Sutton v BE Australia WD Pty Ltd

(NSW) 98 English v Aradlay Insurance Brokers Pty Ltd (2005) 145 IR 129; [2005] NSWIRComm 253 Ewin v Vergara (No 3) (2013) 307 ALR 576; [2013] FCA 1311 Fish v Solution 6 Holdings Ltd (2006) 225 CLR 180; [2006] HCA 22 Gambotto v John Fairfax Publications Pty Ltd (2001) 104 IR 303; [2001] NSWIRComm 87 Hall v A&A Sheiban Pty Ltd (1989) 20 FCR 217** King v State Bank of New South Wales (No 2) (2002) 126 IR 407; [2002] NSWIRComm 353 Kwong v Stone Microsystems (Aust) Pty Ltd (1996) 82 IR 255 Lavings v Barclay Mowlem Construction (NSW) Ltd (1994) 99 IR 247 Lee v Smith (2007) EOC 93-456; [2007] FMCA 59 Legal & General Assurance Society Ltd v Stock (1993) 49 IR 464 McDonald's Australian Holdings Ltd v Industrial Relations Commission of NSW (2005) 223 ALR 78; [2005] NSWCA 286 Miletich v Murchie (2012) 297 ALR 566; [2012] FCA 1013 Nau v Kemp & Associates Pty Ltd (2010) 77 NSWLR 687; [2010] NSWCA 164 State of New South Wales v Banas (2004) 137 IR 63; [2004] NSWIRComm 255 Nikolich v Goldman Sachs J B Were Services Pty Ltd [2006] FCA 784 Poniatowska v Hickinbotham [2009] FCA 680 Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551; [2000] NSWIRComm 143 Richardson v Oracle Corporation (Australia) Pty Ltd (2014) 223 FCR 334; [2014] FCAFC 82 Ross v GM Context (Australia) Pty Ltd (2000) 107 IR 1; [2000] NSWIRComm 133 Shankland v Beta Alistine Pty Ltd (ACN 108 128 534) [2007] NSWIRComm 111 Strathfield Group Ltd v Hall (2002) 121 IR 158; [2002] NSWIRComm 373 Sutton v BearingPoint Australia Pty Limited [2008] NSWIRComm 161 Sutton v BE Australia WD Pty Limited ACN 093 054 623 (subject to deed of company arrangement) [2013] NSWIRComm 104 BE Australia WD Pty Ltd (subject to a Deed of Company Arrangement) v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414 Sutton v BE Australia WD Pty Ltd (No 2) [2015] NSWIC 9 Townsend v Stone Toms & Partners (1984) 27 BLR 26 Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687; [2006] FCAFC 101 Westfield Holdings Pty Ltd v Adams (2001) 114 IR 241; [2001] NSWIRComm 293 Wheelahan v North Coast Area Health Service [2008] NSWIRComm 164 Texts Cited: Practice Note SC CL 3 - Administrative & Industrial Law List Category: Principal judgment Parties: Mary Sutton (plaintiff) BE Australia WD Pty Ltd (first defendant) Representation: Counsel: M Gibian (plaintiff) (ex parte)

Solicitors: Gilbert + Tobin (plaintiff) File Number(s): 2016/26450 Publication restriction: Nil

Judgment

1. By a second further amended summons Mary Sutton ("the plaintiff") sought declaratory relief and monetary payments, pursuant to s 106(1) and (5) of the Industrial Relations Act 1996 (NSW) (hereafter referred to as "the Act"), against BE Australia WD Pty Ltd ("the first defendant") and Phillip James Davidson ("the second defendant") regarding work performed by the plaintiff for the first defendant. The proceedings against the second defendant were dismissed upon the basis of consent orders, without admission of liability, for the payment of a sum of $350,000 inclusive of costs.
2. The balance of the matter concerning the first defendant proceeded before the Court, ex parte.

Relief Sought

1. The plaintiff sought the following relief: 1. An order declaring void (except for monies already paid) the arrangement between the plaintiff and the first defendant whereby [the plaintiff] performed work in the taxation consulting industry for [the first defendant] ("the Contract"). 2. An order declaring that the contract or arrangement was unfair, harsh or unconscionable or against the public interest. 3. An order that the contract be varied from its commencement in the terms set out in Schedule A. 4. An order that [the first defendant] pay [the plaintiff] such sum of money in connection with the contract or arrangement as the Court considers just in the circumstances of the case. 5. An order that [the first defendant] pay [the plaintiff's] interest on the sums of money ordered to be paid by the Court, from 7 October 2005 being the date of the termination of the Contract at the rates set by the Uniform Civil Procedure Rules 2005. 6. An order that [the first defendant] pay the costs of the proceedings.
2. Schedule A to the second further amended summons was in the following terms: 1. The First Respondent and Second Respondent will not conduct themselves in a manner which: 1. Is contrary to the legitimate expectations and understandings of the Applicant particularly in circumstances where any such actions of the First and Second Respondent have the potential to, or do in actual fact, damage or detrimentally impact on the terms and conditions whereby the Applicant performed work for the First Respondent; 2. Is contrary to the representations made to the Applicant; 3. is likely to, or does in fact, cause the Applicant to suffer distress and/or anxiety, humiliation and/or damage to her good name and character. 1. The First Respondent shall not terminate the Contract without a proper reason and without providing the Applicant procedural fairness, including informing the Applicant of the precise nature of the allegations made against her and providing her an opportunity to answer those allegations and to be heard before a decision is made in relation to the termination of the Contract. 2. The First Respondent will take all reasonable steps to prevent any of its employees or agents from bullying and or harassing the Applicant. 3. The First Respondent may only terminate the arrangement by giving the Applicant 15 months' notice in writing or payment in lieu thereof. 4. For the purpose of (4), above, payment in lieu of notice shall be calculated by reference to the payments made to the Applicant whilst performing work for the First Respondent and based on her average hours per week. 5. The exercise of any discretion permitted under the Contract shall be exercised by the First Respondent towards the Applicant in a manner that is at all times fair, just and conscionable, and in this regard the Respondent will afford to the Applicant natural justice and procedural fairness. 6. The First Respondent shall investigate any allegations made by the Applicant concerning the conduct of the Respondents. 7. The First Respondent will inform the Applicant of its findings of any complaint made by the Applicant concerning the conduct of the Respondents. 8. The Respondents following the termination of the Contract shall not alone or with others disparage the Applicant and/or undermine her prospects of future employment and/or employment.

