Truelove v Sydney Water Corporation Limited and anor

APPLICANT Mr A Searle of Counsel Solicitor: Ms L Moliterno Sagacious Legal Pty Ltd LEGAL REPRESENTATIVES: RESPONDENT Mr R F Crow of Counsel Solicitor: Mr B Williamson Workplace Law

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J 14 Friday May 2004

Matter No IRC 5850 of 1996 STEVEN NEIL TRUELOVE V SYDNEY WATER CORPORATION LIMITED AND AUSTRALIAN WATER TECHNOLOGIES PTY LTD Application pursuant to s 106 of the Industrial Relations Act 1996 JUDGMENT NSWIRComm 115

1 By amended summons the applicant, Stephen Neil Truelove, seeks certain relief against the first and second respondents, Sydney Water Corporation Limited and Australian Water Technologies Pty Ltd, respectively under s 106 of the Industrial Relations Act 1996 ("the Act").

2 Section 106 of the Act is in the following terms:

106 Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.

3 The proceedings arise out of the termination of the applicant's employment with the second respondent on 23 May 1996 when he was summarily dismissed from his position as Finance Director. In summary terms the applicant alleged firstly that his contract of employment became unfair by reason of the conduct of the second respondent in dismissing him from employment in circumstances where there was no justification for doing so and secondly by reason of the processes used by the respondents in investigating and dealing with certain complaints made about the applicant and in coming to the decision to summarily dismiss him.

4 It is necessary to deal with that part of the factual background as revealed by the evidence given in the proceedings. The applicant commenced employment with the first respondent in 1992 when he was appointed to the position of Finance Director of Australian Water Technologies Trading which appears to have been a commercial trading arm of the Sydney Water Board. That Board was ultimately corporatised and became the first respondent in these proceedings. A number of businesses then being conducted within the trading arm were transferred to the second respondent and the applicant became the Finance Director of that corporation. It was agreed that the provisions of an employment agreement which the applicant had signed with the first respondent on 12 January 1995 would apply to his employment with the second respondent. On this basis the applicant was employed on what I conclude was a fixed term contract until 31 December 1999. There was provision for renewal of the appointment for a further period not exceeding five years upon certain terms and conditions. Otherwise the question of termination of the agreement was limited by the provisions of clause 19. This clause gave the Managing Director the right to terminate the agreement "at any time without prior notice in circumstances which are not harsh, unjust or unreasonable if the Employee shall: (a) Commit any serious or persistent breach of any of the provisions of this Agreement; (b) Be guilty of any grave or serious misconduct or wilful neglect in the discharge of his/her duties…"

5 In addition, the employer was entitled to terminate the applicant's employment if he became permanently incapacitated.

6 The applicant was given the right to terminate his employment in certain circumstances, namely the failure by the employer to pay any amount due to him within a specific period, the appointment of an administrator, liquidator, receiver or manager to the employer and, in any event, by giving eight weeks notice in writing.

7 For completeness I note that by clause 20 there was provision for termination of the applicant's employment on him becoming redundant upon payment of a redundancy package and upon payment in lieu of notice.

8 Certain duties and responsibilities were imposed on the applicant including compliance with the second respondent's Code of Conduct and Discipline Policy, and an obligation to "Well and faithfully serve the Corporation in a conscientious, expeditious and professional manner."

9 On 1 December 1995 the applicant's remuneration package was increased to $130,000 per annum and he was given access to an "at risk" component of $15,000 per annum based on performance.

10 During the course of his employment with the second respondent the applicant acted as Managing Director during the Managing Director's absence and served as a member of each Executive Committee of the second respondent.

11 In March 1996 the applicant was advised by the then Managing Director, Mr David Marchant, that the Board of the first respondent had directed that an internal audit investigation be conducted into the affairs of the second respondent, it being a wholly owned subsidiary. The applicant participated in discussions with audit personnel on 18 April, 1 May and 24 May 1996. On each occasion he was asked for certain information and said that he gave full explanations in response.

12 On 2 May 1996 the applicant was given a letter suspending his employment signed by Mr Paul Broad, the Managing Director of the first respondent. That letter referred to an investigation conducted by Internal Audit Services concerning certain matters, unspecified, involving the applicant and stated that the audit report would be considered at a special board meeting of the second respondent. The applicant was suspended from duty on full salary until 16 May 1996 and was advised that investigations would continue and that the applicant would be informed of the results of those investigations at a meeting in Mr Broad's office on that day.

