Buitendag v Ravensthorpe Nickel Operations Pty Ltd - [2012] WASC 425

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: BUITENDAG -v- RAVENSTHORPE NICKEL OPERATIONS PTY LTD [2012] WASC 425

CORAM: LE MIERE J

HEARD: 6-9, 12-16, 19 MARCH, 4-5 APRIL 2012

DELIVERED : 15 NOVEMBER 2012

FILE NO/S: CIV 1444 of 2009

BETWEEN: ISAK BUITENDAG
Plaintiff
AND
RAVENSTHORPE NICKEL OPERATIONS PTY LTD
Defendant

Catchwords:

Contract of employment - Termination of employment - Summary dismissal - Conduct amounting to breach of employment contract - Grounds for dismissal - Misconduct - Conflict of interest - Quantum of damages - Turns on own facts

Legislation:

Nil

Result:

Plaintiff's claim dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr G R Ritter QC & Ms S P J Tan
Defendant: Mr K J Mony De Kerloy

Solicitors:

Plaintiff: Q Legal
Defendant: Freehills

Case(s) referred to in judgment(s):

Blackmagic Design Pty Ltd v Overlise [2011] FCAFC 24; (2011) 191 FCR 1
Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66
Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20; (1992) 41 IR 452
Breen v Williams (1996) 186 CLR 71
Bruce v AWB Ltd [2000] FCA 594; (2000) 100 IR 129
Carter v Dennis Family Corporation Pty Ltd [2010] VSC 406
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 103 IR 160; (2000) 176 ALR 693
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41
Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285
McDonald v Parnell Laboratories (Aust) Pty Ltd [2007] FCA 1903; (2007) 168 IR 375
North v Television Corp Ltd (1976) 11 ALR 599
Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165
Rob v Green (1895) 2 QB 315
Sent v Primelife Corporation Ltd [2006] VSC 445
Serventi v John Holland Group Pty Ltd [2006] FCA 1049
State Rail Authority (NSW) v Earthline Constructions Pty Ltd (1995) AILR 5‑018
TCN Channel 9 Pty Ltd v Haydon Enterprises Pty Ltd (1989) 16 NSWLR 130
Transport Workers Union of Australia v K&S Freighters Pty Ltd [2010] FCA 1225; (2010) 205 IR 135

LE MIERE J: The plaintiff, Mr Buitendag, was employed by the defendant, Ravensthorpe Nickel or the Company, as general manager of its nickel mine and processing plant near the town of Ravensthorpe in south west Western Australia. The defendant is a wholly owned subsidiary of BHP Billiton Plc and part of the BHP Billiton group. The Ravensthorpe Nickel operations were part of BHP Billiton's Nickel West Operations which included nickel mines or processing sites in Western Australia.
On 23 January 2009 the defendant terminated Mr Buitendag's employment. Mr Buitendag claims that the defendant wrongfully terminated his employment, claims damages including lost entitlements, which he would otherwise have received, and the value of shares which would have vested in him but for the wrongful termination of his employment.
The defendant says that it lawfully terminated Mr Buitendag's employment. The defendant says Mr Buitendag engaged in serious misconduct which justified his summary dismissal. The alleged misconduct principally concerned the donation by Ravensthorpe Nickel of a transportable house to the Hopetoun Clay Target Club (the Club) of which Mr Buitendag was a founder member. Mr Buitendag says that the transportable was of no use or value to Ravensthorpe Nickel and was located on a property acquired by Ravensthorpe Nickel as part of a buffer zone of properties around the mine and processing plant. The defendant does not accept those contentions. The defendant alleges further misconduct by Mr Buitendag in relation to requests for the defendant, or a contractor to the defendant, to provide materials or services to the Club.

The Contract of Employment

From 1996 to 2005 Mr Buitendag was employed by companies in the BHP Billiton group in South Africa or the Netherlands. In 2005 Mr Buitendag was employed by BHP Billiton SA Ltd. Mr Buitendag was relocated to the defendant on the terms set out in the International Relocation Agreement between BHP Billiton SA Ltd, Mr Buitendag and the defendant made in August 2005.
From 1 October 2007 until 23 January 2009 Mr Buitendag was employed by the defendant under a written contract of employment dated 10 September 2007 (the Contract of Employment) as varied on 24 January 2008 and 12 September 2008 to increase the remuneration to be paid to Mr Buitendag.
The Contract of Employment is titled 'Nickel West Employment Agreement'. The contract says that Nickel West is a division of the BHP Billiton Stainless Steel Materials Group. The organisation structure of the BHP Billiton group includes customer sector groups. The Stainless Steel Materials or SSM Group is one customer sector group.
The terms and conditions set out in the Contract of Employment came into effect from 1 October 2007 and replaced the provisions of all prior employment contracts. The Contract of Employment provided that the contract may be terminated by Mr Buitendag or the Company by giving three months notice in writing or payment or forfeiture of payment in lieu of notice. The Contract of Employment further provided that it may be terminated immediately by the Company for any conduct by Mr Buitendag which would justify summary dismissal.
It is a term of the Contract of Employment that Mr Buitendag comply with and conduct himself ethically and professionally as detailed in the BHP Billiton Guide to Business Conduct (the Guide). Another term of the Contract of Employment is that Mr Buitendag is required to familiarise himself with, and comply with, all workplace policies and procedures and with the Company's rules, policies, practices and procedures as introduced or amended from time to time. The Contract of Employment also provides that all employees are required to follow the Fair Treatment Procedure.
The Contract of Employment provides that Mr Buitendag's remuneration includes an incentive plan. The incentive plan may, at the discretion of the Executive Committee, contain a cash or share incentive. Mr Buitendag was allocated shares under various incentive plans. However, the shares did not vest until a future date. At the time of his dismissal the shares had not vested and lapsed upon the termination of his employment. Mr Buitendag says that if his employment had not been wrongfully terminated those shares would have vested in him and he has accordingly lost the value of those shares.

Developing Hopetoun infrastructure

Before the Ravensthorpe Nickel operations commenced, Ravensthorpe and the nearby town of Hopetoun were small farming communities with few education, sporting or recreational facilities. Adequate housing and infrastructure were important to support the new workforce. BHP Billiton's Nickel West operation developed infrastructure in the area to make it more desirable for the workforce and foster a good relationship between the Company and the local community. BHP Billiton's Nickel West operation invested in the local community. The aim of community investment was to develop long term sustainable partnerships with the community.
In August 2007 Mr Buitendag stated in a memorandum to Marcelo Bastos, who was then president and chief operating officer at BHP's Nickel West operations, that the current state of infrastructure in Hopetoun was having an adverse impact on the Company's residential employees, their partners and families. Some of the key infrastructure problems included the lack of a child minding facility, an indoor sports complex, a community centre and a major shopping complex. The Company funded a child mining facility and a commercial shopping centre. The Company planned the construction of an indoor sports complex.
BHP Billiton Nickel West provided sponsorship to community projects or community groups to assist community projects that supported people and activities in the communities close to Ravensthorpe Nickel's operations. The sponsorship took the form of funding which was provided as part of BHP Billiton Nickel West's ongoing commitment to support community development. An organisation that sought sponsorship was required to submit an application form. The application was considered by the Community Liaison Committee (CLC). The CLC consisted of representatives of Ravensthorpe Nickel and of organisations within the area surrounding and affected by Ravensthorpe Nickel's operations. The role of the committee was to assess applications for sponsorship. The authority to make a grant rested with the relevant Ravensthorpe Nickel representative. Thus, the April 2004 induction kit for new members of the CLC explained that decisions are made by delegated officers of Ravensthorpe Nickel who have a legal obligation to make such decisions. The CLC's contribution is part of the decision making process but not the whole of the decision making. Where a sponsorship was granted the funds came from BHP Billiton's Nickel West sponsorship budget. As I will set out later in these reasons, Mr Buitendag, on behalf of the Club, applied for funding from BHP Billiton Nickel West to relocate the donated transportable house and that application gave rise to allegations of misconduct by Mr Buitendag.