The Parties (during the course of the proceedings)

1. The first defendant was a wholly owned subsidiary of BearingPoint Inc, formerly known as KPMG Consulting Inc (hereafter referred to as "the first defendant's parent company"). The first defendant's parent company was incorporated as a business under the law of the State of Delaware in the United States of America ("USA") in 1999 and was listed on the New York Stock Exchange. It was based in McLean, Virginia.
2. In 2001, the first defendant's parent company purchased the first defendant from KPMG in Australia.
3. On 9 September 2009, the first defendant underwent a formal name change from "BearingPoint Australia Pty Ltd" to "BE Australia WD Pty Ltd". The company went into external administration from 1 October 2009 until 7 December 2014, thereafter it ceased to be in any form of administration. (ASIC records show the filing of a notice of termination of a deed of company administration on 8 December 2014). It might be noted that in proceeding before the NSW Court of Appeal in 2011, the plaintiff was found not be a creditor for the purposes of Pt 5.3A of the Corporations Act 2001 (Cth): BE Australia WD Pty Ltd (subject to a Deed of Company Arrangement) v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414.
4. The second defendant was at all material times an Associate Director of the first defendant. He was the person whom: 1. managed and controlled the affairs of the first defendant; 2. was concerned with setting the terms of the plaintiff's engagement; and 3. controlled the performance of the plaintiff's engagement.
5. The plaintiff is a taxation specialist, has a bachelor of business degree and is a fellow of the Taxation Institute of Australia. The plaintiff has worked as a professional tax specialist for in excess of the last 25 years in the Australian Taxation Office, light professional services chartered accounting firms as well as in in-house taxation executive roles in large multinational corporations.
6. The plaintiff was an employee of Roland Jackson Group Pty Ltd ("RJ Group") (a family company) from 15 October 2003. The sole director and sole shareholder of RJ Group was the plaintiff's partner. It was conceded that the plaintiff was not an employee of the first defendant but performed work for the first defendant via arrangements reached between RJ Group, Link and the first defendant.

Course of the Proceedings

1. The plaintiff commenced proceedings by the filing of a summons for relief on 1 November 2005. The proceedings were brought against the first defendant by reference to the name of the company prior to the aforementioned name change.
2. The first defendant filed a reply to the summons on 23 February 2006 and the plaintiff responded to the same on 7 July 2006.
3. An amended summons was filed by the applicant on 13 June 2008. The amendments primarily exposed the matters underpinning the alleged unfairness to the plaintiff which is said to have occurred in the period from about August 2004 to October 2005.
4. The first defendant filed a reply to the amended summons on 24 October 2008 to which the plaintiff replied by filing a response to the amended reply on 18 December 2008.
5. On 4 September 2008, Marks J dismissed a notice of motion brought by the first defendant to have the proceedings struck out upon the basis of the provisions of s 108A of the Act: Sutton v BearingPoint Australia Pty Limited [2008] NSWIRComm 161 ("Sutton No 1").
6. On 2 April 2009 the first defendant filed an amended reply to the amended summons for relief.
7. About 30 October 2009 the plaintiff provided her solicitors with instructions to make an application to join the second defendant to the proceedings.
8. On 2 June 2012 the plaintiff's applications for special leave to appeal the judgment of the NSW Court of Appeal in BE Australia WD Pty Limited (subject to a Deed of Company Arrangement) v Sutton was refused.
9. On 15 May 2013, the plaintiff filed a notice of motion seeking leave to file a further amended summons joining, among others, the second defendant in the proceedings.
10. It might be noted that, by that motion the plaintiff had also sought to join Mr Charles Cochran, the Vice President and country leader of the first defendant, to the proceedings as a further respondent. Mr Cochran was then a resident of the USA. The plaintiff obtained an order of substituted service on Mr Cochran by emailing or posting documents. Mr Cochran sought to set aside the service of the originating process on him thereby discharging the order of the Industrial Court giving leave to serve him outside of Australia. That motion was dismissed by Boland J: Sutton v BE Australia WD Pty Limited ACN 093 054 623 (subject to deed of company arrangement) [2013] NSWIRComm 104. A challenge was brought to that decision in the NSW Court of Appeal which held that the Industrial Court did not have power to require service of its process outside of Australia: Cochran v Sutton [2014] NSWCA 185. As a result Mr Cochran could not be served.

