Westfield Holdings v Adams

APPELLANT: Hon. J W Shaw QC and Mr I Taylor of counsel Solicitor: Mr M Stewart Speed and Stracey LEGAL REPRESENTATIVES: RESPONDENT: Mr M J Kimber SC and Mr D S Inverarity of counsel Solicitor: Mr D Gardener Cutler Hughes & Harris

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: WRIGHT J, President WALTON J, Vice - President BOLAND J Friday 21 December 2001 Matter No IRC 3545 of 2000 WESTFIELD HOLDINGS LIMITED v RICHARD GRAHAM MURRAY ADAMS Application for leave to appeal and appeal against a decision of Justice Hungerford given on 30 June 2000 in Matter No IRC 5679 of 1998 JUDGMENT OF THE COURT [2001] NSWIRComm 293 1 Richard Graham Murray Adams, the respondent in these proceedings, was employed by Westfield Holdings Limited ("the appellant") between June 1995 and July 1998. From June 1995 to September 1996 Mr Adams held a senior executive position as Deputy General Manager of the appellant's Wholesale Trusts Division. After the wholesale trust business was abandoned in September 1996, the respondent worked as Retail Asset Manager for the appellant until his position was made redundant and his employment was terminated on 13 July 1998. 2 At the time of the termination of his employment the respondent's remuneration package was $250,000 per annum. On termination the respondent received the following: (a) One month's notice, which the respondent worked out; (b) Three months salary - $62,500; (c) The right to exercise 45,000 of 150,000 share options. The 45,000 options were valued at $218,205. The remaining 105,000 options were lost to the respondent. 3 Thus, upon termination and after three years' service, the respondent received benefits to the value of about $280,705 plus one month's notice of termination. 4 About one month after leaving the employ of the appellant, the respondent commenced a consultation assignment with another firm for a fee of $25,000 per month. This assignment initially involved two periods of three months and, after that, the assignment continued on a week-by-week basis. Up to about a week after the respondent gave evidence in the proceedings at first instance he had not been able to obtain permanent employment. 5 The respondent sought relief pursuant to s 106 of the Industrial Relations Act 1996 and in a judgment handed down on 30 June 2000 (Adams v Westfield Holdings Ltd (2000) 99 IR 382), Hungerford J found that the contract of employment between the respondent and the appellant, and certain collateral arrangements, were unfair. Consequently, his Honour made certain orders the effect of which were to increase the benefits payable to the respondent on termination of his employment. The total benefits ordered to be paid to the respondent were as follows: (a) One month's notice (already provided) plus nine months' payment of base remuneration as compensation for both notice and redundancy. This represented an additional six months' pay of $125,000; (b) Performance bonus - 40 per cent of the respondent's base remuneration in respect of the year ended 30 June 1998, which equalled an amount of $100,000; (c) The right to exercise the remaining 105,000 options on a date selected by the respondent not later than 30 months after the date his employment terminated, that is 13 February 2001. This additional benefit may be valued at $775,792; (d) Interest on the additional payment in respect of notice/redundancy and bonus to the value of $40,675. 6 On termination by the appellant, the respondent was entitled to benefits to the value of some $280,705. As a consequence of the orders made by Hungerford J the respondent, after three years of employment, was entitled to total benefits encompassing notice/redundancy, performance bonus, share options and interest, of more than $1.4 million - five times the original benefit received by the respondent. 7 This differential goes to the heart of the appellant's complaint on appeal. It was submitted by the appellant that the orders made by Hungerford J at first instance amounted to a windfall gain by the respondent, and were greatly in excess of any amount of compensation that might, in accordance with the provisions of s 106(5) of the Act, be considered "just in the circumstances". 8 The Hon J W Shaw QC, who appeared with Mr I Taylor of counsel for the appellant, submitted that: This case is an appropriate vehicle to enable the development of more consistent principles to determine the quantum of compensation in unfair contract cases, given the ad hoc approaches taken to date. The development of more coherent principles would be calculated to assist the early resolution of s 106 matters. 9 Mr Shaw further submitted that: The question of principle which we say arises in this case, putting aside for the moment whether objectively there was any requisite unfairness, is whether the Commission should simply characterise the quantification of compensatory payments under section 106 as a broad discretion, leaving it almost entirely at large for trial judges to determine or whether some principles ought to be formulated to guide and circumscribe the exercise of that discretion.

10 Mr M J Kimber SC, who appeared with Mr D S Inverarity of counsel for the respondent, submitted that the appeal raised no matters of such importance that leave should be granted. Senior counsel argued that the appellant's application for leave to appeal, "overwhelmingly involves an attempt to re-agitate issues that have been repeatedly and authoritatively considered by the Court (and its predecessors)" and that leave should not be granted. Mr Kimber also argued that the appellant had failed to identify an error in the exercise of discretion by Hungerford J and that, in those circumstances, the Court would not intervene, even though it may have exercised the discretion differently: Port Macquarie Golf Club Ltd v Stead (1996) 64 IR 53 at 59-60; Health and Research Employees Association of New South Wales v Public Service Association of New South Wales (1997) 92 IR 158 at 178 and Caltex Petroleum Pty Ltd v Ostanone Pty Ltd (unreported, 20 December 1999, Wright J, President, Glynn and Hungerford JJ). Mr Kimber also submitted that the case before Hungerford J was one that turned on its own set of facts and inferences that could properly be drawn from the evidence before him. That his Honour drew inferences and reached conclusions adverse to the appellant did not, without more, justify leave to appeal: Dun & Bradstreet v Robbie (1999) 91 IR 150 at 151. Further, on the question of leave, Mr Kimber submitted that the appellant had raised a number of issues on appeal that it did not raise at first instance and that it was not open to the appellant to do so. We will address this submission later in this judgment. Findings at first instance 11 In order to understand the issues on appeal, and prior to dealing with leave to appeal and the approach to be taken on appeal, it is necessary to set out the findings of Hungerford J in more detail. 12 His Honour described the respondent as a "well-qualified and experienced executive in the industry of financial and funds management". The respondent became aware in December 1994 of the possibility of a position as head of a new wholesale trust initiative of the appellant. The respondent approached the appellant about the position but in April 1995 was informed that Mr Hoog Antink had filled it. The respondent was subsequently offered the position of Deputy General Manager. 13 The respondent met with Mr Hoog Antink to discuss the Deputy's position. In the course of those discussions Mr Adams sought a "very clear understanding" that he and Mr Hoog Antink would work as a team. Mr Hoog Antink agreed that they would work together on this basis. Subsequent negotiations were conducted with Mr Benn, a specialist consultant in senior management recruitment, between 19 April and 2 May 1995. The respondent attempted to negotiate a higher base salary, emphasising his travel costs from Melbourne and the higher cost of living in Sydney. The respondent indicated, in particular, that: · "The bonus and options are all 'blue sky', but what is most important to me is an adequate base salary to compensate for the higher cost of living in Sydney"; · The respondent was prepared to "trade" some of his bonus entitlements to achieve a higher base salary. 14 On 2 May 1995 Mr Benn informed the respondent of Westfield's "final offer", which was made up of the following elements: · Remuneration package of $225,000 per annum; · Annual bonus of up to 40 per cent; · 30,000 options; · A one-off payment of $15,000 to compensate for loss of bonus with National Australia and medical reimbursement. 15 The respondent indicated that the offer was acceptable, subject to it being confirmed in writing. This was subsequently done on 6 May 1995. The respondent said that he was surprised the bonus was not necessarily capped at 40 per cent and he considered the termination terms to be less than current market practice. Despite this, however, he felt confident he would be with the appellant for many years and so he accepted the offer and commenced employment on 5 June 1995. 16 The contract of employment between the respondent and the appellant provided that the appellant could terminate the respondent's employment by giving one month's notice and, in the first year of employment, by paying six months' base remuneration or, in later years, three months' base remuneration. As to bonus, the contract stated that the respondent: … will be eligible for an annual discretionary bonus based upon the divisional results achieved. It will not have a particular cap, but the nominal target for superior performance will be up to 40% of the package. 17 The contract also provided that the respondent would be granted 30,000 options in accordance with the appellant's Executive Incentive Scheme. (As a result of a 5-to-1 company share split in December 1997, the respondent's options increased from 30,000 to 150,000 at a consequentially reduced exercise price). 18 The effect of the appellant's option scheme was that: Under cl 6 of the deed poll, consistent with the terms of par 11 of the Executive Incentive Scheme then applicable to the applicant… the options issued lapsed in the event the executive (option holder) ceased to be employed by the respondent prior to the relevant exercise date on maturity unless the directors permitted earlier exercise; however, the provision went on to provide that the directors may permit the options to continue to be held where the holder "dies or is permanently disabled". 19 The maturity date under the scheme was five years from the commencement of employment. In the respondent's case this was 23 June 2000. The respondent did not receive details of the option scheme until 11 July 1995, over a month after he commenced employment. He had only become aware that the options were "hand-cuffed for 5 years" after being told by Mr Hoog Antink in late June 1995. 20 The respondent said he was "annoyed" not to have been told of this important information during the negotiations for the position. He decided not to raise the matter, however, as he thought it was "probably a little too early in the relationship to raise such problems" and expected that he would still be employed with the appellant after five years. Nevertheless, his Honour noted, Mr Adams: … maintained in his evidence he would not have accepted employment with the respondent if he had known the options would lapse if he was not employed for 5 years. 21 Hungerford J also considered the Executive Option Plan, which was approved at the appellant's Annual General Meeting on 12 November 1998 to replace the scheme that had applied to the respondent. The explanatory notes to this new Plan cited redundancy as an example of a situation in which the Board might permit the early exercise of options. His Honour stated that: The explicit inclusion of redundancy as a circumstance enabling the early exercise of options is most significant for present purposes, particularly as it was introduced a mere 3 months after the applicant was terminated because of redundancy. 22 The respondent and Mr Hoog Antink worked together on the development of the Wholesale Trust until early December 1995, when Mr Antink was asked to establish the Westfield America Trust and, subsequently, had little time to spend on the Wholesale Trust. The Wholesale Trust failed to attract sufficient funding and was abandoned in about September 1996. 23 His Honour noted that Mr Adams': … unchallenged evidence was that his personal efforts to establish the wholesale trusts was acknowledged and, in early-August 1996, Mr David Lowy (the appellant's managing director - corporate and international) informed him that the failure to do so "was not due to any lack of effort on your part, but was due to a range of factors outside your control". 24 Neither the respondent nor Mr Hoog Antink received an annual bonus payment in July 1996. 25 After the failure of the Wholesale Trust the respondent worked as Retail Asset Manager, principally in relation to the Commonwealth Fund Management. On or about 29 June 1998, however, the appellant terminated its relationship with the Fund, and the respondent, consequently, became redundant. 26 The respondent was advised that he would be made redundant on 13 July 1998, and, under the contract, was given one month's notice and paid three months' salary. The respondent was further advised that he could apply to the Board of Directors for the Directors to exercise their discretion to allow him the early exercise of his options. The Board allowed Mr Adams to exercise 45,000 of his 150,000 options. The remaining 105,000 options lapsed and were lost. Hungerford J noted that the Directors' decision allowed the respondent to exercise only 30 per cent of the options, whilst having worked for 63 per cent of the 5-year qualifying period. His Honour also noted that Mr Hoog Antink had recommended "as part of" Mr Adams' termination benefits, that he be allowed to exercise 60 per cent, or 90,000, of the options. 27 About a month after leaving the appellant's employ, the respondent obtained a three months' consultation assignment with another company for $25,000 per month. This position was extended on a week-to-week basis, but "was subject to review about a week after the applicant gave evidence". 28 His Honour accepted the respondent's unchallenged evidence that there was no formal review of his performance conducted by either Mr David Lowy or Mr Hoog Antink, and that neither person had made any criticism of his performance at any time. 29 There were no performance objectives formulated until about 1 April 1998 (for the year ended 30 June 1998). The respondent and Mr Hoog Antink prepared these objectives. Mr Adams stated in his affidavit that he had effectively met all these objectives. Hungerford J noted that whilst Mr Hoog Antink, in his own affidavit, did not challenge Mr Adams' claim, in cross-examination he did not agree that Mr Adams had met all the objectives. Hungerford J found that Mr Hoog Antink's explanation for the omission was not satisfactory, and found his evidence on performance in relation to bonus to be equivocal. 30 Hungerford J found that the failure of the wholesale trust was not due to any lack of effort by the respondent, but was due largely to external market factors, and was also affected, at least to some extent, by the transfer of Mr Hoog Antink. 31 The respondent received only one bonus payment during the course of his employment - $75,000, following negotiations, on 23 April 1997. 32 The respondent's request, made after his termination, for a bonus for the 1997/1998 financial year was refused. Mr Hoog Antink received a bonus of $125,000 in the year 1997, and another bonus at the end of 1998 of 50% of his salary at that time. 33 In December 1995 Mr Hoog Antink was asked to accept as his primary responsibility the establishment of the Westfield America Trust, and was thereafter able to spend little time on the Wholesale Trust. Hungerford J found that this was contrary to legitimate expectations of the respondent that Mr Hoog Antink would work with him as a team, and that Mr Hoog Antink's effective removal placed at risk the respondent's long-term job security. His Honour also found that Mr Hoog Antink's transfer "was likely to have affected the divisional performance", negatively affecting the respondent's prospects of a bonus. 34 Hungerford J emphasised that the relationship between the parties under the contract, and how the contract operated in practice, must be assessed in the context of Mr Adams' redundancy. 35 His Honour then made the following important finding: That redundancy, I am satisfied, manifested relevant unfairness in the terms of the impugned contract in that it initiated a termination of the employment with inadequate benefits available under the contract on its termination . And that was so in a situation where the redundancy was for causes beyond the applicant's control and where in making the original contract he had every reasonable expectation of long and secure employment at a senior executive level in a dynamic and developing corporate environment. 36 Hungerford J emphasised the fact that Mr Benn, on behalf of the appellant, did not provide any indication to the respondent that the share options would lapse unless the applicant had completed five years' service. His Honour stated that: Why the applicant was never provided with the details of the Executive Incentive Scheme or even that certain restrictions applied to the exercise by him of the options was never explained in the evidence and, as the applicant said, when Mr Hoog Antink advised him shortly after the employment commenced of the time qualification he was surprised; the evidence of the applicant was that the options were of such importance that he would not have accepted employment had he been aware of the full circumstances for their exercise. 37 Hungerford J noted that the respondent had completed service for three years or 63 per cent of the option vesting period, and found that the failure of the options scheme to provide any right for the option holder on redundancy to be able to exercise any options, other than at the absolute discretion of the directors, was "inherently unfair". 38 Applying the approach in Lavings v Barclay Mowlem Constructions (NSW) Ltd (1994) 99 IR 247, Hungerford J found that the failure of the contract to make fair and reasonable provision for notice and severance benefits on redundancy rendered the contract unfair. 39 His Honour rejected the appellant's claim that the bonus was based on divisional performance results. He also noted the respondent's understanding that the bonus was an important part of his remuneration package, and was payable up to 40 per cent if the performance standards were reached. 40 In relation to the bonus, Hungerford J concluded that: … the lack of specificity of the entitlement to bonus where the applicant met all of his performance objectives demonstrates in a redundancy situation an inherent unfairness in the contractual specification of the bonus conditions. The way in which, particularly in a situation of redundancy where all prior performance levels had been met, the respondent reserved unto itself the absolute discretion whether a bonus became payable, but in the absence of any published or available criteria by which that could be measured, represents to me a fundamental unfairness in the scheme. 41 Hungerford J expressed his conclusions on unfairness at two different parts of the judgment. Firstly, after completing the review of the facts, his Honour set out an extract from the transcript outlining the case for Mr Adams. His Honour stated that, subject to the licence in language used by counsel, the thrust of the argument was "quite cogent" on the evidence. The passage from the transcript outlining Mr Adams' case appeared to be based largely on the premise that the appellant misrepresented the terms and conditions of employment. It included the claim that: We say it is overwhelming, if they had told the story as the contract was operated at the end of the day they would never have got Mr Adams to come and join Westfield. 42 Secondly, Hungerford J identified those matters which, both separately and collectively, constituted relevant unfairness in the contract of employment and in the Executive Incentive Scheme so as to offend the provisions of s 106 of the Act: The failure by the respondent, either by itself or by Mr Benn as its agent, to inform the applicant of the terms and conditions of the Executive Incentive Scheme insofar as the 5-year qualifying period for the vesting of the share options was concerned was a serious omission; it was one which, having in mind the redundancy occurring after 3 years' service, should not be visited against the interests of the applicant without adequate compensation. The same conclusion may be reached in relation to the lack of specificity concerning the entitlement to bonus, particularly having in mind the achievement by the applicant of the performance objectives as agreed with Mr Hoog Antink. Another significant omission, in my view, in the terms of the original contract was the express failure to deal with termination conditions in a situation of redundancy and where such conditions were not the subject of any discussion between the parties beforehand but rather were set out in the offer letter of 5 May 1995 as the respondent's first and final offer to the applicant. 43 His Honour also found that the removal of Mr Hoog Antink was unfair, as it "would likely prejudice the success of the wholesale trusts initiative, and, hence, the career interests of the applicant". 44 At the conclusion of the judgment, his Honour summarised the aspects of the transaction which he found to be unfair: (1) There was no discussion between the parties in the negotiations leading to the contract of employment relating to the conditions applicable to the applicant in a situation of redundancy.