Buffer zone strategy

Prior to the Company project being formally approved in March 2004, two farms were purchased from nearby properties. The houses and infrastructure on the farms were taken away and demolished because they did not have any use to, or value for, the Ravensthorpe Nickel project. After March 2004 an additional two farms were purchased and the four farms were used to lay out the mine, processing plant and associated infrastructure; such as tailing dams and evaporation ponds.
In 2007 Mr Buitendag discussed with Ford Murray, the manager of government relations and communication for Nickel West, purchasing farms neighbouring the Ravensthorpe Nickel operation. In a memorandum of 9 August 2007 to Mr Buitendag, Mr Murray recommended the purchase of six neighbouring farms. The primary reason for purchasing them was to create direct ownership of land surrounding the nickel operation to mitigate complaints regarding operational noise and the general lifestyle disturbance that occurs when broadacre food producers neighbour a large open pit mining operation and 24/7 process plant. Mr Murray outlined a four step process. Step 1 was to purchase two farms owned by Mr Coxall and Gary Edwards. In relation to that step Mr Ford wrote:
•Edwards is complaining about noise and 'light spill' at night …;
•the other nearby farms also owned by Coxall and Edwards would not be purchased by Ravensthorpe Nickel; and
•Ravensthorpe Nickel would offer both Coxall and Edwards the option of a commercially based lease‑back agreement so they can continue farming and maintain Ravensthorpe Nickel land.
Steps 2, 3 and 4 were to purchase farms owned by Simon Williams, Derek Williams, Mr Crane and Mr Mollett.
Mr Buitendag forwarded Mr Murray's memorandum to Mr Bastos on 10 August 2007. In his email to Mr Bastos, Mr Buitendag said that they could approach landowners to enter into a sale and leaseback arrangement with lease terms favourable to the landowner. In effect, they could incentivise the landowners to be there. The landowners could secure rights to buy the land back at the end of mine life or terminate their leases should they feel unhappy on the land. However, they would enter the arrangement with full knowledge that they were leasing land adjacent to mining operations. Mr Bastos approved the strategy.
Ravensthorpe Nickel engaged a real estate agent, Robert Pens, to provide market appraisals for the six farms. One of the farms was a farm belonging to Mr Edwards and on which he lived. Mr Edwards also owned an adjoining property immediately to the east of his homestead property. Mr Edwards' eastern property was not one of the six farms recommended for purchase. Indeed, as I have said, Mr Murray's memorandum recommended Mr Edwards' eastern property not be purchased.
On 10 January 2008 Sias Jordaan, commercial manager of Ravensthorpe Nickel, prepared a Project Submission Form (PS Form) for the acquisition of Mr Edwards' farm. The PS Form stated that funds were requested for the intended purchase of a farm from Mr Edwards and that it was one of six farms purchased for the purpose of forming a buffer region around the existing mine site. An appendix to the PS Form stated that it was the intention of the project to enable the existing owner to continue to carry on farming activities on a leaseback basis. Section 2 of the submission stated that a condition precedent to the sale was entering into normal commercial lease arrangements, that Ravensthorpe Nickel wanted to ensure that the farming value of the properties was not lost and that the original seller would have a first right of refusal if and when Ravensthorpe Nickel decided to sell the farms. The PS Form was signed by Mr Buitendag as project sponsor on 10 January 2008. It was subsequently approved by Steven Batterham, vice president of human resources at BHP Billiton's Stainless Steel Materials Group, on behalf of Mr Bastos, on 11 January 2008. A PS Form was prepared for each of the six farms to be purchased.
Mr Pens then met with the farmers to negotiate the sale of their farms. He reported periodically to Mr Buitendag and Mr Jordaan in relation to those negotiations. In an email of 15 May 2008 to Mr Jordaan, Mr Pens referred to discussions with Mr Mollett and Mr Williams concerning purchasing from them blocks in addition to those that made up the six farms. Mr Pens referred to the price of Mr Edwards' farm and said:
Gary [Edwards] also has a block across the road to the east and I think that house is not too bad. I will talk again with Gary, but I think he too feels he will be stuck with only one block left.
Negotiations progressed with Mr Mollett and on 4 June 2008 Mr Jordaan prepared a PS Form for further funds in order to include the purchase of Mr Molletts' additional block. Mr Edwards would only sell his homestead, or western farm, if Ravensthorpe Nickel also purchased his eastern property. On 13 August 2008 Mr Jordaan prepared a PS Form for additional funds to purchase Mr Edwards' eastern property. The submission stated that Mr Edwards' homestead farm was crucial, as it is the closest property to Ravensthorpe Nickel operations, that Mr Edwards had suddenly decided to sell due to ill health but he had made the sale of his homestead (western) property conditional upon Ravensthorpe Nickel purchasing his eastern property. The submission stated that the eastern property was of no value to Ravensthorpe Nickel and it would on‑sell the property as a matter of priority. The PS Form was signed by Mr Buitendag, as project sponsor, on 14 August 2008 and approved by Jimmy Wilson, president of BHP Billiton Stainless Steel Materials. The purchase of Mr Edwards' homestead property and the eastern property was agreed and settlement took place in September 2008.

Clay Target Club

Mr Buitendag, and a group of people including Bernie Biddulph and Rick Besso, often made a round trip of 360 km to participate in clay target shooting at a club in Esperance. In about August 2008 Mr Buitendag and several others decided that they would establish a clay target club in Hopetoun (the Club). Mr Biddulph, Mr Besso and Mr Buitendag were the three primary proponents in the establishment of the Club. Mr Besso's allocated task was to identify community land for the establishment of the Club and to approach the Shire of Ravensthorpe about the possibility of an allocation of land on a peppercorn rental to establish the infrastructure that is required for a club. Mr Besso, Mr Biddulph and Mr Buitendag eventually decided that a parcel of land adjacent to the airport would be ideal. On 22 September 2008 Mr Besso wrote to the Ravensthorpe Shire on behalf of prospective members of the Club. The letter proposed that the Shire lease to the Club a portion of the airport property. The letter enclosed a letter of support signed by 10 people including Mr Buitendag. The proposal was approved at a Shire council meeting in November 2008 and the Club was allocated the airport site.
Mr Buitendag undertook the task of forming an incorporated association. Mr Buitendag drafted a constitution for the Club and lodged the application for incorporation with the Department of Consumer and Employment Protection on 17 November 2008.

Edwards' transportable houses

In February 2008 Guy Withers, a mining operator at Ravensthorpe Nickel operations, had asked Mr Buitendag if there was a building or a donga that Ravensthorpe Nickel would be able to donate to the Motocross Club that they could use as a clubhouse. Mr Buitendag said that there was nothing available at that time but he would keep the request in mind. Mr Buitendag subsequently became aware that Mr Withers and Matthew Whittred, a drafting co‑ordinator at Ravensthorpe Nickel, and others were establishing the Motocross Club. Mr Buitendag became aware that the process of establishing the Motocross Club had temporarily stalled because of the difficulty in obtaining land for the club; first as the result of a native title claim and second due to dieback issues.
In August 2008 Mr Buitendag became aware of the availability of two houses on Mr Edwards' farms, which were capable of being transported to other sites. The donation of those transportable houses to the Club and Motocross Club fell within Mr Buitendag's delegated authority. Mr Buitendag was able to authorise donations of assets that were valued at up to $1.5 million. Mr Buitendag recognised that he would be donating an asset to an organisation in which he was involved. Mr Buitendag decided to disclose his involvement in the Club to his direct superior, Mr Wilson, who was president of SSM, and request approval for the donation of the transportables to the Club and the Motocross Club.

Previous conflict of interest disclosures

Mr Buitendag was familiar with the conflict of interest provisions of the Guide. Many of the employees working at the Ravensthorpe Nickel Operations lived in Hopetoun. Mr Buitendag and his wife decided to purchase a farm near Hopetoun. They decided to lease the arable land to a local farmer. Prior to purchasing the farm Mr Buitendag discussed his intention with Ken Hellsten, then president and chief operating officer of BHP Billiton's Ravensthorpe Nickel Operations. On 27 October 2005 Mr Hellsten informed Mr Buitendag that the Company had concluded that in line with the Guide no conflict of interest issues arose. Mr Hellsten attached a summary from the Guide. In June 2006 Mr Buitendag informed Mr Hellsten that as part of the renovations to the homestead of the property, he and his wife had created a guest cottage and his wife had decided to establish a bed and breakfast business from the cottage. On 2 June 2006 Mr Hellsten informed Mr Buitendag that BHP Billiton had no objection to the proposed bed and breakfast business, on condition that it did not impact on Mr Buitendag's ability to carry out his role at Ravensthorpe Nickel and the business did not become a supplier to Ravensthorpe Nickel directly or indirectly. Following further communications, Mr Hellsten confirmed that Mr Buitendag was not to seek to influence or direct anyone associated with Ravensthorpe Nickel, including contractors and suppliers, to use the bed and breakfast facilities.

Buitendag seeks approval to donate transportables

On 26 September 2008 Mr Buitendag telephoned Mr Wilson. Mr Buitendag proposed to Mr Wilson that Ravensthorpe Nickel offer the two transportable houses on Mr Edwards' properties to the Club and the Motocross Club. Mr Buitendag told Mr Wilson that he was a member of the Club. There is a conflict between the evidence of Mr Buitendag and the evidence of Mr Wilson concerning precisely what was said about those matters and what else was said in the telephone conversation. It is common ground that Mr Wilson told Mr Buitendag that he agreed with the donation of the two houses on certain conditions and asked Mr Buitendag to write an email to him confirming the terms on which he had agreed to the donation of the houses. Later that day Mr Buitendag sent an email to Mr Wilson. Mr Buitendag proposed that Ravensthorpe Nickel offer the transportables that would be removed from the farms to the two clubs on the basis that they remove and relocate the buildings at their own cost. Mr Buitendag said that he was seeking the approval from Mr Wilson 'in terms of good business conduct because I have an interest in Clay Target shooting and will participate in the club when it is established'. The following day, 27 September 2008, Mr Wilson sent an email to Mr Buitendag stating, 'noted and supported'.

Buitendag seeks funding from Ravensthorpe Nickel

In October 2008 Mr Buitendag made an application for Ravensthorpe Nickel West Community Sponsorship on behalf of the Club. The application stated that the Club was already in possession of a transportable building that was to be moved to the Club site. The funding application was made for the purposes of securing the services and goods required to safely transport the building to site, and to install the civil structures necessary to support both the building and the initial trap shooting layout.
Mr Besso and his company, R&L Constructions (R&L), demolished an unusable Nissan shed which was on the site and prepared the way for the earthworks for a clubhouse that the Club needed to acquire. Mr Buitendag contacted James Giumelli, Chief Executive Officer of Ertech, a civil and earth moving company, and asked whether Ertech would be willing to become involved in a community project and explained the site levelling that needed to be done. Ertech subsequently carried out the earthworks.
On 9 December 2008 Matthew Keogh, community manager of Ravensthorpe Nickel, stated his intention to progress the grant applied for to the Club through a Memorandum of Understanding (MOU). The MOU between Nickel West and the Club was signed on 11 December 2008.

Jordaan raises concerns about donation of transportable

On 1 December 2008 Mr Buitendag had forwarded to Mr Jordaan the emails between Mr Buitendag and Mr Wilson of 26 and 27 September 2008, in which Mr Wilson approved the donation of the transportable houses. Mr Buitendag said it was likely that the first house would be moved during December and that the Club had appointed an electrician to do the electrical disconnection. Mr Buitendag asked Mr Jordaan to ensure the farmhouse was disconnected from power in an orderly fashion to ensure it was safe to move off Ravensthorpe Nickel property. Mr Jordaan forwarded the emails to Celeste Nel, the finance superintendent, requesting that she keep the emails on file for the purpose of donating the farmhouse to a not for profit organisation.
On 1 December 2008 Mr Besso sent Mr Buitendag an email identifying materials in various lay down areas, that is open storage areas, on the mine site that could be useful for the Club. Mr Buitendag inspected the materials with Mr Besso. Mr Buitendag then took Mr Jordaan and showed him the materials that the Club was interested in and asked him to process the donation of the materials to the Club. Mr Jordaan said that his department was too busy to process the donation and there was no procedure for donating the material. Mr Jordaan undertook to create the necessary procedure so that he could make the donation when his team had time early in the new year.
Project Slate was a proposal to ramp down and indefinitely suspend the Ravensthorpe Nickel operation. The proposal, when accepted by the board of BHP Billiton, involved the closure of the Ravensthorpe Nickel operations. The project was confidential. On 9 December 2008 Mr Buitendag and Mr Jordaan were separately informed of Project Slate and required to sign a confidentiality undertaking not to disclose any information disclosed to them in connection with the project.
On 12 December 2008 Mr Jordaan raised with Mr Buitendag concerns about moving the farmhouse to the Club site. Mr Buitendag was not able to resolve Mr Jordaan's concerns to his satisfaction. Mr Buitendag said that he would elevate the matter to Mr Wilson.