Transitional Provisions and Ex Parte Proceedings

1. Part 18 of Sch 4 of the Act contains provisions of a savings and transitional nature consequent to the passage of the Industrial Relations Amendment (Industrial Court) Act 2016 (NSW). Division 4 of Pt 18 of Sch 4 makes provision for "pending proceedings" being proceedings that commenced before the "abolition day" (8 December 2016), which had not been finally determined before that day by the Court in which proceedings were commenced (cl 65(1)).
2. Pending proceedings may be either "unheard proceedings" or "part heard proceedings". Part heard proceedings are defined in cl 65(1) as meaning pending proceedings where the Court in which the proceedings were commenced had begun to hear (but had not determined) the proceedings before the abolition day. The matter presently before the Court is such a matter given that opening submissions had been completed and the principal evidence in the cases of the parities had been tendered before the Industrial Court.
3. The procedure to be adopted in part heard proceedings is specified by cl 66(2) of Div 4 of Pt 18 as follows: (2) In relation to part heard proceedings in the Industrial Court, the judicial member (or person acting as a judicial member) constituting the Industrial Court for those proceedings: (a) is to continue, on and from the abolition day, to hear the matter, and to determine the matter, sitting as the Supreme Court, and (b) may have regard to any record of the proceedings before the Industrial Court, including a record of any evidence taken in the proceedings before the Industrial Court.
4. It is in consequence of this clause that the Court, as presently constituted, sits in the hearing and determination of this matter. As mentioned above, cl 66(2)(b) gives a discretion to the Court to have regard to any record of the proceedings before the Industrial Court including a record of evidence, such as the plaintiff's affidavits and documents in Ex 1. The Court has not had regard to the evidence filed by the first defendant, in Ex 1. It was appropriate to exercise a discretion in that fashion because the evidence, which had been filed in the Court Book, had been adduced only by the second defendant who was no longer a party to the proceeding. The first defendant did not appear to tender that evidence. Further, the first defendant's witnesses were not available for cross examination.

Factual Background

1. The engagement of the plaintiff for work with the first defendant commenced in August 2004. That engagement was initiated by Helen Aldridge of a recruitment firm known as Link Recruitment Pty Ltd ("Link") on 7 July 2004 who informed the plaintiff of the availability of a senior taxation executive role with first defendant.
2. In around mid-July 2004, the plaintiff attended an interview with representatives of the first defendant conducted by the second defendant. Approximately two days later, the plaintiff received a telephone call from the second defendant in which he indicated that he would like to offer the position to the plaintiff but would have to go through Link (via Ms Aldridge) to formalise the offer.
3. Towards the end of July 2004, a series of documents were executed to facilitate an arrangement whereby the plaintiff was to perform work as a tax specialist for the second defendant as follows: 1. An assignment contract between Link and the first defendant for the placement of the plaintiff as a "contractor" ("the first agreement"). This agreement provided that the first defendant may terminate a temporary/contractor by giving 4 hours notice. 2. A contract entitled "Service and Confidentiality Agreement Temporary Staff or Incorporated Contractor" was entered into between the RJ Group and Link on 23 July 2004 whereby the plaintiff would provide services to clients of Link ("the second agreement"). The agreement provided that the plaintiff was self-employed, had no obligation to accept any assignment and was not guaranteed any work. The agreement also provided that Link may, except when the plaintiff was on assignment, terminate this agreement for any reason without notice. This was the vehicle by which Link offered the plaintiff's services to the first defendant.
4. By a letter dated 28 July 2004 from Link addressed to the plaintiff, Link confirmed the plaintiff's contract assignment as "Tax Manager Asia-Pacific Tax Matters" with the first defendant, commencing on 3 August 2004 (this reflects correspondence from Link to the first defendant to the same effect). The rate of remuneration recorded was a daily rate of $650 (plus GST), which later increased to $800 (plus GST) per day.
5. The arrangement was put in place by the plaintiff commencing work for the first defendant on 6 August 2004, invoices being submitted for payment by RJ Group to Link and Link in turn invoicing payment from the first defendant.

1. In total the plaintiff received an amount of $174,323 from RJ Group in the 14 month period from 1 July 2004 to 7 October 2005.
2. It was contended by the plaintiff that because the arrangement required her to contract through Link, via the second agreement, that the plaintiff was: 1. denied the status of direct employee; and, 2. not afforded the protection from bullying, harassment or retribution (hereafter referred to as "protective provisions"), if any, under the first agreement. To the extent any protective provisions were included under the second agreement protection, it was submitted, these were only afforded to the "clients" of Link.
3. I interpose to note, as to the first such issue, the following factual background: 1. In July 2005, upon being offered the role by the second defendant, the plaintiff was informed that "going forward is the expectation that these three roles, including this one, will be confirmed as permanent roles"; 2. On 28 April 2005, Mr Corbett said in a telephone conference that the plaintiff would be made "full-time"; 3. On 24 June 2005, 1 July 2005 and 22 July 2005 in three respective meetings with Mr Cochran, following prior discussions to prepare documentation setting out the role to be considered, the plaintiff was assured that she would have a "direct contract" with the first defendant; and 4. On 30 September 2005, the plaintiff was informed by a Ms Scmulewicz for the first defendant that it was accepted the plaintiff had an "ongoing contract" with the first defendant and that the standard documentation to formalise the ongoing engagement of the plaintiff was being finalised. This was notwithstanding a significant deterioration in the relationship between the plaintiff and the second defendant by this time. The background to the deterioration follows below.
4. Over the course of 2004 and the early part of 2005, the plaintiff and a Ms Mora raised concerns in relation to the second defendant's conduct, with representatives of first defendant, particularly in relation to certain transactions. Thereafter, the second defendant's conduct became increasingly aggressive and the initially cordial working relationship, perhaps unsurprisingly, deteriorated. The second defendant engaged in belittling conduct and name calling. He also undermined the work of the plaintiff and Ms Mora, which included taking credit for their work without recognition. The plaintiff and Ms Mora made plans to move their offices to distant themselves from the second defendant.

