the expenses it was thereby incurring. The clause required permission for the work to be undertaken, not just prior authorisation of payment.
226 Nor was there any consideration of waiver in the context of an express 'no waiver' clause in the Employment Agreement that provided that:
Failure or omission by the Company or the Employee at any time to enforce or require strict or timely compliance with any provision of this Agreement will not affect or impair that provision in any way or the right of the Company or the Employee to avail itself of the remedies it may have in respect of any breach of any such provision.
227 Mr Reisgys relies on the pattern of conduct alleged as to prior approval of claims for overtime. Not surprisingly, Aphrodite relies on cl 19 to contend the waiver point cannot be pursued.
228 There is no doubt that a contract can be varied by later agreement and so it is possible, for example, for a later oral or implied contract as to a form of approval to be enforceable despite a clause in the original agreement that requires any approval to be in writing.[197] However, the party seeking to avoid the operation of a clause such as cl 19 must make out a contract to vary. In my view, Mr Reisgys has not made out any such contract and in the circumstances cl 19 is enforceable and has not been waived. Whilst Mr Ryder and Mr Reisgys may have come to some informal arrangement, there is no suggestion Aphrodite was a party to that arrangement and had actual knowledge of it. Mr Reisgys was in a position of conflict and could not be taken as agreeing on behalf of Aphrodite to his own claim. Mr Ryder was but one director of the company. There is no evidence he was authorised to enter into any such agreement on behalf of Aphrodite and employment and remuneration of directors were matters for the board.[198] There was no evidence of knowledge on the part of other directors of Aphrodite such as to maintain any suggestion that Mr Ryder's conduct in making any such agreement was ratified or that there was implied authority.
229 Finally, it is to be noted that Mr Reisgys did not plead an estoppel by convention although in oral submissions his counsel said that the estoppel argument 'looked like' that.[199] I would not have found such a claim was made out as there is no persuasive evidence of a mutual assumption. The conduct of Aphrodite in continually reducing costs and approving budgets that did not allow for overtime is inconsistent with any shared mutual assumption during the period of the invoices the subject of Mr Reisgys' claim.[200]
230 I do not accept Mr Reisgys' claim for additional overtime payments. I note, however, that there is no suggestion that Mr Reisgys did not perform a significant amount of important work during this period.
231 Because of my finding in Part A as to the terms of Mr Reisgys' Employment Agreement subsisting during the interim period and on the basis I have found there was no variation to that position, cl 12.3 of his Employment Agreement as to summary termination is relevant:
(a) At any time, the Company may be notice in writing summarily terminate the Employment of the Employee as the result of an occurrence that gives the Company a right of summary dismissal at common law, including but not limited to:
(i) wilful breach of any of the terms of this Agreement;
(ii) gross or wilful disobedience of reasonable instructions given by the Company or non compliance with the Employees duties under this Agreement or with any policy of the Company;
(iii) gross or wilful misconduct, dishonesty, insubordination or neglect;
(iv) the Employee being of unsound mind or under the control of any committee or officer under any law relating to mental health;
(v) if the Employee is guilty of any wilful misconduct or neglect which in the reasonable opinion of the Company injures the reputation or the business of the Company;
(vi) if the Employee is charged with or convicted of a criminal offence which in the reasonable opinion of the Company might tend to injure the reputation or the business of the Company; or
(vii) the Company giving the Employee 2 written notices, at least one month apart, of his failure to meet independent performance objectives.
232 Because of my finding in Part A that other than remuneration, the terms of Mr Ryder's Employment Agreement did not subsist, the principles of common law summary dismissal are relevant to his position.
