Cole v Quest Software Pty Ltd
[2015] FCCA 1314
•27 May 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
COLE v QUEST SOFTWARE PTY LTD [2015] FCCA 1314
Catchwords:
INDUSTRIAL LAW – Applicant employed in position of managing director of sales by respondent – applicant’s employment terminated by respondent employer – whether applicant was by virtue of title also managing director for the purposes of Corporations Act 2001 (Cth) – whether deed of release relating to termination of applicant’s employment executed with proper authority of respondent employer – whether deed of release validly entered into – whether termination of applicant’s employment also ended employee’s directorship of respondent company – definition and role of “officer” of company – application dismissed.
Legislation:
Competition and Consumer Act 2010 (Cth)
Conveyancing Act 1919 (NSW), ss.38(1), 38(3), 38(5)(a), 51A(6)
Corporations Act 2001 (Cth), ss.9, 46, 47, 127(3), 127, 127(4), 201A(1), 201J, 203A, 203C, 203F
Adler v Australian Securities and Investments Commission (2003) 179 FLR 1
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Australian Securities and Investments Commission v Adler (2002) 168 FLR 253Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (ACN 113 114 832) (No.4) (2007) 160 FCR 35
Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Cole v Quest Software Pty Ltd [2013] FCCA 1160Cole v Quest Software Pty Ltd [2014] FCCA 1251
Commonwealth Bank of Australia v Barker (2014) 312 ALR 356
Commonwealth Bank of Australia v Serobian [2009] NSWSC 302
Cope v Thames Haven Dock & Railway Co (1849) 154 ER 1085
Dwyer v Lippiatt; Dwyer v Backpacker R Us (2004) 50 ACSR 333
Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215
Glenmorton Holdings Pty Ltd v D’Aloia [2001] FCA 1331
Goldman Sachs JBWere Services Pty Ltdv Nikolich (2007) 163 FCR 62
Hodgson v Amcor Ltd (2012) 264 FLR 1
Hooker Industrial Developments Pty Ltd v Trustees of Christian Brothers [1977] 2 NSWLR 109
Intico (Vic) Pty Ltd & Ors v Walmsley [2004] VSCA 90
Johnson’s Tyne Foundry Pty Ltd v Maffra Shire Council (1948) 77 CLR 544
Manton v Parabolic Pty Ltd & Ors (1985) 2 NSWLR 361
Matouk v Entrance Seabreeze Pty Ltd [2010] NSWSC 649
Monarch Petroleum NL v Citco Australia Petroleum Limited [1986] WAR 310
Naas v Westminster Bank Ltd [1940] AC 366
Pozzan v Gibbons (2006) 200 FLR 287
R v Scott (1990) 20 NSWLR 72
Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193
Scook v Premier Building Solutions Pty Ltd & Ors (2003) 28 WAR 124
Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors (2004) 219 CLR 165
Vukicevic v Alliance Acceptance Co Ltd & Anor (1987) 9 NSWLR 13
Wilson v Anderson (2002) 213 CLR 401
Windsor Refrigerator Co Ltd & Anor v Branch Nominees Ltd & Ors [1961] Ch 88
Applicant: LAURENCE COLE
Respondent: QUEST SOFTWARE PTY LTD
(ABN 81 078 118 144)
File Number: SYG 871 of 2013
Judgment of: Judge Lloyd-Jones
Hearing dates: 5, 6, 9 May 2014, 2 October 2014
Date of Last Submission: 30 October 2014
Delivered at: Sydney
Delivered on: 27 May 2015 REPRESENTATION
Counsel for the Applicant: Mr C. Lambert
Solicitor for the Applicant: Mr M. Green
Counsel for the Respondent: Mr T. Saunders
Solicitors for the Respondent: Allens Linklaters ORDERS
(1)The Application be dismissed.
(2)The Applicant pay the Respondent’s costs and disbursements of and incidental to the Application as agreed or taxed.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEYSYG 871 of 2013
LAURENCE COLE Applicant
And
QUEST SOFTWARE PTY LTD (ABN 81 078 118 144) Respondent
REASONS FOR JUDGMENT
Introduction
1.Before the Court is an application filed on 26 April 2013 by the applicant, Laurence Cole (“Cole”), alleging breaches by the respondent, Quest Software Pty Ltd ABN 078 118 144 (“Quest”), of the Trade Practices Act 1974 (Cth) (the “TP Act”), and the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) (the “ACL”) and the Fair Trading Act 1987 (NSW) (the “FTA”) in respect of Cole’s former employment with Quest.
2.On 5, 6 and 9 May 2014 these proceedings came before the Court for final hearing. An earlier interlocutory judgment was handed down by the Court in these proceedings on 22 August 2013 in respect of an application filed by Quest seeking to set aside a subpoena that had been issued by Cole: Cole v Quest Software Pty Ltd [2013] FCCA 1160. A further interlocutory judgment was handed down by the Court on 18 June 2014 in respect of an application filed by Quest seeking to tender evidence out of time: Cole v Quest Software Pty Ltd [2014] FCCA 1251.
3.The matter was reserved on the completion of the hearing on 9 May 2014, however, on 10 September 2014 the High Court of Australia handed down judgment in the matter of Commonwealth Bank of Australia v Barker (2014) 312 ALR 356 (“Barker”). In that decision, the High Court rejected the proposition that a term of mutual trust and confidence is implied by law in all Australian employment contracts. The decision in Barker is directly relevant to the matters in issue in these proceedings as Cole has alleged that his employment contract contained various implied terms which Quest subsequently breached. In particular, Cole alleges that his employment contract contained an implied term of mutual trust and confidence. The parties requested the opportunity to address the Court in respect of the implications of the decision in Barker and this was scheduled on 2 October 2014. At the conclusion of the hearing on 2 October 2014, orders were made granting the applicant leave to file further written submissions within 14 days, the respondent to reply within 21 days and the applicant to reply within 28 days of the date of the hearing. These submissions were restricted to issues arising from Barker.
4.In support of the Application, Cole filed the Statement of Claim was also filed on 26 April 2013. This has been reproduced and attached to this judgment as “Schedule 1” as it contains a detailed statement of the background to the Application and the respective pleadings.
Evidence
5.In support of the Application , Cole filed the following evidence:
a)Affidavit of Laurence Cole, sworn 24 October 2013 (the “First Cole Affidavit”);
b)Affidavit of Laurence Cole, sworn 28 January 2014 (the “Second Cole Affidavit”);
c)Exhibit “A1” – Cole, Certificate of Employment;
d)Exhibit “A2” – PACT Reference Check;
e)Exhibit “A3” – PACT – Reference Check;
f)Exhibit “A4” – Exit Checklist.
Both the First Cole Affidavit and Second Cole Affidavit were read into evidence. Cole also gave oral testimony during the hearing.
6.Quest filed the following evidence:
a)Affidavit of Barrie Sheers, affirmed 12 December 2013 (the Sheers Affidavit”);
b)Affidavit of William Owen Evans, sworn 19 December 2013 (the “Evans Affidavit”);
c)Exhibit “R1” – Employment letter – 28 July 2011;
d)Exhibit “R2” – Email – Monday 27 June 2011;
e)Exhibit “R3” – Résumé – produce on subpoena from Hitachi, Cole’s present employer;
f)Exhibit “R4” – Deed of Release (Confidential Exhibit) (the “Deed”);
g)Exhibit “R5” – Exhibit “WE-1”;
h)Exhibit “R6” – Exhibit “BS-1”
The Sheers Affidavit and the Evans Affidavit were read into evidence. Both Barrie Sheers (“Sheers”) and William Evans (“Evans”) gave oral testimony during the hearing.
Consideration
Applicability of the Fair Work Act 2009 (Cth)
7.The circumstances of the termination of Cole’s employment provide that the proceeding before the Court is not an unfair dismissal case under the Fair Work Act 2009 (Cth) (the “Fair Work Act”). The generalised notion of “unfairness” questions such as whether there was a “valid reason” being one which is sound, defensible or well-founded, for the termination, of both of which would be relevant to an unfair dismissal matter, are not relevant in the determination of this matter. As Cole was an employee who was not covered by an award or an enterprise agreement and earned in excess of the high income threshold of AUD$133,000 per annum he is not entitled to bring a claim for unfair dismissal under the Fair Work Act. Quest had the right, pursuant to the express terms of Cole’s employment contract, to terminate his employment on four weeks’ notice, or payment in lieu of such notice for any (or no) reason, without affording any procedural fairness: Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 at [60]; Intico (Vic) Pty Ltd & Ors v Walmsley [2004] VSCA 90 at [3] and [17].
Employment Contract
8.Post hearing, with the benefit of sworn affidavit evidence, evidence-in-chief and cross-examination, both parties provided closing submissions which, in effect, substantially agree with each other’s positions in respect of the establishment of the contract of employment between Quest and Cole.
9.In Quest’s closing submissions it contends that Cole gave evidence about certain communications with Quest prior to his employment, including conversations that he had with various people employed by the entities within Quest’s corporate structure (“Quest Group”) (noting that Quest is a wholly owned subsidiary of a foreign company (this is addressed below)) and an executive recruiter (First Cole Affidavit at [2]-[11]). Quest does not deny that these communications occurred, but submits that they are not relevant to any cause of action by Cole. Following a series of meetings and interviews described in the First Cole Affidavit at [2]-[11], Cole was employed by Quest on or around 7 September 2007. Quest does not dispute Cole’s evidence on this point.
10.In Quest’s closing submissions it contends that the parties agree that Cole’s employment was governed by a contract of employment, the terms of which were recorded in a letter from Quest to him dated 6 September 2007 (the “Employment Contract”). A copy of that document (unsigned by Mr Richard Moseley (Vice-President of Sales - APACJ Quest Software) (“Moseley”), but clearly showing a space in which he was to sign) was put into evidence by Cole and another copy (signed by both Cole and Moseley) appears in Sheers Affidavit at Tab “R”, Exhibit “BS-1”.
11.Quest contends that Cole’s evidence (First Cole Affidavit at [3]-[6]) states the offer of employment was :
a)The product of negotiations between Cole and Moseley, including with respect to Cole’s salary package; and
b)Made by Moseley on behalf of Quest, following two meetings between Cole and Moseley.
Quest does not dispute Cole’s evidence in respect of this issue. The Employment Contract was signed by Moseley in his capacity as Vice-President of Sales - APACJ Quest Software (VP Sales-APACJ). In that title “APACJ” stands for Asia Pacific and Japan, which includes Australia and New Zealand.