(2) The contract of employment as to termination terms, necessarily as including a redundancy situation, was proposed by the respondent to the applicant on a first and final offer basis.

(3) The contract of employment in its terms did not expressly deal with termination of employment in the event of redundancy but equated the benefits to be allowed to the applicant in such a situation with those of a termination for any reason, other than for cause, namely, on one month's notice and 3 months' payment of base remuneration.

(4) The contract of employment as to the entitlement of the applicant to an annual bonus, being the nominal target for superior performance of up to 40% of base remuneration, but otherwise with no particular cap, did not reasonably specify the criteria or performance measures by which that bonus was to be determined.

(5) The operation in practice of the contract of employment as to bonus permitted it to be payable at the discretion of the respondent, such that no bonus was payable on termination even though the applicant satisfied all of his performance objectives.

(6) The terms and conditions of the Executive Incentive Scheme and the deed poll as to options were not provided by the respondent to the applicant until about one month after he had commenced employment.

(7) The final offer of employment to the applicant by the respondent included the options but without any indication that their exercise would lapse in the event the applicant ceased to be employed by the respondent before the maturity date.

(8) The Executive Incentive Scheme and the deed poll failed to make any or any adequate provision for the continuation of the right to exercise the options where the applicant's employment was terminated by reason of redundancy or otherwise for reasons beyond his power and control.

(9) The conduct of the respondent in effectively removing the General Manager of the Wholesale Trusts Division a bare 6 months after the applicant commenced as Deputy General Manager meant that the wholesale trusts initiative was under-resourced, thereby placing the applicant's employment at risk without any indication prior to the employment commencing of such a possibility.

(10) The transfer by the respondent of the General Manager of the Wholesale Trusts Division to the Westfield America Trust denied the applicant the expected team approach in the operation of the Wholesale Trusts Division, and even though the Westfield America Trust was a legitimate business venture but separate from the Wholesale Trusts Division.

(11) The decision of the respondent's directors to permit the applicant to exercise only 30% of his options entitlement but where the General Manager of the Wholesale Trusts Division recommended the applicant be permitted to exercise 60% of such options held by him. 45 Hungerford J noted that in the cases of GIO Australia Limited v O'Donnell (1996) 70 IR 1 and Westfield Ltd v Helprin (1997) 82 IR 411 the successful applicants were awarded share options in the same proportion as the completed service of the option qualifying period. His Honour stated that, unlike the present matter, in both those cases there "was an issue about the adequacy of the performance of the employee concerned". 46 His Honour concluded that: In a situation of redundancy where termination, like death or illness/disability, is beyond the employee's power or control, calls, in my view, for more favourable treatment than an approach merely equating the entitlement to options in the same proportion as the completed service of the option qualifying period. 47 His Honour ordered that the respondent be allowed to exercise the remaining 105,000 options on a date selected by him not later than 30 months after the date his employment terminated (by 13 February 2001). 48 Hungerford J ordered that the respondent be paid the maximum bonus of 40 per cent of his base remuneration for the financial year ended 30 June 1998 (a total of $100,000). 49 His Honour found that: the applicant was fairly entitled to one month's notice plus 9 months' payment of base remuneration as compensation for both notice and redundancy. 50 After making allowances for benefits already received, his Honour awarded an additional payment of six months' base remuneration ($125,000). 51 Hungerford J ordered that the contract be varied (under s 106(1)) to reflect his conclusions in relation to notice and severance payments, bonus, and options. The deed poll was also varied to reflect the conclusions regarding the options. In addition, the appellant was ordered (under s 106(5)) to pay the respondent a total of $225,000 plus interest (for notice and severance, and for bonus). Leave to Appeal 52 Section 188(1) of the Act provides that an appeal may only be made with leave of the Full Bench. Section 188(2) provides that leave will be granted if the Full Bench is of the opinion that the matter is of such importance that, in the public interest, leave should be granted. Section 188(3) provides that the Full Bench may deal with an application for leave to appeal separately and without conducting a hearing into the merits of the appeal. In the present proceedings the appellant and respondent put their submissions both as to the question of leave and as to the merits of the appeal. 53 The law relating to unfair contracts in New South Wales has developed into a substantial and important area of jurisprudence within the jurisdiction of the Commission. Within this jurisdiction there have been an increasing number of cases in recent years involving claims by senior corporate executives or highly paid employees seeking relief under s 106 (or its predecessor). The case law has developed to address particular features associated with the employment contracts or arrangements for this class of employee or, in some cases, independent contractor. These features have included loss of value of share options, bonuses or superannuation on termination; the fate of loans from the employer on termination; post employment restraints of trade; the fairness of notice periods and redundancy; mitigation of loss; and the capacity of this class of skilled and experienced employee or contractor to bargain on equal terms with the employer or principal regarding the terms of their contract. Cases that fall into this category include: Caulfield v Broken Hill City Council (1995) 60 IR 221; Pullen v R & C Products Pty Ltd (1994) 60 IR 183; GIO Australia Ltd v O'Donnell (1996) 70 IR 1; Michel v Ogilvy & Mather Pty Limited (1996) 71 IR 417; David Jones Ltd v Cukeric (1997) 78 IR 430; Harcourt Brace & Co (Aust) Pty Ltd v Cory (1997) 81 IR 321; Newton v Goodman Fielder Mills Ltd (1997) 81 IR 227; Payne v Foxboro L & N Pty Ltd (1998) 81 IR 404; Westfield Ltd v Helprin (1997) 82 IR 411; Gala v State Bank of New South Wales t/a Colonial State Bank (No. 2) (1998) 84 IR 216; Stone Microsystems (Aust) Pty Limited & Stone Group Asia Pacific Investment Ltd v Kwong & Datamax Pty Ltd (1997) 42 NSWLR 160; (1998) 85 IR 237; Paviour-Smith v National Mutual Life Association of Australasia Ltd (1999) 91 IR 8; Bell v Macquarie Bank Limited (No 4) (1999) 93 IR 191; Ruefli v Allam Bros Australia Pty Limited (unreported, Glynn J, 26 October 1999; [1999] NSWIRComm 471; Beahan v Bush Boake Allen Australia Ltd (2000) 99 IR 1; Reich v Client Server Professionals of Australia Pty Limited (Administrator Appointed) (2000) 49 NSWLR 160; (2000) 99 IR 69; Barclays Australia Investment Services Ltd v Nordby (2000) 99 IR 258; Lavings v Barclay Mowlem Construction (NSW) Limited (1994) 99 IR 247; Ross v GN Comtext (Australia) Pty Limited (2000) 107 IR 1; Martin v National Textiles Limited (unreported, Schmidt J, 21 February 2000); Caine v LEP International Pty Limited (unreported, Glynn J, 21 October 1999); King v State Bank of New South Wales [2000] NSWIRComm 229; Henshaw v Sqribe [2000] NSWIRComm 279; Canizales v Microsoft Corporation (2000) 99 IR 426; Graham v Macquarie Bank Limited [2000] NSWIRComm 253; Munro v Chubb Securities Holdings Australia Ltd & ors [2000] NSWIRComm 215; Moray Vincent v Merrill Lynch Australia Pty Ltd [2000] NSWIRComm 160; Simon Richard Lane v Commonwealth Bank of Australia [2000] NSWIRComm 274; Smith v Boral Limited [2000] NSWIRComm 267 (affirmed on appeal: Origin Energy Limited v Smith [2001] NSWIRComm 308). 54 In this appeal, the appellant complained that in the absence of "consistent principles to determine the quantum of compensation in unfair contract cases", particularly in connection with the "corporate executive" line of cases, outcomes will be more in the nature of a lottery than a rational application of legal principle. This was so, it was contended, because of the very broad discretion accorded to trial judges in determining unfairness under s 106, where different minds may take very different views, including widely divergent views, about what is an appropriate remedy. Consequently, Mr Shaw submitted, the Commission should in this case formulate principles to guide and circumscribe the exercise of that discretion. We reject categorically Mr Shaw's analogy of a lottery. Such a submission ignores the very substantial body of precedent that has built up around s 106 and its predecessors over the past 42 years and, indeed, ignores the constraints within the section itself. There has been a considerable refinement of the principles to be applied to such cases arising under s 106 of the Act. 55 Senior counsel for the appellant submitted that if an executive earning a salary of $250,000 per annum could achieve an outcome after three years of $1.4 million upon redundancy in proceedings under s 106 of the Act, such an outcome constituted a "corporate executive cornucopia". The superficiality of such a proposition, in the absence of any reference to the bonus and share option elements of the respondent's remuneration package, is manifest and ordinarily, would not warrant judicial comment. However, we are moved to make the following observation: the fact that outcomes in proceedings under s 106 in favour of applicants are now in some cases being measured in millions, rather than thousands of dollars is not so much a reflection of the manner in which the Commission in Court Session exercises its jurisdiction. Rather, it is largely a function of the labour market, particularly in the finance and technology sectors, and the relatively high level of remuneration, including arrangements as to share options and bonuses, paid to many senior executives. Share option plans have become a more common element of remuneration packages in the private sector and may increase the level of an executive's benefits quite significantly. 56 We should add that it has often been the Court's experience in the unfair contracts jurisdiction that if the respondent employer had taken reasonable care in negotiating and explaining the terms of the contract with an employee and had given more attention to ensuring an understanding and acceptance by the employee of the specifics of the arrangements to apply upon the various circumstances under which separation may occur, the employer could have avoided the consequences of what otherwise was found to have been unfair. In this respect, the exercise of the power under s 106 of the Act merely reflects the need for some employers to adjust their employment practices to conform with the law in this State, which mandates fair dealing between the parties to employment contracts. 57 Notwithstanding these observations we grant leave to appeal in this matter. We consider the matter has sufficient elements of importance and public interest to justify granting leave to appeal: Gala v State Bank of New South Wales at 225. We consider it is appropriate to consider at appellate level the submissions by the appellant regarding the need for principles or guidelines in relation to the exercise of discretion by single judges under s 106 of the Act so as to examine whether any further development or refinement of the relevant principles is warranted. The case before us would seem to be an appropriate vehicle for doing so, typifying as it does the "corporate executive" line of cases. 58 We note the respondent's contention that, in raising on appeal the issues of principles to be applied for the assessment of compensation where there has been a misrepresentation and the principles to be applied in relation to mitigation, the appellant was raising new issues not "squarely raised at first instance": Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380 at 381-382. Mr Kimber also contended that, in any event, principles for the assessment of compensation and principles relating to mitigation are well settled and that, therefore, the Court would not be disposed to grant leave to appeal: Cash Converters Pty Ltd v Yildiz (1999) 94 IR 474 at 475-476. However, given the scope of the submissions by senior counsel for both the appellant and respondent regarding appropriate principles and, as contended by Mr Shaw, the desirability of potential litigants having available a coherent, contemporary statement in that respect, we consider this appeal is an appropriate vehicle to consider such principles. Approach on Appeal 59 The approach we take on this appeal is determined by the provisions of Pt 7 of Ch 4 of the Act, in particular, s 191. We note that Hungerford J made a number of findings of fact including findings in relation to notice, redundancy, bonus, share option terms and the effect of the removal of Mr Hoog Antink from the Wholesale Trusts Division. The appellant did not challenge the findings of primary fact, with the exception of the findings with respect to the effect of the transfer of Mr Hoog Antink, the finding that Mr Hoog Antink recommended that the respondent get 60 per cent of his options on termination and that the subsequent 1998 share option scheme was 'extended' to cover redundancy. 60 The principles applying to appeals from findings of fact in unfair contract proceedings are well established. It was stated in Port Macquarie Golf Club v Stead (1996) 64 IR 53 at 59 that: 4. In addressing error, an appellate court should not interfere with the trial judge's conclusions on facts unless it is of the opinion that they were not reasonably open (or were clearly wrong) on the evidence: Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 107; Clarke & Walker Pty Ltd v Secretary of the Department of Industrial Relations (1985) 3 NSWLR 685 at 690-692; (1985) 14 IR 269 at 273-274; Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178ff; Hussmann Australia Pty Ltd v Walker (1993) 48 IR 396 at 406; Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 129; and Haynes at 154. 61 Mr Kimber, for the respondent, contended that the principles to be applied in relation to an appeal from a finding that a contract is unfair under ss 187 and 191 of the Act, do not include proposition 2 as set out in Port Macquarie Golf Club v Stead at 59, namely: In determining whether a finding of unfairness or otherwise under the section has been established, the general principle is that an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge; in deciding what is a proper inference to be drawn, the appellate court will give respect and weight to the conclusions of the trial judge, but once having reached its own conclusion, will not shrink from giving effect to it: Warren v Coombes (1979) 142 CLR 531 at 551. 62 The majority in Abboud confirmed the position that (at 43): An appellate court is generally regarded to be in as good a position as the trial judge to decide on the proper inference to be drawn from the facts that are undisputed or established by the trial judge. 63 Mr Kimber sought to have these authorities overturned on the basis that the Industrial Relations Act 1996 evinces an intention to allow for a narrower right of appeal than that allowed under the 1991 Act. Mr Kimber's propositions in this respect may be summarised as follows: · The appeal regime under the 1991 Act included ss 297(3) and (4). These provisions reflected overwhelmingly the relevant parts of s 75A of the Supreme Court Act 1970, which was the regime under consideration in Warren v Coombes. · The Industrial Relations Act 1996 deliberately narrowed the scope of appeals, inter alia, from decisions under s 106. This is apparent from any reading of the language found in ss 191 and 192 of the 1996 Act. In particular, the utilisation of the word "quash" in s 192(1)(a) is highly significant as it is suggestive of a power to consider and rule on errors in the decision appealed from. Furthermore, the 1996 Act has removed any suggestion that the Full Bench may exercise the functions of the court or person whose decision is the subject of appeal and has removed the power to make any finding or assessment "which ought to have been made or which the nature of the case requires" (as was formerly found in s 297(4) of the 1991 Act). · Consistent with the above radical change in the nature of such appeals and the powers of the Full Bench on appeal, s 192(1)(b) and (c) countenance the prospect of referral back to the judge at first instance to take all necessary steps to then determine the matter in accordance with the law. · Any reading of the statutory regime now found in the 1996 Act confirms the view that an appeal from a finding under s 106 that a contract is unfair is an appeal stricto sensu as the question of unfairness has been held to be a question of fact and/or law. · The correct approach on appeal is as enunciated in Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 129-130 per Kirby P. · The level of protection or respect given to a trial judge's decision, especially involving the application of a remedial statute expressed in extremely broad terms is, clearly stated by Kirby P in Beneficial Finance Corporation v Karavas (1991) 23 NSWLR 257. Given that such a cautionary approach is appropriate even in an appeal by way of re-hearing (as was the case in Beneficial Finance), the position must be a fortiori in an appeal stricto sensu at least with respect to the question of whether the contract or arrangement was relevantly "unfair". 64 Mr Shaw contested the respondent's interpretation of ss 191 and 192 of the 1996 Act, submitting that there had been no "radical" change in the statutory appeal regime from the 1991 Act to the 1996 Act so as to displace the Warren v Coombes test being applied on appeal to findings of fairness or unfairness. In this respect, we agree with senior counsel for the appellant. 65 Section 297 of the 1991 Act provided that: 297. The Full Industrial Court (1) The Full Industrial Court consists of 3 Judges, whether or not including either the Chief Judge or the Deputy Chief Judge, or both of them. (2) The Full Industrial Court has jurisdiction to hear and determine: (a) an appeal from a decision of the Commission, or a reference by the Commission, that may be made to the Full Industrial Court under Part 4; and (b) an appeal to it allowed by special leave of the Full Industrial Court granted to an aggrieved party, or to the Crown, from a decision of a Judge sitting alone on a question of law arising in proceedings before the Commission; and (c) a question of law that arises in the exercise of the jurisdiction of the Industrial Court by a Judge sitting alone and that is referred to the Full Industrial Court by the Judge; and (d) an appeal to it from a decision of a Judge sitting alone in the exercise of the jurisdiction of the Industrial Court otherwise than on an appeal; and (e) any matter in respect of which this Act or another Act confers jurisdiction on the Full Industrial Court. (3) The Full Industrial Court may exercise the functions of the court or person whose decision is the subject of an appeal, including: (a) amendment; and (b) the drawing of inferences and the making of findings of fact; and (c) the assessment of damages and other money sums. (4) The Full Industrial Court may make any finding or assessment, give any direction for entry of judgment, or make any order, which ought to have been made or which the nature of the case requires. (5) More than one sitting of the Full Industrial Court may be held at the same time. 66 Sections 191 and 192 of the 1996 Act provide that: 191. Nature of appeal (1) An appeal to a Full Bench of the Commission under this Part is not by way of a new hearing and is to be determined on the evidence and material adduced in relation to the decision appealed against. (2) However, the Full Bench may, by leave, receive further evidence if it considers that special grounds exist or if the evidence concerns matters occurring after the decision appealed against. (3) To avoid doubt, the Full Bench cannot merely substitute its decision on the matter, but must follow the principles applying to appeals from discretionary decisions, whether or not further evidence is received. Note. The above section generally follows the decision of the Full Industrial Relations Commission in Big W Discount Stores v Donato (1995) 58 IR 239 as to the nature of an appeal. The appeals in respect of which the section applies include appeals in connection with awards, unfair dismissals, approvals of enterprise agreements, unfair contracts or contraventions of dispute orders. 192. Powers on appeal (1) On an appeal under this Part to a Full Bench of the Commission, the Full Bench may (in accordance with this Act): (a) confirm, quash or vary the decision of the Commission concerned, or (b) direct a member of the Commission to take further action under this Act to carry its decision on the appeal into effect, or (c) refer the matter back to the member of the Commission, with such directions or recommendations as the Full Bench considers appropriate. The Full Bench may determine a part of the matter and refer the remainder back to the member of the Commission. (2) The Full Bench may direct that its decision on an appeal under this Part take effect as from any specified date after the lodging of the original application relating to the decision. 67 We consider that the powers conferred on a Full Bench for the purposes of appeal are plenary in their scope and character and there is no warrant for reading them down in the manner contended by the respondent. The respondent submitted that the 1996 Act had removed the power of a Full Bench to make any finding or assessment "which ought to have been made or which the nature of the case requires" as was formerly found in s 297(4) of the 1991 Act and had removed the function of "the drawing of inferences and the making of findings of fact" previously found in s 297(3) of the 1991 Act. As we understand the respondent's submission, a Full Bench hearing an appeal from a single judge under s 106 of the 1996 Act, is limited to determining whether there had been an error of law or fact and that, if so, the matter was to be referred back to the single judge to determine in accordance with the law. 68 If that were right it seems to us that the power of a Full Bench in s 192(1)(a) of the 1996 Act to vary the decision appealed from would be otiose. The power to vary, in our opinion, enables any error of fact or law at first instance to be corrected by the Full Bench on appeal. That necessarily involves the Full Bench arriving at its own conclusion about the correct law, the correct facts and the inferences to be drawn from those facts. 69 The formulations in Port Macquarie Golf Club v Stead at 59-60 regarding appeals from discretionary judgments, although made in reference to the provisions of the 1991 Act, in our view remain applicable to appeals from judgments under s 106 of the 1996 Act, namely: 2. In determining whether a finding of unfairness or otherwise under the section has been established, the general principle is that an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge; in deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusions of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it: Warren v Coombes (1979) 142 CLR 531 at 551. … 10. The proper approach as to the discretionary aspects requires an appellate court not to reverse a decision of the trial judge on a matter involving the exercise of discretion unless it reaches a clear conclusion that the members of the appellate court would have taken a view different from that of the trial judge if they had been in his place and that the trial judge had failed properly to exercise the discretion committed to him: House v The King (1936) 55 CLR 499 at 504-505; Mace v Murray (1955) 92 CLR 370 at 378; Wilson v Gozney [1978] AR (NSW) 134 at 150; Baker at 267; and Haynes at 154. 70 In Abboud at 44 Wright J, President and Walton J, Vice President said of the formulations in Port Macquarie Golf Club v Stead: These statements were made in relation to the previous legislation, however, in our view, the same principles apply to an appeal as to proceedings under s 106 of the Act. 71 The application of these principles enunciated in Port Macquarie Golf Club v Stead was confirmed in Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420 at 428, where the Full Bench stated: Nevertheless, and notwithstanding the grant of leave, this appeal falls to be considered in accordance with the ordinary principles as an appeal stricto sensu and having in mind the statutory requirement in s 191(3) of the Industrial Relations Act obliging the Full Bench to follow the principles applying to appeals from discretionary decisions: see Big W Discount Stores v Donato (1995) 58 IR 239 at 242-244; Re Solicitors (State) Award (No 3) (1997) 72 IR 225 at 234-235 and the cases cited therein. In the result, it is only open for us to view the challenged decision on appeal in accordance with the proposition that the exercise of a discretion by the primary judge has long required that an appellate court is not justified in interfering with the decision made unless it reaches the clear conclusion that by reason of some error, whether of fact or of law, the primary judge not only has taken a different view but has failed properly to exercise the discretion conferred: see also Mace v Murray (1955) 92 CLR 370 at 378; and Port Macquarie Golf Club Ltd v Stead (1996) 64 IR 53 at 58-60. The principle was restated by a Full Bench ( Wright J, President, Walton J, Vice-President and Peterson J) of the Court in Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 at 446 and again in Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 at 42-43 (per Wright J, President, and Walton J, Vice-President); it needs no further elaboration here. 72 As to inferences to be drawn from facts, in Abboud the majority pointed out that whether a particular impugned contract or arrangement is unfair has been regarded as an inference drawn from the facts as found or agreed. In such circumstances an appellate court is generally regarded to be in as good a position as the trial judge to decide on the proper inference to be drawn from facts that are undisputed or established by the trial judge. In deciding what is the proper inference to be drawn, the appellate bench should give effect to its own conclusions. 73 We intend to approach the appeal on the basis of the principles set out in Port Macquarie Golf Club v Stead, Ace Business Brokers and Abboud. In doing so, we note the strong submission by Mr Kimber regarding the discretionary aspects of the judgment below, which he described as at "the heartland" of the exercise of discretion by a single judge under s 106 of the Act. It is important to acknowledge the respect that must be given to the trial judge's decision, especially involving the application of a remedial statute expressed in broad terms, and that a court on appeal should not and would not intervene simply on the ground that it would have exercised a discretion differently. Principles proposed by appellant 74 We turn now to consider the principles proposed by the appellant to guide the exercise of judicial discretion in making orders under s 106(5) of the Act. These principles are summarised in the appellant's written submissions and are as follows: The first and ultimately guiding principle is that compensation must be aimed to "recompense an applicant for what they have lost": Brown v Rezitis (1970) 127 CLR 157 at 170 per Menzies J. Compensation should accordingly be determined by asking the question: what is the loss incurred by the applicant caused by the unfair contract? Such a question would involve the Court examining the actual loss suffered (as against, for example, loss of expectation) and ensuring that there is a causal nexus between any claimed loss and the unfair contract (or the conduct which rendered the contract unfair). The second principle is that in determining compensation orders, reliance should be placed on the doctrine of restitution, in order to avoid excessive awards or indeed awards that do not adequately compensate an aggrieved applicant. This second principle might be seen to be one way of applying the first principle. Prima facie, any compensation above that to adequately compensate for the loss suffered places the applicant in the position of a windfall gain. Thirdly, in determining the loss, and what would amount to appropriate restitution, the Court would have regard to the principles for the assessment of compensation at common law, and under the similar ( sic ) Trade Practices Act. Fourthly, the Court would consider any possible compensation award in light of established industrial standards, including where relevant the Redundancy Test Case standard and the usual terms contained in awards dealing with termination. Fifthly, the Court would have regard to the overall quantum of any compensation order, and determine whether it was proportional to the unfairness evidenced in the contract or conduct. 75 The appellant submitted that in order for its proposed principles to be effective the principles would not be considered merely 'where appropriate'. Such an approach, it was submitted, would render the principles illusory, because in the absence of guidance as to when they are not appropriate there could be no certainty that they might be applied in any particular case. It was submitted that "[r]ather, such principles must be considered in each case, although the extent to which they affect the order of compensation will depend upon the individual circumstances of each case." 76 As to the first and second principles, the appellant contended that compensation should provide restitution, that is recompense for loss suffered: Brown v Rezitis (1970) 127 CLR 157 at 164, 170. Compensation should not be fixed at an amount greater than the loss suffered: Parry v Cleaver [1970] AC 1 at 13. Monetary relief cannot go beyond compensating for the detriment suffered. The question to be asked by the Court, it was submitted, is: what is the loss incurred by the applicant caused by the unfair contract? In other words, any compensation must be aimed at compensating the applicant for any actual loss they have incurred but that this does not extend to loss of expectation. In proposing these principles the appellant recognised in its submissions that: It is well established that s 106(5) provides a very wide power to grant compensation, not limited by common law concepts of assessment of damages. But that is not to say that there are no restrictions on the power to award compensation, namely principles which should be used as a guide, and in the circumstances of this case applied in determining the appropriate level of compensation. 77 The respondent's position on the other hand was that "[s]o long as relevant nexus exists between the unfairness declared by the Court and the avoidance or variation which follows there is no limit to the approach that may be taken by the Court in assessing what payment is just in all the circumstances": Avis v Australian Mutual Provident [1997] NSWIRComm 182. The respondent also submitted: The wording of s 106(5) itself provides real guidance as to an appropriate monetary order in that the payment must be "in connection with" the contract set aside or varied and it must otherwise be "just in the circumstances of the case." The respondent submits that if the Commission is satisfied, as a matter of discretion, that a contract or arrangement should be varied then it is clearly not surprising and indeed is contemplated by the section, that a monetary order may well be made that will put the applicant in a position that he/she would have been in had the contract contained the variations made by the Commission and those new provisions had been complied with by the respondent, either at the point of termination or earlier (e.g. in the case of bonuses). 78 As we understand the appellant's position regarding the first two principles it proposes, in making any orders under s 106 the Court should approach the task by assessing what is the actual loss suffered by the applicant. Prima facie, the appellant submitted, any compensation above that required to adequately compensate the applicant for the loss suffered would place the applicant in a position of a windfall gain. Mr Shaw contended that this approach was consistent with Brown v Rezitis (1970) 127 CLR 157. Mr Kimber, for the respondent, submitted that subject to the relevant nexus existing between the unfairness and the avoidance or variation of the contract or arrangement, there was no limit to the approach that may be taken by the Court in assessing what payment is just in all the circumstances. 79 In Brown v Rezitis, Barwick CJ, in considering the grounds under s 88F of the Industrial Arbitration Act 1940 on which the Industrial Commission of New South Wales could vary or avoid contractual arrangements, stated at 164 and 165: The five grounds on which the Commission may vary or avoid contractual arrangements are not homogeneous. Only two of them refer to the avoidance of the award for the underpayment of a worker in industry. Consequently the nature of the orders which may be made under sub-s. (2) will of necessity cover a wide field. But underlying sub-s. (2) is I think a broad concept of a restitution of the parties to a situation which existed before the making of the contractual arrangement as well as in an appropriate case to make remedial provision for what has taken place or been done under the contract in the meantime. This, it seems to me, cannot of necessity and in all cases and with relation to an arrangement varied or avoided on each of the grounds in sub-s. (1) be confined to an order for payment of money by one of the parties.

