The Cross-Claim
99In essence, the defendant claims the plaintiff was guilty of misconduct, which would have justified summary termination of her employment. The alleged misconduct was not discovered until some time after its termination.
100The conduct complained of was that, in breach of her contractual, fiduciary, and statutory obligations, she allegedly failed to disclose an actual or potential conflict of interest in authorising the payment of invoices submitted to the defendant by businesses under the names AM Cleaning Services (AM) and MX Cleaning Services (MX) in which her brother, Mr Wilson Ma, was said to be involved. The claim relates to the plaintiff's authorisations between 16 January 2008 and 6 June 2011. Relevantly, AM provided cleaning services which it invoiced to the defendant between 16 January 2008 and 14 May 2010. MX provided similar services which it invoiced to the defendant between 28 May 2010 and 6 June 2011.
101The following is a summary of the circumstances in which AM was engaged by, and provided services, to the defendant. The facts were uncontroversial or established by the evidence.
102In about 1992 the defendant required a new office cleaner. The plaintiff's brother, known as Mr Wilson Ma, managed a contract cleaning business. The plaintiff introduced Mr Ma to Mr Carcaillet. Mr Carcaillet negotiated an agreement with Mr Ma for the provision of cleaning services to the defendant. He told Mr Ma that the plaintiff was the financial controller, and directed him to send his invoices to her for payment. The plaintiff had no involvement in the negotiations, or the decision to engage her brother. Thereafter, Mr Carcaillet was responsible for dealings with Mr Ma and renegotiation of the contract from time to time. It appears that from about 2002 Ms Mancuso, the defendant's Sydney manager, shared responsibility for the supervision of expenditure of the Sydney branch.
103The plaintiff's evidence included (affidavit 29 May 2013):
"54. Mr Ma would issue a fortnightly invoice to the Defendant under the name of his cleaning company, and I was responsible for arranging payment for his invoices following approval by Mr Carcaillet."
55. At the start of the cleaning contract between Mr Ma and the Defendant, Mr Caircallet confirmed that I was authorised to approve and process the payment of the invoices issued by Mr Ma's company in respect of the cleaning costs. This authorisation was conditional upon the invoice being for the standard cleaning charge agreed by Mr Carcaillet, Mr Carcaillet said to me words to the following effect:
JCC: 'You have general authorisation to approve and pay the cleaning invoices as long as they are for the regular fortnightly charge. If they deviate from the regular charge, let me know so I can review and authorise'.
56. Following this discussion, I would approve and process payments for Mr Ma's invoices, unless they were irregular or higher than the agreed fortnightly charge. On those occasions, I would discuss the invoices with Mr Carcaillet."
104Mr Carcaillet's evidence included (affidavit 17 June 2013):
"42 Once a month, Ms Ma and I would prepare P&L statements for the company which would require a review of the operating costs of the Sydney office. Due to this process, both Sue Ma and I were aware of the janitorial and cleaning costs being paid to Wilson Ma. I would also conduct monthly meetings with Ms Mancuso following the issuance of our P/L reports during which time we would discuss the operating costs of the Sydney office, including janitor and cleaning costs. Although Ms Ma was the Financial Controller for the South Pacific Region, it was Ms Mancuso's responsibility, as the Sydney Branch Manager (as well as myself) to manage and supervise the expenditure of the Sydney branch.
...
44 To the best of my recollection, a few senior managers, including Ms Mancuso, as well as some clerical staff, were fully aware that Wilson Ma was Ms Ma's brother. I recall that on a number of occasions I approached Ms Mancuso in order to discuss various cleaning issues, during which time I would use the term 'Sue's brother'. I also note that I used this particular term to describe Wilson Ma within the email referred to in paragraph 31 of this affidavit."
105In about May 2004 the Code was published to employees. Under clause 1.3 employees were "...prohibited from engaging in conduct that is, or appears to be, in conflict with the interests of Expeditors or its customers". It included:
"In particular, no director, officer or employee shall:
...
* Conduct business on behalf of Expeditors with immediate family members, which include spouses, children, parents, siblings and persons sharing the same home (whether or not such a person is a legal relative).
Directors, officers and employees must promptly notify the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, General Counsel or the Chair of the Audit Committee of any actual or potential conflict of interest."
106On 29 November 2004 Mr Carcaillet sent the plaintiff his response to Ms Mancuso's request for clarification of the application of the Code to employees in respect of, inter alia, conflicts of interest. With respect to conflicts of interest, he recited the definition in clause 1.3 of the Code, and said:
"I do not see how this could apply to us not being able to buy flowers from Effie or to use Sue's brother for our cleaning"
107On 30 November 2004 the plaintiff received an email from Mr Carcaillet sent to all employees. Relevantly, it included:
"The purpose of this email is to attempt to answer your questions and clarify Expeditors position:
(1) Conflicts of interest
...