12.In Cole’s closing submissions the statement made at [9] above, which emanates from the First Cole Affidavit at [2]-[11], it is argued that these communications are highly relevant, in that they show the formal offer of employment and the documents that constitute Cole’s Employment Contract, being a letter of offer (the “Letter of Offer”), the Proprietary Information and Inventions Agreement (the “Inventions Agreement”) and the Code of Conduct and Ethics (the “Code”) from Quest, from Ms Jean Wong, but not from Moseley.
13.In respect of Cole’s Employment Contract, Quest contends it consisted only of the unsigned Letter of Offer, dated 6 September 2007. Quest argued that it is not the case, given that both Ms Wong’s email of the same date and the Letter of Offer required Cole to sign and return the signed copy of the Letter of Offer, as well as sign and return the signed copies which “comply with” the Invention Agreement and the Code. Cole submits that the mutual obligation contained in the Inventions Agreement and the Code were incorporated by reference into the Contract of Employment between Cole and Quest: Goldman Sachs JBWere Services Pty Ltdv Nikolich (2007) 163 FCR 62; Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193.
14.In respect of Moseley’s authority to enter into the Employment Agreement, Quest’s submissions state that it is not suggested by either party, nor is there any evidence to support such a suggestion that:
a)Moseley was an employee or director of Quest either when he agreed to the Employment Contract on behalf of Quest, or at any other time;
b)Any resolution of the board of Quest was required to authorise Moseley’s decision to hire Cole or to ratify the execution of the Employment Contract; or
c)Moseley required the approval of any other person to negotiate the terms of, or enter into, the Employment Contract on behalf of Quest.
Quest contends that Moseley possessed sufficient authority to hire Cole and to negotiate and enter into the Employment Contract on behalf of Quest. It is argued that this is apparent from the uncontested fact that Cole was employed pursuant to the Employment Contract, which was entered into by Moseley on behalf of Quest.
15.Quest’s closing submissions state that Moseley possessed this authority because, in his capacity as VP Sales-APACJ, it was his responsibility to decide who should be employed by Quest in the position of “Managing Director – ANZ” (“MD-ANZ”) (Australia and New Zealand) and to supervise that person. So much is apparent, explicitly and implicitly from Cole’s own evidence (especially the First Cole Affidavit at [3]-[6]), from his concessions in cross-examination (Transcript of Federal Circuit Court Proceedings, (“T”) T/61.28-46 and 63.2) and from the evidence of Sheers (Sheers Affidavit at [15], [18]).
16.Quest submits that the appointment and supervision of the MD-ANZ was a significant responsibility, which naturally directly affected the performance of Quest. In appointing and supervising the MD-ANZ, Moseley was, therefore, a person who made, or participated in making, decisions that affected the whole, or a substantial part, of the business of Quest (T/62.19-21). On that basis, in his capacity as VP Sales-APACJ, Moseley was also the “officer” of Quest within the meaning of s.9 of the Corporations Act 2001 (Cth) (the “Corporations Act”). The classification of Moseley as an officer in this respect is consistent with the High Court’s observation at, in identifying whether a person was an “officer” within the meaning of that section, the Court must have regard to the actual responsibilities of the person: Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465 per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [6]-[16], and Heydon J at [41]. The question as to who is an officer of Quest is examined in more detail below.
17.Quest’s Closing Submissions contend that the position in which Cole was employed by Quest, pursuant to the Employment Contract, was of MD-ANZ. Sheers has explained that the MD-ANZ position was one of a number of “Country Manager” roles within the Quest Group, each of which reported to a more senior Quest Group Executive: Sheers Affidavit at [9], [10], [15] and [18]. It is Cole’s evidence (First Cole Affidavit at [13]) that, following the execution of the Employment Contract, he:
a)Commenced work as a MD-ANZ of Quest on 1 October 2007; and
b)Was subsequently appointed as a Director of Quest (within the meaning of the Corporations Act) on or about 30 November 2007.
18.Quest does not dispute Cole’s evidence in respect of the above matters. Quest admits that Cole was appointed to, and worked in, the employed position of MD-ANZ of Quest (see Quest’s Defence at [61], but has never admitted or agreed that Cole was appointed to the statutory office of Managing Director under the Corporations Act). The Statement of Claim states:
[61] At all material times concerning the termination of the Applicant, the Applicant was the appointed Managing Director and a registered Director of the Respondent and Mr Jensen was the other registered Director of the Respondent for the purposes of the Corporations Act 2001 (Cth)…
The Defence states:
[61] The Respondent admits paragraph of the Statement of Claim.
Accordingly, Cole is incorrect when he asserts that Quest is attempting to amend its pleadings in respect of the nature of the two separate roles.
19.In Cole’s submissions it is submitted that s.203C of the Corporations Act requires a resolution of the members of Quest Incorporated for Cole to be removed as a Director and s.203F of the Corporations Act requires a resolution of the Board of Directors for Cole to be removed as the Managing Director of Quest. The ASIC Current & Historical Company Extract reveals that Cole only held the position of Director of Quest from 30 November 2007 to 2 May 2011. There is no reference to him holding the statutory position of Managing Director. The title MD-ANZ in its use and application in these proceedings is a non-statutory title with no direct relevance to the Corporations Act. It is common practice in private business and the public service to give people the title of director, as part of the structural nomenclature of the organisation. Commonwealth and State Public Service Commission’s appoint “Directors-General” to head departments and sections. In private enterprise the term sales director is commonly used to describe an individual employee by a business to manage the activities of subordinate salespersons and to develop and implement an effective selling strategy for the business in general. The title is commonly used in businesses and organisations that offer for sale products and services.
20.In these proceedings there has been an attempt on behalf of Cole to conflate these two roles so as to merge the position of MD-ANZ, being purely a job title, into the provisions of the Corporations Act in respect of managing directors which would then require steps to be taken by Quest to conform with the Act’s relevant requirements.
21.Quest’s closing submissions contend that Cole’s evidence supports the conclusion that Cole’s employment by Quest and his appointment as a Director of Quest were legally and temporally separate events. These events gave rise to Cole’s two distinct capacities in relation to Quest, as an employee and as a director. Cole alleges that he was appointed managing director of Quest within the meaning of the Corporations Act (Statement of Claim at [60], [61] and [64]). Cole appears to allege that his appointment was in addition to his appointment as a director and his employment in the position of MD-ANZ of Quest.
22.Quest submits that despite the assertion in the Statement of Claim, Cole has adduced no evidence to seek to prove that he was appointed as Managing Director of Quest in accordance with either s.201J of the Corporations Act or a corresponding provision of Quest’s Constitution. Cole’s allegation appears to have been based solely on the premise that the words “Managing Director” as they appear in the title of his employment position and the provisions of the Corporations Act must mean exactly the same thing and must refer to an appointment to a statutory office of that name established under the Corporations Act.
23.Quest argues that there are patent, logical problems with accepting Cole’s premise, in particular:
a)The fact that his employment as MD-ANZ of Quest predated his appointment as a Director of Quest by almost three months;
b)The fact that he was performing the responsibilities of the position of MD-ANZ for almost two months prior to his appointment as a Director of Quest; and
c)The fact that the title of his employed position of MD-ANZ suggests responsibilities across the broader geographical area than that to which the Corporations Act applies.
Reporting Lines within Quest Group
24.In Quest’s Closing Submissions it is submitted that Sheers gave an uncontested account of the reporting lines within the Quest Group: Sheers Affidavit at [9] and [10]. In Sheers’ account a number of Quest group country managers (including MD-ANZ) report to him (and, before him, to Moseley). In turn, Sheers reports to a more senior executive within the Quest Group, Mr Alan Fudge, who is based in the United States of America. This account is consistent with Cole’s own evidence and the express terms of the Employment Contract, the first paragraph of which provides that Cole was to report to the VP Sales-APACJ, Moseley.
25.Sheers replaced Moseley as VP Sales-APACJ in December 2010, although, since his appointment, the name of his position has changed slightly to “Vice President and General Manager – Asia Pacific and Japan” for Quest Group (“GM-APJ”) (T/124.34-37). The responsibilities and authorities of the GM APJ positions do not differ from those of the VP Sales-APACJ. In particular, Sheers has “General Executive responsibilities for the business of Quest”: Sheers Affidavit at [17], and was responsible for the Quest Group’s software development and sales business in the Asia Pacific and Japan region, including Australia: Sheers Affidavit at [15(a)]. Accordingly, Sheers as GM-APJ had the same responsibilities and authority as Moseley and as VP Sales-APACJ was, similarly, an “officer” of Quest within the meaning of the Corporations Act. The dispute between the parties as to whether Sheers was an “officer” of Quest is considered below.
26.Quest submits that Cole has deposed that “he reported the performance of Quest” to Sheers: First Cole Affidavit at [21]. Quest states that this is correct, but Cole understates the position. Cole’s reporting obligation to Moseley and to Sheers extended beyond the mere reporting of financial and other performances of Quest. Both Cole and Sheers gave evidence that Cole discussed the performance of the business with Sheers on a weekly basis (T/132.39-40; T/208.46-209.7) and that his reporting obligations to Sheers covered the whole spectrum of the performance of his role as an employee, including (T/61.44-63.2; T/209.44-46; T/275.46-267.10):
a)Setting proposed budgets and financial targets for the business in Australia and New Zealand;
b)The actual performance of the business as against those budgets and targets;
c)Potential sales for the business in Australia and New Zealand (T/132.43-44);
d)The strategic direction of the business in Australia and New Zealand;
e)The decisions that he took, or was thinking about taking, to employ potential employees or dismiss key employees; and
f)His planned annual leave and the approval of such leave.
27.Quest’s closing submissions state that Cole was required to obtain approval from Sheers before making decisions in relation to various matters associated with Quest’s business, including changing the number of employees engaged by Quest, changing the structure of the organisation, and signing up a new partner to the organisation (T/276.38-277.2). Cole also agreed in cross-examination that Moseley (prior to his departure in January 2011) and Sheers (after his appointment in January 2011) participated in making decisions that affected the whole or a substantial part of Quest’s business in Australia and New Zealand (T/62.19-21; T/62.36-63.2). Sheers gave evidence that he participated in the making of decisions that affected the internal management of Quest in Australia (T/186.29-30). Cole required approval from Sheers and, in some instances, Mr Fudge, in relation to certain decisions concerning Quest, both in Australia and New Zealand (T/190.1-4).