13 The applicant complained that he was given no reasons for, nor any warning of, his suspension nor given an opportunity to respond to any allegations. By letter dated 14 May 1996 the applicant's then solicitor Mr Hayward sought particulars from Mr Broad. Solicitors for the respondents replied by letter dated 15 May 1996 setting out details of a number of allegations levelled against the applicant and fixing an appointment for the applicant to discuss them with the Director of Human Resources. The applicant's solicitor was also forwarded a copy of the discipline policy handbook which set out the procedures to be adopted at that meeting. I shall return to the specific allegations later, but I observe that a great deal of documentary material was enclosed with that letter.

14 Eventually a "disciplinary hearing" was conducted by Ms Kerry Stubbs, the Manager - Corporate Human Resources of the first respondent, and Mr Warren Hart, the then Director of Human Resources for the first respondent. These persons had been appointed to constitute a disciplinary committee by Mr Broad. That committee met with the applicant and Mr Hayward, solicitor, on 21 May 1996. The respondent's solicitor was also present as were certain other persons. At that meeting the allegations levelled against the applicant were discussed and he was afforded an opportunity of responding to them.

15 After that meeting Ms Stubbs and Mr Hart met with two other persons to discuss further information about these allegations. They then produced a report to Mr Broad dated 23 May 1996 in which they made certain findings and recommended that the applicant be summarily dismissed that day. There is appended to that document the word "approved" above what the parties have assumed is the signature of Mr Broad with the date 23 May 1996. A copy of that document was given to the applicant that day.

16 It may be assumed, therefore, that Mr Broad, who ultimately determined that the applicant's employment would be terminated, relied upon and adopted that document. In making this observation I note that Mr Broad had sworn an affidavit which was filed in the proceedings. However at the commencement of the hearing there was tendered into evidence a copy letter from the respondents' solicitors to the applicant's solicitor dated 18 March 2004 which referred to the affidavits of Mr Broad and said "we have been instructed by our client not to serve a summons to give evidence on Mr Broad and understand that he refuses to attend to give evidence at the hearing voluntarily. In these circumstances we don't expect Mr Broad will be available for cross-examination". This had the effect of precluding the respondents from relying on the affidavits of Mr Broad. It also had the effect of depriving the court of any evidence of the person who ultimately made the decision to terminate the applicant's employment and as to the reasons therefor. Mr A Searle of counsel, who appeared for the applicant, sought to rely on this as a matter of significance in the proceedings, and I shall return to this aspect later.

17 For reasons which I shall advance shortly, it is now appropriate that I consider the allegations made against the applicant and the applicant's response to those allegations which became evidence in these proceedings. I shall deal with each of the discrete allegations made against the applicant in turn.

18 Second Mobile Phone The applicant had the use of a mobile phone. Whilst acting as Managing Director he arranged approval of a second mobile phone to be used by him as Finance Director. It was alleged that he permitted this second phone to be used extensively by a person, not an employee of either respondent, for private purposes since 1 October 1995 (wrongly described in the document as 1 October 1996) including the making of 97 separate calls between the original mobile phone and the second mobile phone since that date.

19 The allegation raised concerns about the applicant personally approving the supply of the second mobile phone. The respondents' policy required approval by a "Branch Manager/General Manager". The applicant said that as acting Managing Director he had the authority to approve the purchase.

20 The applicant sought to explain this situation in evidence given in these proceedings. He said that the original mobile phone and phone car kit which he had had from 1992 was "rarely portable, because the car kit flattened the batteries. As a result, it could usually only function as a car phone". He also complained about the quality of the transmission from that phone. He said that when he obtained the new mobile phone he used the existing one as a car phone. In October 1995 his de-facto wife became ill and he wanted to keep in contact with her whilst she was working in Wollongong. Accordingly, he allowed her to have the use of the new mobile phone. This continued until April 1996 when his de-facto spouse returned the phone to him. The applicant said that he had asked his de-facto spouse to keep the use of the mobile phone to a minimum and was surprised to be told on 1 May 1996 in a conversation with Mr Goddard, a member of the respondent's audit team, that the cost of calls between 16 January 1996 and 15 April 1996 had been $132.22.

21 In cross-examination the applicant conceded that on a visit to Melbourne with his de-facto spouse in March 1996 both mobile phones had been used including use to make calls to each other.

22 The applicant was also asked why he did not simply purchase a second mobile phone for his de-facto spouse if he was concerned about maintaining contact with her whilst she was ill and working in Wollongong. The applicant characterised what he had done as being an "error of judgment". The applicant in cross-examination said that the cessation of use of the second mobile phone by his de-facto spouse occurred just prior to the commencement of investigations by the second respondent and was unrelated to that event.