Issue referred to Wilson

BHP Billiton's Fair Treatment Process is a procedure to enable an employee to have an issue of concern reviewed. Step 1 is for the employee to discuss the issue with his manager or supervisor. If the issue concerns the employee's manager or supervisor, the employee may discuss it with his next‑up manager. In this case Mr Buitendag, with Mr Jordaan's concurrence, elevated the matter to his manager, Mr Wilson. It is not clear whether Mr Jordaan formally invoked the Fair Treatment Process. On 12 December 2008 Mr Buitendag sent an email to Mr Wilson informing him that Mr Jordaan had discussed a concern regarding the movement of a farmhouse and that they had decided to elevate two issues to Mr Wilson. The first issue concerned the Club's successful application for funding through the CLC for preparing, transporting and recommissioning the transportable farmhouse as well as acquiring a trap. Mr Jordaan was concerned that was inconsistent with Mr Wilson's original stipulation that the preparation, transportation and recommissioning of the donated transportable house was not carried out by BHP Billiton. The second issue concerned the removal of the transportable farmhouse from Mr Edwards' eastern property. Mr Buitendag said that he had sought permission to donate the two houses ‑ one to the Club and the other to the Motocross Club. Mr Buitendag said:
It now transpires that Sias had not anticipated the removal of the second farmhouse in the capital applications that were prepared. Only one of the two farmhouses have been formally donated as a result of the Motocross Club land allocation being suspended by an environmental concern. However, this is the one that was not intended to go in the capital application.
Mr Buitendag said that the wrong house was donated. Mr Buitendag recommended that they allow the 'wrong' removal to proceed but then do not remove the house originally intended for removal as per the capital applications.
Mr Wilson replied asking Mr Buitendag to send him a simple short note he could understand because he did not understand Mr Buitendag's email. Mr Buitendag then sent a further email. In that email, Mr Buitendag said he had offered to the community group the house on the farm destined for resale and that that house was scheduled to be relocated by the Club on Monday using funds secured through the CLC. Mr Buitendag recommended that Mr Jordaan correct the application for capital to reflect that the correct strategy was to remove the house prior to on‑selling and that they allow the removal of the house as scheduled on Monday. Mr Wilson replied:
Given the knowledge that we now have, my suggestion is that we don't take any of the farmhouses off the land.
Mr Buitendag responded:
Your position is understandable. However, how do I take back the transportable that I have donated in good faith?

The transportable moves

Over the weekend Mr Wilson and Mr Buitendag had discussions on the telephone. Mr Wilson said that he agreed that the best option now was to allow the house on the eastern property to be moved as scheduled and not to move any more of the houses. On 15 December 2008 Mr Buitendag sent an email to Mr Jordaan saying:
The farmhouse that is scheduled to move today moves.
The transportable farmhouse was then removed from Mr Edwards' eastern property and re‑established on the Club site.

Earthworks and pipes

Meanwhile, on 14 December 2008, Mr Jordaan had visited the Club site. Mr Jordaan took photographs of earthworks completed at the Club site. Mr Jordaan also took photographs of pipes at the Club site which bore an Ertech job number and were marked BHP or Ertech Ravensthorpe Nickel. Mr Wilson visited the Company's site on 15 December 2008 for a regular meeting. During the visit, Mr Wilson told Mr Buitendag that there were allegations that there were company pipes at the Club. Mr Buitendag said that was impossible.

Jordaan refers Buitendag conduct to Cox

On 22 December 2008 Mr Jordaan sent a memorandum to Stewart Cox entitled 'Issues regarding business conduct'. Mr Cox was deputy chief financial officer of the BHP Billiton Stainless Steel Materials Group. In his memorandum Mr Jordaan referred to conduct of Mr Buitendag in relation to the Club and said that recent dealings of Mr Buitendag had led to behaviour and actions which in Mr Jordaan's opinion were very questionable if not unethical. Mr Cox briefed Gerard Bond, chief financial officer of SSM, who was acting president of SSM in place of Mr Wilson who was then on leave.
On 30 December 2008 Mr Bond met with Mr Buitendag. At the end of the meeting Mr Bond told Mr Buitendag that BHP Billiton would be proceeding with a full investigation of his conduct and that in the meantime he was to remain on leave, not go to site, not access emails, not talk to Ravensthorpe Nickel Operations personnel and be available for interviews.

Investigation into alleged misconduct

On or about 30 December 2008, Mr Bond approved a protocol for an investigation into alleged misconduct and breaches of the Guide by Mr Buitendag. The protocol stated that the allegations on which the investigation was to focus were:
a)[Mr Buitendag] obtained equipment, materials and services from (or at the cost of) BHP Billiton (BHPB) / Ravensthorpe Nickel Operations (RNO) for the benefit of the Hopetoun Clay Target Club (HCTC) without following BHPB policies and procedures in the required manner or without sufficient transparency. Moreover, [Mr Buitendag] had a conflict of interest in doing so, because of his affiliations with HCTC, and exercised undue influence in his capacity as GM RNO;
b)[Mr Buitendag] misrepresented some facts to BHPB including:
i)understating the value of a transportable home owned by BHPB and which was donated to the HCTC (the House);
ii)the relatively restricted size and potential exclusivity of the HCTC; and
iii)the need and readiness of another club (the Hopetoun Motocross Club) to receive a second transportable house as a donation from BHPB.
c)[Mr Buitendag] acted contrary to the explicit approval of [Mr Wilson] by facilitating the request to the BHPB Ravensthorpe Community Liaison Committee (CLC) for funding of transportation of the House to the HCTC site;
d)[Mr Buitendag] solicited work from a key contractor of RNO (and, at the time, a bidder for work from RNO) for the benefit of the HCTC and without cost to HCTC.
The investigation was to be led by Mr Cox with assistance and support provided by Nick Forbes, Manager ‑ Governance and Risk Management SSM, Tony Davies and Miriam Power of Blake Dawson solicitors, Joneen Scott ‑ HR Manager SSM and Peter McEvoy of Group Audit Services. The investigation was to be overseen by Mr Bond.
During the first two weeks of January 2009, the investigation team investigated the allegations in the course of which they interviewed a number of people including Mr Buitendag. On 15 January 2009 Mr Cox sent the investigation team's report to Mr Bond and Mr Batterham. Mr Bond forwarded the report to Mr Wilson. In their report the investigation team concluded that the following allegations were supported by the evidence available:
(a)In respect of the Farmhouse donation, [Mr Buitendag] failed to follow the Nickel West asset disposal procedure ‑ a procedure he had approved in his capacity as General Manager RNO.
(b)[Mr Buitendag] may have known that the Farmhouse was not intended to be removed and deliberately misrepresented this fact to Wilson (this is the more probable circumstance). Alternatively, [Mr Buitendag] was of a genuine, but mistaken view that the Farmhouse was to be removed as a result of failing to consult with persons handling the transaction and failing to follow the established procedure for in‑kind donations. He should have known the actual situation.
(c)[Mr Buitendag] either deliberately understated the value of the house to be donated to the HCTSC to Wilson to persuade him to approve the donation, or deliberately overstated the value of the house to the CLC to persuade the CLC to approve the funding application for relocation of the house. In either case, on at least one occasion, [Mr Buitendag] provided false or misleading information to achieve desired results.
(d)[Mr Buitendag] secured the SSM President's approval for the Farmhouse donation on express condition that no BHPB funds would be applied to the relocation of the Farmhouse. However, [Mr Buitendag] subsequently applied to the CLC to obtain BHPB funds for that very purpose.
(e)[Mr Buitendag] placed himself in either an actual, or a perceived, conflict of interest by requesting Ertech to perform work for the HCTSC at a time when Ertech and RNO were engaged in negotiations for a significant contract which [Mr Buitendag] had the capacity to influence.
(f)[Mr Buitendag] made an inappropriate response to the receipt of information that BHPB's materials may have been removed without authorisation.
(g)Although [Mr Buitendag] did declare his interest and consult with his manager in relation to some matters of conflict of interest, when evaluated against the Guide, [Mr Buitendag] shows an insufficient understanding of conflict of interest and the totality of his disclosures were inadequate.
On 16 January 2009 Mr Bond and Mr Batterham met Mr Buitendag and discussed the findings of the investigation team. Mr Buitendag asked Mr Bond to provide him with the findings in writing and undertook to provide a response to the company about the findings by 20 January 2009. On 16 January 2009 Mr Bond sent to Mr Buitendag a letter in which he summarised findings of the investigation team in relation to the allegations against Mr Buitendag of misconduct and breaches of the Guide. The letter stated that having considered the findings, the Company was concerned that Mr Buitendag may have breached his employment contract, Company policies and procedures, and his fiduciary duties as an employee of the Company.
On 21 January 2009 BHP Billiton publicly announced that it would immediately commence the safe ramp down and indefinite suspension of the Ravensthorpe Nickel Operations.
On 21 January 2009 Mr Buitendag sent to Mr Bond and Mr Batterham a written response to the allegations against him of misconduct. Mr Buitendag responded to each of the findings of the investigation team summarised in Mr Bond's letter of 16 January 2009. Mr Buitendag denied that he had breached his employment contract or his fiduciary duties as an employee of the Company.