233 The principles are usefully summarised by Le Miere J in Buitendag v Ravensthorpe Nickel Operations Pty Ltd:[201]
Two conditions must be satisfied at common law in order to justify a summary dismissal. First, there must be a breach by the employee of the terms of the contract or a demonstrated intention not to be bound by those terms. One of the ways in which an employee breaches their contract is by being guilty of misconduct. Second, the conduct must be sufficiently serious to allow summary termination. Mere misconduct is not sufficient, it must be serious enough to justify summary dismissal. It must constitute a repudiation of the contract or one of its essential conditions: see Blyth Chemicals Ltd v Bushnell [1933] HCA 8; (1933) 49 CLR 66, 81; North v Television Corp Ltd (1976) 11 ALR 599, 608 - 609; Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285, 287- 289 (Lord Evershed MR); Bruce v AWB Ltd [2000] FCA 594; (2000) 100 IR 129 (Sundberg J) [14] - [15].
In Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 103 IR 160; (2000) 176 ALR 693, Kirby J said:
'It is, however, only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily.
Whatever the position may be in relation to isolated acts of negligence, incompetence or unsuitability, it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal. Exceptions to this general position may exist for trivial breaches of the express or implied terms of the contract of employment ... but these exceptional cases apart, the establishment of important, relevant instances of misconduct, such as dishonesty on the part of an employee like Mr Wells, will normally afford legal justification for summary dismissal. Such a case will be classified as amounting to a relevant repudiation or renunciation by the employee of the employment contract, thus warranting summary dismissal [51]. (citations omitted)'
In North v Television Corporation Ltd (608 - 609), Smithers and Evatt JJ said:
'In such a situation it is reasonable to interpret the expression "misconduct" as referring to conduct so seriously in breach of the contract that by standards of fairness and justice the employer should not be bound to continue the employment.'
In Sent v Primelife Corporation Ltd [2006] VSC 445, Mandie J said:
'Serious misconduct (sufficient to justify summary dismissal) has been held to include conduct, in relation to important matters, that constitutes a repudiation of or is incompatible with or repugnant to the essential obligations of an employee or is destructive of the relationship of good faith and confidence between employer and employee [17].'
Serventi v John Holland Group Pty Ltd [2006] FCA 1049, Madgwick J said:
'An employer is entitled to summarily dismiss an employee for serious and wilful misconduct. Such misconduct must be of a kind that, as a practical matter, is likely to make maintenance of the contract of employment impractical [6].'
In Carter v Dennis Family Corporation Pty Ltd [2010] VSC 406, Habersberger J said:
'... serious misconduct and repudiation are two sides of the same coin. Generally, conduct that meets the test of serious misconduct will also constitute a repudiation by the employee of the employment contract because it will be conduct repugnant to the essential obligations of the contract. Thus, as a matter of practical significance the allegations of repudiatory conduct in respect of [the employer's] reasons for summary dismissal do not add anything to the allegations of serious misconduct, as the latter is always alleged when the former is alleged [43].'
The defendant bears the onus of establishing the serious misconduct. The applicable standard of proof is on the balance of probabilities, but both commonsense and authority dictate that findings of serious misconduct should not be made lightly: Carter v Dennis Family Corporation [46] (Habersberger J).
The dismissal of an employee may be justified upon grounds on which the employer did not act and of which the employer was unaware when the employee was discharged: Concutt Pty Ltd v Worrall [29] (Gleeson CJ, Gaudron & Gummow JJ).
234 The plaintiffs emphasized that although the standard of proof remains one of the balance of probabilities, because of the serious nature of summary dismissal, findings of fraud, gross misconduct or incompetence or the like should not be made lightly, referring to Briginshaw v Briginshaw.[202] It was not in issue that such principles were relevant (and Briginshaw and other relevant authorities are discussed in Carter v Dennis Family Corporation[203]).