Termination

1. On 4 October 2005, Richard Storey, on behalf of the first defendant wrote to the second defendant providing him a final warning for unacceptable conduct - the conduct being described as "preventing staff from exiting a meeting room and what was alleged as threatening an bullying behaviour". It was said the conduct was in breach of the company's values. The second defendant's employment was retained.
2. The second defendant responded to the letter by stating he had never previously behaved in such a manner and had done so because "persons concerned [were] refusing to work [with him] in a professional manner during the prior two months and had refused to reply to requests on the day in question".
3. On 4 October 2005, the plaintiff received an email from Ms Samulewicz suggesting that she had only a 4 hour assignment of work to be completed over the following days. Then, on 7 October 2005, Mr Redman approached the plaintiff and informed her that her services were no longer required and he threatened to call the police if she did not leave the workplace immediately.
4. The plaintiff was provided with no explanation as to the reasons for the termination of her services. She had, by that stage, not been advised of actions taken by the first defendant with respect to the second defendant. The only written information provided to plaintiff in relation to the termination was a hard copy of an email.
5. The plaintiff submitted, at the time of her termination, pursuant to her contract of employment with RJ Group, she was entitled to remuneration in the sum of $140,000.

Contract or Arrangement

1. The unfair contracts jurisdiction permits the Court to grant relief with respect to a contract whereby a person performs work in any industry if it considers that the contract is an unfair contract. The term "contract" is defined in s 105(1) of the Act as being "any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument".
2. The consequence of the definition is that the unfair contracts jurisdiction extends beyond legally binding contracts to an "arrangement" whereby a person performs work in any industry.
3. It is well settled that the term "arrangement" in s 105 of the Act is one of wide meaning: see, for example: AOS Group Australia Pty Ltd (in liquidation) v Arrogante (2004) 135 IR 44; [2004] NSWIRComm 80 ("AOS Group Australia") at [15].
4. An "arrangement" extends to transactions which do not give rise to a contract enforceable at law: Custom Credit Corporation Ltd v Goldsmith [1976] AR (NSW) 98 ("Custom Credit Corporation Ltd") at 131. An "arrangement" may envisage a transaction in the nature of a bargain which may not be legally binding or enforceable, something in the nature of an understanding between two or more persons or where there is a bilateral or multilateral plan or concerted action to bring about a particular result: Legal & General Assurance Society Ltd v Stock (1993) 49 IR 464 at 480-481; Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551; [2000] NSWIRComm 143 at [17].
5. An "arrangement" may also be found to exist where two or more legally binding contracts are sufficiently associated with each other in a practical sense as together to constitute an arrangement of which each contract is a part: Custom Credit Corporation Ltd at 131; Kwong v Stone Microsystems (Aust) Pty Ltd (1996) 82 IR 255 at 290; AOS Group Australia at [15]-[16].
6. If an "arrangement" is found to exist, the power to afford relief under s 106(3) extends to the whole of the arrangement: Strathfield Group Ltd v Hall (2002) 121 IR 158; [2002] NSWIRComm 373 at [40].
7. An arrangement can extend to a circumstance in which another entity is interposed between the person performing work in an industry and the entity for whom the work is ultimately performed.
8. In Ross v GM Context (Australia) Pty Ltd (2000) 107 IR 1; [2000] NSWIRComm 133, the Court dealt with the circumstances where an employee employed by an entity in the United Kingdom who took up a position performing work for an entity in Australia. The Court (at [16]-[20]) found it unnecessary to determine whether a new contract was formed with the Australian entity and was satisfied that an "arrangement" for the performance of work existed by reason, among other things, of the employee performing work directly for and to the benefit of the Australia company, being in daily contact with senior employees of that company and that the engagement was terminated by a representative of the respondent.

Were the requirements under s 108A met?

1. Section 108A(1)(a) operates such that application cannot be made under Div 2 of Pt 9 of the Act if the application "relates to a contract of employment" described in the subsection ("the first issue"). The exclusion in s 108A(1)(a) concerns any application under s 106 of the Act which relates to a contract of employment with a remuneration package paid or received (or payable or receivable) exceeds the remuneration cap during the period of 12 months before the termination of the contract ("the second issue").
2. It may be noted that the limitations under s 108A of the Act were previously agitated in these proceedings. As earlier mentioned, the first defendant sought "to have the proceedings struck out because they were precluded from having been instituted by s 108A of the Act": Sutton No 1. Marks J dismissed the motion in an interlocutory judgment, which removed the second issue.
3. The first issue concerns whether or not the plaintiff's application "relates to a contract of employment". I earlier found that the plaintiff performed work for the first defendant as a tax manager under a contract for the purpose of s 105(1) of the Act in that the plaintiff performed that work under an arrangement (formalised by two agreements) falling within the definition of a contract under that provision. By the first agreement the plaintiff was identified as "the Contractor", under contract assignment, and by the second agreement the plaintiff was described as "self-employed".
4. The definition of a "contract of employment" under s 108A(3) extends to "any contract or arrangement under which work is done by a person in the capacity of an employee" and includes "a related condition or collateral arrangement with respect to such a contract".
5. Mr Gibian correctly submitted, in my view, that the manner in which the arrangement was put into effect was to intentionally avoid establishing a direct employment relationship. This was enabled by the interceding role of Link under the first agreement. The plaintiff emphasised that no aspect of the alleged contract or arrangement was in connection to a "contract of employment".
6. I accept that the plaintiff was not an employee for the purposes of the first and second agreements and thereby did not fall within the definition in s 108A(3). It follows that the present application is not caught by the terms of s 108A(1), and accordingly offers no jurisdictional barrier in this case. Strictly speaking, it is not necessary then to consider the matters raised under the second issue. However, for completeness, I will briefly touch upon those matters.