Mr Buitendag's employment is terminated

On 23 January 2009 Mr Buitendag met Mr Wilson, Mr Bond and Mr Batterham. After a discussion the meeting was adjourned. Mr Wilson and Mr Batterham returned. Mr Wilson informed Mr Buitendag that his employment had been terminated and handed Mr Buitendag a letter of termination. In the letter Mr Wilson referred to the investigation and the outcomes of the investigation.
The defendant pleaded that Mr Buitendag's conduct justified his summary dismissal but did not admit that he was summarily dismissed. The Contract of Employment provides for the contract to be terminated by the defendant in two ways. The first is by giving three months' notice or payment in lieu of notice. The second is summary dismissal. The contract provides that in the case of summary dismissal payment shall be up to the time of the dismissal only.
I find that the defendant summarily dismissed Mr Buitendag. The letter of termination referred to the investigation and said that the defendant had formed the view that Mr Buitendag's conduct did not meet the Company's requirements and that termination of his employment was warranted in the circumstances. The letter stated that, notwithstanding that the seriousness of the circumstances justified termination of Mr Buitendag's employment without notice or payment, the Company had decided to pay Mr Buitendag an amount equivalent to three months' notice in lieu in accordance with the terms of the Contract of Employment. I note that the letter stated that the Company had decided to pay Mr Buitendag an amount equivalent to three months' notice, not that the Company had decided to pay Mr Buitendag three months' salary in lieu of notice. The letter concluded by saying that Mr Buitendag's employment was to be 'terminated for cause' and he would not receive any incentive payments for financial year ending 30 June 2009 and would not be eligible for his assignment bonus. Where an employee is terminated for cause his employment is terminated for a specific reason. In this case the reason was the misconduct of Mr Buitendag referred to in the letter. Furthermore, the letter stated that Mr Buitendag would not receive any incentive payments. That was a reference to payments under BHP Billiton's long term incentive plan. When an employee leaves the employment of a group company his shares will lapse if he leaves because of dismissal or a controllable event. Dismissal means termination for cause, including unlawful or serious misconduct. Controllable event means resignation by the employee. In this case Mr Buitendag was treated as having been dismissed and his shares to have lapsed.

Summary dismissal - legal principles

Two conditions must be satisfied at common law in order to justify a summary dismissal. First, there must be a breach by the employee of the terms of the contract or a demonstrated intention not to be bound by those terms. One of the ways in which an employee breaches their contract is by being guilty of misconduct. Second, the conduct must be sufficiently serious to allow summary termination. Mere misconduct is not sufficient, it must be serious enough to justify summary dismissal. It must constitute a repudiation of the contract or one of its essential conditions: see Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66, 81; North v Television Corp Ltd (1976) 11 ALR 599, 608 ‑ 609; Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285, 287‑ 289 (Lord Evershed MR); Bruce v AWB Ltd [2000] FCA 594; (2000) 100 IR 129 (Sundberg J) [14] ‑ [15].
In Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 103 IR 160; (2000) 176 ALR 693, Kirby J said:
It is, however, only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily. Whatever the position may be in relation to isolated acts of negligence, incompetence or unsuitability, it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal. Exceptions to this general position may exist for trivial breaches of the express or implied terms of the contract of employment … but these exceptional cases apart, the establishment of important, relevant instances of misconduct, such as dishonesty on the part of an employee like Mr Wells, will normally afford legal justification for summary dismissal. Such a case will be classified as amounting to a relevant repudiation or renunciation by the employee of the employment contract, thus warranting summary dismissal [51]. (citations omitted)
In North v Television Corporation Ltd (608 ‑ 609), Smithers and Evatt JJ said:
In such a situation it is reasonable to interpret the expression 'misconduct' as referring to conduct so seriously in breach of the contract that by standards of fairness and justice the employer should not be bound to continue the employment.
In Sent v Primelife Corporation Ltd [2006] VSC 445, Mandie J said:
Serious misconduct (sufficient to justify summary dismissal) has been held to include conduct, in relation to important matters, that constitutes a repudiation of or is incompatible with or repugnant to the essential obligations of an employee or is destructive of the relationship of good faith and confidence between employer and employee [17].
Serventi v John Holland Group Pty Ltd [2006] FCA 1049, Madgwick J said:
An employer is entitled to summarily dismiss an employee for serious and wilful misconduct. Such misconduct must be of a kind that, as a practical matter, is likely to make maintenance of the contract of employment impractical [6].
In Carter v Dennis Family Corporation Pty Ltd [2010] VSC 406, Habersberger J said:
… serious misconduct and repudiation are two sides of the same coin. Generally, conduct that meets the test of serious misconduct will also constitute a repudiation by the employee of the employment contract because it will be conduct repugnant to the essential obligations of the contract. Thus, as a matter of practical significance the allegations of repudiatory conduct in respect of [the employer's] reasons for summary dismissal do not add anything to the allegations of serious misconduct, as the latter is always alleged when the former is alleged [43].

The defendant bears the onus of establishing the serious misconduct. The applicable standard of proof is on the balance of probabilities, but both commonsense and authority dictate that findings of serious misconduct should not be made lightly: Carter v Dennis Family Corporation [46] (Habersberger J).
The dismissal of an employee may be justified upon grounds on which the employer did not act and of which the employer was unaware when the employee was discharged: Concutt Pty Ltd v Worrall [29] (Gleeson CJ, Gaudron & Gummow JJ).

Natural justice, substantive and procedural fairness

The plaintiff pleads that it was a term of the Contract of Employment that where an issue arose in relation to Mr Buitendag's employment, including termination, that issue was to be resolved according to the Fair Treatment Procedure and specific issue resolution processes which dealt with, amongst other things, discipline, termination and business ethics, including the BHP Billiton Nickel West Division Performance Counselling and Discipline Policy, which procedures provided for the application of natural justice and procedural and substantive fairness. The plaintiff further pleads that it was a term of the Contract of Employment that any issue in relation to the plaintiff's employment, where business conduct was involved, was to be independently investigated and any person handling such an investigation would have no direct reporting relationship with the plaintiff.
In the course of his opening submissions counsel for the plaintiff agreed that the plaintiff does not claim damages or any relief or remedy based solely on there being a breach of the obligation to afford fair treatment and the plaintiff does not say that his dismissal was wrongful or in breach of contract because he was not afforded fair treatment (ts 142 ‑ 143).
Some time was spent at trial in addressing the issue of whether Mr Buitendag was afforded fair treatment or procedural fairness before his employment was terminated. In view of the acknowledgement by senior counsel for the plaintiff that the plaintiff does not say that his dismissal was wrongful or in breach of contract because he was not afforded fair treatment, the issue of fair treatment or procedural fairness appears to be a red herring. Nevertheless, I will address matters that were raised at trial concerning these issues.

Fair treatment and discipline policy

The Fair Treatment Procedure is dealt with in cl 15 of the Contract of Employment. Clause 15 provides:
The Company has a Fair Treatment Procedure, which all employees are required to follow.
Clause 15 further states that the purpose of the Fair Treatment Procedure is:
… to help all the employees address their concerns about the application of terms of their agreement of where they believe they have been treated unfairly in the application of Company policies, decisions, behaviours or other actions. It allows your concerns to be addressed promptly, fairly and competently.
The only reference to the defendant in cl 15 is:
The Company promotes the concept of resolving issues by addressing them in the first instance with your immediate Supervisor or Manager. If the issue remains unresolved, it should be dealt with by following the Nickel West Fair Treatment Procedure.
Clause 15 of the Contract of Employment refers to the function of Fair Treatment:
Fair Treatment promotes the concepts of natural justice and procedural and substantive fairness. There is no prejudice to employees who request a Fair Treatment Review.
The defendant submitted that the Fair Treatment Procedure has no application to the defendant dealing with concerns about the conduct of an employee. The Fair Treatment Procedure has no application unless and until an employee raises a concern enlivening the procedure. Furthermore, the defendant submitted, and I accept, that if the Fair Treatment Procedure imposes obligations on the defendant, the terms 'natural justice' and 'procedural fairness' take their meaning from and operate within the limits of the Fair Treatment Procedure.
Clause 15 provides a detailed procedure that is to be followed when it applies. The clause, when it applies, imposes an obligation on the Company to follow the detailed procedure specified for the purpose of promoting natural justice and procedural and substantive fairness.
The Fair Treatment Procedure affords procedural fairness and natural justice to an employee in accordance with a four step process. First, an employee who has an issue of concern raises the issue with his immediate superior. Second, if that concern is not resolved, then the employee takes the matter to the next up manager who reviews the issue with the employee and his immediate superior and responds in a timely manner. Third, if the employee formally requests a Fair Treatment Review, the next up manager advises the manager twice removed, who then reviews the Fair Treatment request with the employee and the next up manager. Fourth, if the employee is not satisfied with the outcome of this review, the employee can request a Fair Treatment Review with the President of Nickel West. The President reviews the issues and processes to date and makes decisions and recommendations. Those decisions and recommendations are final. It is through this four step process that the Fair Treatment Procedure affords natural justice and procedural fairness.
The incorporation of the Fair Treatment Procedure into the Contract of Employment does not place an obligation on the defendant to observe and apply natural justice or procedural fairness when the defendant is concerned about the conduct of an employee and makes a decision to summarily terminate his employment. A construction of the contract that the Company must observe and apply natural justice or procedural fairness before summarily terminating Mr Buitendag's employment is inconsistent with the express terms of the contract. Clause 16 of the contract provides that the agreement may be terminated immediately by the Company for any conduct on Mr Buitendag's part which would justify summary dismissal.
In any event, the natural justice and procedural fairness afforded to an employee is the process and steps outlined in the Fair Treatment Procedure. The process was never invoked by Mr Buitendag. Further, Mr Buitendag did not request a Fair Treatment Review.
Nickel West's Performance Counselling and Discipline policy or standard does not provide for the application of natural justice and procedural or substantive fairness before the defendant exercises the power of summary dismissal. The policy details how performance and behavioural issues are addressed. The policy provides amongst other things:
Nickel West has the right to summarily dismiss an employee (without prior notice) if an employee engages in serious or wilful misconduct.

Summary dismissal and procedural fairness

In general, an employer is not required, before summarily dismissing an employee, to give notice or a hearing or afford the employee any of the other aspects of procedural fairness or natural justice. The Contract of Employment does not condition the defendant's right to summarily dismiss Mr Buitendag on complying with the Fair Treatment Procedure or any process to afford Mr Buitendag natural justice or procedural fairness.
In any event, I find that Mr Buitendag was afforded procedural fairness before his employment was terminated. The content of procedural fairness depends upon the nature of the power being exercised or decision being made and all of the circumstances. I find that the process followed by the defendant was sufficient in the circumstances of this case. Mr Buitendag was given sufficient notice of the allegations against him and a sufficient opportunity to respond to them in the course of the investigation, in his meeting with Mr Bond and Mr Batterham on 16 January 2009, the subsequent correspondence and his meeting with Mr Wilson, Mr Bond and Mr Batterham on 23 January 2009.
In any event, as I have said, whether or not Mr Buitendag was wrongfully dismissed does not depend upon whether he was afforded procedural fairness or whether Ravensthorpe Nickel afforded him fair treatment before he was dismissed. Whether or not Mr Buitendag was wrongfully dismissed depends upon two questions. The first is whether he breached the terms of the Contract of Employment. The second is whether that breach or breaches of contract, if established, is or are serious enough to justify summary dismissal. The answer to those questions is not affected by whether or not the defendant complied with the Fair Treatment Procedure or otherwise accorded Mr Buitendag natural justice or procedural fairness.