23 It was submitted on behalf of the applicant that this matter would not justify summary dismissal.

24 American Express Card Use In substance the allegations related to a number of claims made by the applicant on an American Express sponsored credit card claiming payment for food and beverage. The respondents' guidelines indicated that expenditure on food and beverage had to be incurred and authorised on a particular basis. Working lunches and dinners attended only by staff "where official duties are conducted" were to be restricted to what was called "basic fare" the example being given of sandwiches and juices. Business meetings which were described as being attended by "official visitors from outside the Corporation with whom the Corporation has a definite business relationship" were not so similarly restricted. However in all cases there was a requirement to fully document all payments including "brief comments as to the nature of the function and attendees".

25 There was some debate during the course of the proceedings as to the nature and extent of the information furnished by the applicant to the respondents. With respect to a number of the claims the applicant deposed that they related to lunches with fellow employees which he had paid for by using the corporate card. He said that he had "a duty to create goodwill, harmony and develop good business relationships". He said that his entertainment expenses were incurred in order to further those aims and were therefore all properly expended. He justified regular lunches with a number of personnel of both the second respondent and the first respondent as providing an opportunity to deal with a number of "mutual business concerns".

26 Other lunches appeared to have been with persons external to the respondent organisations. He lunched on a number of occasions with a well-known barrister specialising in industrial law for the purpose of discussing industrial relations matters and with respect to which he said no fee was rendered by that barrister for advice given. He also lunched with representatives of an organisation providing management advice and an organisation which provided employee placement services for the second respondent. At a few of these lunches it is clear that there was present at least one person who was neither an employee of the respondents nor a person with a business relationship although she was described as a "friend" of the industrial barrister previously referred to.

27 A further explanation is provided by the applicant when seeking to justify authorisation of expenditure by a human resources employee of the sum of $559.00 on 18 April 1995. The applicant said: "I did so in my capacity as acting Managing Director for AWT. The claim was no different in form to any other claim received and approved by Marchant. I decided to follow his lead and approve Stemi's claim in like manner. In doing so I believed I was acting in a proper manner."

28 The applicant conceded that with respect to those lunches attended only by employees of the respondents that he had breached the policy by providing more than basic sandwiches and juice.

29 The applicant also conceded in cross-examination that the only details he provided to the second respondent was to write down on his American Express statement each month the names of the persons who had attended the particular function. He said that this was all that was necessary by reason of the "customary practice" in the organisation. He also said that it was customary practice on "odd occasions" for employees to buy each other lunch and charge it against the American Express corporate account.

30 On one particular occasion the applicant conceded claiming $318.50 for a farewell function for an employee, not all of the persons attending being persons who were employees and persons known to him.

31 There is evidence that on some few occasions the applicant had lunch on a weekend with a representative of KPMG, and claimed the cost of this on his corporate card. He also claimed the cost of a lunch at Leichhardt to the value of $60.00 with the person who eventually became his de-facto spouse and later his wife.

32 In submissions made on his behalf, Mr Searle said with respect to this matter that the applicant "has accepted that in relation to expenditure claimed involving only internal staff that this was not restricted to sandwiches and juice and to this extent the policy was not complied with. However, it is submitted that the course of conduct by the respondent through its employees Budd and Marchant in accepting and approving the expenditure of this kind cannot later insist on strict compliance with the policy". It was submitted that there was no misconduct involved that would justify summary dismissal of the applicant. Any strict breach of policy could be condoned because of the actions of other senior personnel.

33 Use of an All-Waste Transport Vehicle It was alleged that the applicant had used a transport vehicle owned by the second respondent for private purposes to enable him to move furniture to the Central Coast on the weekend of 2 - 3 of September 1995. The applicant had approached the acting General Manager of the division which hired out vehicles and made arrangements to borrow the vehicle without completing any documentation and without making any further arrangements for payment.

34 There was also an allegation that the vehicle was involved in an accident and that the applicant had failed to disclose this to the second respondent.