Merits

1. The grounds of unfairness may be summarised under three broad categories: 1. Termination The grounds essentially consisted of the following: 1. the arrangement resulted in the plaintiff being in a position of unequal and inferior bargaining power such that the plaintiff had no protection from arbitrary and immediate termination of her engagement at any time and without reason; 2. the arrangement permitted for the termination of the plaintiff's services essentially without any notice and failed to ensure a reasonable period of notice of payment in lieu of notice upon termination of the arrangement; and 3. the arrangement permitted the first defendant to terminate the arrangement without proper reason, without providing any form of procedural fairness and in a manner that was likely to and did cause the plaintiff to suffer hurt, distress and humiliation. 1. Bullying and Harassment The ground consisted of: 1. the arrangement failed to contain any reasonable provisions to protect the plaintiff from bullying and harassment or to ensure the appropriate and timely resolution of any complaint or grievance that the plaintiff might have occasion to raise in the course of her work; and 1. Disparagement The ground consisted of: 1. the arrangement failed to include any provision to protect the plaintiff from future disparagement and from conduct that was likely to and did undermine her prospects of securing future employment and successfully continuing her career.
2. I will provide my findings with respect to each category in turn.

Termination

1. The manner in which the arrangement for the plaintiff to perform work was put into effect was that the first defendant could terminate the plaintiff's engagement at any time on four hours notice given to Link. Link was under no obligation to provide any work or to provide any payment to the plaintiff other than for work actually performed and could terminate the agreement for no reason with no notice if the plaintiff was not on an assignment. I agree with the submission of the plaintiff that the arrangement failed to provide protection against arbitrary or an immediate termination and failed to ensure that any fair or proper process was adopted in circumstances where the first defendant proposed to terminate the plaintiff's engagement in that work.
2. This conclusion is a fortiori given that prior to and during the engagement, various representations were made to the plaintiff to the effect that the role would be made permanent and that the plaintiff would be engaged in an ongoing role by the first defendant. To the knowledge of the first defendant the plaintiff declined other positions to her detriment because of those representations. Further, the contract became unfair by its operation over time because, in the light of arrangement for work which unfolded and the aforementioned representations, the period of notice provided for in the arrangement was wholly inappropriate and unfair.
3. The unfairness of the arrangement was also contributed to by the following factors: 1. The plaintiff was a senior taxation specialist with approximately 25 years of experience in industry; 2. The plaintiff was engaged in a manner that was indistinguishable from that of an employee; 3. The nature of the engagement was such that, the plaintiff was precluded from engagement in other work; and 4. The nature of the plaintiff's role combined with her professional standing was such that she was likely to be particularly damaged by an unexplained termination of her engagement by a company such as the first defendant.
4. On 4 October 2005, the plaintiff was informed the only work that she would be required to do was four hours of further work summarising the state of the projects that she was up to. As earlier mentioned the evidence provided by the plaintiff indicated that the second defendant was endeavouring to source other individuals to replace the plaintiff and another employee, Ms Mora, whom had recently resigned. The plaintiff submitted, correctly in my view, that the notification of her termination occurred in circumstances in which it was obvious there was still work to be done. No representation was made to indicate there was some restructure or deficit of work to be performed going forward.

Bullying and Harassment

1. I also accept the submission of the plaintiff that the unfairness of the arrangement was further exacerbated by the failure of the arrangement to make any provision to adequately protect the plaintiff from bullying or harassment or the resultant distress and harm. Further, the first defendant failed to provide for any appropriate mechanism for the investigation of complaints or protection from retribution.
2. In the months preceding the plaintiff's termination, the plaintiff sought recourse from the first defendant in relation to the bullying and harassment conduct of the second defendant. By early 2005, there began a deterioration in the working relationship between the plaintiff and the second defendant, which rapidly descended to a level which may be appropriate to be described as intimidating and involving harassment.
3. Complaints were communicated to the authorised representatives of the first defendant on several occasions by many means. This included email correspondence, telephone correspondence and face-to-face meetings from early July 2005, and specifically on 18, 25 and 30 August 2005. The plaintiff correctly submitted that no explanation was provided by the first defendant to justify the lack of timely action taken in response to the complaint. The reasonable inference to be drawn from that evidence is that no adequate mechanisms had been put in place by the first defendant to ensure that complaint made by the plaintiff was adequately addressed and acted upon. In fact, the complaints were not effectively acted upon by the first defendant.
4. It was clear that the first defendant considered that the second defendant's conduct (at least on 25 August 2005) was unacceptable. This is hardly surprising given the second defendant had barred the plaintiff and her colleague from exiting the conference room, whilst he verbally abused them. He was described as being "very, very angry", at the time, and "[his] face was bright red". Nonetheless, the first defendant took no action to inform the plaintiff of its conclusions regarding the second defendant or steps to protect her from further intimidation. Rather the plaintiff was dismissed.
5. A contract, as defined in s 105(1) of the Act, may be declared unfair if it fails to ensure that a fair process was undertaken prior to an employee (or other worker) having their engagement terminated on performance, conduct or redundancy ground: see, for example, Abboud v State of New South Wales (Department of School Education) (1999) 92 IR 32; [1999] NSWIRComm 449 at [49]-[50].