235 Aphrodite pleads and Mr Ryder admits that it was an implied term of his employment during the interim period that he would act with fidelity and good faith towards Aphrodite. Aphrodite says it was entitled to summarily dismiss Mr Ryder because of breaches of that term.[204]
(a) cl 4.1(e) of the Employment Agreement provided that Mr Reisgys would well and faithfully serve Aphrodite and use his best endeavours to promote Aphrodite's interest and welfare;
(b) cl 12.3 of the Employment Agreement expressly provided that Aphrodite could terminate Mr Reisgys employment summarily at any time by notice in writing as a result of an occurrence that gives it such right at common law; and
(c) it was an implied term of his employment during the interim period that he would act with fidelity and good faith towards Aphrodite.[205]
237 Aphrodite says it was entitled to summarily dismiss Mr Reisgys because of breaches of those terms.[206]
238 By the time of the closing submissions Aphrodite's case was refined to claims that it was entitled to summarily terminate the employment of both Mr Reisgys and Mr Ryder because:[207]
(a) Mr Ryder knew there was no agreement in place increasing his salary to $27,000 per month and his letter to Ms Northey was false;
(b) Mr Ryder and Mr Reisgys purported to approve Mr Ryder's claim for deferred salary for the months of March 2013 to June 2013 when there was no right to such sum;
(c) Mr Reisgys submitted an invoice for payment of deferred salary for the months of March 2013 to June 2013 when he knew there was no such right;
(d) Mr Ryder and Mr Reisgys created an illusion to the board that they were deferring part of their salaries; and
(e) Mr Ryder claimed and received overtime of $9,900 for which he was not entitled.
239 I have set out the circumstances of payment of the $9,900 overtime claim above. In those circumstances, I consider Mr Ryder breached the implied term of his employment during the interim period that he would act with fidelity and good faith.
240 The request for payment was done in such a way that only Ms Northey and Mr Reisgys knew about it. I have no reason to doubt Mr Reisgys' evidence that Mr Ryder told him Mr Buttigieg had approved the payment. My impression is that Mr Ryder took advantage of the fact Mr Reisgys was likely to sign the approval, as Mr Reisgys generally accepted what Mr Ryder said about conversations with Mr Buttigieg (as evidenced by Mr Reisgys' failure to undertake any inquiries of his own about the alleged approval of his own employment contract in early 2013).
241 Regardless, Mr Ryder well knew that he had no entitlement to overtime and his manner of securing it was underhand. I consider that had he asked for overtime at that point it is most unlikely it would have been approved. It was not provided for in monthly estimates and at that time Mr Ryder knew the company had not secured the $3.8 million required by the end of March. At that time (February 2013) it had a net cash positon of only $338,000. Mr Buttigieg said he was livid when he found out about the claim (after the event).[208]
242 There was clearly a conflict between Mr Ryder's personal position in terms of seeking payment outside the terms of his contractual arrangements and his duty to Aphrodite, and at a time when expenses were being contained. In my view the conduct was such as to undermine the relationship of trust and confidence between Aphrodite and Mr Ryder, the centrality of which is underscored by the seniority of his position and his role as the finance director.
243 I consider that Mr Ryder's conduct in providing the 1 March 2013 letter to Ms Northey in circumstances where there had been no formal agreement of any entitlement to a salary of $27,000 (as I have found above) was also in breach of his duty to Aphrodite to act with fidelity and good faith. The letter was deliberately inaccurate, in my view. There had been no agreement at that time to defer part of any entitlements as the letter suggests. Mr Ryder's evidence on this point was not convincing: although the letter referred to an agreement as to deferral, under crossexamination he said that did not mean he had agreed such position with the company and nor was it a unilateral decision, but it meant he did not want to draw on the balance payments while he was 'uncertain'.[209]
244 The letter was not sent to any independent board member. In fact, it was kept within the close circle of Mr Ryder, Mr Reisgys and Ms Northey, who also acted as Mr Ryder's personal assistant. It could well have been acted upon without any disclosure or knowledge of the board. I consider it was serious misconduct to mislead the particular member of staff who was in a position to make payments. I acknowledge that no payments of 'deferred' salary were in fact made, but on its own and considered together with the overtime payment breach, the conduct of Mr Ryder in misleading a staff member in the position of Ms Northey would undermine Aphrodite's trust and confidence in Mr Ryder carrying out his duties.