Status of Moseley
28.The reporting lines within Quest Group are set out in Quest’s closing submissions and repeated at [23]-[25] above. The structure is also referred to in the Sheers Affidavit at [9]-[10] where Sheers stated:
Reporting lines in the Quest Group generally
9. The Quest Group has at all material times (including at all times during Mr Cole’s employment) carried out business in a number of countries around the world as an integrated corporate group. Generally, employees in each country reported either directly or indirectly to an executive (a Country Manager) in each country who was responsible for managing the business in that country. Each Country Manager reported to a Quest Group regional general manager, who in turn reported to Alan Fudge, whose position titles over time have been Senior Vice President, Sales and Marketing in the period up to December 2012, and Vice President, Worldwide Field Sales, Software Group in the period from December 2012 to date. Mr Fudge is based in the United States.
10. At all relevant time (including at all times during Mr Cole’s employment) each Country Manager was typically an employee of a Quest Group entity incorporated in the country in which the Country Manager was based. Some Country Managers (including Mr Cole) were also directors of the Quest Group entities in their respective countries. At all relevant times (including at all times during Mr Cole’s employment) each regional general manager (including me and my predecessor, Richard [Moseley]) and QSI vice president (including the manager to whom I report Mr Alan Fudge) was typically an employee of QSI.
29.In Cole’s reply to Quest’s closing submissions, Cole challenges the status of Moseley, who initially hired Cole and executed his Employment Agreement. Cole claims that Quest relies upon Moseley’s signing of the Letter of Offer (see [11] above) and, on that basis, submits that Moseley was, therefore, an officer of Quest for the purposes of s.9 of the Corporations Act. Other than his involvement in the hiring of Cole, Quest has put no evidence from Moseley in respect of his participation in any decision “that affected the whole, or a substantial part of the business” of Quest.
30.Cole claims that Quest was on notice from the very outset of these proceedings that Sheers’ authority to execute the Deed and summarily dismiss Cole would be a strongly contested fact in issue (Statement of Claim at [60]-[73]). Cole argues that if Quest wished to make the argument that Moseley was an officer of Quest, which Cole denies, it was open to Quest to put on evidence from Moseley or Mr Fudge (who still works for Quest Group) (Sheers Affidavit at [9]) to support the contention that Moseley participated in the decision that affected “the whole, or a substantial part of the business” (Corporations Act, s.9(b)(i)). Cole contends that the only evidence adduced by Quest that supports this contention is that Moseley was involved in the hiring of Cole. Cole argues that this does not established that Moseley participated in the decision that affected Quest’s “business” for the purposes of the definition in the Corporations Act, as Quest was not in the “business” of hiring persons, rather, was in the business of selling software.
31.Cole submits that Sheers gave no evidence in the proceedings that he knew Moseley to be an officer of Quest and, in taking over from Moseley, he was vested with the same authority as Moseley.
32.Cole argues that Moseley was only ever an employee of Quest Incorporated and that Cole ran Quest in his own right. Further, there is no evidence before the Court of Moseley being an officer of Quest for the purposes of the Corporations Act or that Sheers was vested with the same authority as Moseley.
33.This argument as to the status of Mosely substantially ignores the material in the Sheers Affidavit at [1]-[10] and [17]-[19]. Without reviewing this material in detail, it is difficult to see that Moseley did not satisfy the requirements of ss.9(b)(i) and (ii) in relation to the definition of an “officer” for the purposes of the Corporations Act. The company extract of Dell Software Pty Ltd (ACN 078 118 114) formerly known as Quest Software Pty Ltd is a wholly owned subsidiary of Dell Software Inc. of 5 Plarais Way Alisoviejo, California, United States.
34.In the Sheers Affidavit at [18]-[19] he states:
MR COLE’S EMPLOYMENT WITH QUEST AUSTRALIA
18. Mr Cole was employed by Quest Australia on or around 7 September 2007 in the position of ‘Managing Director – ANZ’. This position was the name of the Country Manager position for Australia and New Zealand and reflects his role as the most senior executive of Quest Australia as well as a director of Quest Australia. At Tab 2 is a true copy of a letter to Mr Cole signed by Mr Moseley on behalf of Quest Australia dated 6 September 2007 offering Mr Cole employment with Quest Australia on the terms set out in that letter (the Employment Contract). Mr Cole accepted that offer by signing the letter on 7 September 2007.
19. Mr Cole was appointed a director of Quest Australia on 30 November 2007, and resigned from this office with effect from 2 May 2011.
35.In the Letter of Offer (at Tab 2 of the Sheers Affidavit), the opening paragraph states:
I am delighted to offer you the full time position as Managing Director – ANZ, with Quest Software (Company), on the following terms and conditions. The position is based in Sydney, Australia, reporting to Richard Moseley, VP Sales APACJ. Your commencement date will be 1st October 2007.
36.I am satisfied that in Cole accepting the position of MD-ANZ that he was to directly report to the VP Sales-APACJ. This was a non-statutory role for the purposes of the Corporations Act, however, Cole was required to take a position as a director of Quest to satisfy the requirement that a foreign wholly owned subsidiary to have at least one Australian director (s.201A(1) of the Corporations Act).
Status of Sheers
37.A substantial theme being argued on behalf of Cole is that Sheers did not fall within the definition of being an officer of Quest, in accordance with s.9 of the Corporations Act. As Sheers was not appointed as a director of Quest there was a requirement for him to hold the position of an officer of the organisation in order to carry out the various steps involved in the termination of Cole’s employment and the execution of the associated documentation. This convoluted set of submissions that sought to establish that Sheers did not have this status was pointless, as he clearly stated in sworn evidence given during cross-examination that he did not hold that position.
38.The following sequence of Sheer’s cross-examination establishes this proposition:
Lambert: From the time you joined Quest Incorporated in January of – sorry, in December of 2010, up until and including 2 May 2011, there were only two directors of Quest Australia, weren’t there – two registered directors?
Sheers: That’s my understanding, yes.
Lambert: And they were Mr Richard Jensen; do you agree?
Sheers: Yes.
Lambert: And Mr Laurence Cole?
Sheers: That’s my understanding.
Lambert: You agree with that?
Sheers: Yes. I do.
Lambert: And those two directors constituted the board of directors of Quest Australia; do you agree with that?
Sheers: That’s my understanding. Yes.
Lambert: And at no time between January 2011, or to be more precise – well, it was 1 January 2011 that you took over from Mr Moseley, wasn’t it?
Sheers: That’s correct.
Lambert: So at no time between 1 January 2011 and 2 May 2011 did the board of directors pass a resolution appointing you a director of Quest Australia, did they?
Sheers: No. They did not.
Lambert: And they did not pass a resolution appointing you an officer of Quest Australia, did they?
Sheers: They did not.
Lambert: And they did not pass a resolution appointing you an agent of Quest Australia, did they?
Sheers: No.
Lambert: …you did not receive from either Mr Jensen or from Mr Cole any letter of authority appointing you an agent during that time, did you?
Sheers: No.
Lambert: And you have never been employed by Quest Australia, have you?
Sheers: No.
Lambert: And you’ve never been an officer of Quest Australia, have you?
Sheers: No.
39.This line of questioning appears to be based on the assumption that to hold the position of “officer” requires a statutory appointment. This is discussed below.
Corporate Status of Quest
40.To fully appreciate the claims and counter-claims brought by the parties, together with the status of both Moseley and Sheers and the evidence in respect to reporting lines within the Quest Group, it is necessary to consider Quest’s status in the context of it as a corporate entity.
41.Companies that are incorporated outside of Australia (in this case a company and its subsidiary registered in the United States of America) that wish to carry on business in Australia must either incorporate a wholly owned or partly owned subsidiary company in Australia, or register a branch office in Australia. In this matter the election was to incorporate a wholly owned subsidiary. It was in the provisions of the Corporations Act that the entity was limited by shares and a proprietary company. Proprietary companies are often used as subsidiaries for foreign companies and must have at least one Australian resident director, but need not have a secretary. It also has the words “Propriety Limited” or “Pty Ltd” in its name. A review of the ASIC Current & Historical Extract reveals that during Cole’s period of employment he was the only Australian Director (appointed between 30 November 2007 and 2 May 2011). The other directors of Quest relevant to these proceedings, being Richard Jensen, Vincent Coburg Smith, Kevin Brooks and Michael Vaughn, are citizens and residents of the United States: Sheers Affidavit, Tab 1).
42.The activities of a company are carried out by the persons responsible for the management and control of the company. Such powers are normally divided between the directors and the shareholders. The way in which the power is shared between these two groups is determined by terms of the company’s constitutional document. The section relevant to these proceedings is the rules upon which the company is to be internally regulated. In this matter Quest’s constitution was attempted to be filed well after the date for filing evidence had passed. An interlocutory judgment was issued on this issue (Cole v Quest Software Pty Ltd [2014] FCCA 1251 on 18 June 2014). This application, in accordance with the previous decision, was rejected.
43.Under the Corporations Act a company is required to appoint office holders who act on behalf of the company. These office holders are responsible for ensuring the company fulfils the company’s legal requirements as set out in the Corporations Act. The directors of a company are responsible for the day to day management of the company. Every company carrying on a business or deriving property income in Australia must also appoint a public officer. The public officer appointed must be an Australian resident. The public officer is responsible for undertaking and ensuring compliance with all things which are required of a company under Australian taxation legislation. The issue of a public officer has not been raised by the parties in these proceedings and should not be confused with the position of an officer.
44.The actual management and control of a company is vested in the board of directors who are appointed by the members or shareholders. Quest has 2,200,012 issued ordinary shares, which are fully paid and beneficially owned by its United States parent, Dell Software Inc. (formally Quest Software International, Inc. prior to acquisition on 28 September 2012.
45.Some parts of the Corporations Act impose special obligations on companies and their participants when a relationship of a holding and subsidiary company exist. Division 6 of Part 1.2 of the Corporations Act provides that a company is a subsidiary of another company (holding company) if, and only if:
a)The holding company controls the composition of the subsidiary’s board. One company is taken to control the composition of another board if “by exercising a power exercisable (with or without the consent of any other person) by it, it can appoint or remove all, or the majority of the directors of [the company]”;
b)The holding company is in a position to cast or control the casting of more than one half of the votes at a general meeting of the subsidiary;
c)The holding company holds more than one half of the issued shares capital (excluding non-voting shares) of the subsidiary; or
d)The subsidiary is a subsidiary of another company of the holding company: ss.46 and 47 of the Corporations Act.
Companies will be treated as holding companies and subsidiaries where they satisfy any one of the above tests.
46.The Governance Institute of Australia, in its guidelines for “Directors of Wholly-Owned Subsidiary Companies”, states that directors of subsidiaries generally hold office until they resign, are removed by the shareholders, or cease being employed by the group. Directors may resign at any time and are usually expected to resign upon ceasing to be employed by the corporate group or if asked to resign by the corporate group. The board of directors of a subsidiary company may act in different ways, depending on the authority provided by the constitution of the company, the board of charter or terms of reference and the company’s activities. Subsidiary companies, their directors and employees will usually be expected to comply with any other of the parent company’s policies and other mandatory requirements.