Disparagement

1. A contract may be unfair if it fails to contain provision preventing an employer from engaging in conduct after termination which has the effect of disparaging or undermining the future employment prospects of an individual: see, for example, Bowker v Software Engineers Australia (NSW) Pty Ltd [2004] NSWIRComm 104 at [163]-[167].
2. An arrangement whereby work is performed for the purpose of s 106 of the Act may become unfair as a result of subsequent conduct, even if such conduct occurs after the termination of the arrangement: see Gambotto v John Fairfax Publications Pty Ltd (2001) 104 IR 303 ("Gambotto") at [34]. This is because, "[t]he conduct arises out of and is directly referable to the contract itself" (Gambotto at [34] per Peterson J).
3. The plaintiff acknowledged the difficulty associated with an individual attempting to prove post-termination disparagement. The plaintiff primarily relied upon evidence of several failed attempts in retaining employment in a comparable position. The principal example of this conduct concerned the plaintiff's engagement with the SIMS Group Australia Holding Pty Ltd ("SIMS").
4. From 3 November 2008, the plaintiff was employed by SIMS. Both PWC and EY provided taxation services to SIMS. Within a short time of the plaintiff's commencing the newly acquired employment, SIMS received notification from EY that the plaintiff was in trouble for serious misconduct at first defendant. The plaintiff was informed that allegations had been made and that SIMS was investigating the matter. The plaintiff surmised that the allegations had derived from the first defendant.
5. The plaintiff was informed that EY was applying "pressure to SIMS" and that a possible cause was a "Machiavellian plot between EY partners to get their name on our fees and to get any tax work they [could] from PWC".
6. The plaintiff was made redundant in March 2009 and on the evidence been unable to obtain comparable work since that time. After her departure, the plaintiff was informed that her position had been terminated partly as a result of the first defendant raising issues with EY and partly due to EY itself. The source of this information was EY. No attribution was given to the first defendant as such.
7. One of the documents attached in support of the plaintiff's contentions in this respect attributed a statement to a representative of the first defendant saying he could not comment of the plaintiff's past arrangement for "legal reasons". There is evidence that the second defendant insisted on reference checks being forwarded to him but no indication of his approach to any such approach, if, in fact, they were made.

Declarations

1. In the circumstances, I consider it is appropriate to make the declarations sought by the plaintiff, which appear in para 3 and (2) of this judgment, save that no declaration will be made that the contract was unconscionable or against the public interest as sought by the plaintiff (see para 3(2)). Further, I consider the order sought and extracted in para 3 of this judgment, namely, varying the contract in accordance with the terms of Schedule A (appearing in para [4] of this judgment) should be granted, save for cll (4) and (5) of Schedule A, so far as the clauses specify a period of notice or payment in lieu thereof or cl 9 (which was not substantiated on the evidence).

Monetary Orders

1. I turn then to the balance of the relief sought by the plaintiff appearing in para 3-(6) of this judgment.
2. The Court has a broad discretion under s 106(5) of the Act to make such orders as to the payment of money as the Court considers just in the circumstances of the case. The power extends to such orders as can reasonably be thought to have a real connection with the making, variation or avoidance of the contract or arrangement: Brown v Rezitis at 165; Fish v Solution 6 Holdings Ltd (2006) 225 CLR 180 at 191[25]. The exercise of power clearly involves the exercise of a very broad judgment in assessing a just monetary amount not limited to defined heads of loss or damage: Barclays Australia Investment Services Ltd v Nordby (1995) 99 IR 258 at 279. The Court is not confined to apply common law or equitable principles for assessing damages but those principles (see, Westfield Holdings Pty Ltd v Adams (2001) 114 IR 241; [2001] NSWIRComm 293 ("Westfield Holdings") at [161]) may nonetheless be instrumental in determining the quantum of a money order pursuant to s 106(5): Westfield Holdings at [130]. In making a money order I must do what is just in the circumstances of a particular case: Westfield Holdings at [102].
3. In this matter, the plaintiff sought that the Court should make an order for the payment of money in connection with the arrangement that takes account of: 1. The failure of the arrangement to contain any reasonable provision with respect to notice of termination or payment in lieu thereof and the consequences of the failure to protect the plaintiff from arbitrary and immediate termination on her future employment and career. 2. The stress and humiliation suffered by the plaintiff as a result of being exposed to bullying and harassment at the hands of the second defendant and the failure of the arrangement to include any adequate provision to protect her from such conduct. 3. The impact upon the plaintiff's career and earnings resulting from the failure of the arrangement to protect her from conduct of the first defendant which disparaged her and undermined her future employment prospects.
4. I shall deal with issues (1) and (2) seriatim (the applicant having failed to demonstrate the contract or arrangement was unfair, harsh or unconscionable or against the public interest with respect to the disparagement ground).