245 On or about 30 June 2013, Mr Ryder issued a detailed invoice for $5,000 and signed what he described as a 'ledger direction' to pay the moneys to a holding account.[210] On 1 July 2013 he issued a detailed invoice for $19,000 and signed a similar ledger direction.[211] The invoices described the fees as being for salary for the period of March 2013 and for the period 1 April 2013 to 30 June 2013 respectively and being the difference between salary paid and $27,000 per month.
246 The invoices were not paid. The ledger directions were signed by Mr Ryder and Mr Reisgys and either prepared by or given to Ms Northey. It is important to note that the directions were expressly marked 'holding' and refer to a holding account.
247 According to Mr Ryder, he prepared the invoices so that everything would be up to date as at 30 June 2013 but they were never signed off by Mr Buttigieg. He said that he wanted to present the invoices to Mr Buttigieg when he next saw him; Mr Buttigieg was overseas at the time; he wanted Mr Buttigieg's approval; and he thought that approval would bring into play the new contracts if he got that approval, but that never came to pass.[212]
248 I am not satisfied taking into account the serious nature of summary dismissal findings that the issue of the invoices and the signing of the directions in the circumstances described by Mr Ryder comprised a breach of any duty such as to justify summary dismissal. No payment was made on the invoices and the potential for Ms Northey or the company to be misled by the invoices or directions was tempered by the hold placed on any payment. No evidence was lead to contradict Mr Ryder's explanation of the ledger directions. In those circumstances, the evidence is such that it is open to me to infer that the payment would not have been made without some further action on Mr Ryder's part, and Mr Ryder intended that there would be further action by seeking approval before any payment on the invoices would be made.
249 In making this finding I have taken into account that Mr Ryder initially did not recall the background to the invoices. However, his explanation under further crossexamination was consistent with the annotations on each of the invoices.[213]
250 The following are relevant to the question of whether Mr Ryder dishonestly or improperly created an illusion as to his salary:
(a) the 2012 Annual Report contained information as to Mr Ryder's and Mr Reisgys' actual salary;
(b) the survey information as to junior mining company salaries contained information about current salaries;
(c) the 8 October 2012 email to Mr Lim incorporated references to anticipated estimates of salaries. There was no suggestion of an actual increase in payments to Mr Ryder or Mr Reisgys at that time or that they were actuals as against estimates;
(d) updated cash flows circulated to Mr Buttigieg by Ms Northey in November 2012 incorporated current packages;
(e) updated profit and loss statements as at November 2012 incorporated current packages;[214]
(f) current packages (taking into account Mr Ryder's motor vehicle entitlement) were included in the email from Mr Buttigieg of 27 December 2012;
(g) Mr Ryder's draft employment contract emailed to Mr Buttigieg included the proposed new salary rate;
(h) the company had previously dealt with Mr Ryder's salary separate to all terms and conditions (in July 2012) so there was some precedent for agreeing only the salary term;
(i) in any event the references to $27,000 in the budget documents were not in the context of actuals but estimates of costs;
(j) at the time such figures were included in budget documents the figure of $27,000 remained the figure that Mr Ryder was pursuing, the question of salaries remained an open question, and that question remained on agendas for board meetings, open for discussion at any of those meetings;
(k) consistent with there being anticipated changes to the terms of his employment, Mr Reisgys' overtime was not included in budgets after March 2013, in contrast to earlier budget documents;
(l) Mr Buttigieg denied any knowledge of Mr Ryder's salary at any time, saying his focus was on the overall costs per month and that he never really got into it.[215] Such evidence is consistent with the approach of the board in May 2013 in asking Mr Reisgys to come up with a cash out exploration budget figure of $70,000: the company's concern was not so much the make up of the costs or the amount of any deferral, but trimming the costs to the minimum possible per month.[216] Whilst I have had regard to Mr Buttigieg's evidence that the quantum of deferrals was less than expected, for the reasons set out above as to his reliability I do not accept that the amount of deferral was as much of an issue as Mr Buttigieg attempted to portray: rather, what was important was achieving the lowest monthly expenditure reasonably possible in any given month and salary was one component that could readily be sacrificed. Mr Mitchell talked about 'what the executives would offer up as part of that process', but he placed no specific significance on the figure of $27,000. He said he looked at the deferral column, and I have taken into account that evidence.[217] But in the end the point was the bottom line that could be attained for the monthly costs estimates. It is to be borne in mind that in the next month both Mr Ryder and Mr Reisgys agreed to payment of only $12,000 per month, well below their entitlements. It seems to me that the question for the company was ascertaining the lowest point that the executives were willing to accept. That was the most important issue in circumstances where Mr Ryder and Mr Reisgys were not in fact being paid anything above their $22,000 entitlements; and
(m) neither Mr Reisgys nor Mr Ryder were actually paid a salary of $27,000 per month, nor any amount as monthly salary that exceeded the $22,000 per month that was in place at the start of the interim period.
