De Beer v TransitCare Limited

[2019] FCCA 1830

FEDERAL CIRCUIT COURT OF AUSTRALIA

DE BEER v TRANSITCARE LIMITED & ORS [2019] FCCA 1830

Catchwords:
INDUSTRIAL LAW – Application for imposition of pecuniary penalties – alleged breaches of Fair Work Act – breach is not made out.

Legislation:

Fair Work Act 2009, ss.323(1), 542, 550, 550(1)

Industrial Relations Act 1999 (Qld), s.71HB, 71HE

Breen v Williams (1996) 186 CLR 71
Concut Pty Ltd v Worrell (2000) 75 ALJR 312
MSL v Sautner (2015) 229 FCR 221
Pilmer v Duke Group Ltd (In Liq) (2001) 207 CLR 165
Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359
The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1
Ying Mui Pty Ltd & Ors v HOH & Ors (No 3) (2017) 349 ALR 296

Applicant: LOUIS JOHANNES DU PLESSIS DE BEER

First Respondent: TRANSITCARE LIMITED

Second Respondent: PETER MARK EMERY

Third Respondent: MARIAE ANN LECKIE

Fourth Respondent: TERENCE O’TOOLE

Fifth Respondent: FRANCINE WICKS

File Number: BRG 368 of 2015

Judgment of: Judge Jarrett

Hearing dates:

27, 28 February 2017; 1, 2 and

3 March 2017; 20 April 2017

Date of Last Submission: 20 April 2017

Delivered at: Brisbane

Delivered on: 1 July 2019

REPRESENTATION

The Applicant appeared on his own behalf

Counsel for the Respondents: Ms Downes QC

Solicitors for the Respondents: McCullough Robertson

ORDERS

1. On the applicant’s claim against all respondents:

   (a)judgment for the applicant against the first respondent in the sum of $2,644.73 together with interest thereon up to judgment in a sum to be agreed between the parties and failing agreement to be fixed by the Court;

   (b)otherwise the application against the second, third, fourth and fifth respondents be dismissed;

2. On the first respondent counter claim against the applicant:

   (a)judgment for the first respondent against the applicant in the sum of $34,072.82 together with interest thereon up to judgment in a sum to be agreed between the parties and failing agreement to be fixed by the Court;

   (b)order that, within 14 days of the date of these orders, the applicant return to the first respondent at its place of business

   (i)the notebook used by the applicant in his employment with the first respondent as at 16 February, 2015; and

   (ii)iPad serial number DLXM107RFLMQ.

3. In the event the parties are unable to agree about issues of pre-judgement interest and costs within 21 days of the date of these orders, the following directions shall have effect:

   (a)by the date no more than twenty-one (21) days after the delivery of these orders, any application for costs or the fixing of interest be notified by one party to the other by the filing and service of written submissions specifying:

   (i)the precise orders for costs and/or interest sought and any alternatives;

   (ii)the argument in support of each order; and

   (iii)whether that party is desirous of any oral hearing of the issues; and

   (b)by the date no more than forty-two (42) days after the delivery of these orders, the respondent to any such application shall file and serve written submissions specifying:

   (i)the precise orders sought by the respondent;

   (ii)the argument in support of the response; and

   (iii)whether that party is desirous of any oral hearing of the issues.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 368 of 2015

LOUIS JOHANNES DU PLESSIS DE BEER

Applicant

And

TRANSITCARE LIMITED

First Respondent

PETER MARK EMERY

Second Respondent

MARIAE ANN LECKIE

Third Respondent

TERENCE O’TOOLE

Fourth Respondent

FRANCINE WICKS

Fifth Respondent

REASONS FOR JUDGMENT

1. Mr de Beer was employed as the chief executive officer for the first respondent Transitcare Limited between 1 July, 2005 and 16 February, 2015 when his employment was terminated.  The employment relationship is documented in a written employment agreement that was signed on 17 December, 2010.

2. By his amended application filed on 22 June, 2015 Mr de Beer seeks certain declarations and consequential orders for:

   a)the payment of $58,263.48 due under his contract of employment upon its termination;

   b)$182,060.30 in compensation for wrongful termination;

   c)interest on those sums; and

   d)the imposition of pecuniary penalties upon the first respondent for contraventions of certain provisions of the Fair Work Act 2009.

3. He also seeks orders that the second, third, fourth and fifth respondents pay pecuniary penalties pursuant to the Fair Work Act in respect of the first respondent’s breaches of that Act on the basis that they were involved in the first respondent’s contraventions for the purposes of s.550(1) of the Fair Work Act.

4. The application is opposed by the respondents.  The first respondent prosecutes a counter claim against Mr de Beer for:

   a)certain declaratory relief;

   b)the repayment of the amount of $44,342.06 which was paid to Mr de Beer under cl.14(a) of the employment agreement; and

   c)damages for breach of the employment contract or breach of fiduciary duty totalling a further $118,849.75.

Some background and context

1. Since 1994, the first respondent has operated a business of providing community transport services.   It is required to perform a number of functions to provide those services, including the supply and maintenance of vehicles, drivers and other ground staff to operate and maintain its vehicle fleet as well as taking transport bookings, scheduling transport, dispatching transport services and invoicing transport users.  For the purposes of its business, the first respondent operates a mobility centre – a transport hub established to aggregate community transport services.  That entails the coordination and delivery of those services to a variety of transport users, including to the elderly and disabled.  The first respondent operates mobility centres in a number of centres in Queensland. 

2. Prior to 17 December 2014, the first respondent’s business was operated by an incorporated association named Logan and Albert North Disability Services Inc, referred to in some of the material before the Court by the acronym “LANDS”.  On 17 December, 2014 Transitcare was incorporated, limited by guarantee and with “not for profit” status.  It commenced operating the business conducted by LANDS upon its incorporation. 

3. The second and third respondents, Mr Emery and Ms Leckie are both directors of the first respondent.  Mr Emery is chairman of the executive board.  The fourth respondent Mr O’Toole was employed by the first respondent in September, 2014 as its chief operating officer.  Upon the termination of Mr de Beer’s employment Mr O’Toole was appointed the acting chief executive officer for the first respondent.  The fifth respondent, Francine Wicks, is employed by the first respondent and since April, 2013 has been its “manager of people and quality”. 

4. From about 2012, the first respondent’s Board considered methods by which it could generate revenue by pursuing commercial ventures.  It considered establishing a commercial arm that would be operated for the purpose of generating a profit that would be used to fund (in part) the operations of the first respondent’s business.  The introduction of the National Disability Insurance Scheme was looming.  There was a real potential that organisations like the first respondent would have the funding levels they received from the government altered, perhaps in significant respects.  The Board’s discussions about such matters were part of the Board’s risk-mitigation strategy in the event it lost government funding, upon which the first respondent was heavily reliant.  

5. Mr de Beer attended Board meetings where these matters were discussed.  Mr Emery also discussed commercialisation strategies with Mr de Beer outside of Board meetings.  Mr Emery gave evidence that Mr de Beer, in his presence, drew diagrams to demonstrate an arrangement in which the first respondent was the parent company of a new for-profit subsidiary company and the profits from that new company being invested back into the first respondent.  I accept Mr Emery’s evidence about that.

6. Ms Leckie described in her evidence the investigation and development of what she called a “Mobility Centre Concept” which had commenced in 2012.  As part of this process, in 2013 the first respondent’s Board agreed to investigate the upgrade of the first respondent’s information, technology and communication system (referred to in the material as the “ITC system”).  As Ms Leckie described in her evidence “The rationale behind this ICT upgrade was so that the first respondent would become more competitive in that it would have advanced ICT systems (including booking and scheduling systems) in place to support the future of the Community Transport Industry and, in particular, the Mobility Centre Concept.  This included having an ICT system that would allow it to operate successfully after the introduction of the NDIS scheme.”

7. In late 2013, Mr de Beer commenced the review of the first respondent’s ITC systems and provider.   As part of that review, Mr de Beer was to consider alternative options to the first respondent’s existing provider, BES Technology Systems Pty Ltd. In September, 2013 Ms Debora Campbell was employed by the first respondent and she assisted Mr de Beer to consider proposals in relation to the ITC systems for the first seven to nine months of her employment. 

8. From the period of August, 2013 to March, 2014 Mr de Beer was active in pursuing merger negotiations with the Endeavour Foundation, another much larger not-for-profit agency that offered wider services in the disability sector.  Mr de Beer urged the Board to proceed with a merger with the Endeavour Foundation.  However, the Board rejected that proposal.

9. In about February, 2014 Mr de Beer was introduced to a businessman named John Hammond.  He told Mr de Beer that he had devised a business model called the “Lynx Transport Model” as an alternative to the traditional not-for-profit transport model being used by the first respondent and other not-for-profit transport agencies.  The particulars are not important.  What is important is that, if it was adopted by the first respondent, it represented a significant change in the way in which it would acquire business and deliver its services.

10. The Lynx Transport Model relied upon an ITC system which had been developed (or was being developed) by Mr Hammond.  Mr Hammond told Mr de Beer that he proposed to exploit the Lynx Transport Model via a company he was forming, to be called TransitLynx Pty Ltd.

11. This case is largely about Mr de Beer’s dealings with Mr Hammond, TransitLynx and another related company itXpress Pty Ltd.  A huge volume of evidence is directed to those matters.  There are significant conflicts in the evidence about various factual matters. 

12. Mr de Beer’s claims are, in large part, based upon the entitlements arising from his contract of employment.  Amongst other matters, he pursues a claim for wrongful dismissal for breach of his employment contract by the first respondent.

13. The first respondent’s counterclaim is, in large measure, about whether Mr de Beer breached his contract of employment and the fiduciary duties he owed to his employer.  If so, issues arise about the damages or compensation to which Mr de Beer is entitled.

The employment contract

1. The employment contract between Mr de Beer and the first respondent was signed on 17 December, 2010 but is contained in a letter dated 1 July, 2010. 

2. Clause 2 of the agreement deals with remuneration.  It sets out Mr de Beer’s “salary package”.  I have dealt with this aspect of the employment agreement in more detail below.

3. By cl.6 of that agreement, Mr de Beer agreed to:

   a)perform his prescribed duties at all times in a diligent and efficient manner “as per the relevant Position Description and Key Performance Indicators”, and other standards;

   b)exercise responsibilities and authorities in accordance with the first respondent’s policies and procedures and relevant legal requirements;

   c)comply with all reasonable instructions relevant to duties and employment; and

   d)not enter into any other commitments or relationships which could present a conflict of interest with his obligations under the agreement.

4. The “Position Description and Key Performance Indicators” referred to in cl.6 of the employment agreement is in evidence.  As part of Mr de Beer’s role, he was required to “attend Board/Committee meetings and provide advice and information, provide relevant reports” and “[e]ffectively serve the Board and committees through a high standard of support, sound accurate and timely advice and timely execution of duties allocated by the Board”.  The evidence shows that Mr de Beer prepared reports which he would present to the Board at each of its meetings.  He attended the Board’s meetings and participated in them.  The evidence shows that the directors were not involved in the day-to-day operations of the first respondent.  They relied upon Mr de Beer to communicate with them via his written reports of his activities and his presentations of his reports at Board meetings.  In addition to the Board meetings the evidence shows that Mr de Beer would meet with Mr Emery in his capacity as Chair of the Board on a regular basis.

5. By cl.7.1 of the agreement the first respondent agreed to provide to Mr de Beer a fully maintained motor vehicle as well as providing him with an entitlement to purchase a second vehicle on a novated lease.  I will say more about this aspect of the employment contract later in these reasons.