47.As indicated elsewhere in these reasons, the constitution of Quest is not before the Court, however, the unchallenged affidavit evidence of Sheers is that Quest operated as a wholly owned subsidiary of Quest Software International Inc. (now Dell Software) through an intermediate subsidiary Dell Software Singapore Pty Ltd (formerly Quest Software Singapore Pty Ltd). Consequently, the appointment and removal of Directors and Officers of Quest is at the total discretion of the parent company.
48.A substantial element of the argument advanced on behalf of Cole appears to be based on the notion that Quest was incorporated, owned and operated as a stand-alone private company within Australia without the status of being a wholly owned subsidiary of a foreign parent. Provided that Quest complies with its obligations under the Corporations Act, its taxation requirements, and other statutory acts and regulations it is free to operate as it has.
49.Against the attempt of Cole to give the appearance that Quest operated in Australia under the sole control of Cole this contention is tempered by the following:
a)Quest is and always was a wholly owned subsidiary of a foreign company;
b)Cole reported directly to Sheers VP Sales-APACJ, who changed titles to GM-APJ;
c)The person who issued the employment contract, Jean Wong, Head of Staffing Asia Pacific, was based in Singapore;
d)The sale incentive scheme issued Restricted Stock Units for Quest Software Incorporated;
e)The Achievers Club for exceptional performance and achievement was a function of Quest Software International;
f)Sales Targets were set by Quest Software International;
g)The Managing For Results (MFR) Profit Sharing Plan operated out of Quest Software International;
h)Doug Garn, President of Quest Software Incorporated (“QSI”) who administered these various incentive schemes was based with QSI; and
i)The Proprietary Information and Inventions Agreement and Corporate Code of Conduct and Ethics were issued out of QSI.
Status of a Company Officer
50.In the “Submissions for the Applicant in Reply to the Respondent’s Submissions” the following points are raised:
3. … at all material times Mr. Sheers was only ever an employee of Quest Incorporated and at no time appointed to the Board of Quest Australia as a Director of Quest Software Pty Ltd, nor was he ever an officer of the Respondent, nor had he at any time ever been appointed or acted as agent for the Respondent.
Further it was submitted:
64. … Mr. Sheers alleged summary termination of Mr. Cole was unlawful and a no effect at law as he was not an officer of the respondent and he lacked the requisite authority to terminate Mr. Cole.
51.It was submitted by Cole, in respect of the execution of the Deed:
75. The fact that that the Deed may have been executed in accordance with the Common Law and the manner of execution is not precluded by s.57A (6) of the Conveyancing Act 1919 (NSW) does not overcome the problem that the Respondent has with Mr. Sheers’ lack of authority to sign the Deed for and on behalf of the Respondent.
…
86. It is therefore submitted that the effect of Mr Sheers signing the Deed for and on behalf of the Respondent without any requisite authority or capacity to bind the Respondent was a nullity and the Deed was there always voidable by Mr Cole.
52.In respect of the issue of the enforceability of the Deed, the following submissions were made by Cole:
Should the Deed be enforced as a simple contract?
104. As the evidence at the hearing shows, Mr. Sheers was at no time appointed by the Board of Quest Australia as a Director of Quest Australia, nor was he an officer of Quest Australia, nor had he at any time acted as an agent of Quest Australia and had no authority either actual or apparent to bind the Respondent and therefore the Deed of Release was of no effect as wither a deed or as a simple contract.
105. This entire section of the Respondent’s submissions is based on a false assumption that Mr. Sheers actually had the capacity to enter into a contract for and on behalf of the Respondent. Although it is so obvious as to go without saying without capacity the Deed is neither valid as a deed or a contract nor it is enforceable against Cole.
(footnote omitted)
53.The Corporations Act imposes duties on an “officer”, as well as on directors. In fact, the key provisions (ss.180-183; duty of care and diligence, duty of good faith, duty not to improperly use one’s position or knowledge) apply to directors or other officers. In most cases it is relevantly simple to say who is or is not a director, but this is not so in respect of an officer. The Corporations Act states in s.9 - “Dictionary” that an officer is:
“officer” of a corporation means:
…
(b) A person;
(i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(ii) who has the capacity to affect significantly the corporation's financial standing; or
(iii) in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation); or
…
54.In R v Scott (1990) 20 NSWLR 72 per Gleeson CJ, Hunt and Allen JJ, the Court of Criminal Appeal was addressing an appeal of an appellant who had been convicted of eighteen offences under s.173 of the Crimes Act 1900 (NSW) after the trial judge directed the jury that, as the appellant had been an employee of the company from which he had allegedly taken or applied properly, he was therefore its officer. He appealed against his conviction, the main ground of the appeal being that this direction was wrong in law. In addition to the consideration given to the provisions of the Crimes Act 1900 (NSW), the following comments were made in respect to the expression of “officer” where Gleeson CJ stated at 77-78 (with Hunt and Allen JJ agreeing):
Little assistance is to be obtained from a consideration of the cases in which courts have had to consider whether, apart from some statutory definition, persons who exercise professional skills, and have independent functions to perform, in relation to the affairs of companies, are “officers” of a company. The position of auditors in that regard has given rise to litigation
over the years, but the principal source of difficulty has been the problem of defining the relationship of such persons to the company in question: see, eg, In Re Western Counties Steam Bakeries and Milling Company [1897] 1 Ch 617; R v Shacter. Nor is the present problem akin to that which arises in the
case of persons who purport to occupy some office but have never been duly appointed to that office, (cf R v Lawson [1905] 1 KB 541; Dean v Hiesler [1942] 2 All ER 340; Corporate Affairs Commission v Drysdale (1978) 141 CLR 236), or in the case of persons who are appointed to a position temporarily: cf Walker v Simpson [1903] AC 208. Further, there are certain contexts, such as those involving the armed forces, the police, the public service or banks, in which the term “officer” may have a meaning fixed or influenced by special usage. The problem in the present case concerns the meaning of the expression “officer of a public company” as applied to a person who was a fairly senior executive of the company.The word “officer” is not one of fixed or precise denotation. Its meaning and signification vary according to the context. Views as to the appropriateness of its application in a given case may change over time and may be influenced by changes in fashions of speech, including the use of what might once have been thought rather grandiloquent job descriptions: see the
reference to Legg v Stoke Newington (The Times, 28 May, unreported) 1895 in Stroud's Judicial Dictionary, 4th ed, (1971) vol 3, at 1834. Lindley LJ, in In re Western Counties Steam Bakeries and Milling Co (at 627), in the context
of company law apart from a statutory definition, said that “to be an officer there must be an office, and an office imports a recognised position with
rights and duties annexed to it”. In In Re A Company [1980] 1 Ch 138, the Court of Appeal in England had to consider the meaning of the term in relation to a group of provisions in the Companies Act 1948 (UK) where the applicable definition was merely, and incompletely, inclusive. Lord Denning
MR said (at 143) that the word referred to “a person in a managerial situation in regard to the company's affairs”. Shaw LJ said (at 144) that “any person who in the affairs of the company exercises a supervisory control
which reflects the general policy of the company for the time being or which is related to the general administration of the company is in the sphere of management” and is an officer.In Harris v S (1976) 2 ACLR 51; (1976) ACLC 28,614, a decision of the Full Court of the Supreme Court of South Australia which was disapproved in Corporate Affairs Commission v Drysdale, but not on the point that is presently relevant, Wells J said (at 60; 28,620):
“The word ‘officer’ is obviously derived from the word ‘office’. The latter denotes a specific position of authority, power, and responsibility (on which a formal name or title has usually been conferred) to which certain functions are annexed, in and for the exercise and discharge of
which the officer is accountable, to a greater or less degree, to a constituted and designated authority (or sometimes to more than one such authority). The degree of accountability (amounting in some cases to subservience) may vary enormously; the limits of the control
exercised over the officer may be prescribed by law, or fixed by contract or other private instrument; accordingly, the officer may, in effect, be a servant, with little independent authority and discretion; a senior officer or manager, with wide authority and discretion; or a director or
governor, with supreme executive powers. According to circumstances, the officer may also have, and exercise, the role of agent to the point of being plenipotentiary, or he may have no, or limited, power to commit the designated authority to anything.”
55.In Australian Securities and Investments Commission v Adler & Ors (2002) 168 FLR 253 (appeal largely dismissed: Adler v Australian Securities Investments Commission (2003) 179 FLR 1) Mr Adler was a director of a holding company, but was not appointed as either a director or officer of its subsidiary. The Court held him to be an officer of the subsidiary on the basis that he participated in decisions that affected the whole of the business of the subsidiary.
56.In Dwyer v Lippiatt; Dwyer v Backpacker R Us Pty Ltd (2004) 50 ACSR 333 a person who described himself as a consultant to a corporation was held to be an officer of the company on the basis that he made, or participated in making, decisions that affected the whole, or a substantial part, of the business of the company. The person was intimately involved in all the important decisions affecting the company and had been solely responsible for negotiating important transactions on behalf of the company.
57.In Hodgson v Amcor Ltd (2012) 264 FLR 1 the Victorian Supreme Court focused its attention specifically to paragraphs of (i) and (ii) of the definition of officer in the Corporations Act. Hodgson v Amcor (supra) concerned a complicated dispute between a company and its former senior manager. Among other things, the company alleged that the former senior manager had been an officer and had breached ss.180-183 of the Corporations Act. This required the Court to determine whether the senior manager fell within paragraphs (i) and (ii) of the definition of “officer”. Although the Court’s reasons were limited to the situation of the specific manager in Amcor, the elements that the Court took into account provide a useful guidance in other circumstances. Two obvious factors which separate the officer from the rest are their position within the company (e.g. senior management) and their ability to take part in decisions which affect the company’s business at a higher level. Sheers holds the position of Vice President & General Manager of Dell Software Group Asia- Pacific and Japan, which is the parent company of Quest, and is responsible for the operations of the Australian subsidiary.
58.Other key elements considered by the Court in Amcor (supra) include:
a)What is the manager’s capital expenditure authority?
In Amcor a limit of $250,000 was said to be an indication that the manager might not be an officer as reference should be made to Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (ACN 113 114 832) (No. 4) (2007) 160 FCR 35 where a trader who had a $10 million trading limit was not an officer;
b)To whom does the manager report?
A person may be an officer if they report directly to the Board, but even a non-direct reporter may be an officer if they are “capable of dealing directly with board members”;
c)Does the manager participate in the making of board decisions?