251 In all the circumstances, I am not satisfied that Mr Ryder set out to deceive the board or deliberately misrepresent that he was entitled to a salary of $27,000 per month. That Mr Buttigieg was not aware of the actual salary entitlements or the source of the $27,000 estimate was in part a product of his failure to read documents openly provided to him by Mr Ryder, Mr Reisgys and Ms Northey. I am not satisfied that Aphrodite suffered any real detriment from the inclusion of the figure of $27,000 in some (and not all) of the budget estimates. Both Mr Ryder and Mr Reisgys were paid $22,000 per month for the relevant period post 1 March 2013 regardless of estimates or estimated deferrals.
252 Mr Ryder could have made it more clear in budgets that the $27,000 per month salary component, where included, remained subject to agreement. I consider he was in a position of conflict of interest in that he was intent on securing the salary increase for himself (and Mr Reisgys) at some point. His failure to recognise such conflict and make more clear disclosure comprised a breach of his duty to act with fidelity and good faith. However, such failure in the circumstances did not comprise gross misconduct and was not misconduct so serious as to justify summary dismissal.
253 As to Mr Reisgys and the 'illusion', the position is similar. He did not draft many of the various communications, leaving that role to Mr Ryder, but he apparently had some role in determining exploration budget estimates, some of which included his salary at the higher (and hoped for) rate, and did not include claims for overtime. I acknowledge, as discussed above, that his evidence was unconvincing on certain matters relating to whether there had been agreement of the terms of his contract with Mr Buttigieg or the board. However, his role in communications about salary with the board was very limited.
254 I do not consider his role, such that it was, comprised conduct in breach of duty. Mr Reisgys perhaps failed to pay sufficient attention to processes and assumed things he was told by Mr Ryder without question, but he did not write a letter to Ms Northey along the lines of that written by Mr Ryder. He did not take any salary to which he was not entitled. I do not consider there was conduct on his part comprising gross misconduct or misconduct so serious as to justify summary dismissal.
255 That leaves the issue of an invoice that Mr Reisgys prepared for the period March 2013 to June 2013, seeking payment of the difference between salary received and $27,000 per month for those months.[218]
256 Although dated 30 June 2013, Mr Reisgys' evidence was that the letter was provided to Ms Northey on 18 July 2013, the day before the meeting when Mr Reisgys' employment was to be terminated (and was in fact terminated). Mr Reisgys said that Ms Northey asked for the invoice to tidy up the books for the year ended 30 June 2013. Mr Reisgys' evidence was not contradicted. He considered his employment was about to be terminated. He took legal advice before issuing the invoice.[219]
257 In my view, there was no detriment to Aphrodite in Mr Reisgys submitting a claim. There was no suggestion Mr Reisgys anticipated Ms Northey would arrange payment of the invoice without any further approvals. It was not a payment that was ever going to be approved by Mr Ryder in the circumstances. I do not consider Mr Reisgys breached any duty in issuing the invoice in those circumstances, particularly where he was on notice that his employment was likely to be terminated the following day, and it can clearly be inferred that any consideration of the invoice would be by others and after he had left the company. I do not consider issuing the invoice in those circumstances comprises misconduct so serious as to justify summary termination.