6. Pursuant to cl.7.2 of the employment agreement, the first respondent agreed to provide Mr de Beer with a laptop, wireless connection and paid for home internet connection for work purposes.  I will say more about this aspect of the employment contract later in these reasons.

7. Pursuant to cl.7.3 of the employment agreement, the first respondent agreed to provide Mr de Beer with a mobile phone for work purposes. On termination or on the last day of employment, the mobile phone was required to be returned to the first respondent.

8. By cl.8 of the employment agreement, Mr de Beer agreed to work full-time, between the hours of 8:30am and 5:00pm on weekdays, and to devote the whole of his working time, attention, skills and ability to the discharge of his duties.  The applicant was not permitted to be engaged by or have a direct or indirect interest in any other occupation or business without the prior written consent of the first respondent, which it agreed would not be unreasonably withheld.

9. Clause 11 of the employment agreement dealt with leave entitlements including annual leave, the payment of an annual bonus, personal/carer’s leave, public holidays, compassionate leave, long service leave, parental leave, other leave and monthly rostered days off.

10. Two other matters ought to be mentioned at this point arising out of Mr de Beer’s employment contract.

11. First, there is no argument between the parties that it is settled law that the relationship between employee and employer is one of the accepted categories of fiduciary relationships.  It is clear, in my view, that Mr de Beer as the CEO of the first respondent owed it a fiduciary duty.  The obligations under that duty are well-rehearsed.  Mr de Beer was required not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict.  If these obligations are breached, he must account for any profits and make good any losses arising from the breach: see Pilmer v Duke Group Ltd (In Liq) (2001) 207 CLR 165 at 197 per McHugh, Gummow, Hayne and Callinan JJ; and Breen v Williams (1996) 186 CLR 71 at 113 per Gaudron and McHugh JJ.

12. Second, the scope of at least parts of Mr de Beer’s authority as CEO is set out in a document described as a “Delegations Schedule”.  It identifies certain matters that are said to be within Mr de Beer’s authority such as:

    a)“Ex-budged allocations for un-planned project or opportunities” >$50,000 (sil. <$50,000);

    b)“Authority to enter into a legal agreement, partnership or MOU which are simple commercial contracts within position scope” – for Mr de Beer as CEO (Level 2) it is stated ‘Within position scope/budget”;

    c)“Any agreements/MOUs that are valued in excess of $50,000 or involve risk or on-going Partnering arrangements must be consider by Board for strategic relevance, Business risk and delegated for signing at their discretion” – for Mr de Beer as CEO (Level 2) it is stated “Agreement with limited risk (impact analysis completed)”; and

    d)“will Approve variations and extension to commercial contracts and agreements”.

13. Further, Mr de Beer’s position description provides that he, “May approve funding submissions, applications or expressions of interest for projects up to $50,000”.

Some more background, context and some findings of fact

1. Mr de Beer continued his discussions and involvement with Mr Hammond, but there is not much detail about those interactions in the evidence.  

2. On 2 April, 2014 a meeting between Mr de Beer and Ms Leckie took place at a coffee shop.  Ms Leckie, I am satisfied, expressed frustration at the length of time it had taken the Board to deal with Mr de Beer’s merger proposal.  In reference to the relationship between Mr de Beer and the board, Ms Leckie formed the view that the relationship had been badly affected by what she considered to be Mr de Beer’s negative behaviour and attitude towards the board and she considered that “rot has set in” and that “either you [Mr de Beer] have to go or the board has to go”.   

3. Mr de Beer told Ms Leckie about John Hammond and the Lynx Transport Model although exactly what he told her is not in the evidence.  To the extent that Mr de Beer claims that he told Ms Leckie that he had been offered a job with Mr Hammond and that he would use that as an exit strategy from the first respondent, I reject his evidence about that.  Ms Leckie says that whilst there was mention about the Lynx Transport Model and Mr Hammond there was no mention that Mr de Beer had been offered a job by Mr Hammond.  Mr de Beer’s subsequent conduct (to which I have referred below) which might be characterised as conducting communications in secret and attempting to conceal matters from the first respondent in its board is consistent, in my view, with Ms Leckie’s evidence that Mr de Beer did not mention those matters to her in this conversation.  Despite Mr de Beer’s submissions to the contrary, there is no evidence that Ms Leckie asked Mr de Beer to organise a meeting with her so that she could meet Mr Hammond.  The only evidence given by Mr de Beer was that she asked him to arrange a meeting with Mr Emery “to discuss it further”.  I do not accept Mr de Beer’s evidence that she asked him to arrange a meeting with Mr Emery as he suggests.

4. The discussions between Mr de Beer and Mr Hammond seem to progress along the lines of the first respondent providing to TransitLynx certain services, described in the evidence as “back-end services”.  Mr de Beer says that he “did some preliminary financial calculations to check that a services offering from the first respondent to TransitLynx would be profitable to the first respondent”.  In cross-examination he described that as “the original work”.

5. Between 10 and 14 April, 2014 Mr de Beer says that he considered the profitability of the first respondent providing “back end services” to TransitLynx.  Mr de Beer’s submission is that there was evidence at the time that such an exercise would be profitable for the first respondent. 

6. On 14 April 2014, Mr de Beer says that he did an “initial brief” in an email to David Taschke and asked him to look at costings and profit, in which he designated a targeted profit of 7%.  There was indeed an email sent by Mr de Beer to Mr Taschke     on 14 April, 2014 that had an attached schedule.  The schedule appears in Mr Taschke’s affidavit.  Within the schedule there is reference to a “% margin” and beside that the figure “7%”.  But it is by no means clear that the percentage relates to “profit”.  The schedule itself is very confused and confusing without further explanation.

1. Mr Taschke prepared a spreadsheet that set out the costs associated with the provision of the relevant services although those costs did not include managerial costs or overheads.  Mr de Beer contended that the spreadsheet prepared by Mr Taschke showed a projected 6 or 7% profit margin for the first respondent if it provided those services to TransitLynx and was paid for them. 

2. In his cross-examination, Mr de Beer said that he had a conversation with Mr Taschke about Mr Taschke undertaking calculations for the amounts to be charged to TransitLynx under the proposed services contract with it.  Mr Taschke however said that there was no discussion about inclusion of a profit margin.  His work related to the costs of the provision of those services.  Mr de Beer says that he instructed Mr Taschke to include a 6% profit margin in those costs.  Mr Taschke denied that there was ever any conversation about profit margin or otherwise. 

3. Moreover, Mr de Beer says that after Mr Taschke provided him with figures for inclusion in the agreement to be entered into with TransitLynx there were discussions about profit.  However Mr Taschke denied that there was ever any such conversation.  Mr de Beer’s evidence about the percentage margin that was discussed is inconsistent as between his oral evidence and his written evidence.

4. Further, the email sent by Mr de Beer to Mr Taschke on 14 April, 2014 referred expressly to costs rather than profit margin, something that Mr de Beer himself drew a distinction between when he was cross-examined about these matters.  The email stated: “Hi David, we are looking for a cost per 100 trips for a client as discussed. We then need to look at base costs, being a percentage of actual fixed costs, Regards, Louis” (my emphasis). 

5. I reject Mr de Beer’s evidence that there was any discussion between he and Mr Taschke let alone any instruction by him to Mr Taschke to include any particular profit margin in the costs that Mr Taschke was asked to prepare for the purposes of the agreement that Mr de Beer proposed that the first respondent would enter into with TransitLynx. 

6. On 14 April, 2014 Mr de Beer met with Peter Emery.  He says that he talked to Mr Emery about what Ms Leckie had said and that it might soon be time for him to leave the first respondent.  I accept that there was a discussion to that effect.  Mr Emery had no recollection of the discussion, but he confirmed to me that in those circumstances he accepted that it was possible that those matters were discussed.

7. Subsequently on 17 April, 2014 Mr de Beer met with Mr Emery and Ms Leckie at a Chinese restaurant on the Gold Coast.  I accept Mr de Beer’s evidence that at that meeting there was a discussion about Mr de Beer’s future and one of his options was transitioning to a “social enterprise”.  I accept that at that point Mr de Beer said to Mr Emery and Ms Leckie that one of the options he was considering was going to work for John Hammond and TransitLynx.  Although Mr Emery when he was asked about this in cross-examination said that he “vaguely recall you mentioning his name” it was a very general discussion. 

8. The conversation was also put to Ms Leckie in cross-examination.  She had accepted that there was a meeting on 17 April attended by she, Mr Emery and Mr de Beer at a restaurant on the Gold Coast.  She denied the conversations in the terms recorded in Mr de Beer’s notes but she accepted that there was conversation about Mr de Beer having a role in setting up “the social enterprise” which would be an arm of the first respondent.  But she gave no evidence about the context in which the conversation occurred.  The context is supplied by Mr de Beer’s evidence about that conversation.

9. Although Mr Emery did not recall some of the particulars of the conversation put to him by Mr de Beer, and in fact, later in his cross-examination purported to deny that there was any discussion about Mr de Beer leaving the first respondent, I accept that the conversation occurred as Mr de Beer gave evidence and that he discussed with Mr Emery and Ms Leckie, perhaps in general terms, that he was considering going to work for Mr Hammond and TransitLynx. 

10. On 24 April, 2014 a meeting occurred between Mr de Beer, Mr Emery, Mr Hammond and Mr Ian Hughes, Mr Hammond’s solicitor.  Mr de Beer introduced Mr Hammond to the second respondent.  The first respondent alleges that the introduction was to instigate a contract for services between the first respondent and TransitLynx.  Mr de Beer says he was simply facilitating a discussion between the second respondent and Mr Hammond to see whether there was any basis for a future agreement between the first respondent and Mr Hammond or an entity associated with him.  The difference, in my view, is inconsequential.  Whatever is the case, it is clear that prior to the meeting substantial work had been done by Mr de Beer and Mr Hammond to formulate a proposal whereby the first respondent would contract with TransitLynx for the provision of certain services to TransitLynx.  A draft services agreement was available for discussion the day after the meeting. 

11. During the meeting Mr de Beer said to the second respondent words to the effect that “TransitLynx might be a future path for me, but this was ‘down the track’.” and that he “saw his future with TransitLynx”.  I accept this evidence.

12. I accept Mr Emery’s evidence that Mr de Beer also informed Mr Emery during the 24 April, 2014 meeting that he wanted Mr Emery involved in the negotiation of the services agreement because Mr de Beer considered that he was “too close to the agreement” to negotiate it on behalf of the first respondent.  Mr de Beer’s own evidence was that, because Mr Hammond had offered him a position with TransitLynx, any discussions between TransitLynx and the first respondent should not involve him.  Whether Mr Hammond had in fact offered Mr de Beer a position is not at all clear from the evidence.  There are no particulars of the position offered or when it was likely to commence.  But Mr Emery did accept that he was asked to negotiate the agreement with Mr Hammond and his lawyer instead of Mr de Beer undertaking that role.  Mr Emery agreed in cross-examination that ordinarily a contract of this nature would be well within Mr de Beer’s authority to negotiate.  Oddly then, there is no suggestion in the evidence that Mr Emery asked Mr de Beer why it was that he thought he was too close to the agreement and could not negotiate on behalf of the first respondent.  The lack of any evidence about any curiosity on the part of Mr Emery as to why Mr de Beer could not carry out his role as CEO of the first respondent tends to be consistent with Mr de Beer’s proposition that he had disclosed to Mr Emery that at the very least he was thinking of going to work for Mr Hammond or TransitLynx at some point in the future.  If that was so, then the prudent course for Mr de Beer was to find an alternative to him negotiating the relevant agreement with a potentially future employer.  