Again, they are more likely to be an officer if they do;
d)What is the extent of the manager’s domain?
In Amcor, the fact that the manager headed and managed the largest division in the company (in terms of staff, resources and revenue), supported the conclusion that he was an officer;
e)Does the manager have direct control over his own budget?
Such control is another indication of being an officer; and
f)Who is the manager’s own direct report?
In Amcor, the fact that the manager had oversight of a significant number of the high level general managers supports the conclusion that he was an officer.
59.In the matter before this Court we have a respondent company that is a wholly owned subsidiary of a foreign owned parent. The constitution and corporate governance has not been fully disclosed as indicated earlier in this judgment. However, unchallenged sworn testimony summarises the reporting structure with the parent and subsidiaries (see [23]-[26] above). This individual is based in Singapore and, besides being responsible for Quest (Australia and New Zealand), also has direct reporting lines from Japan, Korea, Greater China, South-East Asia and India (Sheers Affidavit at [15]). He travels throughout the Asia Pacific regions in order to fulfil his role. The reporting structure of Quest Group is set out at [24]-[27] above. During the approximately eighteen weeks that Sheers was Cole’s direct supervisor, Cole acknowledges that he received approximately 12 to 13 weekly telephone calls for the purposes of reporting (see [26] above).
60.Based on the material before the Court, and putting aside the issue of Cole’s directorship of Quest, Cole directly reported to Sheers, covering all aspects of his employment. There is no evidence tendered on behalf of Cole to suggest that some alternative lines of reporting existed other than that Quest and its directors, Cole and Richard Jensen, reported directly and exclusively to the board of Quest Group in Singapore, including Sheers.
61.Coles held two separate positions and responsibilities:
a)MD-ANZ; and
He had the responsibility of directing the activities of a specific department or departments within an organisation. He had the duty of managing other employees and ensuring all business goals and objective were reached. This was Cole’s substantial and primary role.
b)Director of Quest;
He had the responsibilities under the Corporations Act. This was a secondary role.
The submissions made on behalf of Coles indicate that there has been an attempt to conflate these two roles.
62.This Court is being invited by Cole to accept that Sheers was not in a position to be involved in Cole’s termination of employment because Cole contends he was not an officer of Quest. I am satisfied, on the strength of the authorities and material available to the Court, Sheers can be accepted as performing the duties of an officer of Quest and should be viewed as an officer thereof for the purposes of this proceeding and reasons.
The 2 May 2011 Meeting
63.In Quest’s closing submissions, it states that Sheers has given a clear account of the background and preparatory steps leading up to the meeting held between him, Ms Fiona Durrant and Cole on 2 May 2011: Sheers Affidavit at [32]-[36]. Quest maintains that the account is not disputed by Cole in either of his affidavits and the key elements that emerge from Sheers’ account are:
a)Sheers had decided that Cole was not a suitable person to remain as MD-ANZ, on the basis of the discussions that he had had with other senior managers, executives and his own observations of Cole;
b)This decision was supported by Sheers’ manager, Alan Fudge;
c)Sheers hoped to be able to negotiate with Cole a separation arrangement under which Cole would resign in return for an enhanced severance package and entry into a deed of release;
d)Sheers discussed this proposal confidentially with Fiona Durrant who recommended that, if any benefit was going to be provided to Cole in excess of his statutory or contextual rights, those benefits should be provided on the basis of the proposed deed of release;
e)Sheers asked Fiona Durrant to prepare a number of documents, including a draft deed of release, a document setting out the severance offer that Quest was prepared to make, a resignation letter and a termination letter; and
f)In the event that Cole chose not to resign, Sheers would inform him that Quest had decided to terminate his employment and make to Cole a payment in lieu of notice, in accordance with his contractual entitlements.
64.On the morning of 2 May 2011, Sheers and Fiona Durrant met Cole in Quest’s offices at North Sydney, which was Cole’s usual work place. There is dispute between Cole’s evidence and that of Sheers as to some of the conversations that took place during the meeting.
65.I rely on the final submission prepared by Quest as it contains key facts about the meeting which are supported by the accounts offered by both Cole and Sheers, being that:
a)Cole was aware from the beginning of the meeting on 2 May 2011 that his employment with Quest was likely to soon come to an end (T/69.5-10). Cole was aware of that fact because he had in the past participated in such a meeting with another Quest employee (Mr Donald Williams) (T/69.12-18). As a result of a meeting between Mr Williams, Moseley and Cole, Mr Williams entered into a deed of release with Quest in connection with the termination of his employment and Cole signed a deed of release on behalf of Quest (T/69.40-70.3);
b)Sheers informed Cole that he had decided Cole’s employment with Quest should come to an end;
c)Sheers presented Cole with two options:
i)Quest could exercise its contractual rights to terminate his employment; or
ii)Cole could agree to resign and receive a three months ex gratia payment in addition to four weeks’ pay in lieu of notice if he signed the Deed of Release (the Deed) (T/64.33-40; T/74.34-39; T/80.11-31; T/126.30-37);
d)Cole agreed in cross-examination that he did not accept either of the two options offered to him (T/74.41-42;T/80.11-22). Instead, Cole asserts that he said to Sheers words to the effect of “at my age and with the market the way it is it will take me months to find a new job. I’ll need at least six months’ salary just to pay the bills and mortgage while I find another job”, (First Cole Affidavit at [31]). Sheers’ account of the conversation is similar: he says Cole said words to the effect “given my age of 52, it will take some time for me to get another role in the market. Is the severance package negotiable?” (Sheers Affidavit at [37]). Quest submits that the Court ought to find that Cole did ask whether the severance package was negotiable. In any event, by suggesting that he needed “at least six months’ salary” and putting the reason for such a request, Cole used his “specialist” skills in “complex negotiations” (Exhibit “R3” at p.3) to seek a higher ex gratia payment. Cole asserts that he did not seek to negotiate a higher ex gratia payment (T/74.44-75.46). The result of these negotiations was that the draft Deed was amended such that the amount in the ex gratia payment to be made to Cole was altered to AUD$112,500.00, which was equivalent to six months’ salary (T/83.3-19);
e)The terms of the increased offer were recorded in the Deed;
f)Cole knew it was a condition of the offer of the ex gratia payment that he would have to enter into the Deed and resign (T/64.33-38; T/65.45-47; T/74.34-39);
g)If Cole had wanted to negotiate any of the other terms of the Deed (i.e. in addition to negotiating the quantum of the ex gratia payment (T/217.38-272.3)), Quest would have been open to that and, depending on the amount sought, would have “gone to legal and asked for their advice” (T/250.36-251.3);
h)Sheers provided Cole with a copy of the Deed and a letter of resignation. Cole singed the Resignation Letter and the Deed in the presence of Sheers and Fiona Durrant;
i)Fiona Durrant also signed the Deed as a witness to Cole’s signature;
j)Sheers signed the Deed and accepted Cole’s letter of resignation;
k)At various points during the meeting, Cole asked Sheers to explain why Quest wanted to end his employment. Sheers responded by informing Cole that Quest had decided to exercise his contractual right to terminate his employment;
l)At no time during the meeting did Cole:
i)Challenge Sheers’ authority to represent Quest;
ii)Accuse Sheers of acting beyond the limits of his authority;
iii)Ask to speak to Sheers’ manager or any other senior executive or board director within Quest or the Quest Group; or
iv)Ask for more time to consider the arrangement set out in the Deed or to obtain legal advice; and
m)After packing up his personal belongings Cole shook Sheers’ hand before departing from the premises (T/68.21-26).
66.Quest submits that, according to its own version of events, Cole received the higher offer of six months’ ex gratia payment from Sheers, and went to his office to pack his personal belongings before he signed the letter of resignation and the Deed (First Cole Affidavit at [31]-[36]). While in his office, Cole had the opportunity to call a lawyer or some other person to seek advice. He did not do so and conceded in cross-examination there was nothing preventing him from calling someone to seek advice at that time (T/67.4-20). Further, after signing the letter of resignation and the Deed, Cole returned to his office to pack his personal belongings. Again, he had the opportunity to make a telephone call for advice, but did not do so. Cole conceded that there was nothing preventing him from calling someone to seek advice at that time (T/67.40-68.5).
67.Contrary to the assertion in the First Cole Affidavit at [37], Quest claims Sheers came to see him and asked whether he had finished packing up. Cole stated in cross-examination that no-one came to see him in the twenty minute period he was packing (T/68.10-16).
68.Cole claims that during the meeting he was “in a state of shock” and was “deeply upset, angry and agitated” (Second Cole Affidavit at [25]). Sheers said that Cole appeared “surprised” during the meeting (Sheers Affidavit at [38]). However, importantly, Sheers recalls that Cole “maintained a level of focus and professionalism throughout the meeting” and he did not see Cole become “angry, upset, agitated, tremble, cry or otherwise lose his composure” (Sheers Affidavit at [38]). Sheers’ evidence that Cole displayed no outward sign of distress is supported by Cole’s own evidence that at all times he maintained his “composure and dignity”, “did not cry or tremble and did not raise his face or show any sign of anger” (Second Cole Affidavit at [25]; T/95.6-13).
69.Following the conclusion of his employment with Quest, Cole described himself in the following terms (Exhibit “R3”):
a)He is a man of “broad and extensive experience” in the business world;
b)He had “ten years’ experience as managing director of two significant software vendors”;
c)Prior to working with Quest he had over fifteen years senior sales and management experience;
d)One of his “specialities” is “complex negotiations”;
e)He had a “strong business acumen”; and
f)He is highly educated, having undertaken professional training in advanced negotiations skills, leadership in senior management, and obtained a higher diploma, business and management from an institute in the United Kingdom.
70.These descriptions were contained in Cole’s résumé as produced on subpoena by his current employer, Hitachi (Exhibit “R3”). In cross-examination, Cole conceded that the contents of his résumé were true and correct (T/42.10-15). Cole also conceded in his cross-examination that he believes he has strong entrepreneurial skills, is an outstanding leader (T/44.41-45.1), and has been involved in hundreds of commercial negotiations in his working life (T/80.39-42).
71.Cole claims that he did not read the provisions of the Deed or the letter of resignation in detail during the 2 May 2011 meeting (First Cole Affidavit at [35]; Second Cole Affidavit at [26]). This is contrary to Sheers’ account (Sheers Affidavit at [29]; T/265.5-18).
Function of the Deed of Release
72.The argument advanced on behalf of Quest is that Cole validly executed the Deed and ought to be required to keep his promises recorded in that Deed. Quest claims that the whole of Cole’s claim in these proceedings is barred by the Deed in that Cole released Quest from every claim that he has now brought and permitted Quest to plead that the Deed is a bar to such claims.