35 The applicant said that after discussing the matter with the General Manager of the hire company that he was under the impression that he was to be allowed to borrow the vehicle. However when interviewed on 21 May 1996 by representatives of the respondents in the company of his own solicitor the applicant said that he had not sought approval for the use of the vehicle and that he wished to hire one and expected to pay for it. Furthermore he said that he should be able to use such a vehicle because he had a salary sacrifice vehicle of his own and that in "other businesses where he had worked, such activity was normal practice". I should add that the evidence was that notes of this discussion were taken by a representative of the respondents at the time of the meeting on May 1996 and transcribed shortly thereafter. A copy was given to the applicant's solicitor at about that time. No complaint was made prior to the commencement of these proceedings as to their accuracy and a faint complaint was made by the applicant while giving oral evidence concerning the accuracy of some parts of these notes. I would prefer to accept the accuracy of the notes in these circumstances rather than evidence given almost eight years later as to matters of detail concerning the contents of the notes.

36 In cross-examination the applicant said that he had been in Melbourne on business prior to September 1995 and returned on the Friday evening. He had left his salary sacrifice vehicle in the car park of Sydney Water Corporation. The next day he went to Padstow to collect the hire vehicle. He said that he had made arrangements to pick up a vehicle during the course of the week by way of telephone conversations and that he had intended and assumed that he would be required to pay for it. However it transpired that it was not a hire vehicle that he was given but one which belonged to the second respondent and was a spare vehicle so he felt that in those circumstances he may not be asked to pay for it. His justification for accepting this state of affairs was that he had a salary sacrifice vehicle which could be used also for the respondent's business purposes and which he had left at the first respondent's car park over the weekend. However the salary sacrifice vehicle was not suitable for the carrying of furniture from premises owned by his de-facto spouse including a journey to the central coast.

37 Mr Searle submitted that taking the situation at its highest there was an oversight or misunderstanding by the applicant regarding the nature of the arrangement with the second respondent for the use of the vehicle and as to whether the payment would be required. When the applicant did not receive an invoice for payment he assumed that it was covered by his salary sacrifice arrangement and took no further action with respect to the matter.

38 AWT Golf balls The allegation here is that the applicant ordered the purchase of twelve dozen golf balls inscribed with an AWT logo in October or November 1995 knowing that Mr Marchant, the Managing Director, had previously expressed a view that no further golf balls of this kind were to be ordered. There is conflicting evidence about this matter. The respondents allege that the applicant was aware that the Managing Director had indicated that golf balls inscribed with the AWT logo were not to be used for promotional purposes. The applicant said that he understood that this direction was confined to distribution of golf balls to municipal clients of the second respondent.

39 Mr Marchant did not give evidence in the proceedings and I am not able on the basis of the tendered documentary evidence and the evidence of the applicant to reach any conclusion adverse to the applicant with respect to this matter.

40 Purchase of Air Ticket The allegation is that the applicant as Finance Director directed the corporate administrative staff of the second respondent to purchase two airline tickets to Melbourne and return over the weekend of 1 - 3 March 1996 using the second respondent's staff travel account for this purpose. The applicant was travelling to Melbourne on business-related matters but the second ticket was for the use of the applicant's de-facto spouse.

41 The applicant deposed that when asking for the additional ticket to be purchased that he had said that the Managing Director would not mind him using the corporate account because he would pay for the other ticket. Ultimately he said that he saved the second respondent some money because by using the corporate account he was able to acquire two return tickets at a cost of $263.00 each whereas he said that his return fare would otherwise have been $419.00. He said that he later had a conversation with Mr Budd, the Administration Manager, Corporate Office of the second respondent, in which he asked him how he wished payment to be made for the additional ticket. Mr Budd is alleged to have said that he would forward him an invoice and the applicant could then make payment upon receipt of the invoice. The applicant said that he received the invoice for the ticket on 17 April 1996 and paid for the ticket on 22 April, being three working days later.

42 Mr Budd, in an affidavit, said that he had discussed the matter with Mr Marchant who had denied to him ever approving payment for a partner through the staff travel account. He said that he then saw the applicant and asked him to pay for the additional ticket, which the applicant agreed to do.

43 In the course of a discussion which occurred on 21 May 1996, the notes of which I have previously referred to, the applicant said that it did not matter that the airline ticket was paid for on the second respondent's corporate account because of his clear intention to pay for it and that payment would be made upon receipt of an invoice. He did not believe that there was any problem concerning "fiscal policy and corporate ethics" in this regard.

44 The applicant denied in cross-examination that payment for his de-facto spouse's air ticket occurred because he was aware at that stage that inquiries were being made about him by an audit team. He maintained that at all times he was merely awaiting receipt of an invoice.