13. There was discussion in this meeting about the possibility that the first respondent and TransitLynx might try to win the same business.  I accept Mr Emery’s evidence that in this meeting, in reference to the possibility that the first respondent and TransitLynx were trying to win the same business, Mr Hammond said words to the effect:

    If the first respondent won the work then fine, but the deal was if TransitLynx won the work that the first respondent couldn’t get, then TransitLynx would give the first respondent the back end…You can compete against us, may the best man win.  But if you don’t want to or don’t win the deal then we’ll do it for you.  We’ll take the risk and you will then get the benefit at the other side.

14. A Board meeting occurred on 24 April, 2014 after the meeting had occurred with Mr Hammond.  Neither Mr de Beer nor Mr Emery mentioned the meeting with Mr Hammond to the Board.  Mr de Beer argues that there is reference in the minutes for that meeting to the appointment of a chief operations officer, which he says is consistent with discussions that he had with Mr Hammond and Mr Emery during the meeting on 24, April 2014.  He says that in that meeting when he informed Mr Emery that he would be leaving to work for TransitLynx, Mr Emery suggested that the first respondent employ a chief operations officer who would be Mr de Beer’s successor.  He suggested that the process should commence straightaway. 

15. The minutes of the Board meeting that occurred on 24 April, 2014 record that the meeting was said to be a follow-up from the Board meeting that was held on 26 March, 2014.  It considered the formulation of some reasons that could be given to the Endeavour Foundation for the first respondent’s decision not to proceed with the merger with that organisation. 

16. The minutes of the meeting plainly indicate that there was opportunity for Mr de Beer and for Mr Emery to disclose to the Board that they had met with TransitLynx and Mr Hammond earlier that day.  In the course of discussing the direction to be taken by the first respondent in its business, the minutes record, “Louis indicated that the business development could be handed over to a social enterprise to focus on other areas”.  The use of the phrase “social enterprise” is significant.  In his evidence, Mr de Beer refers to TransitLynx as a “social enterprise”.  What neither Mr de Beer nor Mr Emery revealed to the Board was that they had held discussions with a “social enterprise” (namely TransitLynx) and that a draft services contract was being prepared for consideration.

17. Nor is there any suggestion in the minutes of the meeting that Mr de Beer had come to the conclusion that he needed to move on from the first respondent.  The minutes record this question, “Do we set up a social enterprise and put on a COO (Chief Operations Officer)?’  In the part of the minutes that records the outcomes of the meeting, one of the outcomes so recorded was that the first respondent would employ a Chief Operations Officer.  Mr de Beer was to send to the Board a position description for that position in the following week and the position was to be advertised.  Mr de Beer’s position description was also to be updated.  Legal advice was to be sought on the tax issues that might arise from the first respondent’s “expansion into commercial markets”.  The minutes record that the Board assured Mr de Beer that he had their full support and the Board acknowledged Mr de Beer’s hard work and personal emotional investment “in this organisation”.

18. Despite Mr Emery saying nothing in the Board meeting, the evidence shows that Mr Emery was interested in the first respondent pursuing the services agreement with TransitLynx.  A draft services agreement was subsequently prepared and given to Mr Emery.  He accepted that he negotiated that agreement with Mr Hammond and his lawyer.  Of some significance, in my view, is the fact that the agreement contained an option for TransitLynx to be given a first right of refusal in respect of the first respondent business.  Mr Emery’s evidence was that he saw TransitLynx as a “channel partner”.  According to the tenor of the evidence that seems to be another organisation with which the first respondent partnered with a view to obtaining work or business for itself.  In cross-examination Mr Emery accepted that the first respondent had never given any of its other channel partners an option to purchase the first respondent’s business as part of the channel partner agreement.  Yet such an option was included in the agreement with TransitLynx.

19. I accept Mr Emery’s evidence that on 27 April, 2014 he asked Mr de Beer to confirm the appropriateness of the content in the schedules to the draft TransitLynx Services Agreement which provided for the fees to be paid to the first respondent.  In response, Mr de Beer sent to Mr Emery a copy of the spreadsheet prepared by Mr Taschke and told Mr Emery “Had a look at the schedules, the figures line up with what Data Dave did, which includes a 6% margin”.   The difficulty with this advice, however, is that the figures prepared by Mr Taschke did not include a 6% margin or any margin for profit.  I do not accept that Mr de Beer checked with Mr Taschke at any time that the costings that he had instructed Mr Taschke to prepare included any profit margin.

20. Mr Emery was entitled to rely upon Mr de Beer in relation to his queries about the fees to be paid to the first respondent under the services agreement and the appropriateness of those fees.  That was part of Mr de Beer’s role as the CEO for the first respondent.  For reasons that are not at all clear, Mr de Beer did not ensure that those figures included a profit margin as he contended that they did.  That Mr Emery was responsible for negotiating the agreement is no answer to the proposition that he was entitled to rely upon Mr de Beer for information to assist him with his negotiations and his ultimate decision to enter into the agreement with TransitLynx.

21. The parties agree that on 30 April, 2014 the first respondent entered into an agreement with TransitLynx to supply certain services to TransitLynx for a fee.  Mr de Beer executed the agreement on behalf of the first respondent with Mr Emery’s express authority to do so.  Under the agreement the first respondent was to provide to TransitLynx “Back-end Services” for a period of three years commencing on 1 May, 2014.  The nature of those services is described in Schedule 1 to the agreement.  In consideration for those services, TransitLynx was to pay a fee to the first respondent depending on the nature and extent of the services provided each month.  Schedule 2 to the agreement provided the various fees for particular services.  Those fees were based upon the spreadsheet prepared by Mr Taschke.

22. TransitLynx would use the services it received from the first respondent as part of its business of engaging with other larger care agencies, such as Endeavour, Anglicare, Lutheran Care and others when seeking to “aggregate” their transport needs.

23. Remarkably, even though Mr Emery and Mr de Beer knew that the first respondent had entered into the service agreement with TransitLynx, there appears to be no mention by either gentleman of that fact to the Board of Directors at any meeting until Mr de Beer referred to it in his report for the Board meeting that took place on 28 May, 2014.  In that report, the following entry appears:

    f.  Marketing Channel Partners

    We have been approached by a social enterprise, TransitLynx Pty Ltd who has subcontracted our services as they are particularly interested in engaging us to provide services such as call centre services, bookings and scheduling of their transport requirements. 

24. The minutes for that Board meeting do not reflect that there was any discussion about the services agreement or the fact that it contained an option in favour of TransitLynx to purchase the first respondent’s business in the circumstances set out in the agreement.  Nor was there any entry in item 4 of those minutes headed “item 4 declarations of conflicts of interest”.  What is clear, however, is that by 28 May, 2014 Mr de Beer had reported the contract that had been entered into with TransitLynx.  His report was prepared on 20 May, 2014 although when it was circulated to the Board members is not clear.  It is also clear that Mr Emery, the chairman of the Board of Directors knew about the agreement because he had negotiated it and authorised Mr de Beer’s entry into it on behalf of the first respondent in circumstances where Mr Emery knew that Mr de Beer was interested in working for the first respondent and that at some point in the future he might go to work for that organisation.  Ms Leckie knew the same.

25. Subsequently, Mr de Beer did work for TransitLynx and provided financial assistance to TransitLynx.  He caused other employees of the first respondent to perform work for TransitLynx or to its benefit.  Those matters form the subject of aspects of the first respondent’s counterclaim and I have dealt with them further below.

26. On 10 April 2014, (and so before the agreement was executed with TransitLynx) the Department of Transport and Main Roads requested a quotation for a project that the parties have referred to in the material as the “Mobility Management Services (Maranoa)”.  The project involved Queensland government planning for the NDIS via a “demonstration site for mobility management for the Maranoa Regional Council”.  Mr de Beer’s dealings in relation to this tender including the costs of it and the deployment of the first respondent’s staff for the purposes of the tender form another aspect of the first respondent’s counterclaim against Mr de Beer.  I have dealt with this matter further below.

27. On 24 July, 2014 Mr de Beer signed a document described as a “Master Services Agreement” with a company called itXpress Pty Ltd.  That agreement was to provide the first respondent with a new ITC system, something which the first respondent had been investigating since mid-2013 (as I have referred to above).  The entry into this agreement and the circumstances in which it came about also form an aspect of the first respondent’s counterclaim against Mr de Beer.  I have dealt with it further below.

Termination of the employment contract

1. The parties agree and have argued the case on the footing that Mr de Beer’s employment was terminated on 16 February, 2015.  Clause 14 of his employment contract made provision for its termination. Clause 14 relevantly provides:

   (a) Notice of Termination

   Without prejudice to and subject the Probationary/Qualifying clause and Summary Termination clause of this Contract, either you or the Employer may terminate this Contract and your employment with the Employer by giving three (3) months written notice unless:

   • any law requires the Employer to give any additional notice in which case such notice will be given; or

   • in the case of the Employer, a Remuneration payment is made to you in lieu of any period of notice.

   (b) Summary Termination

   In matters of serious misconduct, the Employer may terminate your employment summarily without providing you with any notice of termination. Acts of dishonesty, no matter how minor, may result in summary dismissal. If you observe any such incident occurring, we ask that you advise the Chairperson at the earliest opportunity.

   (c) Incapacity

   You and the Employer consider that any absence due to illness or injury of more than three (3) months is not a temporary absence.  The Employer may terminate your employment with not less than one (1) months notice in writing if you become incapacitated by illness or involuntary injury for an accumulated period of more than three (3) months in any 12-month period.

   (d) Termination Due to Performance

   The Employer may terminate your employment for continual non-performance of your obligations and non achievement of your KPI performance standards. A termination in line with this clause will be based upon you being provided with reasonable training, coaching and feedback on the performance required (which will depend on the circumstances).

   (e) Return of Employer Property

   Upon the termination of your employment, on your last working day, you will return all documents and property belonging to the Employer which is in your possession, custody or control to the Employer including but not limited to any material relating to or concerning any confidential information, trade secrets or intellectual property.

2. Mr de Beer’s employment came to an end in the following circumstances.

3. On 2 December 2014, Mr de Beer and Mr Emery attended a function at which Mr Hammond was also present.  After the function Mr Emery, Mr de Beer and Mr Hammond met for coffee.  Mr Emery swears that it was at this meeting that he recognised “the link” between Mr Hammond and TransitLynx on the one hand and itXpress on the other.  Before this meeting, he said, he did not know that Mr Hammond was a director of itXpress.    

1. On the following day at a meeting of the Board, Mr Emery advised the Board of this information.  I accept that in doing so, Mr Emery’s conduct is not consistent with him knowing that information prior to 2 December, 2014.

2. Mr Emery’s concerns about Mr Hammond, itXpress and TransitLynx raised concern amongst the other members of the Board.  The minutes of the Board meeting reflect that concern.  The Board’s concerns regarding the relationship between the first respondent, Mr Hammond, TransitLynx and itXpress were discussed for about one hour. 

3. The minutes of the Board’s meeting show that the Board resolved that the Audit Finance & Risk Committee should undertake some work in relation to this issue.  The resolution was that:

   1.AFC Committee (comprising Shane Griffiths and Helen Abrahams) would look at the documents and legal advice if need be:

   a.  ICT guarantee

   b.  TransitLynx agreement

   c.  ITXpress agreement. 

4. As a result of that resolution the AFR Committee prepared some terms of reference that pose some questions for Mr de Beer to answer.  On 16 December, 2014 Mr Griffiths provided Mr de Beer with those terms of reference and requested him to consider the questions posed and to respond by no later than 22 December, 2014.  On 23 December, 2014 Mr de Beer provided his response to Mr Griffiths.  Mr Griffiths and Ms Abrahams then considered the response and discussed those responses with other directors.  