Grounds for dismissal

The defendant relies upon nine breaches of the Contract of Employment by Mr Buitendag to justify his summary dismissal. The first breach was to mislead Mr Wilson when seeking his permission to donate the transportable building to the Club. The second was in failing to disclose Mr Wilson's condition on which the transportable was donated when applying to the CLC for funds. The third was requesting and obtaining drawing services from Ravensthorpe Nickel for the benefit of the Club. The fourth was requesting the donation of materials of Ravensthorpe Nickel for the Club. The fifth was requesting and obtaining from Ertech a gift of services to the Club when Ertech was a substantial supplier of earthmoving services to Ravensthorpe Nickel. The sixth was acting contrary to Mr Wilson's direction that he must not continue to be involved with the matter, not spend any time on it, not apply any of the defendant's funds to it and see that the clubs arranged and effected the relocation of the transportable themselves, and at their own cost, and return his focus to ramping up production. The seventh is that Mr Buitendag failed to comply with the Nickel West Disposal Procedure. The eighth is that Mr Buitendag failed to act appropriately when it was alleged that the defendant's pipes were on the Club's site. The ninth is that Mr Buitendag breached his Contract of Employment in relation to the request for payment of R & L invoices. Before considering these alleged breaches of contract I will identify the terms of the Contract of Employment which the defendant says Mr Buitendag breached.

Contract terms allegedly breached

The defendant says that Mr Buitendag breached a number of express terms of the Contract of Employment. First, cl 2 provides, in effect, that Mr Buitendag is required to comply with and conduct himself ethically and professionally at all times as detailed in the Guide. The section of the Guide entitled 'Violations of Company Policies and Standards' states:
All employees are expected to adhere to the policies and standards described in this Guide. Employees who violated these policies or standards may be subject to disciplinary action up to and including dismissal.
In the section entitled 'Company Policies, Standards and Guidelines' the Guide sets out policies and standards relating to a number of matters. At page 44 and following are set out policies, standards and guidelines relating to 'conflicts of interest'. That section includes the following:
Employees should not engage in activities or hold or trade assets that involve, or could appear to involve, a conflict between their personal interests and the interests of BHP Billiton (ie conflict of interest). Such circumstances could compromise or appear to compromise the employee's ability to make impartial business decisions. If in any doubt you should disclose an issue to your supervisor to ensure it can be adequately considered.
It is further provided:
Employees must advise their manager or supervisor of situations that could involve an actual or perceived conflict of interest and remove themselves from any discussion or activity involving the conflict. It is the manager or supervisor's responsibility to ensure that the matter is properly reviewed, including whether it is appropriate for the employee to resume in any discussions or activities that involve the conflict.
The defendant further says that Mr Buitendag breached cl 12 of the Contract of Employment which, amongst other things, provides that Mr Buitendag must 'diligently and faithfully serve the Company, protect and further its interests at all times'. The contractual term that Mr Buitendag must diligently and faithfully serve the Company and protect and further its interests at all times reflects the duty of good faith and fidelity that is implied into contracts of employment as a matter of law. All employees are obliged to serve their employer faithfully and a duty to this effect is implied into every contract of employment to the extent that the matter is not expressly dealt with: Rob v Green (1895) 2 QB 315. The duty of fidelity and good faith may extend to avoiding conflict between his personal or private interest and his duty to his employer. In Blyth Chemicals v Bushnell, Dixon and McTiernan JJ said:
Conduct which in respect of important matters is incompatible with the fulfilment of an employee's duty, or involves an opposition, or conflict between his interests and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal … but the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to future conduct arises (81 ‑ 82).
The scope and content of the duty of good faith and fidelity will vary according to the circumstances of the particular employment. The trust and confidence required in the employment relationship can be undermined by an employee in many different ways. The numerous cases in which a breach of the duty of good faith and fidelity has been found do not limit the conduct of the employee which may breach the duty of good faith and fidelity. The conduct must, of course, impinge on the employment relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employer is reasonably entitled to have in its employee. That requires an examination of the circumstances of the case.
The defendant also says that Mr Buitendag breached his fiduciary obligations. Senior employees, such as managers, may owe a fiduciary duty to their employer. In general, fiduciary obligations arise when a person undertakes to act in the interests of another or places himself in a position where he is obliged to act in the interests of another. Employees may owe fiduciary duties to their employer which are similar to the duty of good faith and fidelity. The employment relationship was recognised as one of the categories of relationship where fiduciary duties are owed in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 68 (Gibbs CJ), 96 (Mason J), 141 (Dawson J). However, not all functions performed by employees carry fiduciary obligations. In State Rail Authority (NSW) v Earthline Constructions Pty Ltd (1995) AILR 5‑018 (NSWSC) O'Keefe CJ said that there is a difference between a power and a mere function and between the exercise of a power and the performance of a mere function. A power is something which may or may not be exercised, its exercise involves a judgment or discretion on the part of the holder of the power and an exercise of a power involves the holder making up his or her own mind and not acting in accordance with a direction. In that case, although the relationship between SRA and the employee defendants had fiduciary aspects, those aspects did not include performing the particular tasks which they were alleged to have performed wrongfully and improperly.
Senior managers will normally have fiduciary obligations when their position involves high levels of discretion and trust. Their position is such that they undertake to act on behalf of, or in the interest of, their employer. The high levels of discretion and trust reposed in Mr Buitendag placed him under a fiduciary obligation in the exercise of his powers on behalf of his employer. Mr Buitendag was subject to the 'no conflict' fiduciary rule, that is, Mr Buitendag was under an obligation not to bring his interests or duty to a third party into conflict with the interests of, or his duty to, his employer without the informed consent of his employer.
In Breen v Williams (1996) 186 CLR 71, the High Court held that fiduciary duties are proscriptive only in nature, as opposed to prescriptive. Fiduciary duties are confined to the duties to avoid unauthorised conflicts. After reviewing Breen v Williams and referring to Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 Stapledon and Webster in 'Directors' Duties and Corporate Governance' (2008) 26 Company and Securities Law Journal at 472 said:
Under this new model of fiduciary duties, disclosure is said no longer to be a positive fiduciary duty but rather a step necessary in order to obtain the informed consent of the principal to action that would otherwise constitute a breach of duty.
The obligation of a fiduciary to make disclosure in relation to a conflict of interest was considered by the Full Federal Court in Blackmagic Design Pty Ltd v Overlise [2011] FCAFC 24; (2011) 191 FCR 1. Besanko J, with whom Finkelstein and Jacobson JJ agreed, said that there are two views. The first was that there is no duty to disclose a conflict and that when judges refer to such a duty what they really mean is to refer in a shorthand way to the defence of fully informed consent. The other view is that there is a duty not to act in conflict without the informed consent of the principal and, within this principle, there is a duty to disclose the circumstances of conflict of interest and duty. Besanko J held that the first view was correct. The orthodox approach is that there is a breach when the fiduciary places himself in a position of conflict. That breach may be excused or, perhaps, does not arise if the principal consents. Disclosure is part of the defence of consent.
The performance of every function by Mr Buitendag in the course of his employment does not give rise to a fiduciary duty. The exercise of a power or of a function which involves the exercise of a discretion may give rise to a fiduciary duty. It would be a breach of Mr Buitendag's fiduciary duty if, when making a decision or performing a function that involves the exercise of discretion, he brought himself into a position where his interest, or duty to a third party (the Club), conflicted with the interests of, or his duty to, his employer without making a full and fair disclosure to his employer, through Mr Wilson.

Conflict of interest

At the heart of the defendant's case is the claim that Mr Buitendag had a conflict of interest in his dealings with his employer in relation to the Club. Mr Buitendag does not accept that his dealings in relation to the donation of the transportable to the Club gave rise to a conflict between his interest and his duty to his employer or that there was the appearance of a conflict of interest. Mr Buitendag said that the reason he sought Mr Wilson's approval for the donation of the transportable house to the Club was that:
I was frightened that somebody might suggest that I had given the club the house because I was going to be a member of the club but I did say to [Mr Wilson] that I recognised that my personal benefit was zero and I think that the reason why I did that was simply because I was being ultra cautious (ts 275).
Mr Buitendag did not say that he did not have to disclose his involvement with the Club. He said that 'in the presence of any doubt I was going to take a course of action that was going to be conservative'.

In general, in the employment context, a conflict of interest will arise where an employee could be influenced, or could be reasonably perceived to be influenced, by a private interest when exercising a power or performing a function which involves the exercise of a discretion in the course of his employment.
Mr Buitendag says that he had no conflict of interest because he has no proprietary interest in the Club and did not stand to gain any personal benefit from a donation to the Club. I do not agree. All people have interests. The interest may be a proprietary interest such as shares or a business. It may be membership of a church, a political party, or a sporting or other community association. The test of whether an interest is material to a transaction or decision making process is whether the employee has an interest that may influence, or may be perceived to influence his decision, and hence may impede his ability to make an objective decision free of the influence of his personal or private interest. The Guide (at page 44) provides that employees' activities that involve, or could appear to involve, a conflict between their personal interests and the interests of BHP Billiton include circumstances that could compromise or appear to compromise the employees' ability to make impartial business decisions. If there is a reasonable perception that the interest will have an impact on the employee's actions or decision making, then it is a material interest.
Conflicts of interest can arise in circumstances that do not involve a personal financial gain or benefit. The test is to assess the capacity of a private interest, that is an interest separate from that of the company, to influence the actions or decisions of an employee in the course of his employment. The interest of an employee through membership of a sporting association may become material and give rise to a conflict when the interest of the association becomes involved with the performance of a function by the employee in the course of his employment. It is relevant to consider the commonness of the employee's interest. An interest as a ratepayer is not likely to affect an employee's dealings with the Shire in which he pays rates. However, membership of a sporting club reflects a specific interest and would generally be considered a material interest if the employee had any dealings with their employer on behalf of their club. The size of the club and the role of the employee within the club may be relevant considerations. In this case, the Club was a small group. In September 2008 it had not been formally established. Mr Buitendag was one of three people involved in establishing the Club and was actively involved in all of the major activities involved in establishing the Club. Mr Buitendag had a conflict of interest in making any decision, or taking any action involving the exercise of discretion, on behalf of Ravensthorpe Nickel, in relation to Ravensthorpe Nickel donating a transportable building to the Club. Mr Buitendag initiated the request to Ravensthorpe Nickel to donate the transportable building to the Club. Mr Buitendag was, in effect, acting on both sides of the transaction. Mr Buitendag could not make an 'impartial business decision' whether or not it was in the interests of Ravensthorpe Nickel to donate the transportable to the Club in circumstances where he was one of the three men attending to the founding of the Club and it was he who initiated, on behalf of the Club, the request to Ravensthorpe Nickel to donate the transportable building.
Mr Buitendag had a conflict of interest in deciding to donate materials or services of Ravensthorpe Nickel to the Club. The conflict is not removed by Mr Buitendag requesting the donation of materials and services rather than commanding that they be made. By requesting Mr Whittred to provide services to the Club and Mr Jordaan to arrange for the donation of materials to the Club Mr Buitendag was, in effect, authorising the provision of the services and materials by the defendant to the Club.