73.There is no dispute that Cole signed the Deed.
74.In closing submissions, Quest submits that absent a vitiating element, such as duress, a person who signs a document which is known by that person to contain contractual terms, and to effect legal relationships, is bound by the terms. It is immaterial that the person has not read the document: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors (2004) 219 CLR 165 at [57], where the High Court held per curiam:
57. If there is a claim of misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents. The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document. L'Estrange v Graucob explicitly rejected an attempt to import the principles relating to ticket cases into the area of signed contracts. It was not argued, either in this Court or in the Court of Appeal, that L'Estrange v Graucob should not be followed.
75.Quest contends that Cole understood on 2 May 2011 the Deed he signed was an important legal and contractual document: T/93.15-28; T/94.14-18. Cole also understood that he signed the deeds of release on behalf of Quest in relation to the cessation of employment of other employees with Quest that he was intending to affect legal relations between Quest and those employees: T/95.26-34. In cross-examination, Cole denied that he understood the Deed was intended to affect his legal relationship with Quest: T/94.23-24.
Contents of the Deed
76.Clause 4 of the Deed (the “Release Provision”) relevantly provided:
4. Releases
[Cole] releases and will release:
(a) Quest;
(b) each of Quest’s Related Bodies Corporate and other Associated Entities; and
(c) their respective officers, employees and agents (as the case may be), from all claims and liabilities of any nature (including any costs, whether or not the subject of a court order) connected with or incidental to:
(d) the Employment including the circumstances of the termination of the Employment and any matter, act or thing occurring during the course of the Employment; or
(e) any claim which was or could reasonably have been known to the Employee as at the date of this Deed, whether arising from the Employment or otherwise.
77.Clause 5 of the Deed provided:
5. Bar to proceedings
Quest and each of its Associated Entities may use this Deed, including as a bar, against the Employee in any court or other proceedings brought by the Employee (or anyone who claims through the Employee).
78.Clause 12.1 of the Deed relevantly provided:
12.1 Acknowledgement
The parties acknowledge that they enter into this Deed fully and voluntarily on their own information and investigation. Each party to this Deed acknowledges that it is aware that it or its advisers, agents or lawyers may discover facts different from or in addition to the facts that they now know or believe to be true with respect to the subject matter of this Deed and that it is their intention to and they do, fully, finally, absolutely and forever settle according to the provisions of this Deed any and all liabilities, claims, disputes, and differences which now exist, or may exist or have ever existed between them relating in any way to the matters the subject of this Deed.
79.The argument advanced on behalf of Quest is that an objective approach should be adopted to the construction of the Deed, consistent with the principles approved by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 per Mason J (as he then was) at 352 (with whom Stephen and Wilson JJ agreed); Wilson v Anderson (2002) 213 CLR 401 per Gleeson CJ at [8]. Quest maintains that the words used in the Release Provision are clear and plain and there is no ambiguity. Clause 4 has the clear meaning that the release given by Cole in the clause would operate in respect to “all claims” connected with his employment by Quest, including the termination of his employment. Quest maintains that a similar approach could be adopted to the interpretation of Clauses 5 and 12 of the Deed, in that the words are clear and plain.
80.The claim advanced on behalf of Cole is that the Deed cannot be enforced as a deed in law because of alleged defects in the execution of the Deed by Quest: Statement of Claim at [68]-[73].
81.Cole claims that Quest did not validly execute the Deed because the Deed was not executed in accordance with s.127 of the Corporations Act which states:
127. Execution of documents (including deeds) by the company itself
(1) A company may execute a document without using a common seal if the document is signed by:
(a) 2 directors of the company; or
(b) a director and a company secretary of the company; or
(c) for a proprietary company that has a sole director who is also the sole company secretary--that director.
Note: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(5) for dealings in relation to the company.
(2) A company with a common seal may execute a document if the seal is fixed to the document and the fixing of the seal is witnessed by:
(a) 2 directors of the company; or
(b) a director and a company secretary of the company; or
(c) for a proprietary company that has a sole director who is also the sole company secretary--that director.
Note: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(6) for dealings in relation to the company.
(3) A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2).
(4) This section does not limit the ways in which a company may execute a document (including a deed).
82.Section 127(4) makes plain that the ways in which a company may execute a document (including a deed) are not limited to those set out in ss.127(1)-(3). Although a corporation may execute a deed in accordance with the requirements of s.127(3), the corporation does not necessarily need to do so to effect a valid deed: Pozzan v Gibbons (2006) 200 FLR 287. In Pozzan, the company had purported to execute a deed in accordance with the provisions of s.127(3) of the Corporations Act. However the instrument said to construe the deed did not contain the words “executed as a deed”. One of the parties attempted to avoid the deed, on the basis that this formal defect meant that the deed was not executed in accordance with s.127(3) of the Corporations Act and was therefore unenforceable.
83.In Pozzan (supra), his Honour Perry J dismissed that argument and held at [57]-[61]:
57. [The parties seeking to avoid the deed] contended that s 127(3) was not of application, because the words “executed as a deed” do not appear on the loan agreement.
58. In my view, that is a far too literal construction of s 127(3). There are a variety of ways in which a document may be expressed to be executed as a deed.
59. I have already drawn attention to a number of expressions in the loan agreement which make it patently clear that the parties were intending to execute the document as a deed. In my view, that is sufficient to attract the application of s 127(3), and by virtue of that subsection, s 127(1).
60. If I was to be wrong in that view, that is not an end of the matter.
61. Subsection (4) makes it plain that a company may execute a document, including a deed, in any other way which is legally efficacious.
His Honour then canvassed the requirements for the valid execution of a deed under the law of South Australia, being the Law of Property Act 1936 (SA), and concluded that the instrument in question in that case satisfied the requirements of that law.
84.In Cole’s submissions in reply there is the claim that Pozzan (supra) is of no assistance in these proceedings and should be distinguished on the facts, particularly with respect to the nature of the defect in the deed. Section 41 of the Law of Property Act 1936 (SA) deemed a deed which had been defectively executed was valid if there was evidence that the party intended to be bound. The Corporations Act provision set out the requirements for the execution of documents by a company including deeds. The South Australian Full Court held that there was no inconsistency. The s.127 proscription of a method of execution did not preclude a remedy in the circumstances referred to in s.41 of the Law of Property Act 1936 (SA). No seal was fixed to the document so that the method of execution provided for in s.127(2) of the Corporations Act was not followed, however, the respondent relied on s.127(3). The document in Pozzan was singed on behalf of Kangaroo Island Ferries Pty Ltd by Mr Prakash Dhupelia who was the sole director and company secretary at the time he signed. This satisfied the requirements of s.127(1)(c). However, the applicant argued that the further requirement under s.127(3) was not complied with, in that the document was not expressed to be executed as a deed. According to the argument, s.127(3) contemplates that the words “executed as a deed” are to be stated in the document.
85.It is argued on behalf of Cole that the validity of the document expressed to be the Deed and expressed to be executed in accordance with s.127 of the Corporations Act was only executed by one person, being Sheers, and that person being neither a director, secretary or officer of the company was in no way examined by the Full Court in Pozzan. This is advanced on behalf of Cole on the basis that Sheers was not an officer of Quest, however, as indicated at [62] above, this proposition advanced on behalf of Cole cannot be sustained.
86.Quest maintained that it was open for Quest to execute the Deed in any way that was consistent with the general legal requirements for the execution of the Deed. For the purposes of this proceeding the Conveyancing Act 1919 (NSW) (the “Conveyancing Act”), s.38(1) requires that the Deed instrument be signed, sealed and delivered.
87.There is no dispute that the law of New South Wales is the governing law of a deed of release when the deed of release was executed in New South Wales. Although the Conveyancing Act sets out some methods by which a corporation may execute a deed (or other contracts), it does not prescribe the manner by which the corporation must execute deeds. The corporation may, therefore, execute a deed in any method approved by common law. This is the effect of ss.38(5)(a) and 51A(6) of the Conveyancing Act. The High Court has held that the common law has never constrained the manner in which the corporation may contract, provided that the purpose and the method of the execution of the contract did not defeat “the purpose of the corporation”: Johnson’s Tyne Foundry Pty Ltd v Maffra Shire Council (1948) 77 CLR 544 at 562 per Dixon CJ.
88.The common law looks to the constitution of the corporation to determine whether a contract or deed has been validly executed by the corporation: Cope v Thames Haven Dock & Railway Co (1849) 154 ER 1085 per Park B at 1085-1086 (Rolfe and Platt BB agreeing at 1086). In that case the Court looked at the company’s relevant constitutional instrument (a special statute in this instance) to identify the method by which a company ought to have executed a contract. Quest submits that there is no doubt in this case that the Deed was signed by Sheers on behalf of the party to be bound (Quest) and attested to by a witness (Fiona Durrant), who was not a party to the Deed. There is no evidence as to whether this method was or was not consistent with Quest’s constitution. As indicated elsewhere in this decision the tender of Quest’s constitution was successfully opposed.
89.An actual and physical sealing of a deed instrument is not required in New South Wales where the instrument is expressed to be a deed, as such instruments are deemed to be sealed: Conveyancing Act, s.38(3). It is submitted that this principle is clearly applicable in this case because the testimonium in the Deed reads “EXECUTED and delivered as a deed in North Sydney”.
90.Quest submits that the authorities are clear that the essential element of the delivery of a deed is that the delivering party evince an intention to be bound by the deed: Windsor Refrigerator Co Ltd & Anor v Branch Nominees Ltd & Ors [1961] Ch 88 per Cross J at 98, cited with approval as a correct statement of the law of deeds in Australia by Helsham CJ in Equity in Hooker Industrial Developments Pty Ltd v Trustees of Christian Brothers [1977] 2 NSWLR 109 and, more recently by the Full Court of the Supreme Court of Western Australia, Steytler J in Scook v Premier Building Solutions Pty Ltd & Ors (2003) 28 WAR 124 at [25], with whom McKechnie and Hasluck JJ agreed.
91.The key element of intention is a question that must be answered by examination of the facts of each case: Hooker Industrial Developments Pty Ltd v Trustees of Christian Brothers (supra) where Helsham CJ in Equity stated:
Whether there has been delivery in any particular case is a matter of fact, and depends upon intention; this does not appear to be different in the case of execution of a deed by a corporation.
Importantly the Court may infer the existence of such an intention by the party’s later conduct: Scook v Premier Building Solutions Pty Ltd (supra).