5. Mr Griffiths and Ms Abrahams developed a draft report and circulated it to the Board in late January, 2015.  The first of the recommendations in the draft report provided:

   The AFR Committee recommends that following the review of the available information that the Board of Directors:

   1. In considering what is best for the short and long term wellness of the organisation, the Board consider the future of the ongoing employment of the CEO, Mr Louis de Beer, noting that:

   a. information provided in the CEO response may provide sufficiently for grounds for Summary Termination in accordance with paragraph 14 (b) of the employment contract dated 1 July 2010. In particular, (i) a potential breach of confidentiality in disclosing the Endeavour Foundation DD to Mr Hammond; and (ii) failure to inform the Board of a conflict of interest with Mr Hammond, resulting from personal opportunity and as a result, to recuse himself from executing a contract with Hammond; and

   b. their appears to be a widening gap between the capability of the CEO and the Board’s expectations in fulfilling the obligations of the role of CEO;

   c. their appears to be a disconnect between the CEO and the Board;

   d. failure of the CEO to satisfy the AFR Committee with clarity of the information of sought under this review.

6. On 30 January, 2015 Mr Griffiths provided Mr de Beer with further questions for him to answer.  On 10 February, 2015 Mr de Beer provided a written response to those further questions.  He provided a written response and a number of documents to Mr Griffiths.   He did not make many of the allegations which now form part of his case in this proceeding.  I accept the respondents’ submission that for example, if Mr de Beer had informed Mr Emery that Mr Hammond was the sole director of both TransitLynx and itXpress and that he had been authorised by Mr Emery to enter into the itXpress Services Agreement prior to his execution of it, one would have expected, if it were true, that he would have mentioned that in his response.

7. Mr de Beer’s response to the further questions raised by the AFR Committee was considered by the committee members.   Mr Griffith’s evidence is that there were some responses provided by Mr de Beer that caused serious doubts about Mr de Beer’s conduct and performance in his role of CEO, including his failure to answer the terms of reference in what Mr Griffiths thought was a complete and transparent manner. 

8. No further report was produced by the AFR Committee. 

9. The respondents contend that at the meeting of the Board on 12 February, 2015 the Board considered the AFR Committee’s report, including Mr de Beer’s responses to the questions he was directed to respond to as part of that investigation.  Although there is no reference in the minutes of that Board meeting to it having done so, the evidence of those directors in attendance and who gave evidence was that the Board decided that it no longer had confidence in Mr de Beer to act in the best interests of the first respondent. The Board also decided that it would terminate Mr de Beer’s employment.  That decision too, does not appear in the Board’s minutes, but it must have been taken. 

10. To implement that decision, on 16 February, 2015 Mr Emery, Ms Leckie and Mr de Beer met at the first respondent’s premises.  In this meeting, Mr Emery informed Mr de Beer that the Board was terminating his employment with the first respondent immediately by providing him with three months’ salary in lieu of notice.  He was given a letter of termination.  He was told that the first respondent did not need to give a reason for the termination and that beyond saying that the Board had lost confidence in Mr de Beer, no reasons were given.

11. At this meeting, Mr Emery directed Mr de Beer to return the first respondent’s property before leaving the premises on that day.   At the end of the meeting, Mr de Beer left the premises taking with him two items which he had been expressly directed by Mr Emery to return to the first respondent prior to Mr de Beer leaving, namely:

    a)the notebook provided to him by the first respondent in which he recorded his dealings, business plans, strategies and ideas in his role of CEO of the first respondent;  and

    b)the iPad provided to him by the first respondent. 

12. On 11 March, 2015 and 13 March, 2015 the first respondent made payments to Mr de Beer.  I have dealt with these payments in more detail below.

13. The mechanism that the first respondent sought to engage to terminate Mr de Beer’s employment was the mechanism provided for in cl.14(a) of the agreement.  That permitted termination of the employment contract with notice or a remuneration payment in lieu of notice.  The first respondent chose the latter course.  It was not argued that the course adopted by the first respondent was ineffective to bring about the termination of the employment contract.

14. Mr de Beer argues that the termination was not pursuant to cl.14(b).  In my view it was not because the first respondent did not purport to summarily dismiss Mr de Beer in the way contemplated by that clause – i.e., immediate dismissal without notice or payment in lieu of notice.  The first respondent now claims that it could have terminated Mr de Beer’s employment under that clause and that basis is still available to it in these proceedings.  I have dealt with that argument below.

15. Mr de Beer also argues that what the first respondent tried to do was engage cl.14(d) of the employment agreement.  However, I reject that argument.  That clause is engaged when there is continual non-performance of your obligations and non-achievement of your KPI performance standards.  That is not the case here.  There is no suggestion of continual non-performance of Mr de Beer’s obligations and non-achievement of his KPI performance standards.  There was no attempt to identify any of the relevant KPI performance standards that Mr de Beer failed to reach.

16. The evidence demonstrates that the Board was concerned about particular behaviour of Mr de Beer that had little to do with his performance generally and his ability to meet his KPI’s.  I am satisfied that the Board determined to terminate his employment and to do so using the mechanism set out in cl.14(a) of the employment contract.

17. In my view, it is clear from the evidence of Mr Emery, Mr Griffiths and Ms Leckie that whilst the mechanism used to bring Mr de Beer’s employment to an end was the entitlement to terminate under cl.14(a) of the employment agreement, the reason for the termination of the employment relationship was what the Board perceived of Mr de Beer’s conduct in relation to, at least, the itXpress agreement.  Whether the Board’s view about that conduct was correct does not matter because the way in which it chose to bring the employment relationship to an end did not require there to be any reason ascribed to the decision to terminate his employment.

18. Mr de Beer points to correspondence that passed after 16 February, 2015 between the parties’ solicitors as indicating the nature of the contractual basis for the termination of his employment.  Statements after the fact are not particularly helpful, although I have taken them into account in reaching the conclusion I have expressed above.

19. On 25 February 2015, Mr de Beer commenced employment with TransitLynx.   Searches of the TransitLynx website indicate that he held the position of “Director-Operations”.   On or about 30 April, 2015 Mr de Beer was appointed a director of TransitLynx.   

The legal consequence of termination pursuant to cl.14(a) 

1. The first respondent argues that because of matters that it subsequently discovered about Mr de Beer’s conduct whilst he was employed, as at the date of his employment, grounds existed for him to be summarily dismissed and without any remuneration payment or payment in lieu of notice.  The consequence of the way in which the employment relationship was terminated impacts upon aspects of both Mr de Beer’s and the first respondent’s claims for relief.  It is as well to deal with that argument now.

2. Senior counsel for the respondents submitted that the serious misconduct in which the first respondent claims Mr de Beer engaged during his employment, but which it only discovered after it had terminated his employment, permits the first respondent to successfully argue that because the first respondent was entitled to summarily terminate the contract then but did not do so, it may now act as if it had and, for example, recover from Mr de Beer the amount of the termination payment made to him.

3. In support of the submission, senior counsel referred to Concut Pty Ltd v Worrell (2000) 75 ALJR 312. In that case, applying the principle derived from Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, Gleeson CJ, Gaudron and Gummow JJ observed that misconduct of an employee sufficient to give rise to an entitlement to terminate a contract could be relied upon to justify termination of the contract in circumstances where the misconduct was not known to the employer at the time of termination. To understand the way in which that principle was applied in that case, however, it is necessary to understand something of the facts.

4. Concut concerned an employee whose employment was brought to an end without notice by the employer.  Subsequently, the employer became aware of serious misconduct on the part of the employee but about which the employer was unaware at the time it terminated the employment contract.  The employee brought a wrongful dismissal claim.  The employer counterclaimed against the employee for damages arising out of the employee’s misconduct.  The employer and employee had a long employment relationship which at one point was formalised into a written contract of employment.  The employer terminated the employment summarily and without providing any of the requisite notice of termination required by the written contract of employment.  That is to say, it relied on its rights at common law to terminate the employment.  At trial the employer sought to justify the termination of the employment on grounds other than those which were known to the employer at the time of termination.  Those other grounds were found by the trial judge to justify the summary dismissal of the employee.  That finding was not disturbed on appeal.

5. All members of the Court considered that it was well-settled that it was open to the employer to reply upon matters which existed at the time of termination of the employment, but about which it did not know, to justify its summary dismissal of the employee.  Drawing upon Shepherd v Felt and Textiles of Australia Ltd, Gleeson CJ, Gaudron and Gummow JJ (with whom McHugh J agreed) affirmed the trial judge’s decision that it did not matter that at the time of the dismissal, the employer had not been aware of that misconduct.  That misconduct nevertheless was available to the employer to resist the action for damages for wrongful dismissal instituted by the employee.

6. However the present case is not one which fits comfortably with cases like Concut.  That is because in the present case, rather than terminating the employment contract relying upon some common law right to do so, the first respondent terminated the employment contract pursuant to a right to do so given by the contract itself.  That is to say, it was a contractual termination pursuant to a right to terminate agreed between the parties rather than the exercise of any common law right to terminate the contract.  The distinction is significant and decisive.

7. The Full Court of the Federal Court of Australia dealt with a case similar to the present in MSL v Sautner (2015) 229 FCR 221. In that case the employer purported to terminate an employment contract pursuant to a clause similar to that of cl.14(a) in the present case. About two weeks later the employer asserted that it was terminating the contract pursuant to a clause similar to that of cl.14(d) in the present case. Tracey, Gilmour, Jagot and Beach JJ held that the Shepherd principle could not be applied if termination had previously lawfully occurred. Their Honours distinguished the cases as thus (at 243-4):

   97.    The important distinction then between the case of Mr Sautner (and the premise of his termination) and the facts in Shepherd and related cases is that here there has been an actual contractual termination, not a mere purported termination upon inadequate grounds but nonetheless later justified on grounds not known or not relied upon at the time of purported termination.  Moreover, the actual termination was not based upon breach.

   98.    The distinction was articulated by the English Court of Appeal in Cavenagh v William Evans Ltd [2013] 1 WLR 238 at [39] where Mummery LJ said:

   “…Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 did not go as far as to say that after-discovered misconduct provided an employer with a defence to an action for payment of an accrued debt. The principle for which that case stands is that an employer can defend a claim for damages for wrongful dismissal by using at trial, in its defence of justification, evidence of misconduct by the employee that was not known to the employer at the time of dismissal. [H]is appointment was terminated… in a fashion that was lawful... The consequence of the lawful termination was that the company became contractually bound to Mr Cavenagh for pay in lieu. All of that happened before the company knew of, or was in a position to accept, Mr Cavenagh’s prior repudiatory breach. The lawful termination had already triggered the liability for pay in lieu, which was, as a matter of legal analysis, quite a different situation than that facing the Court of Appeal in Boston Deep Sea Fishing.”

   In the same case, Tomlinson LJ said (at [54]):

   “… the Boston Deep Sea Fishing principle is … of no relevance here, since the employer is not seeking retrospectively to justify a termination which was impermissible upon the grounds put forward at the time.”

8. Later, their Honours concluded:

   112.  We do not consider that Shepherd supports MSL’s contention that a lawfully terminated agreement, in effect, may be resuscitated and then re-terminated upon some ground not known at the time of the termination.  An agreement may be terminated lawfully for any number of reasons: resignation of the employee; redundancy; effluxion of the contractual term of employment or some other contractual basis.  A contract cannot be terminated twice: Carter J, Carter’s Breach of Contract (1st Ed, LexisNexis Butterworth, 2011) at 10.08. Upon that question we regard Cavenagh as correctly decided.  Mummery LJ in Cavenagh at [36]-[39] characterised the claim for the sum in lieu of notice as a debt. Mummery LJ referred to the respondent’s choice to terminate the service agreement under cl 11.5 by promising to pay the amount in lieu of notice and then said that “[h]aving chosen to terminate the service agreement in that way, the company was not entitled to resile from the contractual consequences of its choice…”. We would make such an observation in the case before us. MSL made a contractual choice to terminate under cl 7.1. It is bound by that choice, if properly implemented.