Breach 1 - Misleading Wilson about donation of transportable

The defendant says that Mr Buitendag breached the Contract of Employment by misleading Mr Wilson when seeking his permission to donate the transportable house to the Club.
Mr Buitendag had a conflict of interest in making a decision or exercising a discretion in relation to the Company donating property to the Club. The 'conflicts of interest' provisions of the Guide require an employee to advise their manager or supervisor of situations that could involve an actual or perceived conflict of interest. Mr Buitendag complied with that requirement. Mr Buitendag informed Mr Wilson of his proposal that the defendant donate a transportable house to the Club and sought Mr Wilson's approval for the donation. The Guide further requires an employee in a situation that could involve an actual or perceived conflict of interest to remove himself from any discussion or activity involving the conflict. Mr Buitendag did not comply with that requirement. He proposed to Mr Wilson that Ravensthorpe Nickel donate the transportable and briefed Mr Wilson on the proposal. Later, when Mr Jordaan raised issues concerning the donation, Mr Buitendag again briefed Mr Wilson on the circumstances and recommended that the donation should proceed. However, the Guide provided that it is the manager or supervisor's responsibility to ensure that the matter is properly reviewed, including whether it is appropriate for the employee to resume in any discussions or activities that involve the conflict. Mr Wilson, in effect, approved Mr Buitendag being involved in the discussions concerning the donation.
The thrust of the breach of contract alleged by the defendant in relation to the donation of the transportable house is that Mr Buitendag misled and failed to make full or proper disclosure to Mr Wilson in relation to the circumstances of the donation. Mr Buitendag did not receive a request to donate the transportable and refer it to Mr Wilson. In his email of 26 September 2008 Mr Buitendag informed Mr Wilson of 'my proposal' to donate the transportable house to the Club and sought his approval for the donation. Mr Buitendag did so on behalf of the Club and in his capacity as general manager of Ravensthorpe Nickel operations. Mr Buitendag took it upon himself to brief Mr Wilson of the circumstances in which the Company acquired the properties and transportables, the nature or qualities of the transportables ('very modest'), the necessity to remove them from the properties, the advantages to the Company from the donations and Mr Buitendag's interest in the Club which caused him to seek Mr Wilson's approval.
The express terms of the Contract of Employment to faithfully serve the Company and protect its interests at all times, the implied term of good faith and fidelity, and his fiduciary obligation, required Mr Buitendag to make a full and fair disclosure of all matters within his knowledge which would enable Mr Wilson to make a properly informed judgment about the donation. Mr Buitendag's contractual and fiduciary duties required him to bring the nature and extent of his interest in the donation of the transportable house to the Club to Mr Wilson's attention. His contractual and fiduciary duties also required Mr Buitendag to clearly bring to Mr Wilson's attention the value of the transportable houses to Ravensthorpe Nickel and the potential gains and losses to the Company from their donation to the Club and Motocross Club.

Buitendag did not request approval from Wilson during drive

The defendant says that Mr Buitendag had two conversations with Mr Wilson concerning the donation of the transportable house to the Club. In his witness statement Mr Wilson says that in or about late September 2008 he took a long work related drive with Mr Buitendag and Michael Drake during a visit to the mine. Mr Wilson says that he cannot recall precisely what was said during this drive but Mr Buitendag told him about two houses on buffer zone properties that he wanted to donate to two local community clubs.
In his witness statement Mr Drake refers to a work related drive with Mr Wilson and Mr Buitendag in or about early June 2008. He says that during this drive Mr Buitendag raised with Mr Wilson the idea of Ravenswood Nickel donating a house to the Club and Mr Buitendag said to Mr Wilson words to the effect:
I want to bring something up with you because I am a member of a shooting club, BHP Billiton has an old decrepit house on a property needing to be sterilised for buffer purposes. The house has no value. BHP Billiton intends to donate this house to the club, are you okay with that given I am involved in the club?
Mr Drake says that Mr Wilson replied with words to the effect that he consented to the proposal in principle but his approval was given on condition that:
1.The house had zero value;
2.Mr Buitendag be very careful to ensure that he did not involve himself in the donation any further; and
3.No costs associated with the donation were incurred by BHP Billiton.
Mr Buitendag denied that conversation took place, whether in June or September 2008. I am not satisfied that there was a conversation between Mr Buitendag and Mr Wilson in the course of a drive in the terms described by Mr Wilson or Mr Drake. When Mr Wilson was interviewed during the investigation he made no reference to the discussion during a drive. Mr Wilson said that Mr Buitendag had approached him by telephone. That is a reference to the telephone conversation on 26 September 2008.
In his interview during the investigation, Mr Drake said that he was fairly sure that the conversation took place on a Ravensthorpe exercise on 5 and 6 June 2008, but it also may have been on a trip to Yabulu in late September 2008 since that was the only other time he could have been together with Mr Wilson and Mr Buitendag. It is unlikely that such a conversation took place on 5 or 6 June 2008. There is no evidence that Mr Buitendag knew of Mr Edwards' proposal to sell his eastern property as early as 5 or 6 June 2008. The first documentary record of the proposal is in Mr Pens' email of 19 June 2008 to Mr Jordaan in which Mr Pens said that Mr Edwards wanted to sell his eastern property as well as the western property and that there was a reasonable transportable style house on the eastern property. There is no evidence that Mr Buitendag knew of those matters on 5 or 6 June 2008. Furthermore, Mr Buitendag's unchallenged evidence is that it was in or about August 2008 that he, Mr Biddulph and Mr Besso decided that they would establish the Club. There is no evidence that Mr Buitendag went on a drive with Mr Wilson and Mr Drake in late September but prior to 26 September 2008.
It is common ground that Mr Buitendag telephoned Mr Wilson on 26 September 2008, proposed that Ravensthorpe Nickel donate the transportables to the clubs, gave Mr Wilson information about the transportable houses and sought approval to donate the houses to the Club and Motocross Club. Neither Mr Wilson nor Mr Buitendag said that during that conversation there was any reference to any earlier conversation about the transportables. The gist of Mr Wilson's evidence is that in making his decision to approve the donations he acted on the basis of what he was told by Mr Buitendag in the telephone conversation of 26 September 2008 and the subsequent email. I am not satisfied that there was any other conversation between Mr Wilson and Mr Buitendag about donating the transportable houses before or within a few days of 26 September 2008.

Alleged failure to disclose

The defendant says that in the telephone conversation on 26 September 2008 and Mr Buitendag's email of 26 September 2008 Mr Buitendag failed to tell Mr Wilson:
(a)[Mr Buitendag] not only was a member of the Club and would participate in the Club when it was established, but that he was deeply involved in establishing the Club with only two others;
(b)[Ravensthorpe Nickel] intended to sell the eastern property as soon as possible for the highest price achievable in order to recoup the funds it had outlaid in purchasing the eastern property;
(c)removal of the transportable house from the eastern property would devalue, or at least had the potential for devaluing, the eastern property;
(d)[Mr Buitendag] believed the value of the transportable house to be at least $50,000;
(e)the Club had no funds and was not in a position to remove and relocate the transportable house at its own cost;
(f)the Club was intending to apply to the CLC to obtain the funds necessary to pay for the removal and relocation of the transportable house; and
(g)[Mr Buitendag] did not know what was the financial position of the Motocross club and whether it had the financial capacity to remove and relocate the house on the western property at its own cost.