92.Quest submits that the method by which Quest executed the Deed was as follows:
a)Sheers, in his capacity as an officer of Quest, signed the Deed beneath the testimonium; and
b)Quest effected delivery of the Deed by handing a signed counterpart of the Deed to Cole, by paying him the termination payment and by accepting his resignation from his employed position as MD-ANZ.
Taken together, these actions mean that the Deed, according to the law of New South Wales was duly signed, sealed and validly executed by Quest on 2 May 2011. In accordance with the findings in Pozzan (supra), the execution of the Deed, although not necessarily in the manner described by s.127(3) of the Corporations Act was, on the basis of s.127(4), validly executed by Quest.
93.There is no dispute that Cole signed the Deed and he has admitted to doing so in his evidence. The same principles apply to the assessment of the validity of the execution of the Deed by Cole as apply to the question of the validity of the execution by Quest: Conveyancing Act, s.38(1). When describing his execution of the Deed, Cole claims that he did not read the Deed or the Letter of Resignation in detail in the meeting. This is contrary to Sheers’ account. The failure by Cole to read the Deed would not vitiate his execution as it is clearly established that a person who does not read over a deed in detail, or who does not take care to discover its contents, is still bound by the provisions of the deed: Matouk v Entrance Seabreeze Pty Ltd [2010] NSWSC 649 per Ward J. Absent vitiating elements such as duress, a person who signs a document which is known by that person to contain contractual terms, and to effect legal relations is bound by the terms, and it is immaterial that the person has not read the document: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (supra) at [57].
55. The Trust and Confidence Term was implied in the contract by operation of the law as a consequence of the class of contract to which the Applicant’s contract of employment belonged and/or was implied as a necessary incident of a contract of employment, because it was necessary for the reasonable and effective operation of the contract, in that without it the contract would be deprived of its’ substance, seriously undermined or devalued in an essential aspect as to which the Applicant relies, inter alia on Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWCA 217 and on Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198.
56. The Good Faith Term was implied into the contract by operation of the law as a consequence of the class of contract to which the Applicant’s contract of employment belonged and/or was implied as a necessary incident of a contract of employment, because it was necessary for the reasonable and effective operation of the contract, in that without it the contract would be deprived of its’ substance, seriously undermined or devalued in an essential aspect as to which the Applicant relies, inter alia on Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWCA 217 and on Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198.
57. By the conduct pleaded in paragraphs 24 to 37 above and 60 to 73 below the Respondent breached the implied terms and conditions of the Applicants contract of employment including:
(a)The Cooperation Term;
(b)The Good Faith Term;
(c)The Trust and Confidence Term;
58. By the conduct pleaded in paragraphs 24 to 37 above and 60 to 73 below the termination of the Applicants employment by the Respondent was wrongful and unfair. By reason of the Respondents breaches of the Contract the Applicant has suffered loss, damage, humiliation, anxiety and distress and will continue to suffer loss, damage, humiliation, anxiety and distress.
59. Although the Applicant has since the termination of employment by the Respondent done all he can to mitigate his loss and has thereby obtained other employment, his other employment is at significantly reduced remuneration with significantly reduced benefits in comparison to his employment with the Respondent.
THE CORPORATIONS ACT 2001 (CTH) AND THE SUMMARY TERMINATION OF THE APPLICANT
60. By the facts set out at paragraphs 2 to 21 above, the Respondent offered and the Applicant accepted and was appointed as and fulfilled the appointment of the Respondent’s Managing Director.
61. At all material times concerning the termination of the Applicant, the Applicant was the appointed Managing Director and a registered Director of the Respondent and Mr. Jensen was the other registered Director of the Respondent for the purposes of the Corporations Act 2001 (CTH). Messrs. Smith, Brooks, Vaughan and Boag had been registered Directors of the Respondent at the time of the appointment of the Applicant as Director and Managing Director but all had ceased to be Directors prior to the time of the Applicant’s termination of employment.
62. At all material times concerning the termination of the Applicant, the Applicant and Mr. Jensen constituted the Board of Directors of the Respondent.
63. At no time during the employment of the Respondent by the Applicant and in particular on or about 2 May 2011 was Mr. Barry Sheers an appointed or registered Director of the Respondent.
64. Being the appointed Managing Director and a registered Director of the Respondent Section 203C of the Corporations Act 2001 (CTH) required a resolution of the Board of Directors for the Applicant to be removed as a Director of the Respondent.
65. Being the appointed Managing Director of the Respondent Section 203F of the Corporations Act 2001 (CTH) required a resolution of the Board of Directors for the Applicant’s appointment as the Managing Director of the Respondent to be terminated.
66. At no time either prior to or on or about 2 May 2011 did the Respondent’s Board of Directors pass a resolution either terminating the Applicant’s appointment as Managing Director or removing the Applicant as a Director of the Respondent.
67. In light of the facts pleaded at paragraphs 60 to 66 above the purported summary termination of the Applicant as Managing Director of the Respondent and removal of the Applicant as a Director of the Respondent, as pleaded at paragraphs 24 to 37, was of no effect at law and was unjust and unfair.
THE CORPORATIONS ACT 2001 (CTH) AND THE PURPORTED RELEASE
68. The purported Deed of Release (“the Deed”) executed 2 May 2011 was expressed to be executed as a “deed in accordance with s. 127 of the Corporations Act”.
69. The purported Deed is not and was not executed under the Company Seal of the Respondent.
70. Relevantly Section 127(1)(a) of the Corporations Act 2001 (CTH) provides a company may execute a document without using a common seal if the document is signed by two directors of the company.
71. As set out at paragraph 31 above Sheers, and Sheers alone, purported to sign the alleged Deed for and on behalf the Respondent.
72. At no time either immediately before or at the time of the execution of the purported Deed was Sheers a director of the Respondent for the purposes of Section 127(1) of the Corporations Act 2001 (CTH) nor was the purported Deed executed in accordance with Section 127(1) of the Corporations Act 2001 (CTH).
73. In the premise the purported Deed executed 2 May 2011 is and was always void for the purposes of Section 127 of the Corporations Act 2001 (CTH).
THE CONTRACTS REVIEW ACT 1980 (NSW) AND THE PURPORTED RELEASE
74. Pursuant to Section 6 of the Contracts Review Act 1980 (NSW), the Deed was not entered into in the course of or for the purpose of carrying on a trade, business or profession by the Applicant or the Respondent or proposed to be carried on by the Applicant or the Respondent.
75. The purported Deed is unjust in that the circumstances relating to the manner in which the Respondent required the Applicant to execute the Deed at the time it was made, as set out and pleaded at paragraphs 24 to 37 and 60 to 73 above, were for the purposes of Section 9 of the Contracts Review Act 1980 (NSW) unconscionable, harsh or oppressive.
76. Pursuant to Section 9 of the Contracts Review Act 1980 (NSW) the purported Deed is unjust in that the circumstances relating to the manner in which the Respondent required the Applicant to execute the Deed at the time it was made, as set out and pleaded at paragraphs 24 to 37 and 60 to 73 above, inter-alia included the following facts;
(a) There was material inequality in the bargaining power between the Respondent and the Applicant in that the Respondent is a large corporation fully owned by a large international public corporation with the legal and corporate resources of the same at its’ disposal; and
(b) In the circumstances imposed by the Respondent on the Applicant, the Applicant could not either prior to or at the time he was required by the Respondent to execute the Deed negotiate the provisions of the Deed therein other than the amount of the ex-gratia payment; and
(c) In the circumstances imposed by the Respondent on the Applicant, it was not reasonably practicable for the Applicant to negotiate the alteration of or the rejection of any of the provisions of the Deed other than the amount of the ex-gratia payment; and
(d) The provisions of the Deed were not reasonably necessary to protect the legitimate business interests of the Respondent; and
(e) In the circumstances imposed by the Respondent on the Applicant, the Respondent placed the Applicant under such stress as the Applicant was not reasonably able to fully protect his interests and had the Respondent not placed the Applicant under such stress the Applicant would not have executed the purported Deed; and
(f) In the circumstances imposed by the Respondent on the Applicant, the Respondent did not allow and the Applicant was not able and did not obtain independent legal advice before executing the purported Deed and had the Applicant been given an opportunity to do so would not have executed the purported Deed; and
(g) The Respondent made no attempt to and did not explain the provisions of the purported Deed and their legal and practical effect to the Applicant, nor did the Respondent provide the Applicant with any time to read the purported Deed in any detail or consider the legal and practical effect of the purported Deed; and
(h) In the circumstances imposed by the Respondent on the Applicant and in requiring the Applicant to resign and execute the purported Deed or be summarily terminated, the Respondent, Durrant and Sheers, who purported to act for or on behalf of the Respondent, all exerted unfair pressure and employed unfair tactics on the Applicant in that because of the Applicant’s age and the damage when it became known within his industry that he had been terminated would cause to his reputation the Applicant was effectively left with no choice other than to comply with the Respondent, Durrant and Sheers demands; and
(i) Although the Applicant had in the past, as a result of acting in accordance the instructions of the Respondent’s legal representative, requested other employees execute similar Deeds the Applicant had not previously read the purported Deed in any detail, believed it primarily dealt with the protection of intellectual property and was not fully aware of the legal and practical effects of the purported Deed and had the Applicant been given an opportunity to do so would not have executed the purported Deed; and
(j) The provisions of the purported Deed were not purely commercial and did not have a legitimate business purpose with respect to the Respondent’s business.
(k) The Deed of Release was void and of no effect either as a contract or a deed because the Deed was executed by Sheers who, as pleaded in paragraph 24 and 68 to 73 above, was not at the time of the execution of the Deed an employee or officer of the Respondent, had no authority to act on behalf of the Respondent and therefore not entitled to execute the Deed for on behalf of the Respondent.
(l) Knowing the purported termination of the Applicant’s appointment as Managing Director of the Respondent and purported removal of the Applicant as a Director of the Respondent by Sheers was void and of no effect for the reasons pleaded at paragraphs 60 to 67 above, the Respondent, Sheers and Durrant misrepresented the contrary to the Applicant.
77. In accordance with Section 7 of the Contracts Review Act 1980 (NSW) and in light of the considerations pleaded at paragraph 76 above were the Court to uphold the purported Deed would have an unjust consequence or result and therefore the Court should;
(a) Refuse to enforce any of the provisions of the purported Deed or in the alternative refuse to enforce Clauses 4 & 5 of the purported Deed; and
(b) Make an order declaring the purported Deed void as a whole or in the alternative Clauses 4 & 5 of the purported Deed to be void; or
(c) Make an order striking out Clauses 4 & 5 of the purported Deed.