9. Here the first respondent terminated Mr de Beer’s employment contract pursuant to a contractual right to do so and not pursuant to a breach of contract by Mr de Beer.  The consequences of the way in which the termination was effected pursuant to cl.14(a) created entitlements for Mr de Beer upon termination, namely, the right to a remuneration payment, which, when made, brought the employment contract to an end in a mutually agreed way.  The first respondent contends, and Mr de Beer admits, that the first respondent made a remuneration payment for the purposes of cl.14(a) of the employment contract.  The first respondent is not entitled to rely on Mr de Beer’s alleged misconduct to retrospectively erase the exercise of its contractual right under cl.14(a).  To do that would be to accept that the contract “may be resuscitated and then re-terminated upon some ground not known at the time of the termination”: MSL v Sautner at 246.

Mr de Beer’s claims

1. Against that background, I turn to deal with the claims of each of the parties.  I will deal with Mr de Beer’s claims first and then the counterclaim.  I will deal with each of Mr de Beer’s claims separately.

The annual bonus claim

1. Mr de Beer’s first claim relates to the failure by the first respondent to pay to him an annual bonus for the calendar year ending 31 December, 2014.  This is a contractual claim based upon the terms of his employment contract.  If his argument is correct, there is a debt due by the first respondent to Mr de Beer which survives the termination of his employment.  It is not a payment which accrued to him upon termination of his employment contract.

2. The entitlement to an annual bonus is dealt with in his employment contract.  The relevant clause is as follows:

   11(b) Annual Bonus

   You are entitled to an annual bonus, which would be paid at least 17.5% of four weeks’ pay at your normal rate of pay on the same calculations basis as annual leave loading.  This will be payable in the month of December. 

3. Mr de Beer’s case is straightforward.  He says that by reason of that clause he was entitled to a bonus equivalent to at least 17.5 per cent of four weeks’ pay at his normal rate of pay payable in December, 2014.  The first respondent’s case is that the payment of any bonus was discretionary. 

4. The evidence demonstrates that the first respondent established a committee described as the CEOs Recruitment, Remuneration and Review Committee, the purpose of which was to consider the payment of bonuses particularly to the CEO each year.  Mr Peter Emery, the Chairman of the Board was on the RRR Committee.  He gave evidence that the committee determined that a bonus should not be payable in the 2014 calendar year.  He took the view that the payment of the bonus was discretionary.  However, in cross-examination he said that he had not consulted Mr de Beer’s employment contract with the first respondent at all.  His evidence was that he had never seen it and had never read it. 

5. The respondents argue that as at 16 February, 2015 the employment agreement had been varied by “agreed conduct” and, in particular, that any bonus to be paid pursuant to cl.11(b) of the employment contract was to be paid at the discretion of the Board of the first respondent on a recommendation of the recruitment, remuneration and review board’s sub-committee. 

1. However, the evidence does not bear out the assertion that the employment agreement was varied by “agreed conduct”.  The first respondent contends that since 2012 the bonus to be paid to Mr de Beer was determined by the RRR Committee and there was no certainty that there would be a bonus paid to him for any particular year.  In 2012 he was paid a bonus of $8,000 and in 2013 a bonus of $4,000.

2. On 18 September, 2014 the RRR Committee met to discuss bonuses for the executive staff of the first respondent, including Mr de Beer.  The applicant was present at the meeting.  The applicant made recommendations as to bonuses for the executive staff.   Following this, Mr de Beer was excused from the meeting enabling the RRR Committee to deliberate on Mr de Beer’s recommendations with regards to his performance, remuneration review and whether he should be paid an annual bonus. 

3. The RRR Committee decided that it would recommend to the Board that no bonus would be paid to Mr de Beer.   The RRR Committee advised Mr de Beer it would recommend to the Board of the first respondent that no bonus would be paid to him.  Not surprisingly, Mr Emery states that Mr de Beer appeared to him to be upset by the RRR Committee’s recommendation.  But Mr Emery says that he did not insist that a bonus was payable as a matter of entitlement.  Mr Griffiths swears that Mr de Beer expressed his disappointment with the RRR Committee’s decision about the decision not to pay him a bonus but that at no time during the meeting did Mr de Beer object to the RRR Committee’s decision to recommend to the Board that it should not pay a bonus to Mr de Beer.

4. At the subsequent Board meeting on 24 September, 2014, the Board met and the recommendation of the RRR Committee not to pay a bonus to Mr de Beer was accepted by the Board.   The applicant attended this meeting.  Mr Griffiths swears that, while Mr de Beer expressed his disappointment that the executive staff were not receiving bonuses, at no time did he object to non-payment of a bonus on the basis of an alleged contractual entitlement to be paid a bonus.

5. In the minutes of that meeting, it is noted under the ‘CEO’s Report’ heading that the executive, of which Mr de Beer is a member, acknowledged that bonuses were ‘completely discretionary’.  In these minutes, there is no reflection of any disagreement from Mr de Beer that he had an entitlement to be paid a bonus.  On about 4 November, 2014 Mr de Beer reviewed the draft minutes of the 24 September, 2014 meeting, provided proposed amendment and in doing so, did not raise an objection to or seek to amend the reference to the executive acknowledging that bonuses were completely discretionary.

6. The first respondent’s case is predicated upon the assumption that the employment agreement provides an entitlement to be paid a bonus.  If it were otherwise, the argument about variation would be unnecessary.  It was not put to Mr de Beer that he had agreed to any variation to his employment contract in the sense contended for by the first respondent.  Nor was it Mr Emery’s position that a payment of the bonus might be seen as an entitlement pursuant to the terms of the employment agreement that was subsequently varied by some later agreement between the parties. 

7. The matter falls to be determined according to the terms of the employment contract.  That is so, because even if there was a variation as the first respondent suggests, it was not a variation that was agreed.  At best, the first respondent’s case is that Mr de Beer chose not to object to the way in which the first respondent chose to interpret its obligations under the agreement.  There was no quid pro quo for the relinquishment of the entitlement to a bonus by Mr de Beer which would render the variation binding. 

8. According to cl.2 of the employment agreement, Mr de Beer’s base salary as at 1 July, 2010 was $130,800.  However, pursuant to cl.3 of the employment agreement, his remuneration was to be reviewed annually at the end of each calendar year.  Clause 3.1 contemplates that there might be increases to his remuneration or any component of it but that such increases were at the employer’s discretion.  The increases were not guaranteed. 

9. The parties agree that as at the end of 2014, Mr de Beer’s base salary was $173,296.10 per annum.  Accordingly, he was entitled to a bonus of at least 17.5 per cent of four weeks’ pay at his normal rate of pay.  His normal rate of weekly pay having regard to his base rate of pay was $3,332.62.  17.5 per cent of four weeks of his weekly rate of pay is $2,332.83.  In my view, Mr de Beer has established an entitlement to that sum.

The remuneration contravention

1. I have set out the terms of cl.14(a) of the employment contract above.  The parties are agreed that the first respondent gave to Mr de Beer, upon termination of his employment, what purported to be a remuneration payment in lieu of the three month period of notice provided for in cl.14(a) of his employment contract.  Mr de Beer, however, argues that the first respondent did not pay to him an equivalent to three months remuneration in lieu of notice on termination of his employment. 

2. The payments are set out in Mr de Beer’s final pay summary.  They are based upon Mr de Beer’s annual gross salary of $173,296.10.  The payment summary records a payment for:

   a)Mr de Beer’s accrued but unused annual leave entitlements totalling $37,052.82 less tax of $10,512;

   b)three months of Mr de Beer’s gross base salary for the period 16 February to 15 May, 2015 in the sum of $43,324.03 (less taxation of $13,863);

   c)three months of Mr de Beer’s income protection insurance for the period of 16 February, 2015 to 15 May, 2015 (taking into account however, that the first respondent had already paid to Mr de Beer’s income protection insurer the sum of $203.60 for the period up to 28 February, 2015) in the sum of $1,018.03; and

   d)home internet until 15 May, 2015 in the sum of $300.

3. The first respondent also paid $4,115.78 to Mr de Beer’s nominated superannuation fund, being 9.5 per cent of Mr de Beer’s base salary for the three-month period to 15 May, 2015.  

4. Mr de Beer alleges that the first respondent should pay him a further $16,033.38 pursuant to cl.14(a).  He arrived at that figure by subtracting what the first respondent had already paid him ($44,642.06) from what he says was three months’ remuneration – $60,675.44.  He calculated his annual remuneration (and from that three months’ pay) by adding his base salary of $173,296.10 together with his annual entitlements of superannuation of $16,643.12, “motor vehicle contribution” valued at $43,200, his credit card spending allowance of $2,000, income protection insurance premiums of $4,886.52, mobile phone expenses of $1,1760, and internet and home line rental of $1,500.    

5. Clause 2 of the employment contract dealt with Mr de Beer’s remuneration as follows:

   Your salary package is as follows:

ITEM	ANNUAL VALUE	IMPLEMENTATION
Base Salary	$133,800	LANDS to pay
Superannuation 9%	$13,459	LANDS to pay
Mortgage repayments	$15,747	LANDS to pay
Credit card spending allowance	$2,000	LANDS to reimburse
internet and home line rental	$1,500	LANDS to pay
Income protection insurance	$2,531	LANDS to pay
Motor vehicle contribution	$2,388	Employee to reimburse

1. The first respondent argues that insofar as Mr de Beer’s employment contract provided for him to be paid a credit card spending allowance, that allowance was subject to Mr de Beer incurring expenditure on his credit card for the first respondent and him then demonstrating that he had incurred the charges on his personal credit card.  I accept that argument.  The amount is plainly to be paid on a reimbursement basis having regard to the notation in the table “LANDS to reimburse”.  The reference to the amount being reimbursed or for the employer to reimburse Mr de Beer carries with it the clear implication that he must first incur the relevant amounts for which he is reimbursed.  In circumstances where his employment has been terminated from a particular date and he is being paid remuneration to cover what would otherwise be a period of notice, it is difficult to see how Mr de Beer could maintain a claim that he had incurred any personal expenditure on his credit card for which the employer should reimburse him pursuant to that clause.  Indeed Mr de Beer’s evidence does not suggest that he had incurred expenditure on behalf of the first respondent following his termination from its employment and so, there was nothing to reimburse.  The position, of course, would have been different had the first respondent given him three months’ notice of the termination of his employment and he continued to work for the first respondent during that period.

2. In any event, Mr de Beer’s written submissions accept that the amount claimed by him under this head may not be payable.

3. Mr de Beer includes in his calculations an amount for motor vehicles – $10,800.  The provision of motor vehicles to Mr de Beer during the course of his employment is dealt with in cl.7.1 of his employment contract as follows (errors in the original):      

   7.1 Motor Vehicle: A fully maintained motor vehicle (including the cost of road tolls) will be provided to you (“the Vehicle”) The type of vehicle is to be determined by the Chairperson of the Board of Directors, but will be a vehicle commensurate with the position and no less than a 4 door sedan.  The annual cost of the vehicle to the Employer will not exceed $18 000.00 (including lease costs, and fringe benefit tax)

   A fleet card for petrol and repairs/maintenance is also provided.  You are entitled to purchase a second vehicle on a novated lease upon the terms and conditions as set out in this contract.  In respect thereof you will contribute and pay to the Employer and amount of $2,388.00 per year, which may be amended from time to time, for reasonable cause only, for personal use of the vehicle.  Please refer to the Vehicle Policy for more details.