258 I consider that Aphrodite has established that Mr Reisgys is liable to pay it $9,900 by way of damages arising out of the overtime payment to Mr Ryder.[220] It is quite possible that Mr Ryder told him that he had spoken to Mr Buttigieg about it: Mr Ryder was keen to have the payment approved and saw Mr Reisgys as the person who could bring that about. However, it was not a matter that Mr Reisgys could approve. Nor could it be approved by him and Mr Buttigieg. Despite Mr Reisgys' claim that the company had not required strict compliance with the process of approval of his own overtime claims, such argument could never have applied with respect to Mr Ryder, who had no history of any entitlement to overtime. I consider Mr Reisgys' conduct was in breach of his duty to use his best endeavours to promote Aphrodite's interest and welfare. Damages for such breach are assessed at $9,900, being the amount of the benefit allegedly received by Mr Ryder and to Aphrodite's detriment. I assess damages in that amount.
259 However, that single event viewed against the backdrop of being told that Mr Buttigieg also approved the claim does not rise to the level of misconduct by Mr Reisgys that would justify summary dismissal.
260 Had I not found that Aphrodite was entitled to summarily dismiss Mr Ryder, then I accept Aphrodite's submissions as summarised above that a reasonable period of notice under the interim arrangement with Mr Ryder was that he be provided with four weeks notice. I accept the reasoning in those submissions. The circumstances of the company at the time of termination do not support that period being any greater. There was nothing at that time that suggested that Mr Ryder's employment was to continue indefinitely or for any particular term. I have taken into account that under the Employment Agreement the parties had provided for a termination payment in addition to notice: that did not apply in any event to Mr Ryder post 2 July 2012.
261 As to the alternate case for Mr Reisgys (in the event the terms of the Employment Agreement as to termination do not apply) then I see no reason to distinguish his position from that of Mr Ryder. Again, at the time of termination, there was nothing to suggest that Mr Reisgys' employment was to continue indefinitely or for any particular term. A reasonable period of notice in all the circumstances would also be four weeks.
(a) at the 2 July 2012 board meeting it was agreed that Mr Ryder would continue in the employment of the company on the same salary as was in place under his expired Employment Agreement and such employment would continue until such time as the company entered into a new contract of employment with him;
(b) at the 2 July 2012 board meeting it was agreed that Mr Reisgys would continue in the employment of the company on the same terms and conditions as those that were in place under the expired Employment Agreement. Those terms and conditions were not limited to his salary but encompassed all terms and conditions and would continue until such time as the company entered into a new contract of employment with him;
(c) those arrangements were not varied at any relevant time. That is, no new contracts of employment were entered into on or about 1 March 2013 or otherwise;
(d) Aphrodite was not entitled to terminate Mr Reisgys' employment summarily on 19 July 2013. Accordingly, he is entitled to the same entitlements that were payable to him under the Employment Agreement, being a termination payment of five months base salary (being $22,000 per month at the relevant time);
(e) Mr Reisgys is not entitled to the additional overtime that he claims in the proceedings;
(f) Mr Reisgys is liable to Aphrodite for damages in the sum of $9,900[221] as a result of his breach of duty in approving Mr Ryder's request for overtime without any or any proper inquiry as to his entitlement, but such breach did not justify Mr Reisgys' summary dismissal;
(g) Aphrodite was entitled to terminate Mr Ryder's employment summarily on the basis of the improper treatment of his overtime claim and the misleading letter to Ms Northey; and
(h) Mr Ryder wrongfully having had the benefit of the overtime payment of $9,900 must repay it to Aphrodite.
263 I will hear the parties as to formal orders including as to interest and costs.
[7] The Joint Ore Reserves Committee (JORC) Code sets the minimum standard for public reporting of exploration results, mineral resources and ore reserves in Australia.
[32] Defence and counterclaim [7(c)], [7A(c)].
[33] Defendant's closing submissions [133].