In my opinion, the power to make an order for the payment of money is at best no more than a power to make such an order as can reasonably be thought to have a real connexion with the making, variation or avoidance of the contract or arrangement which has been varied or avoided. It may in truth be limited to a power to make an order for payment of money which has in fact a real connexion with the making, variation or avoidance of the contract or arrangement. However, in either case it will, of course, include power to make an order for payment of money which has been paid or which was payable under the contract arrangements themselves. But, in my opinion, the power will not be limited to the making of such orders. It will extend to ordering the payment of money where the order on the larger view of the jurisdiction given by the sub-section could be considered to be appropriate to effect wholly or partially the restitution of the parties to their former position upon the variation or avoidance of the contract or arrangement. 80 Referring to s 88F(2), Menzies J at 170 said: It seems to me, without exhausting the meaning of the phrase, that a payment of money in respect of (1) work done, or (2) money spent, or (3) obligations incurred, under the avoided contract or arrangement, is properly to be regarded as a payment in connexion therewith so long as the person who is ordered to make the payment is a person who is connected in some way with the making of the contract, or the work done, or the expenditure made, or the obligation incurred thereunder. Such persons could, I think, be ordered as it were to recompense the worker for what he has lost. 81 Brown v Rezitis is the foundation for the applicant's contention that restitution is the basis or the starting point in determining what money orders should be made under s 106. The appellant also referred to Port Macquarie Golf Club v Stead, where a Full Bench of the Industrial Court of New South Wales confirmed that: The nature of the orders which may be made under s 275(3) [of the 1991 Act] for the payment of money cover a wide field; underlying the subsection is a broad concept of a restitution of the parties to a situation which existed before the making of the contractual arrangement as well as in an appropriate case to make a remedial provision for what has taken place or been done under the contract in the meantime: Brown v Rezitis (1970) 127 CLR 157 at 164; and Baker at 277. 82 For its part, the respondent relied on Stevenson v Barham (1977) 136 CLR 190 at 192 and more particularly, Avis v Australian Mutual Provident for its proposition regarding the wide nature of the power under s 106. In Stevenson v Barham, Barwick CJ said: … the language of s 88F of the Act is intractable and must be given effect according to its width and generality. 83 In Avis the Full Bench said: AMP raised another issue described as "fundamental" concerning the proper approach to the awarding of compensation. Mr Buchanan submitted that once her Honour had determined to avoid the agency agreements this would determine the appropriate and proper approach to the basis for ordering just compensation. That compensation should be directed to placing the parties in the position in which they would have been if the agreements had not been entered into. Accordingly, the ADL would need to have been repaid in any event and Chancellor would have suffered no loss in this regard. In other respects her Honour should therefore have concentrated on considering what moneys would be payable to effect a restitutio in integrum rather than fixing compensation on the basis of the loss of income stream as determined by her. Such an approach would only have been permissible if her Honour had determined to vary the agency agreements and in those circumstances any compensation payable would be assessed by reference to the impact on the parties of the variations so made.