45 In submissions Mr Searle relied on evidence given by Mr Budd asserting that there was a local rule or policy that an airline ticket could be acquired for a person who was not an employee of the second respondent so long as it was paid for when it was collected at the airport. However, it was the evidence of Mr Budd that payment would not be made through the second respondent's corporate travel account but would be paid individually and personally by the passenger. That is, the services of the second respondent's corporate administration would be restricted to booking the seat only.

46 I should add for completeness that there was evidence of and on behalf of the respondents to the effect that in some way the applicant had endeavoured to negotiate some package including accommodation in Melbourne to his own benefit. The evidence was quite clear that accommodation had been paid for separately by the applicant and had been arranged by his de-facto spouse from Wollongong.

47 Procedural Unfairness It was alleged by the applicant that in a number of respects he was not afforded procedural fairness in the manner in which the complaints against him were investigated, dealt with and ultimately determined. It was said that Mr Broad was in any event biased against him, and certainly there was evidence given in the course of the proceedings that prior to the investigation being completed Mr Broad had expressed an opinion to another person that he thought that the applicant should be summarily dismissed. There was also evidence that some of the observations made by the members of the investigating committee could not be justified on the basis of the documentation which was produced and which reflected the discussions between the applicant and the respondents' representatives to which I referred which took place during the investigative process. The investigating committee report indicates, for example, that the applicant conceded that he had breached the second respondent's policies in a number of respects, but there is simply no evidence on the basis of the written material that any such concessions had been made. I accept this submission. I have referred to and will refer only to such concessions as were made by the applicant in the course of the proceedings or were contained in documentation or were made by his counsel during the course of submissions.

48 However, assuming that I was to be persuaded that the respondents had in some way failed to afford procedural fairness to the applicant, this gives rise to a consideration as to what impact this should have on the outcome of these proceedings. In a classic unfair dismissal case brought under s 84 of the Act, a failure to follow appropriate processes might arguably result in an applicant succeeding in an order for reinstatement or being awarded monetary compensation. Much would depend upon the nature of the applicant's conduct overall and as to whether that might justify dismissal in circumstances which were not unfair for the purpose of s 84.

49 In my opinion a similar situation applies in the circumstances of these proceedings. The applicant seeks a finding that the contract of employment was unfair. On one view of it, the attack made by the applicant is not directed in any way to any of the provisions, either express or implied, in his contract of employment with the second respondent or any previous contract of employment with the first respondent. The applicant has not pleaded reliance upon an overall arrangement between the second respondent and the first respondent concerning the investigation and determination of complaints made against him arising out of his employment with the second respondent. It is arguable that the applicant is then thrown back on a consideration of s 106(2), namely whether the applicant's contract of employment was or became an unfair contract because of any conduct of the parties. In view of the conclusion to which I have come, concerning the disposal of these proceedings, it is not necessary that I consider submissions made by Mr Crowe of counsel who appeared for the respondents that I should apply the decision of the Full Bench of this court in Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 and that I consider the comments of the Chief Justice in the New South Wales Court of Appeal in Mitchforce Pty Ltd v Industrial Relations Commission of New South Wales (2003) 57 NSWLR 212 at 233.

50 In my opinion it is sufficient that I consider, at least initially, whether or not the applicant has demonstrated any unfairness to justify making a relevant finding of unfairness, which is a precondition to the making of any orders under s 106. I adopt, with respect, the observations of Schmidt J in this court in Lane v Commonwealth Bank [2000] NSWIRComm 274. Her Honour said (at para 171): "None of these cases however, is authority for the proposition that unfair investigation procedures, of themselves, will lead to the conclusion that dismissal was unfair or that the contract was unfair, with relief being granted on that basis alone. Each of these authorities contemplates that a failure to follow fair procedures may deny an employee the opportunity to advance an innocent explanation for the conduct called into question, or some other reason upon which the proper conclusion that dismissal for misconduct would not be warranted could rest. Whether such an explanation or reason exists, must therefore be considered".

51 I am of the opinion that even if, allowing for some deficiency in the processes adopted by the respondents, I am unable to find that there was any relevant unfairness then this would ipso facto determine the outcome of these proceedings, provided that the failure to follow those processes could not unduly impact upon the validity of the finding that there was no unfairness.

52 I am prepared to proceed on the basis that this last qualification does not apply. That is, I have, in my review of the evidence, taken into account the allegations made against the applicant by the respondents in written form and such material by way of oral evidence and documentation as has been admitted into evidence in these proceedings. I have therefore excluded any of the material about which the applicant has complained as creating unfairness in the respondent's processes and, not being aware of what was in the mind of Mr Broad at the time that he determined to dismiss the applicant summarily, I am not fettered in any way by any bias that he might have displayed in coming to that decision.