   You will be responsible for the ongoing care and cleaning of the vehicle and the Employer has the right to inspect the vehicle upon demand.  The Employer reserved the right to seek payment from you for any maintenance, repairs or replacement of the vehicle caused through damage, loss or other unaccounted or unauthorised expenses arising out of the use of the vehicle as the result of the willful or negligent use of the vehicle by you.  The Employer will not be liable for any speeding fines, parking fines or other penalties imposed on you for breaches of relevant legislation occasioned through the (sic) your use of the vehicle.

   The Vehicle may only be driven by you and your immediate family, provided that they comply with the terms and conditions of the insurance policy applicable to the vehicle from time to time.

   On termination of employment, on the last day of employment, the vehicle must be returned to the Employer in a neat and clean condition with any accessories in working condition.

4. Clause 7.1 of the employment agreement deals, in a rather confused way, with the provision of two motor vehicles to Mr de Beer.  The first is the provision of a fully maintained vehicle defined in the clause as “the Vehicle”.  The second is a vehicle provided pursuant to a novated lease dealt with in the second paragraph of cl.7.1.  The first vehicle is, according to the terms of the clause, provided to Mr de Beer at no cost.  The second is provided to Mr de Beer on the basis that he will contribute and pay to the first respondent an amount of $2,388 per year.  That is reflected in the remuneration table because although that figure is included in that table it is accompanied by the notation “employee to reimburse”.

5. The first respondent argues that the provision of the CEO vehicle pursuant to cl.7.1 of the employment contract was “for work purposes and was not included in the remuneration of Mr de Beer within the meaning of cl.14(a) of the employment agreement”.  Having regard to cl.2 of the employment agreement and cl.7.1, in my view the first respondent’s argument is correct.  In terms of his remuneration, Mr de Beer was not provided with any allowances for a motor vehicle but rather, was provided with a motor vehicle for the purposes of carrying out his employment: “the Vehicle”.  He was also provided with the ability to obtain a vehicle on a novated lease but at some cost to himself. 

6. Once Mr de Beer’s employment came to an end and he no longer performed duties for his employer, he had no entitlement to the motor vehicles.  Notwithstanding that, he retained use of them, it seems for about a month after his employment ended.  This aspect of Mr de Beer’s claim fails. 

7. Mr de Beer includes an amount for a mobile phone allowance.  However, there is nothing in his contract of employment which entitled him to any payment associated with the provision of the mobile phone.  Rather, cl.7.3 of the employment agreement provided that a mobile phone would be provided for work purposes with limited private use.  Further, cl.7.3 provides that, upon termination of employment, on the last day of employment, the mobile phone must be returned to the first respondent.  I accept the first respondent’s submissions that this claim must fail.

8. In any event, Mr de Beer’s written submissions accept that the amount claimed by him under this head may not be payable.

9. Mr de Beer has also included in his claim an amount for home telephone and internet.  Clause 7.2 of the employment agreement deals with the provision of those matters to Mr de Beer.  That clause is in the following terms:

   7.2 Lap Top: You will be provided with a lap top, wireless connection and home internet connection paid for by the Employer.  Reasonable private use is permissible however it is to be kept to a minimum as these facilities are provided for work purposes.  Only authorised applications, software may be loaded.

   On termination of employment, on the last day of employment, the lap top must be returned to the Employer in a neat and clean condition with any accessories in working condition.

10. The first respondent argues that the reimbursement of $150 per month for home telephone and internet was for work purposes as cl.7.2 provides and in those circumstances it ought not be included in the calculation of Mr de Beer’s remuneration within the meaning of cl.14(a) of the employment agreement. 

11. However, the provision of internet and home line rental was one of the components of Mr de Beer’s remuneration.  To the extent that the first respondent argues that the amounts were paid to him for work purposes, the same argument can be mounted for all of the remuneration paid to him.  It was compensation for the work, time and energy expended by him in the service of the first respondent.  Mr de Beer was entitled to be paid the internet and home line rental component of his remuneration package as part of the remuneration payment made to him at the conclusion of the employment.  It was not of the same nature as the credit card reimbursement that I have dealt with above. 

12. Mr de Beer’s final payment summary shows that his home internet was only paid until 28 February, 2015 rather than to 16 May, 2015.  To make up his proper payment he was owed a further 2.5 months of payments of his home internet allowance of $150 per month.  That is a total of $312.50.

The Wrongful Termination Claim

1. Mr de Beer claims that the first respondent terminated his employment in breach of cl.14(d) of his employment contract.  I have set out the terms of his employment contract concerning termination earlier in these reasons.

2. However, the first respondent contends, and at times the parties appear to agree, that it terminated Mr de Beer’s employment pursuant to cl.14(a) of the employment contract.  Mr de Beer accepts that the first respondent purported to do this.  Indeed those aspects of his case that I have just dealt with were advanced by him on the basis that a remuneration payment was due to him pursuant to cl.14(a) of the employment agreement.

3. Mr de Beer’s claim for wrongful termination misconstrues the purpose of the subclauses in cl.14.  The operation of cl.14(a) is such that either party was able to terminate the contract at any time provided they gave the requisite notice, or in the case of the employer, it made a remuneration payment in lieu of the period of notice.  Subclauses (b) and (c) both afford notice periods in the circumstances provided for each therein.  Subclause (d) does not.  Subclause (d) might be the subject of an implied term of reasonable notice or the operation of relevant legislation: see for example McGowan v Direct Mail and Marketing Pty Ltd (2016) 313 FLR 370. But cl.14(d) is irrelevant because it was plainly pursuant to cl.14(a) that the first respondent terminated Mr de Beer’s employment. The termination payment can only be consistent with termination pursuant to cl.14(a) of the agreement.

4. In his written submissions Mr de Beer acknowledges that cl.14 “provides four methods of termination”.  He argues that termination of his employment was not pursuant to subclause (a) but pursuant to subclause (d).  He relies on a transcript of the meeting during which he was notified of his dismissal.  He says the following extract is evidence that his employment was not terminated pursuant to cl.14(a):

   Louis, I am here this morning because the Board has come to the decision that your employment with the first respondent is to cease with immediate effect. The Board is not required to give any reason but suffice to say you no longer have the support or confidence of the Board.

5. In my view, that extract only supports the notion that his employment was terminated pursuant to cl.14(a) because other than cl.14(d), it is the only provision by which the first respondent could have terminated his employment with “immediate effect”. 

6. Mr de Beer further argues that the payment of $44,324.06 could not have been made pursuant to cl.14(a) as it was not “Remuneration payment” contemplated by cl.14(a) because it was not the full amount to which he was entitled.  I do not accept that submission.  Even taking into account that he was not paid the internet and home line rental allowance a modest sum indeed, the insufficiency of the payment does not evidence that his employment was not terminated pursuant to cl.14(a).  The sum paid to him was clearly a Remuneration payment as that phrase is used in cl.14(a).

7. In my view, the first respondent did not terminate Mr de Beer’s contract pursuant to cl.14(d).  It did so pursuant to cl.14(a).  Accordingly, it could not have breached cl.14(d) of the employment contract.  This aspect of Mr de Beer’s claim fails.

The Long Service Leave Claim

1. Mr de Beer claims that he is entitled to payment for untaken long service leave pursuant to cl.11(f) of his employment contract or alternatively pursuant to s.71HB of the Industrial Relations Act 1999 (Qld). He claims the first respondent should pay him $38,962.96 for his untaken long service leave.

2. The first respondent opposes the claim. It asserts that cl.11(f) is subject to the Industrial Relations Act and that Mr de Beer is not entitled to any pro-rata payment of long service leave as his employment was terminated by the Board of Directors by reason of his conduct as it was known to the Board at the time.

3. Clause 11(f) of his employment contract provides:

   You will become entitled to Long Service Leave after 5 years service and in accordance with relevant legislation.

4. The agreement does not otherwise define the phrase “long service leave”. Nor does it stipulate the entitlements that might flow to Mr de Beer when he became entitled to long service leave. It is to the “relevant legislation” that one must turn. The parties conducted the case on the basis that the relevant legislation was the Industrial Relations Act.

5. Section 71HB of the Industrial Relations Act relevantly provided at the time of Mr de Beer’s employment was terminated:

   (2) The employee is entitled to long service leave, on full pay, of—

   (a) if the employee has completed 10 years continuous service—8.6667 weeks; and

   (b) after 10 years service, if the employee has completed at least a further 5 years continuous service—a period that bears to 8.6667 weeks the proportion that the employee’s further period of continuous service bears to 10 years.

   (3) An employee who has completed at least 7 years continuous service is entitled to a proportionate payment for long service leave on the termination of the employee’s service.

   (4) However, if the employee’s service is terminated before the employee has completed 10 years continuous service, the employee is entitled to a proportionate payment only if—

   (a) the employee’s service is terminated because of the employee’s death; or

   (b) the employee terminates the service because of—

   (i) the employee’s illness or incapacity; or

   (ii) a domestic or other pressing necessity; or

   (c) the termination is because the employer—

   (i) dismisses the employee for a reason other than the employee’s conduct, capacity or performance; or

   (ii) unfairly dismisses the employee; or

   (d) the termination is because of the passing of time and—

   (i) the employee had a reasonable expectation that the employment with the employer would continue until the employee had completed at least 10 years continuous service; and

   (ii) the employee was prepared to continue the employment with the employer.

   (5) Long service leave is exclusive of a public holiday that falls during the period of the leave.

   (6) An employee who is entitled to long service leave other than under this Act is entitled to leave that is at least as favourable as the entitlement under this section.

   …

   (9) In this section—

   proportionate payment means a payment equal to the employee’s full pay for a period that represents the same proportion of 8.6667 weeks that the employee’s period of continuous service bears to 10 years.

1. On 24 September, 2014 Mr de Beer disclosed to the Board in his report to the Board, the arrangements between the first respondent and TransitLynx in relation to the Maranoa tender.  The minutes relevantly provide:

   TransitLynx is a marketing channel with which we put in a joint tender for the NDIS demonstration site in the Maranoa. We won the tender and need to bring it to fruition. There is no money in it at this stage as it is a demonstration site of our capability. We have 3 agencies coming on board and a 1300 number for us to do all their scheduling. When we heat mapped the area we have determined that we can do their transport in one vehicle (as opposed to the 15 vehicles used to provide transport currently in the Maranoa).  Steve Powis, Director DCCSDS is excited about this demonstration site.  The agencies outsource to us on a contractual arrangement and we will run their transport.  Agencies involved are: Anglicare, Maranoa Regional Council and Community Health.

   We are starting off managing the call centre, scheduling, control and dispatch. Staff are the responsibility of agencies. No more staff required for this trial site. The project is receiving approximately $16,000 to cover phones and extra licenses – 2 devices in vehicles and a 1300 Maranoa number. The Maranoa Regional Council vehicle will be used to service 3 agencies and the other two are not involved. Evidence will be compiled by a base line report and a report in December. Base line will finish in about 3 weeks. It will be a controlled, studied trial. TransitLynx will not make any money. This is not profitable but not loss making. Investment of cost, time and energy to get this right. There is a funding disparity in this area. When the project is up and running it could be profitable. We need to position ourselves to end up with the call centre. We will optimise efficiencies and reap some reward from this.

   Government have made it clear that this is a demonstration site and if it is successful this will be the first time 3 agencies have worked together. Our core business is the call centre. We need to be in a position to provide services all the way to the vehicle and we are happy to be the back end.