Mr Buchanan argued therefore that the nature of the relief ordered would determine the approach to compensation. In our opinion the approach contended for by counsel seeks to impose a regime for the fixing of compensation which is unnecessarily restrictive. We do not agree that in principle or in precedent justification has been demonstrated for the adoption of a different approach depending upon whether avoidance as opposed to variation has been ordered; that is particularly so as avoidance may be ordered either ab initio or from some other time as indeed is the case also with variation. In our opinion, provided that the relevant nexus exists between the unfairness declared by the court and the avoidance or variation which follows the section does not otherwise limit the approach that may be taken to assessing what payment is just in all the circumstances. The wide nature of the discretion to order the payment of compensation is described in general terms in the judgment of Barwick CJ in the High Court of Australia in Brown v Rezitis (1970) 127CLR 157 esp at 165. 84 It is to be noted in Avis that the Full Bench made the remarks about the power to make money orders in the context of addressing the issue of whether a different approach should be taken depending upon whether the contract or arrangement had been avoided or varied. As to the nature of the power to make money orders, it does not seem to us that in expressing the view that it did the Full Bench was doing anything other than acting in accordance with the approach of Barwick CJ in Brown v Rezitis. Whilst the Full Bench in Avis must be taken as expressing a broad view of the power under s 106(5), we do not consider Avis to be a departure from the principles enunciated by Barwick CJ in Brown v Rezitis. 85 The respondent also relied on Hoffman v Industrial Commission (NSW) (1990) 33 IR 139 to support his contention regarding the width of the power to make money orders under s 106. At 142-143 Handley JA said: In my opinion Brown v Rezitis decides that the jurisdictional requirement in s 88F(2) is that the monetary order must "in connection with" a contract or arrangement etc avoided or varied by the Commission. No other jurisdictional limitation was expressed in the subsection and, in my judgment, no other such limitation is to be read in by a process of construction. Mr Campbell also contended that s 88F(2) was subject to a further limitation, that it was only exercisable so as to achieve restitution for the benefit of an applicant who had succeeded in obtaining an order or award in subs (1). In this respect he referred to, and relied upon the remarks of Barwick CJ in Brown v Rezitis at 164. However, in my opinion those remarks by the Chief Justice while indicating a substantial purpose underlying subs (2) were not intended by his Honour, and were not expressed by his Honour, to be an exhaustive statement of the effect of that subsection. I therefore consider that the further limitation, which Mr Campbell has urged upon us, which would involve limiting the powers of the Industrial Commission under subs (2) so as to leave the present orders beyond jurisdiction should not be accepted either. 86 Both Samuels and Priestley JJA agreed with Handley JA. However, the remarks by Handley JA have to be seen in their context. Hoffman was concerned with whether the Commission had jurisdiction to make an order on the application of a respondent to an action under s 88F against another respondent. On a proper reading of the passage quoted above, Handley JA was dealing with the notion that the remarks by Barwick CJ in Brown v Rezitis meant that orders could only be made as between applicants and respondents. Handley JA was not dealing with the description by Barwick CJ of the nature of the power under s 88F(2) to make money orders except to say that the remarks by Barwick CJ, while indicating that restitution for the benefit of an applicant was a substantial purpose underlying s 88F(2), were not an exhaustive statement of the effect of that subsection. We respectfully agree. 87 Apart from the cases cited earlier, there have been a number of other cases that have referred to the wide nature of the power to make money orders under s 106(5) or its predecessors. 88 In Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 at 374, Sheldon J said of s 88F(2): By adding sub-s (2), it gave the Commission power, when avoiding or altering a transaction, to "make such order as to the payment of money … as may appear to the commission to be just in the circumstances of the case". Not only can no wider discretion be conceived, but the whole subject of right and remedy under this section was thus committed exclusively to the industrial tribunal. 89 The description by Sheldon J of the power under s 88F(2) was, course, tempered by the High Court in Brown v Rezitis. 90 In Baker v National Distribution Services Limited (1993) 50 IR 254 the Full Court of the Industrial Court of New South Wales, in making a variation to the appellant's contract to provide for redundancy pay, indicated that in doing so it had very much in mind what was said by Barwick CJ in Brown v Rezitis at 164 (the passage quoted earlier in this judgment) as to the proper approach in the assessment of monies payable under s 275(3) of the 1991 Act. 91 In Barclays Australia Investment Services Ltd v Nordby (1995) 99 IR 258 at 279 a Full Bench of the Industrial Court of New South Wales (Bauer, Glynn and Hill JJ) said: The task of assessing a "just" monetary amount is one which, not infrequently, involves the exercise of a broad judgment without the assistance of defined and identifiable parameters or heads of loss or damage. 92 There is nothing in the judgment in Barclays, however, to suggest that it was expressing any different view of the power under s 106(5) to that of the High Court in Brown v Rezitis. Their Honours were commenting on the difficulty in that particular case confronting the trial judge in calculating an amount that might have been considered just in the circumstances. 93 We consider that the formulation by Barwick CJ in Brown v Rezitis as to the nature of the power under s 106(5) to make money orders has not been seriously questioned. There has been no real attempt to depart from that formulation as it was summarised in Port Macquarie Golf Club v Stead. The question, however, that has been squarely raised on this appeal, is what in precise terms does Brown v Rezitis stand for? 94 The formulation by Barwick CJ in 127 CLR at 164 suggests that in making a money order under s 106(5), subject to the order having a real connection with the making, variation or avoidance of the relevant contract or arrangement, the Court should do so on the basis of: 1. Restitution of the aggrieved party to a situation which existed before the making of the contractual arrangement; and 2. In an appropriate case, making remedial provision for what has taken place or been done under the contract in the meantime. 95 The formulation by Barwick CJ in Brown v Rezitis, however, has to be seen in the context of the facts of the case. Shortly stated, these were that Imisons Metal Sand Filling Supplies Pty Ltd, one of the appellants, in consideration of the sum of $2,000 paid to it by the respondents, promised to engage the respondents (Mr and Mrs Rezitis) "for the cartage of goods with payments for work performed in accordance with a schedule of rates". Imisons agreed to provide the respondents with sufficient cartage work to enable them to earn a minimum average amount of $200 per week gross, the respondents for their part agreeing to provide a suitable vehicle that they would keep in good order and comprehensively insured. As Barwick CJ observed in his judgment at 162: The respondents were given some cartage work by the company (Imisons) and were paid certain sums of money. However, the representations which had been made both by the company and by the agents and the contractual promises by the company as to the amount of available work and the amount of money to be earned by the respondents were not made good. 96 The respondents sought relief under s 88F of the Industrial Arbitration Act 1940. Richards J ordered the appellants to pay jointly and severally to the respondents an amount that included the $2,000 paid by the respondents for the contract, loss on the truck purchased by the respondents, plus registration, insurance, road taxes, repairs and service as well as wages. The appellants appealed to the Court of Appeal, where the appeal was dismissed, and subsequently appealed to the High Court. 97 The High Court upheld the appeal on the basis that there had been an excess of jurisdiction because some parts of the moneys ordered to be paid could not be regarded as being "in connection with the contract or arrangement" as against those respondents who received no benefit from the contract or arrangement, or because the order extended beyond their association with the making or execution of the contract. 98 So, the formulation by Barwick CJ as to the nature of the power to make money orders under s 88F(2) of the 1940 Act may be said to be, strictly speaking, obiter. However, the main point we wish to make about Brown v Rezitis is that in arriving at his formulation, the Chief Justice did so against the background of the facts of the case. He was required to focus on the question of restitution because of the order of Richards J that the appellants repay the $2,000 paid by the respondents for the contract, thus restoring "the aggrieved party to a situation which existed before the making of the contractual arrangement". Understandably then, the concept of restitution figured prominently in the Chief Justice's judgment. Given the other orders by Richards J requiring the appellants to pay the respondents for work done and expenses incurred, Barwick CJ was also required to address the question of making remedial provision for what had taken place or been done under the contract. 99 In these circumstances, given the particular facts of the case with which Barwick CJ was dealing, it could not be said that the formulation by the Chief Justice regarding the nature of the power to make money orders under s 106 is to be taken as the exclusive, or even the primary, test to be applied universally to all of the diverse circumstances that arise under s 106. Restitution has been said to be concerned with restoring or giving back something to its proper owner or making reparation for loss or injury previously inflicted. As the Full Industrial Court (Fisher CJ, Bauer and Hill JJ) observed in State of New South Wales v Health and Research Employees Association of New South Wales (unreported, 31 March 1993) (at 82): "… 'restitution' seems to involve a reversion to a position as if the contract had never been entered into." 100 In Harris v Dealing Information Systems Pty Ltd (unreported, Schmidt J, 11 December 1997) in considering the effect of Brown v Rezitis, her Honour rejected a submission that "all monetary orders under s 106(5) are to be understood as restitutionary, rather than compensatory in nature". Having regard to our analysis of Brown v Rezitis, we respectfully agree with her Honour. 101 Restitution may be an appropriate approach where a franchisee has paid money for a franchise and the contract has been found to be unfair. But restitution, as a basis for compensation, is rarely relevant to contracts of employment found to have operated unfairly. 102 We do not think that Brown v Rezitis mandates an approach to the assessment of compensation under s 106(5) on the basis that restitution in the sense referred to, is to be the fundamental guiding principle. Restitution so understood may be appropriate in particular cases, but the fundamental guiding principle is that which is stated in the statute itself, namely, what is just in the circumstances of the case. In any event, the term restitution is at once ambiguous and a word of wide meaning. As Mason and Carter observe in their now standard text, Restitution Law in Australia, Butterworths, 1995 at 7: Where a legal order is made, there must not only be a point of reference for the order, there must be an objective. This is also a relative concept. The theme common to bases for legal liability is a process of adjustment. Here the ordinary senses of restitution are somewhat ambiguous, since restitution may refer to compensation for loss, or payment for a benefit, or restoration to a prior position or status.

• thus providing confirmation, if any were necessary, of the importance of adhering to the actual words of the statute. As for the proposition propounded by the appellant that it is only "actual loss" that is to be compensated under s 106(5), we fail to see how that can be derived from Brown v Rezitis . There were two elements in the formulation laid down by the Chief Justice in Brown v Rezitis . The first was restitution and the second was to "make remedial provision for what has taken place or been done under the contract in the meantime." It seems to us that this is a broader test than one that requires compensation for actual loss. We note the phrase used by Menzies J in Brown v Rezitis at 170 where he referred to the requirement to "…recompense the worker for what he has lost." There is nothing, however, in the judgment of Menzies J to indicate that he regarded the power to make money orders under s 88F(2) as limited to compensation for actual loss. Appellant's third proposed principle 103 The third principle proposed by the appellant was that "in determining loss, and what would amount to appropriate restitution, the Court would have regard to the principles for the assessment of compensation at common law, and under the similar (sic) Trade Practices Act." 104 The settled common law principle governing the assessment of compensatory damages, whether in actions of contract or tort, is that "the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed": Haines v Bendall (1991) 172 CLR 60 at 63 per Mason CJ, Dawson, Toohey and Gaudron JJ. This principle is similar to the longstanding rule in Robinson v Harman (1848) 1 Ex 850 at 855 applying to contract cases. 105 The rule in Robinson v Harman has been accepted and applied in Australia: The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80 per Mason and Dawson JJ. The extent to which it has any application to s 106, however, is another matter. If the rule in Robinson v Harman or the principle of restitutio in integrum were to be the sole basis upon which money orders might be made under s 106, one wonders what was the point of the legislature adopting the form of words used in s 106(5), and its predecessor provisions. We think it would be imposing something of a straitjacket - and more importantly something the legislature did not intend - to limit the power in s 106(5) so that it conformed to the rule in Robinson v Harman or to the principle of restitutio. There is a significant difference on the one hand, between a requirement to put an aggrieved party, as far as money can do, in a position he or she would have been in had the contract been performed, and on the other hand, a requirement to make a money order in connection with an avoided or varied contract as might be considered just in the circumstances of the case. 106 The difficulty of applying common law rules and principles in determining what is 'just' under s 106 was recognised by the Full Industrial Court in State of New South Wales v Health and Research Employees' Association of New South Wales, at 80: It is clear that an instruction for the payment of a sum 'just in the circumstances' in s 88F(2) has a wider base than that generally available under the principles of common law damages. Indeed, the existence of s 88F indicates that the legislature found that common law remedies were not necessarily appropriate and it seems to follow, insofar as argument by analogy might be useful that, though persuasive, reliance solely upon common law rules as to "damages" may well be inappropriate. 107 In Harcourt Brace & Co (Australia) Pty Limited v Cory (1997) 81 IR 321 the Full Bench (Hill, Hungerford and Schmidt JJ), after referring to that decision said at 337: That reasoning, which we find persuasive, as to the application of the relevant common law principles (including the concept of mitigation) in determining under s 275(3) what is "just", necessarily conflicts with the approach adopted here by Glynn J. Given, as we think is the case, that s 275(3) is wider in its operation than that available under the common law principles as to damages, we respectfully agree with their Honours that in making an appropriate monetary order under s 275(3) it is proper to have regard to the common law principles or rules, including that of mitigation, but recognising that in particular cases some of the principles or rules will be inappropriate to adopt. 108 We also refer to the decision of the High Court in Marks v GIO Australia Holdings Limited (1998) 196 CLR 494 where it was held that once causation was established, neither the amount recoverable under s 82(1) of the Trade Practices Act 1974 (Cth) nor the orders that might be made under s 87 of that Act were limited by analogy with breach of contract, tort or equitable remedies. 109 In this regard, at 503 Gaudron J said: Once it is appreciated that references to the "established measures of damages ... [for] contract and tort", as in Gates ((1986) 160 CLR 1 at 11, per Mason, Wilson and Dawson JJ) signify different kinds of loss and not different methods by which loss is measured, it is irrelevant to inquire as to the appropriate measure of damages for the purposes of ss 82 and 87 of the Act. Rather, the task is simply to identify the loss or damage suffered or likely to be suffered and, then, to make orders for recovery of that amount under s 82 or to compensate for or prevent or reduce that loss or damage under s 87 of the Act. Moreover, once it is appreciated that, for the purposes of the law of contract "expectation" loss signifies the loss of a valuable right, namely, the contractual promise, it is irrelevant and quite misleading to ask whether, in the case of misleading and deceptive conduct under s 52 of the Act, ss 82 and 87 allow for "expectation" loss or "consequential" loss. It is irrelevant, because, if the misrepresentation is not contractual, there can be no loss of a contractual promise. It is misleading because it tends to suggest that if "expectation" loss is not recoverable, the claimant can never be compensated in an amount equivalent to that which would be payable if the representation were contractual. Not only is it misleading to speak of "expectation" loss and "reliance" loss in the context of s 82, but there is no basis for thinking that relief under s 82 is to be confined by analogy either with actions in contract or in tort. With regard to that last matter, all members of the Court are agreed. We differ only in our approach to the question whether, in the circumstances, the appellants suffered or were likely to suffer loss or damage. 110 Similarly, at 510, McHugh, Hayne and Callinan JJ said: It can be seen, therefore, that both ss 82 and 87 require examination of whether a person has suffered (or, in the case of s 87, is likely to suffer) loss or damage "by conduct of another person" that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s 82 or s 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s 82(1), or that the orders that may be made under s 87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss 82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s 52) or with equity (eg, s 51AA) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies. 111 Gummow J took essentially the same view as the other members of the Court where he said at 529: These considerations, reflecting the apparent scope and purpose of the statute, militate against the presence of any legislative intention that before the court comes to assess the amount for which applicants are to be compensated under s 82 it first must identify any relevant general common law rules or analogies, understand the reasons that led to their development, and then seek to adapt or adopt them consistently with the scope and purpose of the legislation. As I have indicated earlier in these reasons, what was said by this Court in Gates (1986) 160 CLR 1 at 11-12, 14-15 (and Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 290) does not determine that the measure of compensation which is recoverable in an action under s 82 is confined by analogies with tort or otherwise. The measure of damages recoverable in actions of a varied nature for which s 82 provides is not to be determined on the basis that the appropriate guide in most cases will be found by asking what would have been the measure if the common law did what it does not do, namely treat as a tort any facts which happen to give rise to an action under s 82. Analogy, like the rules of procedure, is a servant not a master. 112 The remaining member of the High Court in Marks, namely Kirby J, whilst dissenting overall, agreed with the other members on this issue that orders under s 87 of the Trade Practices Act were not limited by analogy to remedies for breach of contract, tort or to equitable remedies. 113 The High Court, Court of Appeal and Full Benches of this Court and its predecessors have consistently referred to the width and generality of the language used in s 106. See in particular the description of the powers available to the Commission under s 88F by Kirby P in Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 135 where his Honour said: The High Court of Australia, and this Court, have repeatedly stressed the very wide discretion conferred by s 88F upon the former Industrial Commission (and now the Court). Once s 88F(1) attaches, the remedies which are then at the disposal of the Commission (now the Court) are also extremely wide. There is no warrant for confining this very large power, or for narrowing the circumstances of its exercise, except as the statute provides. See Stevenson v Barham (1977)136 CLR 190 at 195,199,201. 114 The language of s 106 is arguably even wider than that in ss 82 and 87 of the Trade Practices Act. If, on the basis of its scope and purpose, there is no foundation for limiting the language of the Trade Practices Act as expressed in ss 82 and 87, by drawing some analogy with the law of contract, tort or with equitable remedies. Similarly, in our view, there is no basis for doing so in respect of s 106 of the Industrial Relations Act, except to the extent that, in State of New South Wales v Health and Research Employees Association and Harcourt Brace, the Court referred to such arguments by analogy being, in appropriate circumstances, "persuasive". 115 Mr Shaw, for the appellant, nevertheless contended that the remedies available under ss 82 and 87 of the Trade Practices Act bear some similarity to those under s 106 of the Industrial Relations Act. For example, s 82 of the Trade Practices Act allowed a person who had suffered loss or damage by the conduct of another person (who was in breach of Pt IV, IVB, V or s 51AC of the Trade Practices Act) to recover the amount of loss and damage. Analogous provisions were contained in ss 106(2) and (5) of the Industrial Relations Act. 116 Mr Shaw submitted that s 87 of the Trade Practices Act allowed the Court to: (1) Declare void ab initio or at all times a contract or collateral arrangement that contravenes the Trade Practices Act; (2) Vary a contract or arrangement that contravenes the Trade Practices Act. (3) Make such orders as the Court thinks appropriate to compensate for the loss or damage caused by the proscribed conduct: Collings Construction Co Pty Ltd v Australian Competition and Consumer Commission (1998) 43 NSWLR 131 at 147 per Cole JA. 117 It was submitted by the appellant that provisions analogous to s 87 of the Trade Practices Act are found in ss 105, 106(1), (3) and (5) of the Industrial Relations Act. 118 Mr Shaw contended that because of the similarities between ss 82 and 87 of the Trade Practices Act and s 106 of the Industrial Relations Act, it was appropriate for the Commission in Court Session, in making money orders under s 106(5), to have regard to the approach adopted by other courts to the assessment of compensation under the Trade Practices Act. 119 Mr Shaw submitted that: [I]n assessing compensation under a similar statutory framework courts, and particularly appellate courts, have not left the question of compensation as one that is determined merely by application of some overarching 'discretion', but by careful determination of the true 'loss' by applying sound principles, including principles that have become well-established at common law. Those principles would include: a) The need to prove causation between the loss claimed and the conduct complained of that was in breach of the Act: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525; b) The need to compensate only actual loss and not mere lost expectation - an applicant must show that but for the misrepresentation s/he would have been able to act in some other way which would have been of greater benefit: Marks v GIO Australia Holdings (1998) 196 CLR 494 at 514; c) In compensating for misrepresentation, restitution involves determining what position the applicant would have been in but for the breach: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 13 and 14; and d) The need to apply the principle of mitigation to avoid compensation that is in excess of the applicant's actual loss: Haines v Bendall (1991) 172 CLR 60 at 63. e) Ultimately in determining compensatory damages, whether in actions of tort or contract, the test is to provide an amount for the injured party in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed: Haines v Bendall (1991) 172 CLR 60 at 63.