53 I therefore proceed to embark upon a determination as to whether in all the circumstances the court is entitled to or ought to make a finding that the relevant unfairness exists for the purpose of these proceedings. This is, as I have observed, a precondition for the exercise of any power under s 106 to make any orders of avoidance, variation or for the payment of monetary compensation.

54 In Schwartz v Sydney City Area Health Service and another (2002) NSWIRComm 79 I summarised my understanding of the approach to the determination of such an issue and as to the principles to be adopted in the following way: 71 "It is a trite observation that a pre-condition for the exercise of any power under s 106 is a finding that the relevant contract is unfair. A helpful discussion as to the approach of the predecessor tribunals to this Court to the determination of whether a contract etc is unfair is contained within the joint judgment of Fisher CJ and Hungerford J in the Industrial Court of New South Wales Full Court in Baker v National Distribution Services Ltd (1993) 50 IR 254. At 271-272 their Honours said: 'The test of unfairness within the meaning of s 88F of the Industrial Arbitration Act , and hence s 275 of the present Act, has received much attention by the Court and by the previous Industrial Commission over very many years, but, in our review of the cases, the approach stated by Sheldon J in Davies v General Transport Development Pty Ltd [1967] AR (NSW) 37 over 26 years ago has endured; his Honour commented (at 374) that unfairness of a contract or arrangement was to be determined according to "the common sense approach characteristic of the ordinary juryman ...It is a plain matter of morals not law." His Honour cautioned, however, (at 374,375) that the section's "massive power makes it imperative that it should be exercised with proper restraint ... it should not permit itself to become a refuge for those who are merely disgruntled with a bargain entered into on even terms. ... the discretion should be exercised to protect victims of wrong dealing not to prescribe anodynes." Those words by his Honour echoed what had been said earlier by Beattie J in Agius v Arrow Freightways Pty Ltd [1965] AR (NSW) 77 at 89 that it was a matter of deciding "in each particular case by the application of the tribunal's common sense and sense of justice whether a particular transaction is unfair, harsh and unconscionable. The nature of the unfairness attracted by s 88F was considered later by the Industrial Commission in Court Session (Perrignon and Dey JJ, Cahill J dissenting) in A & M Thompson Pty Ltd v Total Australia Limited [1980] 2 NSWLR 1 at 13 as follows: It has been said that fairness is determined by the commonsense approach of a juryman and that it is a moral and not a legal issue ( Davies' case). Whether this be so or not, it does seem that in distinguishing between what is fair and what is not fair the Judge must apply standards which appear to him to provide a proper balance or division of advantage and disadvantage between the parties who have made the contract or arrangement. In doing so he would always have to bear in mind the conduct of the parties, their capability to appreciate the bargain they had made and their comparative bargaining positions when entering into the contract or arrangement.' 72 It is my understanding that in determining whether there is unfair conduct for the purpose of proceedings brought under s 106 and especially under subsection (2), the Court is required to exercise a value judgment reflecting contemporary community values. The contemporary values may be derived from the commonsense approach characteristic of the ordinary, reasonable, hypothetical "standard" member of the community. Such a person will be neither an employer nor an employee, must be careful to weigh up the competing interests of the applicant as an employee and the respondent as an employer and those interests must be accommodated and viewed objectively and balanced within the context of the factual matrix which applies to them. Such a process will accommodate the reasonable requirements and understanding of an applicant as an employee and the reasonable requirements and understanding of a respondent as an employer in the context of the needs of the employer to undertake its activities in an efficient, effective and competent manner. 73 Of course the identification of contemporary community values is not without its own difficulties. Some insight as to the difficulties involved may be gained from the discussion by Professor John Braithwaite in the article entitled "Symposium on Community Values in Law" published in vol.17 of the Sydney Law Review at 351. Professor Braithwaite draws on a body of literature to make a distinction between community attitudes and community values, the former not necessarily assisting a court in determining a matter, the latter having much greater relevance. An obvious example of an attitudinal matter is the debate concerning abortion. The corollary and underlying value against which such debate is conducted is 'respect for human life, health, freedom of choice.' … 81 I have already referred to the process which is involved in determining whether a contract or arrangement etc or conduct is unfair. In the context of this process it is important to observe that there will be many cases where there is no absolute defining boundary which delineates what is fair from what is unfair. Often a range of conduct or activities may be said to fall within the limits of what is assessed to be fair, and, by corollary not unfair. This is because of the lack of absolute and scientifically determined criteria which differentiate the concept of what is unfair. 82 The assessment which is to be made judged by the standard of the ordinary, reasonable, hypothetical "standard" member of the community is not capable of precise analysis and delineation. There will be a variety of opinions held by such a person. The exercise of a value judgment in these circumstances is obviously made more difficult, but it is a difficulty which is not confined to judges of this Court. By way of analogy, evaluations of what is "reasonable" are made daily by judges in all courts determining claims based on breach of duty of care in negligence, and those brought under certain provisions of the Trade Practices legislation. 83 It must be also be observed that the determinative process by which a judge ascertains whether the relevant unfairness exists cannot be undertaken in a factual vacuum. There has to be a contextual framework within which the value judgment may be made, as with any judgment. I am unable to ascertain how a value judgment can be made concerning conduct of persons without considering as a potentially important contextual matter the circumstances of any relationship between them. Where the parties are employer and employee, in many, but not necessarily all, cases the fact of employment and the circumstances surrounding the employment situation will be important contextual matters…"