   We need to make sure we have some outcomes established in terms of this project so we know milestone events and the lead to this is a one page briefing to the board. Agreement and what is involved is important to the board. Louis prefers to get rubber on the tar and then come forward and has been trying to disconnect from driving the board. Louis feels gratified tonight that the board is asking the right questions.

   Business Case needs to be put to the board including outcomes, strengths and weaknesses. Louis gave the undertaking that with Terry on board will be able to apply more time to Business Development and the board will be very well informed. It is suggested that Louis work with Graham Davis to come up with a one page business case template.

2. The minutes of the meeting, in my view, demonstrate that the Board was aware of and an active participant in the progress of the first respondent’s involvement in the Maranoa project. 

3. To the extent that the entry into the joint tender process and the sharing of fees represents a breach of the fiduciary duty owed by Mr de Beer to the first respondent (and I do not think that it does), Mr de Beer did what he did with the knowledge and consent of Mr Emery.  Moreover, the first respondent had a legitimate interest in the work being tendered for on the basis that it was a demonstration site that was not expected to make any money but which was designed to be a “proof of concept” or demonstration site from which more work might flow.  TransitLynx was in the same position.  There is nothing remarkable about that – that is the nature of partnerships or joint ventures – there is generally some benefit to be identified from the business of the venture that will pass to each side. 

4. The first respondent’s claim for the two payments made by way of consulting fees – a total of $12,687.93 does not succeed.

The travel and accommodation for Mr Taschke, Mr Woods and Mr de Beer

1. The quantum of the amounts claimed under as expenses paid by the first respondent for Mr de Beer, Mr Taschke and Mr Woods to visit Roma, I am satisfied, are proved in the evidence.  The amounts claimed do not include an amount of $4,909.75 reimbursed by Mr Hammond to the first respondent on 18 February, 2015.

2. In my view, these costs are not recoverable by the first respondent.  For the reasons I have expressed above, the entry into the joint tender process and the sharing of fees for that project was something that was done with the knowledge and consent of Mr Emery.  The work to be done on the project was not limited to the provision of services under the TransitLynx Services Agreement.  This aspect of the claim fails.

The Maranoa variation

1. On 28 July, 2014 Mr de Beer executed a variation to the TransitLynx Services Agreement.   The terms of the Maranoa Variation prevented the first respondent from charging fees to TransitLynx for the services performed by the first respondent in relation to the Maranoa project that the first respondent would otherwise be entitled to charge under the TransitLynx Services Agreement.   The terms of the Maranoa Variation prevented the first respondent from seeking reimbursement from TransitLynx for additional resources provided to TransitLynx in relation to the Maranoa Project.

2. It is now uncontroversial that Mr de Beer did not seek the approval of the Board, nor did he have the approval of the Board, to enter to the Maranoa Variation on behalf of the First Respondent.   I say “now” because in his reply at paragraphs 32 and 33(a) he pleaded that he had the authorisation of the first respondent’s board to sign it.  He alleged that he had informed the second, third and fourth respondents about the variation agreement by way of email and face-to-face meetings.  However, in cross-examination he resiled from that:

   And before you signed the Maranoa variation, which we see behind tab 6, you did not discuss with any director of TransitCare that you were going to sign this agreement?   That’s correct.  Qualified, though, I did say to them on 24 September in the board meeting there is no money in it and that we are both – and also my business case indicated that we would spend up to $9000.

   And in none of the documents and at none of the meetings did you disclose to the board of directors that you had signed the Maranoa variation, which is the document in front of you now, on 28 July 2014.  Do you agree?   I agree.  

   And you didn’t disclose in this CEO report – I think we have already established this – that the Maranoa variation had been executed.  And you didn’t provide the board with a copy?   No.

   No as in you agree with me?   I agree with you’.

3. But he did not need the Board’s approval.  It was within his delegations as discussed above.  The evidence of Mr O’Toole establishes that the cost in terms of lost revenue to the first respondent by reason of the Maranoa Variation was $5,580 for the fees that should have been charged to TransitLynx for the First Respondent’s provision of back-end services in the Maranoa project but for the Maranoa Variation.  To enter into such an agreement was within Mr de Beer’s authority as chief executive officer.    

4. But was to do so a breach of his fiduciary duty owed to the first respondent?  I find that it was for these reasons:

   a)Mr de Beer did not disclose the Maranoa Variation to the Board prior to his execution of that document. That is especially curious given that he had earlier considered that he should not be involved in the negotiations of the TransitLynx Services Agreement on behalf of the first respondent at all.  At the very least one might have expected there to have been a discussion with Mr Emery about it and a request on his part to negotiate and sign the variation. But there was not;

   b)despite having the opportunity to do so, on 24 September, 2014 Mr de Beer did not advise the Board that TransitLynx would not be paying any fees to the first respondent for its work on the Maranoa project.  Rather, he explained that TransitLynx would not make any money and that the project is not profitable but not “loss making”.  That was plainly not so, at least insofar as the first respondent was concerned because it was not to receive anything under the services agreement with TransitLynx despite and entitlement, the variation agreement aside, to do so;

   c)further, as the first respondent’s submissions point out, Mr de Beer told the Board that the first respondent would “break even” in relation to its participation in the Maranoa project.   I accept that Mr de Beer’s conduct in that regard was misleading.  He knew that the first respondent would not receive any revenue from the tender because the first respondent had no contract with the government.  Moreover, it had no income under the services agreement with TransitLynx, and yet it had incurred expenses and other liabilities of an ongoing nature that it would have to fund from its own resources;

   d)Mr de Beer owed his employer a duty of fidelity and to act in its interests.  Agreeing to the variation, even in the circumstances described by Mr de Beer in his evidence, was not acting in the interests of his employer.  The services agreement with TransitLynx was in place, as was the agreement for TransitLynx to deliver the Maranoa project.  There was no legal imperative that the first respondent forego its revenue under the services agreement.  At best, such an arrangement could only have benefited TransitLynx;

   e)Mr de Beer was in an irreconcilable position of conflict given his expressed desire to work for TransitLynx.  He had a vested interest in that company being successful so that it could employ him when he left the employ of the first respondent.  I have found above that he mentioned that to Mr Emery.  Whether he said it or not to Mr Emery on 24 April, 2014, Mr de Beer had the view that his future lay with TransitLynx.  That was something plainly within his contemplation; and

   f)in those circumstances he needed to act carefully and precisely to avoid breaching his duty to his employer.  But he did not.  Instead of disclosing the conflict and seeking the Board’s approval for the proposed variation, I am satisfied that he deliberately hid it from them.

5. On the evidence, the Maranoa Variation cost the first respondent $5,580 in foregone fees.  By reason of his breach of duty, he must account to his employer for that sum.

The Telstra contract

1. On 23 September 2014, on behalf of the First Respondent, Mr de Beer entered into a 36-month agreement with Telstra for the use of a 1300 telephone and facsimile number (1300 MARANOA).  However, the first respondent already had its own 1300 number.  Mr de Beer did this despite the duration of the Maranoa Project being for 12 months, 24 months less than the term of the telephony contract.

2. The payments made by the first respondent to Telstra pursuant to the agreement for the provision of 1300 MARANOA were $260 per month for a period of 36 months – totalling $9,360.

3. Mr de Beer’s case is that to start up the Maranoa Mobility Centre, TransitLynx needed to connect a 1300 number to the TransitCare Call Centre and this was done in the name of TransitCare in order to connect it up to the TransitCare ISDN line.  Mr de Beer asserts that “John agreed to reimburse TransitCare for this cost, which was supposed to be paid by the Department of Transport and Main Roads”.  He argues that TransitCare would have a claim for this against TransitLynx.

4. However, whether that is so or not, the question is whether Mr de Beer is liable for the sum.   It is plainly within his authority as the CEO of the first respondent.  It was in furtherance of the agreement that he had made with TransitLynx to pursue the Maranoa project and about which I have found he informed Mr Emery.  I do not consider that the incurring of these costs was a breach of Mr de Beer’s fiduciary duty to the first respondent because they were covered by his disclosure to Mr Emery that he and Mr Hammond had agreed to share the expenses of the Maranoa tender.  The contract may have been imprudent, but it was within Mr de Beer’s authority and was not a breach of his fiduciary duty. 

5. The first applicant’s claim in this regard fails.

HSV Holden

1. On 10 May 2011, Mr de Beer entered the first respondent into a corporate lease agreement with GE Capital for the provision of a Holden motor vehicle.   The parties agree that this vehicle was supplied to Mr de Beer as his CEO Vehicle under clause 7.1 of the employment agreement.

2. Mr de Beer alleges that he reached an arrangement with the first respondent’s former chairman, Ms Langley, whereby at the end of the hire purchase term of the lease for the Holden, Mr de Beer could purchase the vehicle through his family trust as the “novated lease vehicle” contemplated by clause 7.1 of the employment agreement.  

3. However, despite that agreement on 10 April, 2013 Mr de Beer entered the first respondent into a further lease agreement with GE Capital for the lease of the Holden.   Pursuant to clause 12 of that lease agreement, at the expiry of that lease, the first respondent was required to return the Holden in “good condition”, as defined in clause 1 of the lease agreement.  That definition required the vehicle to be returned:

   a)in good condition and appearance throughout, & mechanical order, having regard to the distance the vehicle has travelled for the hours the vehicle has been in operated for excepting fair wear and tear; and

   b)without scratches, dents or other damage which will in total cost more than $250 including labour and materials to repair; and

   c)without sign writing or other distinctive markings (other than those “we or the vehicle’s manufacturer produce”; and

   d)(where the vehicle is a motor vehicle) with 5 tyres with tread known in the used car trade as saleable tread.

4. On 4 December 2013, Mr de Beer caused the wheel colour of the HSV Holden to be changed, incurring a cost of $1,056 to the first respondent.  

5. On 17 February 2014, Mr de Beer caused further work to be done on the HSV Holden at a cost of $1,882.67 to the first respondent.  The work included inspecting the car for a roadworthy certificate, car cleaning and detailing, the cost of which was $680 and other cosmetic changes, the cost of which was $500.   

6. On 24 February 2014, Mr de Beer advertised the HSV Holden for sale on the carsales.com.au website. 

7. On 4 March 2014, Mr de Beer obtained a vehicle roadworthy certificate on the HSV Holden, causing the first respondent to incur a cost of $71.50. 

8. The evidence also establishes that on 4 March, 2014:

   a)at 2:20pm, ABC Financial Services wrote to GE Capital to advise that an ABC Customer was to purchase the HSV Holden.  ABC sought a payout letter in the sum of $37,000;  and

   b)at 4:27pm, GE Capital wrote to Mr de Beer advising that it could not issue the letter for the $37,000 amount, but suggested a process whereby GE Capital terminates the lease and invoice the first respondent for $24,523.84 and the first respondent then invoice ABC for $37,000. 

9. It is not in dispute that on 5 March, 2014:

   a)at 10:36am, Mr de Beer wrote to GE Capital and advised that he would transfer the HSV Holden to his family trust, and then the trust would raise an invoice to ABC for $13,579.44 less a deposit at the same time as GE Capital would raise an invoice to ABC for $23,420.56.  Mr de Beer informed GE Capital in this email that he had already received a $2,000 deposit from the buyer of the HSV Holden;

   b)Mr de Beer purchased and had fitted to the vehicle four tyres and a wheel alignment service at the cost to the first respondent of $1,166.  On about 11 August 2014, Mr de Beer caused the first respondent to reimburse him for this cost.

