Allsop P at [1] Macfarlan JA at [150] Meagher JA at [151]
Decision:
1. Appeal allowed in part.
2. Set aside the orders of the Supreme Court made on 9 September 2011.
3. Within 14 days the appellant file agreed orders disposing of the appeal, or in lieu of any agreement, the appellant and the respondent file draft short minutes that each contends should be made together with submissions of no more than three pages in support thereof, including as to costs in the Supreme Court and in the Court of Appeal.
Catchwords:
EMPLOYMENT LAW - contract - executive of public company - contract provided for bonus and other payments in event of termination - no bonuses payable in case of termination for serious misconduct - company terminated employment under contract - later discovery of misconduct - principle in Shepherd v Felt and Textiles of Australia Ltd - no bonuses payable
CORPORATIONS - duties and liabilities of officers - fiduciary and related statutory duties - chief executive officer - payments out of accrued bonus pool and company treasury facility - payments repaid shortly thereafter - no tax withheld from payments - payments not declared as related party loans - short periods in which CEO was overpaid from bonus pool - no overall net loss to company - CEO and others acting honestly - company exposed to risk of regulatory or taxation irregularities - misconduct
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Downer EDI Ltd v Gillies [2012] NSWCA 333
Case
[2012] NSWCA 333
Decision Date
CaseChat Overview and Summary
The dispute in *Downer EDI Ltd v Gillies* concerned the entitlement of a former chief executive officer, Mr Gillies, to certain termination payments under his employment contract, following the termination of his employment by Downer EDI Ltd. The Court of Appeal of New South Wales was required to determine whether Mr Gillies was entitled to these payments, specifically accrued bonuses, despite the subsequent discovery of serious misconduct on his part.
The central legal issues before the Court of Appeal were whether the principle established in *Shepherd v Felt and Textiles of Australia Ltd* applied to disentitle Mr Gillies to his accrued bonus payments, and whether the conduct of Mr Gillies and others in relation to certain payments from a bonus pool and company treasury facility constituted misconduct that would forfeit his entitlement to termination benefits. The Court also considered the nature of the duties owed by Mr Gillies as CEO and the implications of certain financial transactions for his contractual entitlements.
The Court of Appeal allowed the appeal in part, setting aside the orders of the Supreme Court. The Court reasoned that while Mr Gillies and others acted honestly and there was no overall net loss to the company, the company was exposed to risks of regulatory or taxation irregularities due to payments not being declared as related party loans and tax not being withheld. The Court applied the principle from *Shepherd v Felt and Textiles of Australia Ltd*, which suggests that an employee's entitlement to accrued benefits may be forfeited if they engage in serious misconduct that harms the employer, even if the misconduct is discovered after termination. The Court found that the conduct in question, while not causing direct financial loss, did expose the company to significant risk, and therefore, the accrued bonus payments were not payable. The Court ordered that the parties file agreed orders or draft short minutes and submissions within 14 days to dispose of the appeal, including as to costs.
Orders
Orders of the court
1. Appeal allowed in part.
2. Set aside the orders of the Supreme Court made on 9 September 2011.
3. Within 14 days the appellant file agreed orders disposing of the appeal, or in lieu of any agreement, the appellant and the respondent file draft short minutes that each contends should be made together with submissions of no more than three pages in support thereof, including as to costs in the Supreme Court and in the Court of Appeal.