Termination of Employment

1. The amount claimed in the further amended statement of claim was calculated on the basis of a 15 month period of the earnings actually received by the plaintiff in respect of her work for the first defendant. The evidence demonstrated that the plaintiff received a daily payment through the contract which resulted in total remuneration of $174,323. It was submitted that figure provides an appropriate basis for calculating the plaintiff's loss of earnings.
2. It was submitted the unfairness in the arrangement, whereby she performed work, and the conduct it permitted on the part of the first defendant caused immediate and substantial loss to the plaintiff. It was contended this had an enduring and devastating effect upon the plaintiff's career and earning potential. It was further contended a substantial payment ought to be ordered having regard to the ongoing loss of earnings experienced by the plaintiff for reasons including the following: 1. Despite her efforts to obtain other employment, the plaintiff did not obtain any further work between October 2005 and May 2006 when she took up a short term position with IBM and was then again unable to obtain alternative employment until commencing with SIMS in November 2008. 2. The termination of the plaintiff's engagement occurred notwithstanding repeated and clear representations made by Mr Cochran and others during 2005 that the plaintiff would be employed in a permanent and ongoing position by the first defendant. 3. To the knowledge of the first defendant, the plaintiff did not pursue opportunities to obtain other employment, including a tax role with United Group, as a result of representations made to her in relation to her ongoing engagement with the company. 4. The fact of the plaintiff's immediate and unexplained termination cast a pall over her reputation and ongoing employment prospects. The events which took place in relation to her engagement with the first defendant have destroyed her otherwise successful career.
3. These contentions may be accepted on the evidence in these proceedings.
4. In this context, it was submitted that the Court was not strictly limited to common law notions of reasonable notice of termination: Westfield Holdings at [161]. The Court may have regard to the fact that the consequences of the unfairness evident in the arrangement whereby the plaintiff performed work have had enduring consequences for her beyond the immediate period following the termination. Again this submission may be accepted in the broad but I do not consider that Westfield Holdings is authority for a proposition that factors relevant to the assessment of reasonable notice may be put out of account in determining appropriate money orders. Those common law principles offer a guidepost as to what may constitute an appropriate period of notice of termination or payment in lieu thereof in considering whether a contract is unfair for the purposes of s 106. Further, those principles may also inform the assessment of the quantum of money orders that should be properly made upon the finding of the existence of an unfair contract.

Bullying and Harassment

1. The plaintiff submitted that an order should be made arising from the stress and humiliation she suffered as a result of the failure of the arrangement to include any adequate provision to protect her from bullying and harassment. The plaintiff did not claim compensation for loss occasioned by discrete medical or other expenses incurred as a result of her suffering distress and humiliation.
2. It was submitted, that compensation may be awarded under s 106(5) of the Act for "distress" or "stress and suffering" arising from the unfairness of a contract or arrangement whereby work is performed is settled: see, for example, King v State Bank of New South Wales (No 2) (2002) 126 IR 407; [2002] NSWIRComm 353 at [114]; State of New South Wales v Banas (2004) 137 IR 63; [2004] NSWIRComm 255 at [101]-[105]; Wheelahan v North Coast Area Health Service [2008] NSWIRComm 164 at [254]-[256]; Brown v State of New South Wales (Department of Education and Communities) [2014] NSWIRComm 115 at [188]-[198]. I accept this submission so long as it is tempered by the observation that there must be a careful approach taken in assessing an appropriate money order with respect to the ground to avoid the "risk of double compensation".
3. It was submitted, the failure of the arrangement whereby work was performed to contain provision to protect the plaintiff from bullying and harassment, or ensure that any complaints were properly acted upon, exposed the plaintiff to conduct peculiarly likely to cause distress and humiliation. The plaintiff has given evidence of feeling belittled and humiliated by the conduct of the second defendant and the failure of the first defendant to respond appropriately. The effect of the conduct was humiliation, distress and damage to the plaintiff's career by virtue of reputational damage. I accept those submissions subject to the caveat that there must be avoidance of double counting of factors taken into account under the previous termination of employment heading associated with the difficulties in finding alternative employment. I also note that there was no material evidence as to the impact of the conduct of the first defendant upon the plaintiff.
4. The calculation of compensation in the nature of general damages for hurt, humiliation and distress will frequently not be susceptible to mathematical calculation. In Hall v A&A Sheiban Pty Ltd (1989) 20 FCR 217 at 256, for example, Wilcox J said (at 256): [D]amages for ... injury to feelings, distress, humiliation and the effect on the claimant's relationships with other people are not susceptible of mathematical calculation ... [t]o ignore such items of damage simply because of the impossibility of demonstrating the correctness of any particular figure would be to visit injustice upon a complainant by failing to grant relief in respect of a proved item of damage.

Mitigation

1. The Court is required by s 106(6) of the Act to take into account whether or not the plaintiff took action to mitigate loss. This section does not require a strict application of the doctrine of mitigation at common law: English v Aradlay Insurance Brokers Pty Ltd (2005) 145 IR 129; [2005] NSWIRComm 253 at [35]-[36], but it is proper to have regard to those principles in appropriate cases.
2. Ordinarily, where an employee has been successful in avoiding loss or has failed to take reasonable steps to avoid loss in the period following dismissal, the Court, in determining what is just in the circumstances of the case will give consideration to whether, and to what extent, any money amount in respect of notice of termination that is contemplated to be made the subject of an order under s 106(5) should be reduced by moneys earned or "[imputed] earnings" in the relevant post termination period: Westfield Holdings at [161].
3. It was submitted, there is no basis to think that the plaintiff did not act reasonably in mitigating her loss. She has given evidence of endeavouring to obtain replacement employment for a substantial period without success.
4. The plaintiff did obtain some employment with IBM from May 2006. It was submitted, however, that in the circumstances of this matter, the period of loss suffered by the plaintiff clearly did not end then. The employment was IBM was only short-term and, the effect of the events surrounding her engagement by the first defendant continued for many years and continued to cause the plaintiff loss as a result of the effective destruction of her career. The period of loss of earnings is certainly not limited to the period to May 2006.
5. Having regard to the period of notice and the aforementioned submissions for the plaintiff, which I accept, I do not consider any money order in favour of the plaintiff should be reduced by the operation of common law principles of mitigation (and that the application of those principles would not require such a result).