Failure to disclose extent of involvement with Club

In his responsive witness statement Mr Buitendag said that he told Mr Wilson he was involved in establishing the Club. In cross‑examination Mr Buitendag said he told Mr Wilson that he was part of a group of people who are establishing a club.
In his witness statement Mr Wilson said that Mr Buitendag told him that he was a member of the Club. In cross‑examination Mr Wilson said that Mr Buitendag told him that the Club was being established but he did not recall Mr Buitendag saying that he was assisting in establishing the Club; Mr Buitendag had not told him that. Mr Wilson said that he knew that the Club was being established but Mr Buitendag did not say anything about the number of members and Mr Wilson 'had no idea that he was part of the establishment of the club' (ts 700).
I find that Mr Buitendag did not fully or accurately inform Mr Wilson of the extent of his involvement with the Club, even if Mr Buitendag did say to Mr Wilson that he was assisting in establishing the Club. It may have been literally true to say that he was part of a group of people who were establishing a club. But that did not convey to Mr Wilson the extent of Mr Buitendag's involvement in the Club or in the donation of the transportable building to the Club.
Mr Buitendag, together with Mr Biddulph and Mr Besso, decided to establish the Club. The work to be done to establish the Club was undertaken by the three of them. Mr Buitendag assumed the task of forming an incorporated association. Mr Buitendag, with Mr Biddulph and Mr Besso, inspected a number of areas identified by Mr Besso as suitable for a club site. The three of them decided that a parcel of land adjacent to the airport would be ideal. Mr Buitendag discussed with Mr Biddulph and Mr Besso the presentation that should be made to the Shire prior to Mr Besso sending a letter on 22 September 2008 to the Shire councillors regarding the proposal to establish the Club. Mr Buitendag had researched and obtained a quote for the supply of clay target traps. On 17 September 2008 Mr Buitendag had written to Mr Besso and Mr Biddulph giving them an update in relation to his progress on incorporating the Club. In the days immediately preceding 26 September 2008 Mr Buitendag drafted a constitution for the Club and an advertisement for the Club and assisted Mr Besso in drafting a letter to the Shire requesting a lease of land on which to conduct the Club. Within days after Mr Wilson's approval Mr Buitendag approached Amanda Barrett, community co‑ordinator Ravensthorpe Nickel, about applying for Nickel West Ravensthorpe Nickel operations sponsorship for funds to move and relocate the transportable. The application form subsequently drawn and lodged by Mr Buitendag, stated that Mr Buitendag was part of a three man project team and that he was responsible for integration of the establishment effort.
Mr Buitendag did not tell Mr Wilson that it was he, Mr Buitendag, who had initiated the request, on behalf of the Club, for Ravensthorpe Nickel to donate the transportable and that he was responsible for integration of the effort to establish the Club as stated in the Ravensthorpe Nickel ‑ Nickel West Community Sponsorship application.
After the telephone conversation, Mr Buitendag sent Mr Wilson an email summarising the request that Mr Wilson approve the donation. In his email of 26 September 2008 Mr Buitendag said:
I am seeking this approval from you in terms of good business conduct because I have an interest in Clay Target shooting and will participate in the club when it is established. The club will be a community facility under the auspices of an incorporated association registered as not for profit. Besides being able to participate in the sport of my choice locally, there will be zero personal benefit.
The email is misleading. It would lead a reader to believe that Mr Buitendag had no greater involvement in the Club than that he would become a member and participate in clay target shooting when it was established. It was relevant for Mr Wilson to know that Mr Buitendag, together with two other people, was founding or establishing the Club and it was Mr Buitendag who, on behalf of the Club, had made the request that Ravensthorpe Nickel donate the transportable building. Mr Buitendag's role in establishing the Club and requesting the donation of the transportable house was relevant to Mr Wilson's consideration of the proposal to donate the house. When he was interviewed during the investigation Mr Wilson was asked whether someone who declares an interest in a transaction is always removed from further involvement or whether there were circumstances where he is permitted to continue to be involved in the transaction. Mr Wilson responded:
[Mr Buitendag] told me that two clubs had approached BHP for donation of two houses that we were going to have to pay to get rid of. As far as I was concerned, the transaction was over ‑ it was done and dusted. There was not, as far as I was concerned, any need for further involvement.
Mr Wilson believed that the Club had approached BHP to donate the transportable, not that Mr Buitendag had initiated the request. That fact, together with the information that Mr Buitendag provided about the proposed donation, caused Mr Wilson to approve the donation without further enquiry.

Failure to disclose information about the transportable

Mr Buitendag did not fully or accurately inform Mr Wilson of the circumstances in which Ravensthorpe Nickel had acquired Mr Edwards' eastern property, what it intended to do with the property and the use or value of the transportable house on the property.
In his email to Mr Wilson, Mr Buitendag stated:
As part of creating a buffer zone around our existing and future operations, RNO have acquired a number of farms just recently. There are two very modest transportables on these farms that we will remove to ensure that they are not inhabited during the lifetime of our mining operation.
The purchase of farms surrounding the mine originated from discussions, which resulted in the recommendation in Mr Murray's memorandum of 9 August 2007 and Mr Buitendag's email to Mr Bastos of 10 August 2007, in which he put forward the proposal to purchase farms adjoining the mine. The proposal was to purchase six neighbouring farms. Mr Ford's memorandum expressly stated:
The other nearby farms also owned by Coxall and Edwards would not be purchased by RN.
The reason for purchasing the six farms was for Ravensthorpe Nickel to own the land surrounding the mine and plant so that it could mitigate complaints regarding operational noise and the general lifestyle disturbance arising from the mine: see Murray memorandum 9 August 2007. Ravensthorpe Nickel intended to retain ownership of the land after purchasing the farms. In his email to Mr Bastos, Mr Buitendag said he believed 'that ownership of these farms is critical'.

It is established by a number of decisions in this court that the adjective 'unusual' in s 280(2) of the LPA qualifies only the word 'difficulty' and not the words 'complexity' and 'importance'.
Order 66 r 12(1) of the Rules of the Supreme Court 1971 (WA) (RSC), which provided for special costs orders before 1 January 2004, provided that where the court is of opinion that a special order as to costs should be made by reason of the unusual complexity or importance of the case or for any other good or sufficient reason the court may order that any particular allowance in any relevant scale may be raised or a limit removed. In Schmidt v Gilmour [1988] WAR 219 the Full Court held that the amount of work done in getting up the case for trial may constitute a good and sufficient reason for making an order increasing the scale notwithstanding that the case is not one of unusual complexity or of importance. However, under s 280(2) of the LPA, the amount of work done in relation to an item in the scale cannot constitute a good and sufficient reason to depart from the scale unless the amount of costs allowable in respect of the item under the costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter.

The defendant's submissions

In her affidavit sworn on 1 February 2013 Ms Klimczak, a solicitor who had the day‑to‑day conduct of the action on behalf of the defendant, says that the action broadly involved allegations by the plaintiff in relation to the following issues:
a.the reasons for his dismissal (summary dismissal claim);
b.the manner in which the investigation into his alleged misconduct was conducted (breach of policies claim);
c.information reported in the media surrounding his dismissal (breach of confidentiality claim); and
d.computation of damages.
Ms Klimczak says that there were broadly seven grounds of dismissal on which the defendant relied with a further six issues to be considered in relation to two of those grounds. Additionally, the plaintiff made allegations related to his prior disciplinary history, involving two prior incidents. The relevant conduct occurred over the course of approximately six months. The defendant says that the matter was made unusually difficult by the complex set of facts and circumstances referred to by Ms Klimczak. The defendant says that the matter was factually complex for the same reasons, that is the number of grounds of misconduct and related issues regarding the defendant's policies and approach to community investment and the farmhouses, the volume of material involved, including in relation to the defendant's investigation, and the complex interpretation of the share plans in the context of the issue of damages. The defendant says that the following matters attest to the complexity of the factual issues:
(a)the matter spanned over three years;
(b)there were numerous amendments to pleadings and interlocutory applications;
(c)the volume of material involved in the matter was substantial, and as a result, significant time was required in order to give discovery, and prepare the matter for hearing;
(d)the defendant's opening and closing submissions were lengthy and involved considerable factual and legal analysis;
(e)the matter required the evidence of a large number of witnesses from various locations;
(f)the duration of the hearing was lengthy (10 days) in order to allow the significant amount of material to be put forward; and
(g)the trial bundle alone comprised seven lever arch files.
The defendant further says that the matter was of very great importance to the parties. The plaintiff was a senior manager of the mine, and the allegations of dismissal related to him putting himself in a conflict of interest situation. The defendant says that the most important of its policies relate to safety and the Guide to Business Conduct. The defendant considered it important to defend the matter because of the different, narrow interpretation taken by the plaintiff, and it considered it important to defend its interpretation of the policy. This had the potential for global implications for the BHP Billiton Group if the defendant's views were accepted. The defendant further says that the plaintiff's statement of claim made a number of serious allegations of bias against senior managers acting on behalf of the defendant in relation to the conduct of the investigation and the disciplinary process. The plaintiff also made a number of statements to the media about his dismissal, his intention to commence proceedings and the closure of the Ravensthorpe Nickel Operation of which he was the general manager. The plaintiff also made comments to the media during the trial and after the judgment was handed down. The defendant says that given the comments that had been made by the plaintiff as reported in the media, and the allegations of bias against its senior managers, the defendant considered it important to defend the allegations that it had not acted properly in relation to the dismissal of the plaintiff.
The defendant seeks a special costs order in relation to its defence, giving discovery, getting up case for trial and counsel fees. The pleadings were amended on a number of occasions. The statement of claim was amended five times, the defence four times and the plaintiff's reply four times. The defence pleads facts which would have required extensive investigation and taking of instructions, as well as requiring time to employ the facts within a legal framework and structure the defence. The effect of [10] of Ms Klimczak's affidavit of 1 February 2013 and [9] of her affidavit of 4 February 2013 is that approximately 219 hours of work were billed by all solicitors and counsel involved in the work in relation to the various versions of the defence. The Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008 and the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (the Determinations) allow 10 hours for a senior practitioner.
There were four affidavits of discovery sworn on behalf of the defendant. These included a total of 352 documents occupying approximately four lever arch files. In her affidavits Ms Klimczak says in effect that approximately 290 hours work by the defendant's solicitors and counsel related to discovery. The Determinations allow 10 hours for discovery.
The defendant submits that the amount of costs allowed for getting up case for trial under the Determinations is inadequate because of the complexity of the matter. There were 14 witnesses required to give evidence and 24 filed witness statements. The trial bundle was extensive, and it is apparent that substantial work went into investigating and identifying relevant documentary evidence. The effect of Ms Klimczak's affidavits is that approximately 1,760 hours were spent by the defendant's solicitors and counsel related to getting up the case for trial. The Determinations allow 120 hours for getting up.
The defendant seeks a special costs order for counsel fees on brief, ie the first day of trial and preparation and a further special costs order for counsel fees for the second and each successive day of the hearing. The Determinations allow counsel fees on brief calculated on the basis of 3.5 days of preparation in addition to the first day of trial. A comparison of the hourly rate and daily rate allowed for counsel under the 2010 Determination shows that the fees for trial and preparation are calculated on the basis of a 10 hour day. Accordingly, the counsel fees under the Determinations for preparation and the first day of trial are calculated on the basis of 45 hours. In her affidavits Ms Klimczak says that the defendant's counsel, Mr De Kerloy, billed approximately 132 hours of work in preparing for the trial. It is not clear that all of that work is properly designated as part of the fee on brief. Nevertheless, it is apparent that Mr De Kerloy spent more than 35 hours in preparing for the trial.

The plaintiff's submissions

The plaintiff submits that there was no unusual difficulty or factual complexity surrounding the matter, although there was a significant amount of material involved. In respect of the defendant's claim that the matter was of importance, the plaintiff submits that every case is of utmost importance to the parties involved, but that there was nothing of particular import or significance in this case that would require the court to remove the limits on the scale rates. The plaintiff submits that in any event, any limits with respect to maximum hourly rates that may be fixed in the cost determinations should not be removed.