55 In the circumstances of these proceedings I take into account, in particular, the obligations, responsibilities and duties incumbent upon the applicant as the Chief Financial Officer and, from time to time, acting Managing Director of the second respondent. The respondents in their submissions emphasised the applicant's contractual duties and those duties imposed upon him by the Corporations Law, submitting that the applicant was an officer within the meaning of s 82A of the Corporations Law at all relevant times. In my opinion this matter may be dealt with without considering the detailed provisions of the Corporations Law or, indeed, the detailed provisions of the applicant's contract of employment. The applicant at all times had a duty to act with fidelity and to ensure that the respondent's policies were implemented. He was responsible in particular to ensure the fiscal integrity of the second respondent's operations with particular emphasis on the respondent's resources and its funds.

56 In my opinion contemporary community values and standards require a high standard of conduct of a person in the applicant's position. Although the media continually reports circumstances where Chief Executive Officers are handsomely rewarded even where the organisation over which they preside suffer questionable losses, and cases where Chief Executive Officers are seemingly paid handsomely on departure from organisations where their contribution to the worth of the organisation is questionable, I do not understand that contemporary community values and standards support matters of this kind. This is particularly so in the case of government instrumentalities and statutory corporations.

57 In my opinion the circumstances which apply to the applicant in these proceedings are different from those about which I have made general observations. Here, the applicant is alleged to have participated himself in questionable activities and is alleged to have breached not only his duty of fidelity but also particular policies established by the respondents. In my opinion the attitude taken by the applicant to the allegations against him, as manifested by the explanations which he has given both during the course of these proceedings and as recorded in documentation reflecting discussions held with the respondents' personnel, reflects a lack of insight as to his conduct and as to the consequences of what has been described on his behalf as "errors of judgment".

58 Perhaps, taken in isolation, it might be asserted that each of the items referred to was of minor consequence and might justify a reprimand or counselling of some kind. However, in my opinion, taken in their totality all of the matters in the aggregate constitute an attitude on the part of the applicant and conduct on the part of the applicant which is inconsistent with his duties, responsibilities and obligations and which, in my opinion, would not allow this court to characterise the summary dismissal as constituting unfairness for the purposes of s 106 of the Act.

59 The most blatant example is the provision of the second mobile phone to the applicant's de-facto spouse. It was clearly an item paid for and maintained in connection with its use at the expense of the second respondent. This mobile phone was used predominantly by the applicant's de-facto spouse for purposes unrelated to the applicant's employment. The applicant should have provided a mobile phone for his de-facto spouse out of his own funds. At the least, he should have not only offered to pay but should have reimbursed the second respondent for all expenses incurred by the use of the mobile phone. There is no evidence that he sought to do so. I agree with the respondents' submissions that there could be no justification for the need for the applicant to have two mobile phones. If his first phone was giving him trouble then it could have been replaced.

60 In the same way, the use for private purposes of the second respondent's vehicle was not attended by any offer to make payment for its use after the matter was raised with the applicant. He accepted a free loan of the vehicle on an asserted basis that he understood that this was to be the situation. Such circumstances were inconsistent with the proper and effective management of the second respondent's resources which, as was submitted, required him to ensure that the respondent earned a proper fee for the use of its assets. I do not accept the justification proffered by the applicant that he was entitled to rely in some way on the fact that he had a salary sacrifice vehicle which was not being used. Such a submission is, in my opinion, illogical and demonstrates again the lack of the applicant's insight into his attitude.