THE AUSTRALIAN CONSUMER LAW (“ACL”) AND THE PURPORTED RELEASE
78. Pursuant to Section 2 of The Australian Consumer Law (CTH), the purported Deed procured by the Respondent from the Applicant in the circumstances and manner set out and pleaded at paragraphs 24 to 37 and 60 to 73 above, included rights, benefits and privileges to be provided, granted and conferred by the Applicant in favour of the Respondent in trade and commerce during the course of the Respondent’s dealings with the Applicant but not under the Applicant’s contract of employment with the Respondent.
79. Pursuant to Section 21 of The Australian Consumer Law (CTH), the conduct of the Respondent in summarily terminating and demanding the Applicant sign a letter of resignation and execute the purported Deed and the manner in which the Respondent required the Applicant to resign and execute the Deed at the time it was made, as set out and pleaded at paragraphs 24 to 37 and 60 to 73 above, was for the purposes of s. 21 of The Australian Consumer Law (CTH) unconscionable.
80. Pursuant to Section 22 of The Australian Consumer Law (CTH) the conduct of the Respondent in summarily terminating and demanding the Applicant sign a letter of resignation and execute the purported Deed and the manner in which the Respondent required the Applicant to resign and execute the Deed at the time it was made, as set out and pleaded at paragraphs 24 to 37 and 60 to 73 above, included inter-alia the following facts;
(a) There was material inequality in the bargaining power between the Respondent and the Applicant in that the Respondent is a large corporation fully owned by a large international public corporation with the legal and corporate resources of the same at its’ disposal; and
(b) In the circumstances imposed by the Respondent on the Applicant, the Applicant could not either prior to or at the time he was required by the Respondent to execute the Deed negotiate the provisions of the Deed therein other than the amount of the ex-gratia payment; and
(c) In the circumstances imposed by the Respondent on the Applicant, it was not reasonably practicable for the Applicant to negotiate the alteration of or the rejection of any of the provisions of the Deed other than the amount of the ex-gratia payment; and
(d) The provisions of the Deed were not reasonably necessary to protect the legitimate business interests of the Respondent; and
(e) In the circumstances imposed by the Respondent on the Applicant, the Respondent placed the Applicant under such stress as the Applicant was not reasonably able to fully protect his interests and had the Respondent not placed the Applicant under such stress the Applicant would not have executed the purported Deed; and
(f) In the circumstances imposed by the Respondent on the Applicant, the Respondent did not allow and the Applicant was not able and did not obtain independent legal advice before executing the purported Deed and had the Applicant been given an opportunity to do so would not have executed the purported Deed; and
(g) The Respondent made no attempt to and did not explain the provisions of the purported Deed and their legal and practical effect to the Applicant, nor did the Respondent provide the Applicant with any time to read the purported Deed in any detail or consider the legal and practical effect of the purported Deed; and
(h) In the circumstances imposed by the Respondent on the Applicant and in requiring the Applicant to resign and execute the purported Deed or be summarily terminated, the Respondent, Durrant and Sheers, who purported to act for or on behalf of the Respondent, all exerted unfair pressure and employed unfair tactics on the Applicant in that because of the Applicant’s age and the damage when it became known within his industry that he had been terminated would cause to his reputation the Applicant was effectively left with no choice other than to comply with the Respondent, Durrant and Sheers demands; and
(i) Although the Applicant had in the past, as a result of acting in accordance with the instructions of the Respondent’s legal representative, requested other employees execute similar Deeds the Applicant had not previously read the purported Deed in any detail, believed it primarily dealt with the protection of intellectual property and was not fully aware of the legal and practical effects of the purported Deed and had the Applicant been given an opportunity to do so would not have executed the purported Deed; and
(j) The provisions of the purported Deed were not purely commercial and did not have a legitimate business purpose with respect to the Respondent’s business.
(k) The Deed of Release was void and of no effect either as a contract or a deed because the Deed was executed by Sheers who, as pleaded in paragraph 24 and 68 to 73 above, was not at the time of the execution of the Deed an employee or officer of the Respondent, had no authority to act on behalf of the Respondent and therefore not entitled to execute the Deed for on behalf of the Respondent.
(l) Knowing the purported termination of the Applicant’s appointment as Managing Director of the Respondent and purported removal of the Applicant as a Director of the Respondent by Sheers was void and of no effect for the reasons pleaded at paragraphs 60 to 67 above, the Respondent, Sheers and Durrant misrepresented the contrary to the Applicant.
81. By the conduct of the Respondent, as set out and pleaded at paragraphs 24 to 37 and 60 to 73 above, in demanding the Applicant resign and execute the purported Deed and the manner in which the Respondent required the Applicant resign and execute the Deed at the time it was made, and having regard to the matters pleaded at paragraph 80 above the Respondent contravened Section 21 of The Australian Consumer Law (CTH).
82. As a result of the Respondent’s contravention of Section 21 of The Australian Consumer Law (CTH) the Applicant has suffered loss, damage, humiliation, anxiety and distress and will continue to suffer loss, damage, humiliation, anxiety and distress.
83. As a result of the Respondent’s contravention of Section 21 of The Australian Consumer Law (CTH) the Court should;
(a) Make an order under Section 237 or Section 238 of the ACL refusing to enforce any of the provisions of the purported Deed or in the alternative refuse to enforce Clauses 4 & 5 of the purported Deed; and
(b) Make an order under Section 237 or Section 238 of the ACL declaring the purported Deed void as a whole or in the alternative Clauses 4 & 5 of the purported Deed to be void; or
(c) Make an order under Section 237 or Section 238 of the ACL striking out Clauses 4 & 5 of the purported Deed.
(d) Make an order that the Respondent pay the maximum penalty as set out in Section 224 of the ACL for breaching Section 21 of the ACL and order the same to be paid over to the Applicant by order made under Sections 237 or 238 of the ACL.
THE AUSTRALIAN CONSUMER LAW AND THE SUMMARY TERMINATION OF THE APPLICANT
84. By reason of the employment relationship between the parties and the facts and matters pleaded in paragraphs 2 to 23 above and in particular the representations made by the Respondent to the Applicant in the Code of Conduct, the Applicant had a reasonable and legitimate expectation that the Respondent would be bound by the express or implied terms and conditions in the employment contract and would exercise its powers under the contract in good faith and would not exercise its powers capriciously or to deprive the Applicant of the benefit of the contract or for collateral purposes extraneous to the contract.
85. Further the Respondent promised and represented that the Respondent would be bound by the express or implied terms and conditions in the employment contract as pleaded in paragraphs 15 & 16 above and would exercise its powers under the Contract ethically and would not exercise its powers capriciously or to deprive the Applicant of the benefit of the contract by summarily terminating the Applicant’s employment other than for the reasons set out at paragraph 15 above.
PARTICULARS
(a) The terms of the letter offer dated 6 September 2007; and
(b) The terms of the Contract dated 7 September 2007; and
(c) The representations and express conditions set out and pleaded at paragraphs 15 & 16 above.
86. The Respondent, by the conduct pleaded in paragraphs 24 to 37 and 60 to 73 above did not exercise its powers under the contract of employment in good faith and exercised its powers capriciously and to deprive the Applicant of the benefit of the contract and for collateral purposes extraneous to the contract, and acted, in trade and commerce, unconscionably for the purposes of and engaged in conduct that was, in all the circumstances, unconscionable within the meaning of Section 51AC of the TPA and or alternatively Section 21 and Section 22 of the ACL.
87. By the conduct pleaded in paragraphs 24 to 37 and 60 to 73 above in contravention of Section 51AC of the TPA and or alternatively Section 21 of the ACL the Plaintiff has suffered loss, damage, humiliation, anxiety and distress and will continue to loss, damage, humiliation, anxiety and distress.
88. By reason of the conduct of the respondent as pleaded in paragraphs 24 to 37 and 60 to 73 above the Deed of Release was entered by the Applicant in circumstances that were:
(a) Harsh and Oppressive;
(b) Unconscionable;
(c) Misleading and deceptive.
89. As a result of the Respondent’s contravention of Section 21 of The Australian Consumer Law (CTH) the Court should;
(a) Make an order that the Respondent pay the maximum penalty as set out in Section 224 of the ACL for breaching Section 21 of the ACL and order the same to be paid over to the Applicant by order made under Sections 237 or 238 of the ACL.
LOSS AND DAMAGE:
90. The Applicant has suffered or and continues to suffer the following loss or damage:
(a) Loss of past and future salary; and
(b) Loss of past and future commissions; and
(c) Unpaid superannuation payments in respect of the salary and commission; and
(d) Loss of opportunity and the right for legal title in the shares in QSI resulting from the issue of the RSU’s to vest in the Applicant and the associated value of the Applicant’s share entitlement in QSI; and
(e) Legal costs and expenses.
1) THE APPLICANT CLAIMS:
1.Statutory compensation under Section 82 or Section 87 of the TPA, Section 68 or Section 72 of the FTA and Section 236 or Section 237 and Section 238 of the ACL for loss of past remuneration, commission payments and superannuation thereon.
2.Statutory compensation under Section 82 or Section 87 of the TPA, Section 68 or Section 72 of the FTA and Section 236 or Section 237 or Section 238 of the ACL for loss of future remuneration, commission payments and superannuation thereon.
3.Statutory compensation under Section 82 or Section 87 of the TPA and Section 236 or Section 237 or Section 238 of the ACL for anxiety, humiliation, anxiety and distress.
4.Aggravated statutory compensation under Section 82 or Section 87 of the TPA and Section 236 or Section 237 or Section 238 of the ACL for anxiety, humiliation, anxiety and distress.
5.Statutory compensation under Section 82 or Section 87 of the TPA, Section 68 or Section 72 of the FTA and Section 236 or Section 237 or Section 238 of the ACL for loss of the value of shares in the Respondent’s then parent company, QSI, resulting from the issues of RSU’s.
6.Compensation in respect of breach of contract for loss of past and future remuneration, commission payments and superannuation thereon.
7.Compensation in respect of breach of contract for loss of the value of shares in the Respondent’s then parent company, QSI, resulting from the issues of RSU’s.
8.Compensation for anxiety, humiliation, anxiety and distress in respect of breach of contract.
9.An order that the Respondent pay the maximum penalty as set out in Section 224 of the ACL for breaching Section 21 and Section 31 of the ACL and the Court order the same to be paid over to the Applicant by order made under Sections 237 or 238 of the ACL.
10.Interest on any award of statutory compensation or damages in accordance with Section 76 (2) and Section 76 (3) of the Federal Circuit Court Of Australia Act1999;
11.Costs.
12.Such order as the Court deems fit.
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