Matter is complex

In my opinion the matter was a difficult case but I am not satisfied that it is unusually difficult for a matter heard in this court. I am satisfied that it was a complex case. The complexity arises from the numerous grounds which the defendant relied on to justify the summary dismissal. Those grounds required a consideration of the terms of the Contract of Employment, including the defendant's policies and their application to the primary facts and inferred facts which underlie each of those grounds. The volume of evidentiary material was extensive. Whilst it is not conclusive, the length of the parties' written closing submissions is an indication of the complexity.
I am also satisfied that the amount of costs allowable in respect of this matter is inadequate because of the importance of the matter. The case raised no questions of general or public importance. A matter may satisfy the requirement of importance in s 280(2) of the LPA where it involves matters of importance to the parties rather than the public. There must be something about the issues in the case or its significance or consequences that makes it important to the parties. Section 280(2) of the LPA does not require that the matter be one of unusual importance. The case involved issues concerning conflict of interest and whether the plaintiff's conduct breached policies of the defendant. The media coverage of the case, before, during and after trial, is some, albeit not definitive, indication that the matter was important. The issues, their significance and the consequences for the parties justified an amount of work being done, or resources employed, such that the costs allowable under the relevant costs determination is likely to be inadequate because of the importance of the matter.

Costs allowable under Determinations for defence inadequate

Before the court's discretion to make a special costs order is enlivened, it must be of the opinion not only that the matter is complex or important, but that the amount of costs allowable in respect of the matter under the relevant costs determinations is inadequate because of the complexity or importance of the matter. It is fairly arguable that the taxing officer might properly allow costs at an amount greater than the amount allowable under the relevant Determinations for preparing and settling the defence. As I have said, the defence was amended four times. Ms Klimczak has sworn that solicitors and counsel did approximately 219 hours of work in relation to the various versions of the defence. It is a matter for the trial judge to determine as a matter of judgment whether, on the face of it, the amount of work done appears to have been reasonably done so that the amount allowable under the relevant costs determinations is inadequate. This is a judgment which is essentially preliminary and provisional in nature. My impression is that the amount of work reasonably required to prepare and settle the defence in its various versions might properly exceed the amount allowable under the relevant Determinations. Two hundred and nineteen hours is an extraordinary amount of time to be spent on preparing and settling the defence. It will be for the taxing officer to assess what amount should properly be allowed. I am of the opinion that the amount of costs allowable in respect of the defence under the Determinations is inadequate because of the complexity and importance of the matter.

Costs allowable under Determination for discovery inadequate

I am of the opinion that the amount of costs allowable for giving discovery of documents under the Determinations is inadequate because of the complexity and importance of the matter. As I have said, there is evidence that the defendant's solicitors and counsel did approximately 290 hours of work related to discovery. That seems an unusual amount of time. It may be that some, or even a large part, of that work was related to the plaintiff's discovery rather than giving discovery. Furthermore, the taxing officer may assess that a large part of that work was not reasonably necessary. Nevertheless, it is fairly arguable that the taxing officer might properly allow costs for giving discovery at an amount greater than the amount allowable under the relevant Determinations.

Costs allowable under Determination for getting up inadequate

The defendant seeks a special costs order for getting up case for trial. I have already referred to the relatively large number of witnesses and witness statements. There is evidence that the defendant's solicitors and counsel spent approximately 1,760 hours on work related to getting up the case for trial. That is a very large amount of work. The Determinations allow only 120 hours for getting up. It is fairly arguable that the taxing officer might properly allow costs at an amount greater than the amount allowable under the Determinations for getting up. Of course, it will be for the taxing officer to assess whether all, or any part, of that work was reasonably necessary. The material before me does not enable me to form a judgment whether 1,760 hours, or anything like that, was reasonably necessary. My finding is only that it is fairly arguable that the amount allowable under the Determinations is inadequate because of the complexity and importance of the matter.

Costs allowable under Determination for fee on brief inadequate

The defendant seeks a special costs order for counsel fee on brief. As I have said, the Determinations allow an amount for counsel fees for preparation and the first day of trial calculated on the basis of 45 hours work. There is evidence that the defendant's counsel billed 132 hours of work in preparing for the trial. It does not necessarily follow that the defendant should recover all of those costs. However, it is fairly arguable that the taxing officer might properly allow costs for the fee on brief at an amount greater than the amount allowable under the Determination. It will be a matter for the taxing officer to determine whether all or what part of the work done was reasonably necessary and proportionate to the case. I am of the opinion that the amount allowable for the fee on brief under the Determination is inadequate because of the complexity and importance of the matter.

Costs allowable under Determination for subsequent counsel fees not inadequate

I am not satisfied that the counsel fee for the second and each successive day under the 2010 Determination is inadequate because of the complexity or importance of the matter. The trial went for 12 days. Accordingly, the Determination allows for 110 hours for preparation and attendance at trial on the second and successive days of trial. Ms Klimczak's affidavit says that Mr De Kerloy billed 106.5 hours related to preparation for attendance at trial on the trial days. Whilst the complexity and importance of the matter might have caused additional work to be reasonably necessary in preparation for the trial I am not satisfied, having regard to the course of the trial, that the allowance under the 2010 Determination is inadequate.

Hourly rates

The plaintiff submits that any limits with respect to maximum hourly rates under the Determination should not be removed. The hourly and daily rates set out in the Table in the Determinations are the maximum hourly and daily rates which the Legal Costs Committee determined shall be used to calculate the dollar amounts in the scale of costs. Each item in the scale of costs specifies a dollar amount with reference to the fee earner. The rates are set by the Costs Committee as a result of a survey of solicitors to ascertain hourly rates charged by them for work performed by practitioners and subsequently revised as a result of enquiries by the committee and submissions from the Law Society and the Bar Association. As a result, the hourly and daily rates in the Determinations reflect the rates generally charged by practitioners. It may be appropriate to increase the hourly rate having regard to the work that was done and the person who did it. There is evidence that the number of hours spent on the defence, discovery, getting up case and counsel fee on brief exceed by a considerable magnitude the number of hours allowed under the scale. I have formed the judgment that the number of hours allowable in respect of those items of work under the relevant determination is inadequate because of the complexity and importance of the matter. However, the evidence before me, and my knowledge of the matter as case manager, does not lead me to the conclusion that there should be any increase in the hourly rates set out in the Determinations.

Transcript

The trial went for 12 days. Many primary facts and inferred facts were in issue. It was necessary for the parties to refer in the course of the trial and in closing submissions to the evidence in detail. That is demonstrated by the numerous transcript references in the closing submissions of both parties. It was reasonably necessary for the defendant to obtain a copy of the transcript. The plaintiff should pay the defendant's costs of obtaining the transcript.

Interrogatories

The defendant was granted leave to administer interrogatories. The defendant's interrogatories related to certain identified matters. The defendant says that if the plaintiff had pleaded those matters the defendant would not have needed to request these interrogatories.
Order 66 r 47(1) of the RSC provides that the cost of interrogatories shall be reserved for consideration of the judge at the trial. Rule 47(2) provides that in considering whether any order or allowance should be made for the costs of interrogatories, the judge shall consider whether the party requesting answers to interrogatories has by his conduct in connection with the request, unnecessarily increased the costs, and whether the results achieved have justified wholly or in part the additional costs involved. In Civil Procedure Western Australia at [66.47.1] the authors cite Geraldton Fisheries Co‑op Ltd v Minister for Fisheries (Unreported, WASC, Library No 9187, 12 December 1991) as authority for the propositions that:
A successful party who has administered interrogatories pursuant to leave ought to have the costs of them unless, after trial, they are plainly shown to have been unnecessary or unreasonable at the time they were administered. Proper preparation may involve investigation well beyond what is directly productive of evidence led at trial. It is not the rule that costs are allowed only for the preparation which produces admissible evidence.
Applying those principles, the defendant should have the costs of administering interrogatories.

Conferences

The defendant seeks an order pursuant to O 66 r 18(2)(b) of the RSC that the plaintiff pay the defendant's costs of the conferences between counsel on 10 February 2012 and 15 February 2012 regarding objections to witness statements and the index to the trial bundle. The defendant submits that the conferences between counsel were necessary in order to limit the objections to be dealt with at trial and avoid an unnecessary delay in the progress of the matter. The plaintiff submits that counsel conferences are a normal part of the process, including conferences in respect of witness statements, and that the plaintiff should not be ordered to pay the defendant's special costs of the conferences.

Before June 2010 conferences between counsel were not specially provided for in the scale of costs. However, the 2010 Determination introduced into the scale at item 24 'pre‑trial, mediation, conferrals, or other conferences'. Practice Direction 4.1.2.2 provides for the usual orders made in the CMC list. In relation to witness statements the usual orders include:
46.If any dispute concerning the admissibility of any statement or any part thereof has not been resolved, counsel for the parties shall confer and attempt to resolve it. Such conferral shall, if practicable, be in person and failing that shall be by telephone.
That reflects the practice in this court that counsel confer in an attempt to resolve objections to witness statements. It appears to me that the costs of the conferences may be allowed under item 24 of the scale. In any event, I am satisfied that the costs should be allowed. Out of an abundance of caution I will order that the plaintiff pay the defendant's costs of the conferences between counsel on 10 February 2012 and 15 February 2012 regarding objections to witness statements and the index to the trial bundle to be assessed under item 24 of the 2010 Determination.

Conclusion

Orders should be made to the following effect:
1.The limits on costs allowable under the applicable Legal Practitioners (Supreme Court) (Contentious Business) Determinations should be varied in respect of the following items of work:
(a)scale item 3(b) - defence;
(b)scale item 7(b) - giving discovery of documents;
(c)scale item 16 or 17 - getting up or preparation of case;
(d)scale item 19(a) or 20(a) - counsel fees on brief, including first day of trial and preparation;
by removing the limit on the number of hours that may be allowed in the scale for each item of work.
2.The plaintiff shall pay to the defendant the cost of obtaining the transcript of the trial of the action.
3.The plaintiff shall pay the defendant's costs of administering interrogatories.
4.The plaintiff shall pay the defendant's costs of the conferences between counsel on 10 February 2012 and 15 February 2012 regarding objections to witness statements and the index to the trial bundle to be assessed under scale item 24(a).
5.The plaintiff should pay the defendant's costs of applying for special orders as to costs.