[44] Eg ts 426 where he suggested that there would be some variance to reflect he was acting as managing director and not solely as the technical director - but so much was anticipated by the resolution itself as it refers to the role of managing director.
[50] For example ts 410A, 431A, 473A, 478A, 482A, 494A, 501A.
[55] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165; Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164; (2014) 48 WAR 261 [35] [45], [152] [157].
[56] Section 200B Corporations Act deals with approval of retirement benefits of those who have held a managerial or executive position; Listing Rule 10.18 (exhibit 15) provides that an entity must ensure that change of control payments are not made.
[57] Rogan-Gardiner v Woolworths Ltd [2012] WASCA 31.
[58] Rogan-Gardiner v Woolworths Ltd [46].
[59] Rogan-Gardiner v Woolworths Ltd [50].
[60] Sappideen C, O'Grady P and Riley J, Macken's Law of Employment (8th ed, 2016) [9.40].
[62] Rogan-Gardiner v Woolworths Ltd [46], [49].
[86] Exhibit 10 [92] - [93]; ts 460A - 461A, 491A - 492A.
[110] ts 480A, 490A, 495A, 501A. There was some suggestion of a separate meeting between Mr Ryder, Mr Reisgys and Mr Buttigieg before 7 January 2013 but the evidence was not clear. Mr Ryder referred to such a meeting occurring 'as previously explained' but it had not been previously explained. The plaintiffs' counsel suggested to Mr Buttigieg that Mr Reisgys gave some evidence about such a meeting but he did not. Mr Buttigieg in response to counsel's suggestion that Mr Reisgys had given such evidence said he remembered a meeting. In the end little rests on it but the evidence was not sufficient to satisfy me of what if anything was discussed at such a meeting.
[140] Exhibit 13 suggests Mr Buttigieg had not approved the minutes by 19 July 2013 despite request.
[171] For example TB 69A; TB 71; TB 83.
[174] Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146, 205.
[187] ts 425A - 428A; ts 454A; exhibit 10 [85].
[190] Amended statement of claim [40.5].
[191] The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1 [3459] [3514].
[192] Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466.
[193] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387.
[197] See the much cited analysis of Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1 [213] [223].
[198] Northside Developments Pty Ltd v Registrar-General (205).
[200] See generally as to estoppel by convention in this context CMA Assets Pty Ltd v John Holland Pty Ltd [No 6] [2015] WASC 217 [379] [380].
[201] Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 [46] [49] (upheld on appeal: Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2014] WASCA 29). See also Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 as to reliance on information uncovered post termination.
[202] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 361 362. See also Gandini v Legal Profession Complaints Committee [2013] WASCA 168 [76] [80].
[203] ts 525; Carter v Dennis Family Corporation [2010] VSC 406 [44] [46].
[204] Defence and counterclaim [7(e)(iii)]; reply and defence to counterclaim [4.2]; defence and counterclaim [31] [32] (breaches). Other alleged breaches (defence and counterclaim [29], [30] and [33]) were respectively expressly not relied upon, not pursued or I infer not relied upon. See defendant's outline for trial [35]; ts 574. The claim in [33] was not addressed by counsel.
[205] Defence and counterclaim [5(d)];[7A(e)]; reply and defence to counterclaim [3], [5.1].
[206] Defence and counterclaim [35] - [36]. Aphrodite did not pursue another alleged breach [34] (ts 574).
[207] Defendant's closing submissions [255] - [267].
[220] Defence and counterclaim [35].
[221] Save that there is to be no double recovery of this sum.
(1933) 49 CLR 66
(2000) 100 IR 129
(1938) 60 CLR 336
(1976) 11 ALR 599
(2000) 103 IR 160
(2000) 176 ALR 693
(2004) 219 CLR 165
(2014) 48 WAR 261
(1990) 170 CLR 146
(2008) 39 WAR 1
(1988) 13 NSWLR 466
(1988) 164 CLR 387
(2003) 128 FCR 1
(1931) 45 CLR 359