In trade practices cases, whilst not being required to apply either the tort or contract test in determining the "loss or damage" caused by the proscribed conduct (see ss 82 and 87, Trade Practices Act), commonly the court turns to either the tort or contract tests as a useful benchmark. And most commonly in deceit or misrepresentation cases the tort damages test is applied, namely determining damages with the object of placing a plaintiff in the position in which s/he would have been in had the tort not been committed: Gates (1986) 160 CLR 1 at 14 per Mason, Wilson and Dawson JJ.

120 We do not consider the appellant was correct in contending that in determining loss or damage under the Trade Practices Act, the courts commonly turn to either the tort or contract tests as a useful benchmark. As evidenced by the earlier references to Marks, all members of the High Court in that case expressly disavowed an approach to the measure of damages under s 82 that the appropriate guide in most cases will be found by asking what would have been the measure if the common law applied. As Gaudron J said:

… the task is simply to identify the loss or damage suffered or likely to be suffered and, then, to make orders for recovery of that amount under s 82 or to compensate for or prevent or reduce that loss or damage under s 87 of the Act. 121 It was also said by McHugh, Hayne and Callinan JJ in Marks at 510-512 that the High Court in Gates, Wardley and Kizbeau did not hold that the remedies provided by ss 82 and 87 of the Trade Practices Act are to be confined by analogies, whether with tort or otherwise. At 512, their Honours added, however, that: This is not to say that no help can be had from the common law in deciding what damages may be allowed under s 82 in cases of conduct contravening s 52. Very often, the amount of the loss or damage caused by a contravention of s 52 will coincide with what would have been allowed in an action for deceit. But that is because the inquiry in both cases is to find out what damage flowed from (in the sense of being caused by) the deceit or contravention. Leaving aside questions of remoteness of damages in assessing damages for deceit (a question that was left unresolved in Gould v Vaggelas ((1985) 157 CLR 215 at 223-224, per Gibbs CJ) the damages for deceit will be the sum representing the loss suffered by the plaintiff because the plaintiff altered its position in reliance on the defendant's misrepresentation. But the analogy cannot be pressed too far. It should not be pressed to the point of concluding that the only damages that may be allowed under s 82 are those that would be allowed in an action for deceit. The question presented by s 82 is not what would be allowed in deceit, it is what loss or damage has been caused by the conduct contravening the Act (our emphasis). 122 We think it is clear from Marks that whilst it could not be said that no help can be had from the common law in deciding what damages may be allowed under s 82 in cases of conduct contravening s 52, the primary focus of the court must be on the requirements of the statute. Under the Trade Practices Act, that focus gives rise to the question: what loss or damage has been caused by the conduct contravening the Act? 123 In Marks, McHugh, Hayne and Callinan JJ elaborated this test at 513: If loss or damage is shown to have been suffered or to be likely to be suffered, orders of the kind prescribed by s 87 may be made. Proof of loss or damage (actual or potential) is therefore the gateway to the s 87 remedies. But the identification of loss or damage is important in the operation of s 87 not only for this reason but also because the power to make orders under s 87 is limited to making orders "if the Court considers that the order or orders concerned will compensate ... in whole or in part for the loss or damage or will prevent or reduce the loss or damage..." (s 87(1) and (1A)). That is, the Court can make orders under s 87 only in so far as those orders will compensate (or will prevent or reduce) the loss or damage that is identified.

124 The test, however, under s 106 is not "what loss and damage has been caused by the conduct contravening the Act". The test under s 106 may be expressed as follows: (1) If the contract or arrangement was an unfair contract in terms of s 106, should the contract or arrangement be avoided or varied? (2) If it is decided that the unfair contract should be avoided or varied, should an order be made for the payment of money in connection with the unfair contract declared void or varied? (3) If a money order is to be made, what order is just in the circumstances of the case? 125 It may readily be seen that the test under ss 82 and 87 the Trade Practices Act in determining what might be appropriate by way of compensation is quite different to that required under s 106 of the Industrial Relations Act. Accordingly, it is neither logical nor appropriate when assessing compensation under s 106(5) of the Industrial Relations Act to follow the approach adopted by other courts to the assessment of compensation under the Trade Practices Act. 126 As part of the appellant's submissions that it was appropriate for the Commission in Court Session, in making money orders under s 106(5), to have regard to the approach adopted by other courts to the assessment of compensation under the Trade Practices Act, the appellant contended that Marks provided assistance in assessing 'expectation loss' in circumstances of misrepresentation. It was contended that an aggrieved party under s 106 should only be entitled to recover actual loss (i.e., loss suffered in reliance on the contract) and not mere lost expectation (i.e., loss of the bargain or loss of expectation of receiving the other party's performance of the contract) and that Marks supported this contention. Mr Shaw submitted that: "[w]here the 'expectation' is not contractual, but based on misrepresentation or deceit, the proper approach to determining expectation loss is to ask: what has the executive lost due to those misrepresentations?" Put another way: "[w]hat is the position that the Respondent would have been in but for the alleged misrepresentation?" 127 In respect of this submission, we say firstly, that we do not accept that Marks, or for that matter Gates, is authority for the proposition that in assessing loss caused by misrepresentation, it is only actual loss and not loss of expectation that is to be compensated. In this respect, all that the majority in Marks decided was that the applicants were not entitled to damages under s 82 of the Trade Practices Act as they had suffered no loss or damage as a result of conduct in contravention of s 52. Gaudron J and Gummow J in separate judgments discussed the concept of expectation loss. Gaudron J, with whom Gummow J agreed, said at 503: "… it is irrelevant and quite misleading to ask whether, in the case of misleading and deceptive conduct under s 52 of the Act, ss 82 and 87 allow for "expectation loss" or "consequential loss". In arriving at the conclusion that there had been no loss or damage, McHugh, Hayne and Callinan JJ said at 515 that: The central inquiry is what consequence has the contravention of the Act had on the party in question. That requires comparison between the position in fact of the party which alleges loss and the position that would have obtained had there been no contravention. 128 It was also said by McHugh, Hayne and Callinan JJ at 514 that: A party that is misled suffers no prejudice or disadvantage unless it is shown that that party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted. 129 We think that Mr Shaw was correct in submitting that if one were to follow Marks in proceedings under s 106 involving misrepresentation, the appropriate question to be considered in determining loss or damage would be "what is the position that the Respondent would have been in but for the alleged misrepresentation?" However, we reiterate that the power to make money orders under s 106(5) is not limited by analogy or otherwise with either the power to award compensation for loss or damage under ss 82 and 87 of the Trade Practices Act or with common law principles relating to the assessment of damages. Consequently, we do not accept the appellant's contention that in determining what might be appropriate compensation under s 106(5) in circumstances where unfairness may have been caused by misrepresentation, it is necessary to have regard to the test applied by McHugh, Hayne and Callinan JJ in Marks or any other decision under ss 82 and 87 of the Trade Practices Act. 130 We have, of course, acknowledged earlier in this judgment that whilst orders made pursuant to s 106(5) should not be limited by drawing some analogy with the law of contract, tort or equitable remedies, it is proper to have regard to common law and equity principles but recognising that, in particular cases, some of the principles will be inappropriate. This means that, for example, where a contract or arrangement has been found to be unfair, and the unfairness has been caused by fraudulent misrepresentation or negligent misstatement, in making any money orders under s 106(5) it is proper for the trial judge, in appropriate cases, to have regard to the common law principles relating to the assessment of damages. It may also be helpful to have regard to approaches taken to the assessment of damages in decisions under ss 82 and 87 of the Trade Practices Act, especially where the common law principles may have been a consideration. However, given the different statutory requirements of ss 82 and 87 of the Trade Practices Act as opposed to s 106(5) of the Industrial Relations Act, particular caution needs to be exercised. Ultimately, the relevant guiding principle for the Commission in Court Session under s 106(5) is not confined to a question of what loss or damage an aggrieved party has suffered but rather a wider test, namely, what is just in the circumstances of the case. That is not to say that the discretion of a trial judge under s 106(5) is at large. The jurisprudence developed by the extensive case law on the subject enables, and requires, limits on what orders may or should be made. The statements of principle in these reasons should also assist in the clarification of any doubts that may be said to exist. 131 Mr Shaw submitted that, under the appellant's third proposed principle, the common law principle of mitigation should be followed when making orders under s 106(5). Senior counsel submitted that "the principle of mitigation is fundamental to a proper assessment of loss. Failing to properly apply it can lead to orders for compensation beyond the loss actually suffered." 132 The common law principle of mitigation concerns the avoiding of the consequences of a wrong, whether tort or breach of contract: McGregor on Damages, 16th edition, Sweet & Maxwell Ltd, 1997 at 185. McGregor at 185-186 identifies three rules that make up the principle: 1) The plaintiff must take all reasonable steps to mitigate the loss to him consequent upon the defendant's wrong and cannot recover damages for any such loss which he could thus have avoided but has failed, through unreasonable action or inaction, to avoid. Put shortly, the plaintiff cannot recover for avoidable loss. 2) Where the plaintiff does take reasonable steps to mitigate the loss to him consequent upon the defendant's wrong, he can recover for loss incurred in so doing. Put shortly, the plaintiff can recover for loss incurred in reasonable attempts to avoid loss. 3) Where the plaintiff does take steps to mitigate the loss to him consequent upon the defendants wrong and these steps are successful, the defendant is entitled to the benefit accruing from the plaintiff's action and is liable only for the loss as lessened. Put shortly, the plaintiff cannot recover for avoided loss. 133 In cases of wrongful dismissal it is well established at common law that an employee has an obligation to mitigate his or her loss: Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435. That obligation, however, is only to attempt to reduce damages by taking reasonable alternative work. It is not a failure to mitigate loss when the alternative employment was in a position which was not reasonable to take: Yetton v Eastwoods Froy Ltd [1966] 3 All ER 353 at 362 where Blain J said: Moreover, if he can minimise his loss by a reasonable course of conduct, he should do so, though the onus is on the defaulting defendant to show that it could be, or could have been, done and is not being, and has not been, done. Thus the opportunity to reduce damages by finding reasonable (I repeat reasonable) alternative employment, should be taken and indeed, sought, whether such employment is by the same defaulting employer or someone else; in either case the test being whether it is reasonable to refuse it or not in the circumstances of each case. 134 The discretion conferred by s 106(5) of the Act to order 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" is wider than the power to award damages in the case of tort or breach of contract at common law. As has been discussed, the discretion conferred by s 106(5) of the Act is not restricted to awarding payment so as to compensate the applicant for actual loss suffered: see Brown v Rezitis at 164. As earlier observed, it was said by the Full Bench in State of New South Wales v Health and Research Employees' Association of New South Wales that the existence of s 88F(2) of the 1940 Act, now s 106(5) of the current Act, "indicates that the legislature found that common law remedies were not necessarily appropriate." For this reason, and as earlier observed, reliance solely on common law rules as to damages may, in certain cases, be inappropriate. 135 This does not mean that the common law principle of mitigation of damages will never be relevant to the discretion to order the payment of money in connection with a contract declared void, or varied, under s 106 of the Act. In Harcourt Brace, for example, the Full Bench of the Court indicated (at 337) that, in making monetary orders under s 106(5), it is proper to have regard to common law principles, including that of mitigation, although it may be inappropriate in particular cases to adopt them. We do not understand this to mean that the principles applicable to the assessment of damages at common law will themselves apply under s 106 of the Act. Rather, in Harcourt Brace, the Full Bench recognised that, in some respects, the approach of the courts to the assessment of damages at common law may properly influence the resolution of the question of what orders would be "just in the circumstances of the case". 136 There are many decisions of this Court, and its predecessors, which have had occasion to consider the application of the principle of mitigation when assessing the appropriate monetary orders, if any, to be made following an order declaring void, or varying, a contract. In some cases where the principle of mitigation has not been applied, the result will in any event be consistent with the application of the common law principle because the employee has been found to have properly mitigated his or her loss. For example, the principle of mitigation has not been applied in cases where the employee had made reasonable attempts to obtain alternative employment without success: see Fuller & Anor v Nestle Australia Ltd (unreported, Kavanagh J, Matter No IRC 2159 & 5226 of 1998, 26 October 1999) and Ross v GN Comtext (Australia) Pty Ltd at [57]. Similarly, even where alternative employment was available, the principle of mitigation has not been applied where the employee refused to take up alternative employment, and that refusal was reasonable in the circumstances of the case: Paviour-Smith v National Mutual Life Association (1999) 91 IR 8 at 61 - 62; cf Rejder v Nationalpak Pty Ltd (unreported, Glynn J, Matter No IRC 5119 of 1998, 13 December 1999). 137 Different considerations are likely to arise where an applicant has wholly or partly mitigated his or her loss by obtaining alternative employment, or has failed to take reasonable steps to do so. In these circumstances, the principle of mitigation is usually to be applied in a case at common law to reduce the amount that would otherwise be awarded as compensation. Where the applicant has avoided any loss, any loss so avoided may operate to reduce or cancel out the sum otherwise to be awarded even if the employee's conduct has exceeded what was reasonable. However, as is also the case at common law, it will be important to identify the purpose for which it is proposed to make any monetary order, or any component of a monetary order, when applying the principle of mitigation. To take a clear example, where it is proposed to make an order by reason of the unfairness referred to in s 105(c) of the Act because the contract provided a total remuneration that is less than a person performing work as an employee would have received, the appropriate payment may represent a liquidated sum due to the applicant under the contract (once varied) or under an award. In these circumstances, the application of the principle of mitigation will not be appropriate because, under the common law, the principle of mitigation does not apply to debts: see White & Carter (Councils) Ltd v McGregor [1962] AC 413; and it does not apply to underpayment of award entitlements. 138 More complex questions are raised when consideration is given to the application of the principle of mitigation to any payment it is proposed to make in lieu of a specified period of notice or in the nature of a severance or redundancy payment. There is some disagreement in the authorities as to the purpose of a payment in lieu of notice as distinct from a payment by way of redundancy and the degree of overlap, if any, which exists between the functions served by the two types of payments. It has been said that the function of a period of notice is to give an employee the opportunity to adjust to the change in circumstances that results from the termination of his or her employment and to seek other employment: see Matthews v Coles Myer Ltd (1993) 47 IR 229 at 232, cited with approval by von Doussa J in Fryar v System Services Pty Ltd (1996) 137 ALR 321 at 331. Notice provisions focus on the future of an employee and are intended to compensate, to the extent possible, for the disruption, cost and hardship caused by the periods of unemployment that commonly follow termination. 139 Some decisions have expressed the view that a payment in the form of a redundancy or severance pay is also directed at ameliorating any adverse consequences which flow directly from the termination of an employee's employment in the period immediately following termination. In Shop, Distributive & Allied Employees' Assn (NSW) v Countdown Stores ("Crocker's Case") (1983) 7 IR 273 at 292, Fisher P stated: [T]he major application of severance pay where the dismissal relates to redundancy caused by the economic recession is likely to be directed towards the amelioration of social hardship by supplementing income from unemployment benefits and so prolonging the maintenance of living standards and extending the period during which the search for work can be conducted without the serious erosion of family assets and family stability. It would also help meet the absence of income which seems customary during the first three to four weeks of unemployment until receipt of unemployment benefits. 140 However, although the function of a notice period, or a payment made in lieu of notice, and redundancy or severance pay overlap to some extent, the purposes of those payments are, in our view, conceptually and functionally distinct. In the Termination, Change and Redundancy Case (1984) 8 IR 34, for example, the Full Bench of the then federal Commission drew a distinction between payments by way of notice and redundancy payments. The Full Bench stated (at 73): Having regard to the other aspects of our decision and having regard to what we have said about the existence of, and reason for, unemployment benefits we do not believe that the primary reason for the payment of severance pay relates to the requirement to search for another job and/or to tide over an employee during a period of unemployment. … We prefer the view the view that the payment of severance pay is justifiable as compensation for non-transferrable credits and the inconvenience and hardship imposed on employees. 141 A useful discussion of the differing functions of a payment in lieu of notice and a redundancy or severance payment may be found in the judgment of von Doussa J in Fryar v System Services Pty Ltd. His Honour stated (at 331): There is a distinction between the nature and purpose of a period of notice or payment in lieu, and a severance payment. The distinction is reflected in Arts 11 and 12 of the Termination of Employment Convention. While the two are often treated together to arrive at a global redundancy package, the separate nature and purpose of the two entitlements remains, and assume importance in this case. A period of notice is to give an employee the opportunity to adjust to the change in circumstances which is to occur and to seek other employment: Matthews v Coles Myer Ltd (1993) 47 IR 229. The period may be worked out, as s 170DB allows, and it often is, as it is recognised that the employee's prospects of obtaining other employment may be better if the search is undertaken while the employee remains in employment: see for example Sinclair v Anthony Smith & Associates Pty Ltd (IRC of A, v on Doussa J, 1 December 1995, unreported) at 8. A severance payment, however, is intended to provide a payment as compensation for the loss of non-transferable credits and entitlements that have been built up through length of service such as sick leave and long service leave, and for inconvenience and hardship imposed by the termination of employment through no fault of the employee: Termination, Change and Redundancy case (1984) 8 IR 34 at 62, 73. The inconvenience and hardship includes the disruption to an employee's routine and social contacts and the competitive disability to long term employees arising from opportunities forgone in the continuous service of the employer: Food Preservers Union of Australia v Wattie Pict Ltd (1975) 172 CAR 227. Such a payment is taxed on the favourable terms which apply to an eligible termination payment. It is quite inconsistent with the nature and purpose of the payment, and the taxation regime, that the severance entitlement should be worked out as if the number of weeks used to calculate the entitlement were weeks of notice.