10. It is also uncontroversial that on 6 March, 2014:

    a)at 1:53pm, Mr de Beer caused the first respondent to transfer registration of the Holden from the first respondent to his family trust and he caused the first respondent to incur the a cost of that, namely $747.98;

    b)at 4:30pm, Mr de Beer supplied to ABC the details of the transfer of the registration from the first respondent to his family trust and an invoice issued by his family trust for the outstanding balance of the third party’s purchase of the HSV Holden, being $11,579.44.  On 7 March, 2014 Mr de Beer caused the Holden to be transferred from his family trust to the third party.  

11. There is no dispute between the parties that, by transferring the HSV Holden from the first respondent to Mr de Beer’s family trust and then transferring it from that trust to the third party, his family trust made a profit of $13,579.44.

12. The first respondent claims that Mr de Beer was in breach of his employment contract and his fiduciary duty to the first respondent and that he should pay it the sum of $4,924.15 and $13,579.44.

13. Mr de Beer’s case is that:

    a)the painting, repair and tyre related expenses were incurred by the first respondent in accordance with his contractual entitlement to a “fully maintained motor vehicle” and that those expenses would have been incurred by the first respondent at the end of the lease term;

    b)he was authorised by Ms Langley, the then chairperson of the board of directors of the first respondent, to buy the Holden through his family trust at the conclusion of the lease term as the “novated lease vehicle” contemplated in cl.7.1;

    c)the roadworthy and transfer costs were associated with the purchase of the Holden; and

    d)upon transfer, the de Beer Family Trust was free to deal with the Holden as it saw fit, including the right to sell it for a profit.

14. He further argues that the expenses were paid on his credit card and the monthly statement was reviewed and approved by the second respondent.  He says the purchase of the Holden by the de Beer Family Trust was disclosed to and approved by the second respondent.  The profit from the sale, he says, was disclosed to the second respondent who expressed no objection to it.

15. Mr de Beer’s entitlement to a “fully maintained motor vehicle” was subject to the following:

    The Employer reserved the right to seek payment from you for any maintenance, repairs or replacement of the vehicle caused through damage, loss or other unaccounted or unauthorised expenses arising out of the use of the vehicle as the result of the willful (sic) or negligent use of the vehicle by you.

16. I reject Mr de Beer’s argument that the expenditure that he incurred in respect of the Holden motor vehicle was expenditure that was necessary so as to supply him with a fully maintained motor vehicle.  It was not satisfactorily explained in the evidence just why wheel painting needed to be carried out when there were some scuffs and scratches on the wheels from what Mr de Beer described as other employees’ poor driving.  Moreover in circumstances where the lease of the motor vehicle was very quickly coming to an end, there was no explanation given as to why the expenditure was necessary in circumstances where, no doubt, the vehicle was about to be replaced with another.

17. The first respondent submits that it was not usual practice for it to pay the roadworthy and transfer costs if a leased car was to be sold to an employee.  The evidence demonstrates that another employee of the first respondent was disciplined for causing the first respondent to incur costs of transfer in similar circumstances.  Mr de Beer had been involved in that disciplinary process.

18. The first respondent points out that in his reply, Mr de Beer asserts that he had the agreement which I have referred earlier with Ms Langley in place so that he was entitled to purchase the vehicle from the first respondent at the conclusion of the lease term for the vehicle.  He asserts that Ms Langley told him that at the end of the hire purchase term he could buy the Holden through his family trust as the “novated lease vehicle” contemplated by clause 7.1 of the employment agreement.  However, contrary to that, the first respondent argues that Mr de Beer did not act in accordance with this arrangement because he did not purchase the Holden, but rather, he caused the first respondent to transfer its registration to his family trust for no consideration.  Had he or his family trust purchased the vehicle, he would have been obliged to buy it (and pay for it) at market value.  The first respondent argues that that must be so because he was in the position of a fiduciary and owed fiduciary obligations to his employer to not make a personal profit at his employer’s expense.  The first respondent argues that to avoid breaching his duty, Mr de Beer was required to pay the amount which was paid by the third-party he purchased the vehicle from Mr de Beer’s family trust.  The value of that transaction represented the market value of the vehicle.

1. I accept that argument.  Notwithstanding that the first respondent was not the owner of the Holden – it was at all times owned by the leasing company, it was an opportunity that came to Mr de Beer through his employment and which his employer, as the lessee under the relevant vehicle lease was entitled to exploit.  Ms Wicks’s evidence does not help Mr de Beer.  Mr de Beer had an obligation to disclose the potential profit to the first respondent’s governing body, the Board of Directors and to obtain the consent of the Board of Directors to him and retaining the profit.  Although Ms Wicks was a member of the senior executive of the first respondent, she was not a director nor a member of the Board of Directors.

2. I reject Mr de Beer’s evidence that Ms Langley gave consent to this particular transaction.  By the time of the trial Ms Langley was deceased.  Even though she may have agreed to Mr de Beer or his family trust purchasing the vehicle at the end of the lease, Mr de Beer gave no evidence about the terms or conditions upon which that purchase might take place.  He did not suggest that there was any agreement about price.

3. Nothing in Mr de Beer’s evidence demonstrated that the first respondent or anybody on its behalf (apart from Mr de Beer) gave any consent to the acquisition by him or his family trust of the Holden at an undervalue and then sale by him or the family trust at market value and at profit.

4. I also accept the first respondent’s submission that there was informed consent by Ms Langley or anyone acting for the first respondent whereby Mr de Beer was authorised to spend the first respondent’s money making improvements to the HSV Holden before selling it for a profit.  As senior counsel for the first respondent submitted, Mr de Beer accepted in cross-examination that if it was established that he had engaged in this conduct, it would be dishonest.   He also agreed that if he had not spent the first respondent’s money to “do up the car”, that the de Beer Family Trust would not have made as much profit.

5. I do not accept that Mr de Beer told anybody from the first respondent, let alone told Mr Emery about his plans to improve the Holden motor vehicle and then sell it for a profit which he would then retain.  His actions were clearly dishonest as Mr de Beer accepted in cross-examination.  He is liable to account to the first respondent for the profit.  He is not liable to account to the first respondent for the cost of the improvements because the cost of those improvements led to the making of the profit.  He should account to the first respondent for the transfer and registration costs because they were unnecessary in the circumstances and would not have been incurred by the first respondent had it been permitted to sell the Holden to the third-party. 

6. I assess the damages under this aspect of the claim as:

   a)profit   $13,579.44

   b)registration costs to de Beer family trust           $747.98

   Total  $14,327.42    

Mercedes Benz

1. There are two aspects to this claim.  The first relates to an amount of $5000 that was paid by the first respondent by way of deposit on a Mercedes-Benz motor vehicle that was to be provided to Mr de Beer under his employment contract.  When the purchase of the vehicle was completed, there was a refund of the deposit, but for reasons that are not now relevant, the deposit was paid to Mr de Beer’s personal credit card on 16 October, 2014.  Mr de Beer has retained that amount to which he has no entitlement.  There is no dispute about that.  The first respondent is entitled to recover that some.

2. As the second aspect, Mr de Beer accepts that the lease costs for the Mercedes-Benz motor vehicle exceeded the allowance he was permitted under his employment contract and that he is liable for the difference.  The parties disagree on that difference.

3. I accept that the first respondent was required to pay $5,176.80 more per year for the Mercedes Benz than Mr de Beer’s entitlement under cl.7.1 of the employment agreement.  Under his employment agreement he was entitled to a lease car with an annual cost of $18,000.  Under the lease for the Mercedes-Benz that is in evidence, I find that the annual cost was $23,176.80.  The annual difference was $5176.80.  The car was disposed of on 16 September, 2015 which meant that the first respondent paid the extra sum of $4,745.40.

4. I reject the method by which Mr de Beer suggests I should calculate the amount for which he is liable under this head.  His calculations are not borne out by the evidence.  He does not rely upon the terms of the actual agreement with the leasing company that is reflected in the evidence of Mr O’Toole.

5. Mr de Beer is liable to the first respondent for $9,745.40 under this claim.

Termination payment

1. The first respondent argues that the evidence establishes that Mr de Beer’s conduct amounts to serious misconduct for the purposes of cl.14(b) of the employment contract and that had it known of that conduct when his employment contract was terminated, it would have acted under that clause rather than cl.14(a). 

2. The first respondent now claims that the amount paid to Mr de Beer on the termination of his employment ought to be repaid by him.  It argues that, in circumstances where it was entitled to summarily terminate his employment but chose not to do so, it is in any event unconscionable for him to retain that payment.  That is so, it is said, because the first respondent was acting on a mistake in view of the facts namely that it had no entitlement to summarily dismiss him.

3. For the reasons I have set out earlier, this argument cannot succeed.  The applicant chose to terminate Mr de Beer’s contract pursuant to cl.14 (a).  It cannot now resile from that choice.  It did not terminate his contract on any common law basis but rather used the contractual entitlement it had under cl.14(a).  It cannot now resile from that choice irrespective of what it has learned about Mr de Beer’s conduct since the termination of his employment.

Failure to return property

1. The parties agree that on 16 February, 2015 Mr de Beer was directed by the second respondent to return all property of the first respondent, namely:

   a. the written notebook Mr de Beer used in recording business. dealings and information of the first respondent; and

   b. all electronic devices such as the iPad provided by the first respondent to Mr de Beer.

2. The first respondent alleges that Mr de Beer is in breach of his employment contract because, despite such direction, Mr de Beer has failed to return the notebook and the iPad, which are both property of the first respondent.

3. Mr de Beer denies the allegation.  He says the notebook was used for both private and business purposes.   In respect of the notebook, he alleges that on 16 February, 2015 the second respondent requested the notebook, but it was not handed over as it contained private details and the respondents did not raise it as an issue at the time.

4. In respect of the iPad, Mr de Beer says that he mistakenly handed his personal iPad to the second respondent.  He says he has since ascertained that the iPad in his possession is the property of the first respondent.  However, he argues that there was no loss incurred by the first respondent because the iPad handed to the second respondent was in an almost new condition.  Mr de Beer says he is prepared to return the first respondent’s iPad in return for his iPad, which is in the possession of the first respondent.

5. The evidence establishes that the notebook belongs to the first respondent as does the iPad presently in Mr de Beer’s possession.  The fact that the notebook contained private details or personal matters is not to the point.  It was provided to Mr de Beer for the purposes of his work and is owned by the first respondent so too, the iPad.  There should be an order for the return of both items forthwith.

Conclusions

1. Mr de Beer succeeds in two aspects of his claim namely:

   a)his claim in relation to an annual bonus for the 2014 year – $2,332.23; and

   b)his claim in relation to his remuneration payment insofar as there was a shortfall in his home internet payment –$312.50.

2. Mr de Beer is entitled to judgment against the first respondent on his claim for a total of $2,644.73.  That amount should attract interest.

3. Mr de Beer’s claims against the second third and fourth respondents must be dismissed.

4. The first respondent’s counter claim against Mr de Beer succeeds in the following respects:

   a)$10,000 by way of damages for breach of his employment contract or alternatively compensation for breach of fiduciary duty;

   b)$14,327.42 in respect of the Holden motor vehicle transaction; and

   c)$9,745.40 in respect of the Mercedes-Benz purchase and lease.

5. The first respondent is entitled to judgment against Mr de Beer on its counterclaim for $34,072.82.  That amount should attract interest.

6. In addition to those orders the first respondent is entitled to an order for the return of its personal property as I have indicated above.

7. Neither party made submissions with respect to the question of interest for costs and I will make directions for those matters to be dealt with.

I certify that the preceding two hundred and sixty (260) paragraphs are a true copy of the reasons for judgment of Judge Jarrett.

Date: 1 July 2019