Settlement as against the Second Defendant

1. The plaintiff was able to reach a settlement against the second defendant prior to the proceedings being heard. The plaintiff accepted that, where relief is sought for the same loss against more than one defendant, the Court may (but is not required to) take into account a settlement as against one defendant to ensure the plaintiff does not receive double recovery: Miletich v Murchie (2012) 297 ALR 566; [2012] FCA 1013 ("Miletich") at [121]-[125]; Ewin v Vergara (No 3) (2013) 307 ALR 576; [2013] FCA 1311 ("Ewin") at [685]-[691].
2. In assessing the question of whether "double recovery" arises from a settlement against one defendant, a party may be entitled to deduct the costs incurred in pursuing an action before giving credit for the amount received: Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2) [1988] 2 All ER 880 ("Banque") at 882; Nau v Kemp & Associates Pty Ltd (2010) 77 NSWLR 687; [2010] NSWCA 164 ("Nau v Kemp") at [108]; Miletich at [124]-[125]; Ewin at [691].
3. The first authority relied upon by the plaintiff in this regard was Banque. Steyn J sets out the accepted principle: [A] plaintiff who has a claim against two defendants cannot recover more than his total loss, and must therefore give credit for any sum received from one defendant in or towards satisfaction of the claim, whether received before or after judgment.
4. The judgment also concerned the entitlement of a plaintiff to deduct the costs incurred in pursuing an action before giving credit for the amount received upon the settlement with one defendant. The approach of Steyn J was as follows (at 882-883): The first live issue, as between Chemical and Skandia, is whether the costs of the action against Notcutt ought to be deducted from the credit to be given. Notcutt was liable to Chemical on the ground of Notcutt's vicarious responsibility for the fraud of an employee. I am satisfied that Notcutt would have been held liable in full for the agreed costs if the matter had proceeded to trial against Notcutt. The principle appears to be that if a plaintiff who receives payment from one tortfeasor establishes an additional separate claim against that tortfeasor, the payment is allocated first to that claim, and credit must be given in favour of the second tortfeasor only for the excess necessarily referable to the overlapping claim. … It also appears to me to be the approach which is required by an application of first principles. Prima facie therefore the costs of Chemical's action should be deducted from the credit to be given for the receipt of money under the Notcutt settlement. … More importantly, the terms of settlement expressly provided that the recovery against Notcutt would be in full and final settlement of the banks claims 'including claims for costs'. These words cannot be treated as pro non scripto or as a sham. The argument based on the actual allocation of the proceeds of the settlement between the banks is a tenuous one. In multi-party disputes an element of arbitrariness frequently enters into the calculation of recovery by way of overall settlement. That may have been so in the present case. Certainly, it would be wrong to read the contract as if the words 'including claims for costs' were not there. And there is nothing in the terms of settlement which serves to displace the general principle that the credit to be given to one tortfeasor in respect of recovery from another tortfeasor must be adjusted to take into account any additional and separate claim which the plaintiff had against the second tortfeasor. … This decision supports the general principle which I have stated, and authoritatively makes clear that there is no general equitable principle of pro-rating in such cases.

Interest

1. It was submitted, an order should also be made for the payment of interest on any amount ordered to be paid by first defendant under s 106(5) of the Act. The proceedings have taken, it was contended, an extraordinary period to conclude and resulted in the plaintiff bearing the losses she has incurred for in excess of a decade. Further, it was contended a useful summary of the procedural history is set out in the judgment of Kite AJ in Sutton v BE Australia WD Pty Ltd (No 2) [2015] NSWIC 9 at [7]-[8]. Kite AJ further noted (at [30]): On the face of events there has been a substantial lapse of time between the termination of the contract and the pressing of this application. I do not consider it can be said that the applicant has been dilatory in prosecuting her claims. The chronology provides ample explanation for the lapse of time in particular the decision by the respondent in 2009, just prior to the scheduled trial, to enter voluntary administration, required the applicant to take a number of procedural steps to be able to continue the prosecution of those claims. Those reactive steps have been opposed and, necessarily, litigated. That has taken time.
2. In these circumstances, the plaintiff contended the Court should make an order for the payment of interest upon any payment required to be made by the first defendant. I accept that submission. The plaintiff submitted that the convenient course would be for the plaintiff to be given leave to file a schedule of interest after judgment. That step would be premature given the further submissions sought from the plaintiff. I do require, however, submissions to be filed dealing with the basis upon which, it is contended, interest should be calculated including the date from which interest should be calculated.

Costs

1. The plaintiff foreshadowed seeking an order for costs by seeking a gross sum order under s 98(4) of the Civil Procedure Act 2005 (NSW). I will reserve the question of costs.

Money Orders

1. Having regard to the outstanding issues of the consequences of the settlement reached with the second defendant I will refrain from pronouncing upon any money orders at this time.

Orders

1. The plaintiff shall bring in short minutes of order of the declarations which the Court proposes to make in accordance with this judgment within 7 days. Further, the plaintiff shall file further submissions as to the settlement reached with the second defendant and interest in accordance with this judgment within 28 days of the publication of judgment. Leave is granted to the file further evidence by affidavit bearing upon those issues within the same timeframe.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 June 2017