Our position on this is that Senior Management needs to be made aware of any possible conflict of interest or of any employee's outside transactions that may influence Expeditors business.
-For example it is OK buying flowers from Effie M, we have approached her and noone (sic) related to her has either given her the business or used his/her influence to try and get her to obtain the business. It would not be OK, if, say Maria had tried to coerce us to buy flowers from Effie.
-It is also OK using someone's brother in law to help fix our electrical problems as long as the costs of the service has been checked against other contractors and found to be competitive and noone (sic) related to him has either given him the business directly or used his/her influence to try and get him to obtain the business.
-It is not OK however for a EI employee to buy services on behalf of EI or goods from a related party without prior clearance from an officer of the Company, eg a DM cannot appoint his brother in law to run his cartage services (too close to the wind).
BEST BEFORE PROCEEDING WITH THESE TYPES OF DEALINGS TO GET CLEARANCE FROM AN OFFICER OF THE COMPANY."
108On 8 January 2010 Mr Carcaillet sent the plaintiff an email received from Mr Brad Powell, the chief financial officer of Expeditors Inc, advising of the commencement of a quarterly certification process with which senior employees of the defendant, including Mr Carcaillet and the plaintiff, were required to comply.
109Accordingly, each quarter, the plaintiff completed and sent to the chief executive officer and chief financial officer of Expeditors Inc a pro forma certificate as to various matters including:
"6. Except for items reported to the Corporate Legal Documents, if any, to the best of my knowledge of my knowledge there have been no violations or possible violations of our Code of Business Conduct by employees, agents, third party brokers, or other parties that represent Expeditors, which includes among other items:
...
(d) Conflicts of interest
7. Related party transactions such as sales, purchases, loans, transfers, leases, guarantees, contractual commitments and amounts receivable from or payable to related parties (excluding intercompany transactions) have been disclosed to the Country Controller, Regional Controller or Corporate Controller, as appropriate."
110Thereafter until termination, the plaintiff completed and sent the certificates each quarter.
111The defendant alleged that disclosure was required under clause 1.3 of the Code and clauses 6 and 7 of the quarterly certificates. The failure to disclose was said to be wrongful, being conduct which was, during the relevant period, in breach of express and implied contractual duties, fiduciary duties, and s 182(1)(b) Corporations Act 2001, which relevantly provides:
"182 Use of position-civil obligations
(1) A director, secretary, other officer or employee of a corporation must not improperly use their position to:
...
(b) cause detriment to the corporation.
(2) A person who is involved in a contravention of subsection (1) contravenes this subsection."
112The nature of the conflict was explained by Senior Counsel for the defendant as follows (T 295, ll 42-48):
"MOSES: ...Can I assist your Honour by just making it clear, the position. The position is that the conflict of interest here has to be not putting yourself in a position that would appear to put you in conflict with the interests of Expeditors.
Now, what is happening here is by approving or monitoring the payments to be made to her brother in breach of the prohibition contained in the last dot point, she was putting herself in that position, otherwise the words mean nothing in the last dot point...
(and T297 ll 10-18)
MOSES: ...the conflict of interest contention,... it's very clear what it is....in a circumstance where you are a fiduciary and the position that she held with the defendant, where you are authorising payments to your brother, that relationship, brother and sister, gives rise to either an actual, potential or appearance of a conflict of interest where you would prefer the interests of the sibling over that of the company. "
113Although in oral submissions the defendant maintained there was an actual conflict, the primary submission was there was a potential, or the appearance of, conflict in that it might appear that the plaintiff was in a position to prefer the interests of her brother over the interests of the defendant.
114The plaintiff accepted that under her employment contract she was bound to comply with the Code and the certification process. She also accepted that she gave no notification of any actual or potential conflict of interest as required by the Code, and had made no disclosure of any related party transaction as contemplated in clause 7 of the certificate.
115In cross-examination, she did not accept that by authorising invoices she was conducting business on behalf of the defendant, and denied there was a conflict of interest arising out of her brother's involvement in AM. She relied on Mr Carcaillet's email of 29 November 2004, which she had understood to say there was no conflict. Her position was, there being no conflict, the obligation under clause 1.3 of the Code did not arise. She also denied that she had engaged in a related party transaction which required disclosure under clause 7 of the certificate.
116Mr Carcaillet said he had instructed the plaintiff to approve the invoices. He denied there was any transaction, and, hence, any related party transaction, between the plaintiff and Mr Ma, or that there had been any conflict of interest between her and the defendant.