142 We also observe that reference was made in Fryar to ILO Convention 158 concerning Termination of Employment at the Initiative of the Employer made in Geneva on 22 June 1982, to which Australia is a signatory. Relevantly, the Convention provides that a worker whose employment is to be terminated shall be entitled to both a reasonable period of notice or compensation in lieu thereof (Article 11) and a severance allowance or other separation benefits (Article 12). 143 The differing rationales of notice and redundancy have been observed in the context of proceedings under s106 of the Act, and its predecessors: see ICI Operations Pty Ltd v Hutton (1993) 47 IR 288 at 297; Newton v Goodman Fielder Mill Ltd (1997) 81 IR 227 at 238; Starky v Healthcare Corporation Pty Ltd (unreported, Maidment J, Matter No IRC 6613 of 1997, 24 August 1999) and Ross v GN Comtext at [40]-[43]. In Newton v Goodman Fielder, for example, Hill J stated (at 238): The agreements made with the union in 1988 and 1991 express themselves to cover not only redundancy or severance payments but also notice of termination of employment or payment in lieu provisions. There are, in my opinion, significant differences in the nature and purpose of provisions governing notice of termination of employment and provisions dealing with the appropriate severance payments to be made on retrenchment for redundancy reasons more particularly in the case of the restructuring of a business - despite that there may be some overlapping of the factors relevant to take into account in each case. See generally Sinclair v Anthony Smith & Associates Pty Ltd (unreported, Industrial Relations Court of Australia, von Doussa J, 1 December 1995, Matter No SI 126 of 1995). See also Lavings v Barclay Mowlem Construction (NSW) Ltd (unreported, Industrial Court of NSW, Hill J, 5 September 1994, Matter No 1233 of 1993); Fryar v System Services Pty Ltd (1996) 137 ALR 321 at 331 ; Matthews v Coles Myer Limited (1993) 47 IR 229; Termination, Change and Redundancy Case (1983) 8 IR 34 at 62, 73; Food Preservers Union of Australia v Wattie Pict Limited (1975) 172 CAR 227; cf Marks J in Caulfield v Broken Hill City Council (1995) 60 IR 221. Furthermore, in addition to the considerations referred to in these cases and others the general rule, except in cases of summary dismissal for cause and/or any contractual provision to the contrary, is that an employee is entitled as of right to fair and reasonable notice of termination irrespective of the reasons therefore. Termination of employment on the ground of redundancy consequent upon restructuring for reasons of economy and efficiency, has long attracted special consideration, and generally speaking, separate and additional benefits. 144 In our opinion, these authorities persuasively demonstrate the distinct functions to be served by awarding a payment in lieu of notice and a payment in the nature of redundancy or severance. Whilst a period of notice, or payment in lieu, is directed at supplementing the income of an employee immediately following termination, the focus of a redundancy or severance payment is to compensate an employee for the loss of non-transferable benefits and for the inconvenience and hardship imposed by the termination. This is, in our view, not merely an additional purpose, but rather the dominant function of a redundancy or severance payment. The fact that an employee may apply redundancy or severance payments to supplement the employee's income during a period of unemployment, or to support the employee and their family, does not alter the purpose of those payments being made. In many instances, an employee will, of necessity, be forced to draw on any available resources during a period of unemployment. The purpose of making a redundancy or severance payment is, nonetheless, qualitatively different to providing for the employee during this time. 145 The differing purposes of a payment in lieu of notice and a payment for redundancy or severance are important matters to be taken into account when considering the application of the principle of mitigation to a sum which may otherwise be ordered under s 106(5) of the Act. In our view, the principle of mitigation may be a relevant consideration in relation to an order it is proposed to make for the payment of money in connection with the failure to provide reasonable notice. Of course, as we have already observed, s 106(5) has a wider base than that generally available as to common law damages and the Court is not limited to strict application of the doctrine of mitigation. Nonetheless, where an employee has successfully avoided his or her loss by obtaining reasonable alternative employment, or has failed to take reasonable steps to do so, it will usually be appropriate to reduce any payment which would otherwise be made in consideration of the failure of the employer to afford reasonable notice or provide for a payment in lieu of reasonable notice. Certainly, this is a matter that should be considered by a trial judge in the assessment of any monetary payment to be awarded upon this factor. 146 We emphasise that the application of the principle of mitigation in cases under s 106 of the Act represents an aspect of the consideration of what orders are "just in the circumstances of the case". It may, in some cases, be appropriate not to reduce any amount otherwise payable, even in lieu of notice, notwithstanding the fact that the employee has earned some income following termination. For example, a number of cases have held that the amount otherwise to be awarded should not be reduced in circumstances where the employee was able to find alternative employment, but it was not reasonable alternative employment: see Harcourt Brace at 338; Payne v Foxboro L & N Pty Ltd (1998) 81 IR 404 at 408; Drake v UPM-Kymmene Pty Ltd (unreported, Kavanagh J, Matter No IRC 3926 & 7151 of 1997, 9 March 1999); Prince v Northern Rivers Area Health Service (unreported, Schmidt J, Matter No IRC 2422 of 1998, 25 August 1999); Caine v LEP International Pty Ltd (unreported, Glynn J, Matter No. IRC 2441 of 1998, 21 October 1999); Young v Tieman Industries Pty Ltd [2000] NSWIRComm 133 at [26]. There is nothing in what we have said which would necessarily preclude this approach. 147 However, the principle of mitigation is unlikely to be a central consideration when assessing the appropriateness or magnitude of any payment it is proposed to make in the nature of a redundancy or severance payment. As we have discussed, the function of such a payment is not merely directed at supporting an employee during any period of unemployment. It is made to compensate an employee for loss and hardship that is likely to accrue whether or not the employee is successful in obtaining reasonable alternative employment. Of course, the appropriateness of making provision for such a payment, and the size of any payment to be ordered, will depend upon the circumstances of the employment. For example, a significant redundancy or severance payment may be appropriate where the employee has built up non-transferable benefits over a long period of employment with one employer. However, unless there are special considerations, it will not ordinarily be appropriate to reduce any redundancy or severance payment otherwise to be made in consideration of the efforts or success of an employee in obtaining alternative employment. 148 There is an additional reason why it will not ordinarily be appropriate to reduce any order otherwise appropriate in the nature of a redundancy or severance payment. The making of orders varying a contract so as to provide for a payment by way of redundancy or severance, as opposed to a period of notice, constitutes the provision for the payment of a liquidated sum payable upon termination: see Ross v GN Comtext (Aust) Pty Ltd and Day v Lumley Life Ltd (1999) 90 IR 70. As a result, the application of the principle of mitigation will not be appropriate because the principle of mitigation does not apply to debts. For example in Day v Lumley Life, Hungerford J said at 95: I assess a proper severance payment to comprehend both a notice period and redundancy benefit at $23,333.33 being 7 months' salary based on an underwriter's salary at the relevant time of the dismissal of $40,000 per annum; that amount was properly due and payable at the date of dismissal and, therefore, I make no deduction for mitigation even though the applicant obtained alternative employment as from 25 August 1997.

We understand the reference to an amount being due and payable at the date of dismissal to refer to the element provided by way of redundancy, rather than to the element of notice. Appellant's proposed fourth principle 149 The fourth principle proposed by the appellant was that the Court would consider any possible compensation award in light of established industrial standards, including, where relevant, the Redundancy Awards Case (1994) 53 IR 419 standard and the usual terms contained in awards dealing with termination. 150 In Baker v National Distribution Services Limited (1993) 50 IR 254 the Full Court of the Industrial Court of New South Wales (Fisher CJ, Hill and Hungerford JJ) discussed the relevance of general industrial standards when considering the question of fairness under s 275 of the 1991 Act. The Full Court said at 270: It seems to us the issue for determination on appeal is whether the contract of employment or employment arrangement as between the appellant and the respondent was, either in its terms or in its operation, unfair or otherwise offended the grounds contained in s.275(l). The answer to that question is not assisted, in our view, by an examination merely of matters external to the circumstances existing as between the parties to the contract or arrangement, although it must be acknowledged in a realistic sense that in assessing whether unfairness has occurred recourse to general standards or levels of what is considered to be fair will be a factor to take into account, even as a guide. In other words, s.275 occupies a most special role in the scheme of the Act by enabling the Court, in relation to transactions within its scope, to grant relief inter partes according to ordinary standards of fairness but nevertheless by directing attention to the particular circumstances of the individual contract or arrangement concerned. Illustrative of the point we are endeavouring to make as to the nature of s.275, the Court (Hill J.) in Barry v Incitec Limited (1991) 45 IR 143 was concerned with a claim under s.88F of the Industrial Arbitration Act by staff employees to obtain payment of accumulated and untaken sick leave as part of a redundancy or severance pay package where the award employees were allowed such a benefit; the claim was based essentially on the differential treatment by the employer of his staff employees compared to the award employees. The employer respondent there raised questions of jurisdiction and discretion in opposing the claim, but his Honour found that the staff employee applicants had regularly invoked the jurisdiction of s.88F. That finding was affirmed on appeal by the Full Court (Fisher, C.J., Glynn and Cullen JJ.) in Incitec Limited v Barry (1992) 45 IR 148 in which their Honours observed 45 IR at 154 - "Whether or not such contracts are unfair is a matter to be decided upon examination of the facts of each particular case." The matter then proceeded before the Supreme Court of New South Wales, Court of Appeal by way of prerogative relief in Incitec Limited v. Industrial Court of New South Wales (1992) 45 IR 155, and the Court ( Gleeson C.J., Kirby P. and Priestley J.A.) concluded as follows 45 IR 157,158: "Section 88F is concerned with alleged unfairness or harshness or unconscionability of individual contracts of employment. The focus of attention is the contractual relationship between a particular employer and employee. The employment protection legislation, concerned, as it is, with the matter of awards and industrial agreements, directs attention to more general industrial issues. Hill J. said, in his judgment at first instance ( Barry v Incitec Limited (1991) 45 IR at 146): '"On the other hand s.88F of the Act deals with the matter of what for present purposes may be briefly described as unfair contracts. It applies to a contract or arrangement between the particular persons who are party thereto. Unfairness may arise either from the terms of the contract itself, the surrounding circumstances, and/or from the manner of performance or operation of the contract. The section deals largely with private rights inter partes. Despite that a general and relevant industrial prescription governing benefits payable to employees in termination of employment situations may exist, unfairness in relation to a particular contract of employment may nevertheless arise in a situation of redundancy or termination of employment for reasons unrelated to or not relevant to the basis of award prescription of an objective and fair benefits. It may arise simply in the special circumstances of and surrounding the particular contract." 151 In Payne v Foxboro, Hill J, in considering whether a redundancy benefit paid to the applicant was fair, had regard to other standards of redundancy, including that set in the 1994 Redundancy Awards Case. At 407 his Honour said: The retrenchment benefits paid to the applicant were fixed unilaterally by the respondents' US parent and without any consultation or discussion with the applicant; and the levels of the benefits were determined as far back, at least, as 1983. Since that time there have been substantial movements generally in the standards of redundancy benefits in New South Wales and in Australia. Despite that there appear to have been revisions of the employment policy document after 1983 and as late as 1992, there have been no alterations to the benefits payable on redundancy. It may reasonably be assumed that the respondents determined the redundancy benefits of one week for each year of service, with a maximum of 26 weeks, before 1983, on the basis that they were then fair and reasonable. The benefit of one week per year of service, capped at 26 weeks, was then at a standard which was not uncommon; it was comparable with those of a number of Australian employer corporations of substance. (See, for example, Re Steel Works Employees' (BHP Co Ltd) Award and Other Awards (1983) 4 IR 56; see also Clerks (State) Award & Or Awards (1987) 21 IR 29). As to the most recent New South Wales Termination, Change and Redundancy Case 1994, the benefits contained therein operate as a minimum or safety net standard determined on a general industry basis. That decision increased the basic standard fixed in 1983 from a maximum of eight weeks pay (plus 25% increase for employees aged 45 years and over, namely, ten weeks) to a maximum of 16 weeks (plus 25% increase for employees aged 45 years and over, namely, twenty weeks.) The increase amounted to 10 weeks in the case of an employee aged 45 years and over, as is the applicant. Notwithstanding the foregoing, in the absence of evidence of a higher and objective standard applicable to the circumstances of this case, or of some other comparative unfairness, I am unable to conclude, but subject to the views I later express that the appropriate rate of pay should be based on the full remuneration package, that the redundancy benefit of one week's pay per year of service with a maximum of 26 weeks (i.e. 26 years x 1 week) is unfair; while the benefits are certainly on the low side for corporations of the standing and size of the respondents and their US parent corporation/s and, indeed, for many employers of lesser standing, they are not so low as to be unfair. Despite the fact that the benefit has not been increased since 1983, and could reasonably be said to approximate to a minimal or "safety net" class of benefit, it is still 6 weeks above that payable under the 1994 Redundancy Case . 152 In Moray Vincent v Merrill Lynch (Australia) Pty Ltd [2000] NSWIRComm 160, Marks J at par [32] made the following observations regarding the different circumstances that may need to be taken into account when considering standards of redundancy pay for award employees compared to non award employees: Obviously the existence of standards applying to award employees as referred in Baker will create some form of standard by which the provision of payments on redundancy to all employees may be judged on a relative basis in terms of fairness. However, there are many areas of distinction between circumstances where employment is governed by industrial awards and redundancy standards applied to employees whose employment is governed by industrial awards and those which apply, and ought to apply to non-award employees. Such a distinction will be heightened in cases, such as this, where the applicant worked under conditions and in circumstances which are remote from those usually governed by industrial instruments. 153 In Gala v State Bank of New South Wales Ltd a Full Bench of the Commission in Court Session referred to the redundancy standard set in the Redundancy Awards Case. At 225 - 226 the Full Bench said: In assessing the amount of compensation in these circumstances we therefore consider what benefits an employee in the appellant's position might reasonably expect to receive if the respondent had retrenched the employee after 11 years of satisfactory service in a senior specialist professional position when, through no fault of the employee, that position had been made redundant. In the Redundancy Awards Case ((1994) 53 IR 419) the Full Commission determined a scale under awards, on a "safety net" basis, of severance pay for employees whose employment is terminated by the employer for reasons arising from the introduction of major changes in production, program, organisation or structure that are likely to have significant effects on employees. The standard award clause arising from that case (see, for example, Electrical Contracting Industry Redundancy and Technical Change (State) Award (287 IG 749)) provides for periods of notice (four weeks for employees with service of five years or more), and severance pay benefits (up to a maximum of 16 weeks' pay for employees with service of six or more years). Employees aged 45 years or over receive an additional 25 per cent. The Full Commission made clear that the scale was fixed on a "safety net" basis, and that many examples of employers having more beneficial schemes had been examined in the proceedings. 154 We consider that the following principles may be derived from these cases: 1) Whether or not a contract or arrangement is unfair within the meaning of ss 105 and 106 is a matter to be decided upon examination of the facts of each particular case; the sections deal largely with private rights inter partes; the focus of attention is the contractual relationship between a particular employer and employee. 2) Subject to the primary focus being the particular circumstances of the individual contract or arrangement concerned, in assessing whether unfairness has occurred general standards or levels, including standards of redundancy pay applying to employees covered by industrial awards or legislation, of what is considered to be fair will be factors to be considered. 3) Despite that a general and relevant industrial prescription governing benefits payable to employees in termination of employment situations may exist, unfairness in relation to a particular contract of employment may nevertheless arise in a situation of redundancy or termination of employment for reasons unrelated to or not relevant to the basis of award prescription of an objective and fair benefit. 4) The scale fixed in the Redundancy Awards Case was fixed on a "safety net" basis. In making money orders under s 106(5) the Court may have regard to the Redundancy Awards Case scale but is not bound to apply it in the context of the case before the Court. 155 In assessing whether unfairness has occurred, and in making money orders under s 106(5), we consider that it would be appropriate to have regard to the foregoing principles relating to the relevance of general industrial standards. This will assist in providing perspective in exercising the broad discretion available to the Court under s 106(5). We stress, however, the primacy of the particular circumstances of the individual contract or arrangement concerned. Appellant's proposed fifth principle 156 The fifth principle proposed by the appellant was that "the Court would have regard to the overall quantum of any compensation order and determine whether it was proportional to the unfairness evidenced in the contract or conduct." 157 Mr Shaw submitted that: [W]hen considering the question of quantum of compensation, the appellate bench would take a similar approach to an appellate court considering quantum of compensation arising from negligence. While not engaging in fine arithmetic examination, where it is satisfied that the overall quantum is quite different to what, in all the circumstances, would be appropriate, then the bench would be satisfied that there was the requisite degree of error, and that such error must have arisen due to a failure to properly apply principles for the assessment of such compensation. In this case, where the total amount awarded was so clearly excessive, given the short period of service and general industrial standards of fairness, it is open to the Court to find that the discretion must have miscarried. 158 Mr Kimber, on the other hand, submitted that: Given the broad nature of the discretion under s 106(5), there could be little doubt His Honour could have considered the value of the options that he was proposing to award to be so significant that it would not be "just" to award any further sum by way of bonus or redundancy payment: see Westfield Limited v Helprin 82 IR 411 at 439.6. Indeed, it is impossible to rule out the idea that His Honour rejected the claim for twelve months notice or payment in lieu thereof on this basis. However, given the broad discretion bestowed on His Honour by s 106(5) it cannot be suggested that His Honour was required to desist from awarding bonus or redundancy payments because of the size of the award that His Honour was contemplating with respect to the options or vice versa. Nor could it be seriously contended that His Honour was somehow required to "set off" his proposed award with respect to any one or more head(s) of claim because of the award that His Honour was proposing for any other particular head of claim. In this regard see Baker v National Distribution Services Limited 50 IR 254 at 274.9-276 generally, where the issue was whether the superannuation payments made to the employee on termination served to "remove or modify" the unfairness that had been found in the redundancy arrangements allowed to the employee. 159 The approach contended for by Mr Kimber is, in our opinion, essentially correct. We would expect that in arriving at any tentative conclusions regarding money orders under s 106(5), prior to making any final determination, a trial judge would, metaphorically speaking, take a step back and consider the overall quantum of what he or she was proposing to order and whether or not it was just in the circumstances of the case. If the overall amount was considered to be excessive it would be appropriate for the trial judge to review his or her approach to each of the elements in respect of which money orders were proposed, eg, bonus, superannuation, payment in lieu of notice, redundancy, share options, etc, and to determine whether he or she may have fallen into error. This approach is consistent with the cautionary note struck by Barwick CJ in Stevenson v Barham at 192 and with the approach taken by the Full Bench (Cahill V-P, Hungerford and Schmidt JJ) in Westfield v Helprin where at 439 their Honours said:

A variation to a contract found to be harsh, unfair or unconscionable under s275 is a discretionary matter, as is the making of any monetary order in connection with such a variation. In this case the question of whether that discretion should be exercised in relation to the question of notice arises for consideration in the context of all of the circumstances before us, which include the other orders which we have decided to make in relation to the giving of a warning before termination and the option scheme and the orders as to the payment of moneys which flow from those variations. It is also relevant that reasonably generous discretionary benefits flowed to Mr Helprin on his resignation from Westfield and withdrawal from the superannuation scheme.

The adoption of this approach is likely to lead to a limitation on some of the larger verdicts that have been awarded. 160 We think Mr Kimber was also correct in contending that it would not be appropriate to "set off" a proposed money amount in respect of one head of claim against the money amount proposed to be ordered in respect of another head of claim, where the heads of claim are entirely unrelated and serve different purposes: see Baker v National Distribution Services at 275-276. Principles to be applied under s 106(5) 161 In summarising our conclusions in relation to the principles proposed by the appellant in these proceedings, we consider that the correct principles to be applied in the making of money orders under s 106(5) of the Act are as follows: 1) Any order must be in connection with the making, variation or avoidance of the contract or arrangement that has been varied or avoided 2) Where appropriate, an order may be made restoring a party or parties to the situation that existed before the making of the contract or arrangement that has been varied or avoided. 3) Whether or not an order has been made providing for restitution, in appropriate cases the Commission in Court Session may make remedial provision for what has taken place or been done under the contract or arrangement that has been varied or avoided. 4) Any order shall be what the Commission considers just in the circumstances of the case. Whilst such orders should not be limited by drawing some analogy with contractual, tort or equitable remedies it is proper to have regard to the common law or equitable principles, but recognising that in particular cases those principles may be inappropriate. That is not to say that the discretion under s 106(5) is at large. As with any judicial discretion it must be exercised judicially having regard to the accepted jurisprudence which enables, and requires, limits on what orders may or should be made. 5) It follows that in making an appropriate monetary order under s 106(5) it is proper to have regard to the common law principles relating to mitigation but recognising that in particular cases it will be inappropriate to apply mitigation. Ordinarily, where an employee has been successful in avoiding his or her 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, should give consideration to whether, and to what extent, any money amount in respect of notice of termination that is contemplated to be the subject of an order under s 106(5), should be reduced by monies earned, or imputedly earned, in the relevant post-termination period. We emphasise that the application of the principle of mitigation in cases brought under s 106 represents one aspect of the consideration of what orders are "just in the circumstances of the case". 6) Further, the differing purposes of a payment in lieu of notice and a payment for redundancy or severance are important matters to be taken into account when considering the application of the principle of mitigation to a sum which may otherwise be ordered under s 106(5) of the Act. The principle of mitigation is unlikely to be a central consideration when assessing the appropriateness or magnitude of any payment the Court may order for redundancy or severance. Unless these are special considerations, it will not ordinarily be appropriate to reduce any redundancy or severance payments otherwise to be made as a result of orders under s 106 of the Act because of the efforts or success of an employee in obtaining alternative employment. 7) In making orders under s 106(5) it may be helpful to disaggregate payments for notice and payments for redundancy and, in the reasons for judgment, to explain how the respective amounts were arrived at. This may assist in an appropriate case in avoiding the prospect of double counting that could arise out of the overlapping purposes of redundancy pay and payment in lieu of notice. 8) It is neither logical nor appropriate when assessing compensation under s 106(5) of the Industrial Relations Act to follow the approach adopted by other courts to the assessment of compensation under the Trade Practices Act . Nevertheless, it may be helpful to have regard to approaches taken to the assessment of damages in decisions under ss 82 and 87 of the Trade Practices Act , especially where the common law principles may have been a consideration. However, given the different statutory requirements of ss 82 and 87 of the Trade Practices Act as opposed to s 106(5) of the Industrial Relations Act , particular caution needs to be exercised. Ultimately, the relevant guiding principle for the Commission in Court Session under s 106(5) is not confined to a question of what loss or damage an aggrieved party has suffered but rather a wider test, namely, what is just in the circumstances of the case. 9) In assessing whether unfairness has occurred and in making money orders under s 106(5) it would be appropriate to have regard to the following principles regarding the relevance of general industrial standards. In doing so, however, the individual contract or arrangement concerned remains the primary consideration: a) Whether or not a contract or arrangement is unfair within the meaning of ss 105 and 106 is a matter to be decided upon examination of the facts of each particular case; section 106 deals largely with private rights inter partes; the focus of attention is the contractual relationship between a particular employer and employee. b) Subject to the primary focus being the particular circumstances of the individual contract or arrangement concerned, in assessing whether unfairness has occurred general standards or levels of what is considered to be fair, including general standards of redundancy pay applying to employees covered by industrial awards or legislation, will be factors to be considered. c) Despite that a general and relevant industrial prescription governing benefits payable to employees in termination of employment situations may exist, unfairness in relation to a particular contract of employment may nevertheless arise in a situation of redundancy or termination of employment for reasons unrelated to or not relevant to the basis of award prescription of an objective and fair benefits. d) The scale fixed in the Redundancy Awards Case was fixed on a "safety net" basis. In making money orders under s 106(5) the court may have regard to the Redundancy Awards Case scale but is not bound to apply it. 10) If the overall amount proposed to be ordered under s 106(5) was considered to be excessive, it would be consistent with an appropriately cautionary approach for the trial judge to review his or her approach to each of the elements in respect of which money orders were proposed, eg, bonus, superannuation, payment in lieu of notice, redundancy, share options, etc, and to determine whether he or she may have fallen into error. In correcting any error it would not be appropriate to "set off" a proposed money amount in respect of one head of claim against the money amount proposed to be ordered in respect of another head of claim where the heads of claim are entirely unrelated and serve different purposes. Issues for determination on appeal 162 It is apparent that in the proceedings before Hungerford J there were four principal issues his Honour was required to consider in determining the fairness or otherwise of the contract of employment between the appellant and the respondent. These may be addressed under four headings: 1. Notice period and severance payment. 2. Share options. 3. Bonus. 4. The removal of Mr Hoog Antink from the Wholesale Trusts Division. Notice Period and Severance Payment 163 On termination of his employment the respondent received one month's notice and three months' pay. Hungerford J found that the respondent was entitled to "one month's notice plus nine months' payment of base remuneration as compensation for both notice and redundancy". The nine months' payment was made up of three months' pay already paid to the respondent, plus a redundancy payment of six months. 164 The aspects of the contract relating to notice and redundancy that his Honour found to be unfair at [79] were: (1) There was no discussion between the parties in the negotiations leading to the contract of employment relating to the conditions applicable to the applicant in a situation of redundancy.

(2) The contract of employment as to termination terms, necessarily as including a redundancy situation, was proposed by the respondent to the applicant on a first and final offer basis. (3) The contract of employment in its terms did not expressly deal with termination of employment in the event of redundancy but equated the benefits to be allowed to the applicant in such a situation with those of a termination for any reason, other than for cause, namely, on one month's notice and 3 months' payment of base remuneration. 165 We have examined closely the relevant factual material before his Honour and the various case law relating to notice of termination and redundancy. Whilst we consider that one month's notice plus nine months' payment of base remuneration as compensation for both notice and redundancy (which represented an additional payment of six months' base remuneration) was at the high end of the acceptable range applicable to this matter, and is not an amount we would have awarded at first instance in the circumstances (particularly given the relatively strong bargaining position of the respondent), we do not consider there was any appellable error. It was open to his Honour to arrive at the conclusions he did in respect of notice and redundancy, and in the absence of any error of law or fact, it is not open to us to intervene merely on the basis that we would have exercised our discretion differently. Share Options 166 In his summary of findings relating to the share options issue at [79], Hungerford J found: (6) The terms and conditions of the Executive Incentive Scheme and the deed poll as to options were not provided by the respondent to the applicant until about one month after he had commenced employment.

(7) The final offer of employment to the applicant by the respondent included the options but without any indication that their exercise would lapse in the event the applicant ceased to be employed by the respondent before the maturity date.

(8) The Executive Incentive Scheme and the deed poll failed to make any or any adequate provision for the continuation of the right to exercise the options where the applicant's employment was terminated by reason of redundancy or otherwise for reasons beyond his power and control.