61 In the same way, it is clear that the applicant did not offer to make reimbursement for the airline ticket paid for through the second respondent's corporate account until some seven weeks after the ticket was utilised. This is inconsistent, in my opinion, with a professed intention to pay for the ticket and is inconsistent with the second respondent's policies and protocols. If the applicant was unaware of any such policies or protocol, then as Chief Financial Officer he should have made it his business to make himself so aware. I am also unimpressed by the applicant's assertion that the Managing Director had authorised in some way his purchase of the ticket for his de-facto spouse. This is simply not borne out by the evidence.

62 In coming to the conclusion that the failure to make timely payment was of itself a breach of the applicant's duty of fidelity I have not taken into account any submissions by the respondents that it was more than coincidence that the applicant ultimately paid for the air ticket at about the time that he became aware that audit investigations were being made about his conduct.

63 I do not deal in this connection with the allegations concerning the acquisition of the golf balls, for reasons earlier advanced. However I do take into account that the expense claims made by the applicant are also indicative in a general sense of his lack of insight concerning his duties, responsibilities and obligations to the second respondent and his attitude overall to the need to comply with the second respondent's policies concerning these matters. Whilst the applicant might be able to justify some of the claims queried, I am not persuaded that all of the claims may be so justified. It is impermissible in my opinion for a person in the applicant's position to have knowingly asked the second respondent to pay for lunches attended by persons who had no association with the second respondent either by way of employment or commercial arrangements and it was impermissible to blatantly breach the second respondent's policies concerning the nature and level of lunch expenses for employees. One might question those policies in terms of what the applicant saw as a need to enhance and promote harmony and good will amongst colleagues but this requires either authorisation from the Managing Director, if appropriate, or securing a change in the policies. Breach of such policies albeit for appropriate reasons, does not detract from the culpability of the applicant's overall conduct.

64 The respondents were entitled to expect that the applicant would not only enforce all of its policies but would lead by example. A chief financial officer who breaches policies designed to ensure the integrity of an employer's fiscal resources sends a message to others which undermines those policies. These fundamental breaches of the applicant's duty of fidelity towards the second respondent are compounded by their potential impact on others. The amounts involved were small, but this does not detract from the nature of the breaches and their potential impact. They were such that the second respondent's reaction to them cannot be characterised as constituting unfair conduct or as rendering the contract of employment in some way as being unfair.

65 For these reasons I am unable to characterise the actions of the second respondent in terminating the applicant's services summarily as constituting or creating an unfair contract for the purpose of s 106.

66 Consistent with the observations which I have earlier made, I reach this conclusion notwithstanding the alleged failure to follow appropriate processes during the investigative and determinative aspects of the respondents' processes. Viewed objectively the termination of the applicant's employment by reason of his conduct did not in all the circumstances constitute relevant unfairness, and the alleged failure to follow these provisions can have no effect on this conclusion.

67 This leaves for consideration one further submission made by the applicant, namely that it is necessary to take into account the actions of the second respondent with respect to the conduct of three other employees which was investigated by them. The first relates to the departure of the then Managing Director, Mr Marchant. This was a negotiated situation. The evidence is to the effect that Mr Marchant lost the confidence of the Board of Directors of the second respondent as a result of certain policy matters which he advocated and not by reason of any misconduct of the kind referred to in these proceedings. Reliance was also made on the circumstances of a Human Resource Manager. Her circumstances revolved substantially around a pattern of conduct involving alleged unauthorised claims for luncheon expenses. Whatever that person's seniority in the second respondent's organisation, it did not equate with that of the applicant in these proceedings. The third person was accused of a variety of misconduct and an investigative committee recommended his summary termination. However it appears from the evidence that in some way a trade union became involved and representations were made leading to a negotiated settlement allowing ultimately for this employee to be regarded as having been made redundant with a redundancy payment made on termination of employment. Whilst the circumstances surrounding this employee may, objectively, be seen to raise issues of a questionable kind, there is in my opinion insufficient material which would allow this court to come to any concluded and appropriate view about this matter. In any event I decline to find that the circumstances of that particular individual would or should impact upon the determination of any finding of unfairness in these proceedings.

68 For these reasons I have concluded that the applicant's case must fail and that the summons should be dismissed. I was asked by the parties to refrain from making any order for costs and I shall therefore reserve costs.

69 ORDERS 1. The summons is dismissed.

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