(11) The decision of the respondent's directors to permit the applicant to exercise only 30% of his options entitlement but where the General Manager of the Wholesale Trusts Division recommended the applicant be permitted to exercise 60% of such options held by him. 167 His Honour also found that the Executive Incentive Scheme and the deed poll were unfair in that no provision was made, other than for death or permanent disability, for the respondent as an option holder to retain any right on redundancy to continue to be able to exercise any options other than in the absolute discretion of the appellant. And further, that in a situation that is beyond the employee's power or control (like redundancy) a more favourable treatment than an approach merely equating the entitlements to options in the same proportion as the completed service of the option-qualifying period should occur. 168 The issue arises as to whether or not the respondent entered into the contract with the appellant due in part to being misled as to the share options, such misrepresentation giving rise to an expectation that he would be entitled to exercise the share options in full at any time after they were awarded. Mr Shaw, for the appellant, submitted there was no misrepresentation but that in the event the Court found that misrepresentation had occurred, then consideration must be given to what loss or damage was caused to the respondent by that conduct, which should be compensated. Mr Shaw submitted that the relevant question "is not how much better off the claimant would have been if the (mis)representation were true, but how much worse of he or she is by having relied on that (mis)representation". 169 Mr Kimber, for the respondent, submitted that Hungerford J made no specific findings that misrepresentation had occurred in relation to the share option scheme but conceded that his Honour clearly agreed with the submissions put on behalf of the respondent in this regard. 170 We note that, in the proceedings at first instance, a fundamental aspect of the respondent's case was that he was misled by the appellant when entering into the contract by the failure of the appellant to inform the respondent that the share options that he had been granted could only be exercised if he remained in employment for five years, there being no entitlement (other than by the exercise of discretion by the employer) if employment ended for whatever reason before that date. 171 Hungerford J indicated in his judgment that he accepted the evidence of the respondent, evidence that included a statement by the respondent that he would not have accepted employment with the appellant if he had known the options would lapse if he were not employed for five years. His Honour found that the failure to inform the respondent about the 5-year qualifying period was a serious omission and that this and other matters (to which his Honour referred) "both separately and collectively constituted relevant unfairness…." It would seem to follow from this that his Honour, whilst not making a specific finding, regarded the respondent as having been misled as to the terms of his employment as they related to share options and that the position relating to the share option scheme was misrepresented to him. 172 Hungerford J determined that, in the circumstances, the appropriate remedy was to allow the respondent to exercise the remaining 105,000 options on a date selected by him, not later than 30 months after the date his employment terminated. 173 Whilst it was the case that the respondent was not fully informed at the time of engagement about the conditions attaching to the share option scheme we consider that a counterbalancing factor to be taken into account is that the respondent failed to take reasonable steps to satisfy himself about any conditions that might attach to the share option scheme. 174 The respondent had participated in share option schemes in his past employment and thus had knowledge of how they operated. One of those schemes, the Citibank scheme, was unlike the appellant's scheme in that it rewarded for past performance by providing, as part of a performance bonus, options that were exercisable up to a defined date. The purpose of the appellant's scheme was to provide executives with " a reward to enable them to share in the benefits enjoyed by shareholders in a manner linking their performance to growth and expansion of the (appellant)". Under the Citibank scheme, there was no waiting or qualifying period before participants could exercise their options. Under the appellant's scheme there was a 5-year qualifying period. There was no evidence that the Citibank scheme provided options that could be exercised immediately upon commencement of employment. Indeed, it is difficult to see how this could be the case if the options were given as a reward for past performance. 175 It appears that the other type of scheme in which the respondent participated involved a waiting period of two or three years. While covered by this scheme the respondent left the employer prior to the expiration of the waiting period and so lost his entitlement to the options. It is clear that the respondent had personal knowledge of schemes involving waiting or qualifying periods and knew that options may lapse if the employee was not still employed as at the maturity date. 176 As we have already noted, the appellant clearly did not advise the respondent of the conditions attached to the share option scheme either during the negotiations or at the time the offer of employment was made. The letter of offer said In accordance with the company's Executive Incentive Scheme you will be granted 30,000 (thirty thousand) options at the first Board Meeting after your commencement. More may be granted from time to time based on your performance and company circumstances. 177 For his part, the respondent said he would not have joined Westfield without the options. However, he made no investigations and sought no additional information about the option scheme other than what he had been told; he did not even inquire as to what the option price would be. The respondent did not request a copy of the Executive Incentive Scheme referred to in the letter of offer. This compares to his request for more information about salary packaging alternatives, his job description and the appellant's superannuation scheme, information that the respondent agreed was provided without hesitation. The respondent did not seek to negotiate anything about the options. It was as though share options were entirely unimportant to the respondent at the time he negotiated his terms of engagement and that they were indeed a 'blue sky' issue. 178 When the respondent was terminated, he was invited and encouraged to make a submission to the appellant's Board in respect of the exercise of his share options. We note from the evidence that the respondent's submission to the Board's Remuneration Committee, whilst prepared with the assistance of legal advice, made no reference to the respondent being misled about the 5-year qualifying period. 179 In A & M Thompson Pty Limited v Total Australia Limited [1980] 2 NSWLR 1 at 13 the Industrial Commission in Court Session (Perrignon and Dey JJ, Cahill J. dissenting) commented on the issue of comparative bargaining positions of parties when entering into a contract or arrangement and the need to provide a proper balance of advantage or disadvantage between the parties: 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. 180 In applying this approach to the present case, we agree with Hungerford J that the failure of the appellant to inform the respondent of the 5-year qualifying period attached to the share option scheme was a serious omission. However, in assessing the overall fairness or otherwise of the contract or arrangement insofar as it involved the share option scheme we consider that it is also necessary to take into account the respondent's conduct. 181 It follows that whilst we agree with Hungerford J that the failure by the appellant to inform the respondent about the full terms associated with the share option scheme led to unfairness, our view is that some weight should have been placed on the respondent's conduct in failing to take reasonable steps to inform himself of the scheme. To this extent we consider that his Honour erred. 182 Before finalising our conclusions on this issue, we turn to consider the question of whether there was unfairness arising out of the decision of the appellant's Board of Directors to allow the respondent to exercise only 30 per cent (that is, 45,000) of the share options upon his position being made redundant. We agree with the view expressed by Hungerford J and the reasoning underlying it that [T]he Executive Incentive Scheme and the deed poll were unfair in that no provision was made, other than for death or permanent disability, for the applicant as the optionholder to retain any right on redundancy to continue to be able to exercise any options other than in the absolute discretion of the directors of the respondent. Such a provision in a situation of redundancy, I think, is inherently unfair and should be remedied. 183 His Honour went on to say, however, that: Here, of course, the directors exercised discretion in favour of the applicant being able to exercise 30%, that is 45,000 of his 150,000 options - the remaining 70% or 105,000 were lost. However, in a situation of redundancy where termination, like death or illness/disability, is beyond the employee's power or control calls, in my view, for more favourable treatment than an approach merely equating the entitlement to options in the same proportion as the completed service of the option qualifying period. That approach, adopted even in GIO and Helprin where there was an issue about the adequacy of the performance of the employee concerned, unlike in the present case, well exceeded what Mr Hilmer and Mr Gonski here decided to allow the applicant; Mr Hoog Antink would have allowed the applicant access to twice the options allowed by the directors. I think that result to be unfair and in need of correction. 184 We earlier referred to the respondent's failure to make proper inquiries, indeed any inquiries about the share option scheme, despite it being open for him to do so. This is what a reasonably prudent person would have done. In light of this, we consider the respondent's entitlement to options should be what he would have received if the 'proportionality' approach had been applied. That is, his entitlement to options should be in the same proportion as the completed service of the option qualifying period. In this respect, we consider his Honour erred in providing the full benefit of share options that the respondent would have received if he had met the five-year qualifying period. 185 We note his Honour's reference to the adequacy of the performance of employees concerned in GIO and Helprin as perhaps being one of the factors that distinguished those cases from the present. In GIO, however, the Full Bench acknowledged the finding made by the trial judge that the appellant terminated the respondent's employment, not because of any misconduct or serious default in the performance of his duties, but because of a difference with another senior executive as to the manner in which the respondent performed his duties. In Helprin, whilst performance of the respondent was clearly a matter in issue, the Full Bench said at 437: On the evidence, his Honour found that Mr Helprin's performance had not been inadequate, that it had been comparable to that of other leasing executives, that Mr Helprin had never been warned that his performance required improvement and that the performance criteria required of him were virtually impossible - being criteria requiring perfection. All of those conclusions were available on the evidence before his Honour and we do not disagree with them. 186 The purpose of the appellant's share option scheme was to link the performance of executives to the growth and expansion of the appellant. In other words, the better the executive performed in contributing to the creation and growth in shareholder wealth, the greater the reward. Whilst the respondent's position became redundant through no fault of his own, we think that from the time he ceased his employment with the appellant he also ceased his contribution to increasing shareholder wealth. It seems to us that any reward flowing to the respondent from this contribution would, like his salary, also cease at the time of termination. There may be circumstances, not involving any notions of punishment for perceived unfairness, where an order would be made to provide an applicant (in this case the respondent) with an entitlement to options in excess of a proportion equivalent to the completed service of the option qualifying period, but not in this case. 187 Mr Kimber referred to a number of authorities that, he submitted, supported the contention that it is appropriate to award more than a proportional amount in respect of share options, namely: Henshaw v Sqribe; Canizales v Microsoft Corporation; Sasse v National Dairies Ltd; GIO Australia Ltd v O'Donnell. In Henshaw v Sqribe, Peterson J did not order 100 per cent of options. His Honour assessed that the applicant was entitled to six months for notice and redundancy and then allowed him those options that he would have obtained if he had been employed during that six months period. In Canizales, Peterson J held that the applicant had acted on an assurance that he would be employed in Australia for at least two years, and allowed the applicant those options that he would have obtained if he had been employed for that two-year period. This did not amount to 100 per cent of the share options. In Sasse, Marks J did order 100 per cent of the options but in that case the applicant had paid $1200 for the options and his Honour found that the options were at least partly attributable to the applicant's past performance. Under the scheme, all option holders could keep their options unless the Board of Directors determined otherwise. Marks J held that the options had been unjustifiably withheld from the applicant. His Honour said: For the above reasons I conclude that the conduct of the directors of the respondent's parent company National Foods Ltd in declining to permit the applicant to retain the options consequent upon the termination of his employment for redundancy rendered the Share Option Scheme unfair in all the circumstances. I also conclude that apart from the failure of the Board of Directors to permit the applicant to continue to hold the options the Share Option Scheme was nevertheless unfair because it was capable of operating in a manner which deprived the applicant of the benefit of the options for which he had outlaid not inconsiderable moneys in substantial part just prior to the termination of his employment against the background of his justifiable acceptance of the grant of those options as being a recognition of his performance as an employee of the respondent and an entitlement which he justifiably considered ought to have survived redundancy. 188 In GIO v O'Donnell the Full Bench allowed the respondent to retain 100 per cent of the options but the facts in that case were significantly different to those we are required to consider. In GIO the respondent had over seven and a half years' service. Further, the unfairness was found to have arisen from the fact that the respondent had, when he was originally given the options with a five-year vesting period, a contractual right to employment for the same term other than dismissal for cause. Accordingly, when subsequently dismissed before the five-year vesting period expired under a later contract allowing dismissal with notice, the respondent lost what amounted to an accrued right to the options. 189 We propose to amend his Honour's orders to provide the respondent with 63 per cent of his share options. 190 Finally, we should say that in light of our reasoning and the conclusions we have reached on the share option issue we do not consider that the common law principles relating to misleading or deceptive conduct or misrepresentation have any application to the circumstances of this case. Bonus 191 In his summary of findings relating to the bonus issue, Hungerford J found: (4) The contract of employment as to the entitlement of the applicant to an annual bonus, being the nominal target for superior performance of up to 40% of base remuneration, but otherwise with no particular cap, did not reasonably specify the criteria or performance measures by which that bonus was to be determined. (5) The operation in practice of the contract of employment as to bonus permitted it to be payable at the discretion of the respondent, such that no bonus was payable on termination even though the applicant satisfied all of his performance objectives. 192 Hungerford J also considered the removal of Mr Hoog Antink from the Wholesale Trusts Division was relevant to the question of the bonus payments because his removal was likely to have affected the Division's performance, and that performance was one of the criterion by which any bonus was to be determined. 193 We do have some difficulty with his Honour's findings in relation to the removal of Mr Hoog Antink. However, we are of the opinion that his Honour was correct in relation to his findings regarding the bonus issue and we do not propose to interfere with those findings or the orders that flowed from them. Removal of Mr Hoog Antink 194 In his summary of findings relating to the removal of Mr Hoog Antink from the Wholesale Trusts Division to the Westfield America Trust, Hungerford J found: (9) The conduct of the respondent in effectively removing the General Manager of the Wholesale Trusts Division a bare 6 months after the applicant commenced as Deputy General Manager meant that the wholesale trusts initiative was under-resourced, thereby placing the applicant's employment at risk without any indication prior to the employment commencing of such a possibility. (10) The transfer by the respondent of the General Manager of the Wholesale Trusts Division to the Westfield America Trust denied the applicant the expected team approach in the operation of the Wholesale Trusts Division, and even though the Westfield America Trust was a legitimate business venture but separate from the Wholesale Trusts Division. 195 Earlier in his judgment, Hungerford J expressed the view that: To some extent at least, the demise of the Wholesale Trusts Division was affected by the transfer of its General Manager, Mr Hoog Antink, to concentrate on the Westfield America Trust, which proved a lucrative venture, thus denying a major and significant management resource to the new wholesale trusts area. 196 The evidence would suggest that the reason the Wholesale Trusts Division did not succeed was due to external factors and that Mr Hoog Antink's transfer could not be regarded as a significant factor. Indeed, it was the respondent's own evidence that the Division failed for reasons outside the control of the appellant. In describing the effect on the business of Mr Hoog Antink's transfer, Hungerford J said: I consider that the removal of Mr Hoog Antink from active participation in the Wholesale Trusts Division a bare 6 months after it commenced was potentially against the interests of the applicant in that it provided a very real risk that the wholesale trust initiative would be under-resourced notwithstanding the satisfactory input by the applicant (our emphasis ). That Mr Hoog Antink was directed to the Westfield America Trust, separate and distinct from the Wholesale Trusts Division, would likely prejudice the success of the wholesale trusts initiative and, hence, the career interests of the applicant; nothing to that extent was indicated to the applicant before he commenced employment with the respondent as being contemplated or even possible. I would conclude that the consequences of such action, whilst it may be undoubted that the respondent had a right to do what it did, should not sound against the interests of the applicant. He should receive appropriate compensation for what occurred by the early termination of his employment because of redundancy. 197 These comments by his Honour would suggest that the effect of Mr Hoog Antink's transfer on the respondent's continued employment in the Wholesale Trusts Division was more in the nature of putting the employment at greater risk rather than causing, or leading to, the respondent to be made redundant. There was no evidence that the appellant's decision to transfer Mr Antink to the Westfield America Trust led to the respondent being made redundant. 198 There were no allegations made in the respondent's amended summons for relief that the removal of Mr Hoog Antink affected the respondent's job security or provided any justification for higher redundancy payments. The respondent by way of opening did not put such allegations and the respondent did not lead evidence as to this matter. There was cross-examination by the respondent's counsel in relation to the removal of Mr Hoog Antink but it was not put that Mr Hoog Antink's removal had been to the detriment of the respondent. Submissions by the respondent on the removal of Mr Hoog Antink were limited to the effect of that removal on the respondent's potential to earn bonus. There were no submissions made to the effect that by the removal of Mr Hoog Antink the respondent's employment would be put at risk or that it would lead to the respondent being made redundant, therefore justifying a higher redundancy payment. 199 Nevertheless, Hungerford J determined that part of the additional compensation for redundancy should be attributable to the unfair conduct of the appellant in removing Mr Hoog Antink. We consider that his Honour erred in this respect. The connection between the removal of Mr Hoog Antink and the respondent being made redundant was insufficient, in our view, to justify any additional payments based on increased redundancy. However, we do not consider that this consideration featured significantly in the final orders made by Hungerford J, nor do we consider that this aspect warrants any departure from our general conclusions as to the orders for notice and redundancy at first instance. Accordingly, we have decided to make no adjustment to this aspect of the decision in the orders made on the appeal. Mitigation 200 At first instance, Hungerford J recorded the events following the termination of the respondent's employment and made a number of comments concerning his general employment prospects. His Honour stated: 59 On leaving the respondent's employ on 13 August 1998, the applicant about one month later commenced a 3-month consultation assignment with Templeton Investment Management (Australia) Limited for a fee of $25,000 per month. In early-December 1998 the assignment was extended for a further period of 3 months and it has since continued on a week-to-week basis but was subject to review about a week after the applicant gave evidence. To that date, he had been unable to obtain permanent employment notwithstanding discussions with a number of potential employers; given his present age, early fifties, the applicant said that an executive recruitment consultant had advised him that it may take 12 months or more to secure an appropriate appointment in the current Melbourne employment market. 201 The question that now arises is whether the amounts that would otherwise be awarded in lieu of notice and in the nature of a redundancy payment should be reduced by application of the principle of mitigation as a result of the fact that the respondent obtained alternative employment. For the reasons given earlier, we do not consider that the principles of mitigation will ordinarily be applied to reduce any payment of the nature of the redundancy or severance payment. We do not see any reasons to depart from this approach in the present case. 202 However, different considerations may arise in relation to the payment it is proposed to order in lieu of notice. The common law principle of mitigation would, if applied in this case, operate to reduce any compensation to be ordered in lieu of a reasonable period of notice to take account of the actions of the respondent in mitigating his loss. As has been discussed, the principle of mitigation is to be applied in the context of the power provided under s 106(5) of the Act. The question must be whether it would be just in the circumstances of the case to so reduce any payment in lieu of notice. 203 It was submitted by the respondent that amounts earned following his termination should not be taken into account to reduce the period of notice because the consulting work did not represent comparable permanent employment. In considering whether to apply the principle of mitigation under s 106 of the Act it may be appropriate to consider whether the employee has been successful in obtaining reasonable comparable employment. Matters to be considered may include the terms of engagement in any new position, whether the employee has achieved a similar level of seniority and whether a comparable level of remuneration has been received. 204 In this case, we consider that it is appropriate to apply the principle in consideration of the monies earned by the respondent after termination. Although the respondent was unable to obtain permanent employment, we note that he was successful in obtaining consulting work very quickly following his termination. The consulting work paid a superior rate of remuneration compared to his position with the appellant and constituted a substantial and lucrative consultancy arrangement. In these circumstances, we do not believe it would be just to award the respondent a payment in lieu of notice for a period in which he was receiving remuneration for the consulting work. As a result, the additional six months' pay in lieu of notice that was ordered by Hungerford J should be reduced by one month's pay. 205 The payments relating to the bonus and share option schemes are not subject to principles of mitigation, such payments being analogous to debts owed and payable at the time of termination. Conclusions 206 We find that Hungerford J erred in: 1. Finding that the respondent was entitled to the full benefit of the share option scheme as if he had met the five-year qualifying period.

2. Finding that there was unfairness because of the removal of Mr Hoog Antink from participation in the Wholesale Trusts Division.

3. Failing to allow for mitigation of loss. 207 To the limited extent we have found it necessary we propose to uphold the appeal and to set aside the decision and orders of Hungerford J. The effect of our decision in this matter will be to: 1. Reduce the order for an additional payment of $125,000 for notice and redundancy by one month arising out of mitigation of loss; 2. Provide the respondent with 63 per cent (or 94,500) of his share options, which may be exercised on a date selected by him not later than 48 months after his employment terminated, that is, by 13 August 2002; 3. Reduce the interest payable having regard to the revision of the orders at first instance in relation to the reduction in the amount payable for pay in lieu of notice by one month. Costs 208 The question of the costs of the appeal is not without some difficulty because of the varying degrees of success each party has had on the issues agitated on appeal. In all the circumstances, having particular regard to the limited measure of success which the appellant has achieved on appeal, and as the extent of the issues dealt with on appeal has depended, at least in part, on the Full Bench's preparedness to permit argument on some issues not argued or insufficiently contested by the appellant at trial, the appropriate costs order is that the appellant shall pay three-quarters of the respondent's costs of the appeal. Orders 209 We make the following orders: 1. Leave to appeal is granted. 2. The appeal is upheld to the extent identified in this decision. 3. The decision and orders of Hungerford J are varied by: (a) Reducing the payment of six months' base remuneration in Order 1.(1) by one month's base remuneration on account of mitigation of loss. (b) Deleting Order 1.(3) and making an order in lieu thereof as follows: i. That in the event your employment is terminated by Westfield by reason of redundancy at any time after three years' service you will be entitled, notwithstanding the current terms of the Company's Executive Incentive Scheme, to exercise 94,500 of the share options granted to you and such options shall not lapse but shall continue until the maturity date specified under the said Executive Incentive Scheme or such other date as may be determined by law. (c) Deleting Order 2. and making an Order in lieu thereof as follows: ii. The deed poll made on 29 June 1995 and thereto executed by the respondent in favour of the applicant as the executive, together with the annexed terms and conditions of the Executive Incentive Scheme, are varied from their commencement by inserting the following provisions: (1) Notwithstanding anything elsewhere contained in this Deed and in the Executive Incentive Scheme, in the event the Executive's employment is terminated by Westfield by reason of redundancy at any time after three years from the Issue Date of any Options then the Executive's entitlement to exercise 94,500 Options held shall not lapse but shall continue until the Maturity Date determined as being a date at the sole selection of the Executive not later than 48 months after the date the Executive's employment terminated. (2) In the situation referred to in paragraph (1) hereof, Westfield shall not be able to cancel the Options and to pay the Executive an amount of money in consideration thereof but shall issue to the Executive on the Allotment Date (as adjusted by the new Maturity Date) that number of Westfield Ordinary Shares equal to the Exercise Number. (d) Varying Order 3 so as to require the respondent to pay the applicant the amount of $204,166 (five months' base remuneration for notice and redundancy and 40 per cent bonus). 4. The appellant shall pay interest to the respondent on the amount stated in Order 3 (d) hereof, in accordance with s 94 of the Supreme Court Act 1970, such interest to run from the last date of employment to the date of this judgment.

5. The appellant shall pay three-quarters of the respondent's costs of the appeal. 6. The parties have liberty to file short minutes of consent orders in respect of the stay granted of the orders of Hungerford J and, in the absence of agreement, to have the matter listed before a member of the Full Bench for determination.

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