Hurley v Security & Technology Services (NT) Pty Ltd - [2021] FedCFamC2G 181

Federal Circuit and FamiLY Court of Australia
(DIVISION 2)
Hurley v Security & Technology Services (NT) Pty Ltd [2021] FedCFamC2G 181

File number(s): SYG 530 of 2020

Judgment of: JUDGE STREET

Date of judgment: 2 November 2021

Catchwords: INDUSTRIAL LAW – FAIR WORK – whether the applicant wrongfully dismissed – whether the first respondent contravened s 44 of the Fair Work Act 2009 (Cth) – no serious misconduct summary dismissal not justified – contravention of s 44 of the Fair Work Act 2009 (Cth) in failing to give notice required under s 117 of the Fair Work Act 2009 (Cth) – failure to make out serious misconduct within s 123 Fair Work Act 2009 (Cth) – compensation awarded under s 545 of the Fair Work Act 2009 (Cth) – interest under s 547 of the Fair Work Act 2009 (Cth)

Legislation:
Fair Work Act 2009 (Cth), ss 19, 44, 117, 119, 123, 408, 409, 474, 475, 545, 546, 550, 566, 570

Corporations Act 2001 (Cth), ss 181(1), 182, 183, 200AA, 200B, 200F

Fair Work Regulations 2009 (Cth), reg 1.07(1)

Cases cited: National Tertiary Education Industry Union v University of Sydney (2021) FCFC 159

Division: Division 2 General Federal Law

Number of paragraphs: 216

Date of hearing: 31 August 2021
1 September 2021
17 September 2021

Place: Sydney

Counsel for the applicant: Ms C Ronalds
Ms R Kumar

Solicitors for the applicant: Nicole Dunn Lawyers

Counsel for the first respondent: Mr M Seck

Solicitors for the first respondent: Seyfarth Shaw Australia
ORDERS

SYG 530 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:
MARK HURLEY
Applicant

AND:
SECURITY & TECHNOLOGY SERVICES (NT) PTY LTD ACN 110 544 753

First Respondent

MARK RANYARD
Second Respondent

order made by:

Judge street

DATE OF ORDER:

2 November 2021

THE COURT DECLARES THAT:
1.The first respondent contravened s 44 of the Fair Work Act 2009 (Cth) by failing to give notice of termination to the applicant required by s 117 of the Fair Work Act 2009 (Cth).

THE COURT ORDERS THAT:
1.The first respondent, pursuant to s 545(2)(b) of the Fair WorkAct 2009 (Cth), pay compensation to the applicant for the loss suffered because of the contravention in the sum of $308,401.83 together with interest under s 547 of the Fair WorkAct 2009 (Cth) from 12 March 2020 to date in the sum of $21,598.04, making a total sum of $329,999.87 payable within 28 days.
2.If Order 1 had not been made, the Court would have awarded damages in favour of the applicant for breach of contract by the first respondent in the sum of $308,401.83 and interest under s 211 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) from 12 March 2020 to date in the sum of $21,598.04.
3.The proceedings against the second respondent are dismissed.
4.The Court will hear the parties on costs under s 570 of the Fair WorkAct 2009 (Cth).
5.The issue of penalty under s 546 of the Fair WorkAct 2009 (Cth), by reason of the said contravention will be heard separately.

Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
INDEX
1.1        Introduction
1.2        The Central Issue and Outcome
1.3        Background to the Dismissal
1.4        Applicant’s Contract of Employment 30 April 2018
1.5        Deeds Of Variation
1.6        12 September Notice of Termination and Redundancy Agreement
1.7        Mr Ranyard’s Discovery of Alleged Conflict
1.8        Mr Ranyard’s Erroneous Misconduct View
1.9        Show Cause Letter 22 October 2019
1.10      Applicant’s Response on 29 October 2019 to the Show Cause Letter
1.11      Purported Summary Dismissal 31 October 2019
1.12      The Statement of Claim
1.13      The Defence
1.14      The Reply
1.15      Applicant’s Evidence
1.16      Mr Fowler’s Evidence
1.17      Mr Ireland’s Evidence
1.18      Mr Rakkas’ evidence
1.19      Mr Cherrington’s Evidence
1.20      Mr Ranyard’s Evidence
1.21      Mr Murphy’s Evidence
1.22      Respondents’ Submissions
1.23      The Redundancy Agreement
1.24      Entitlement to Long Service Leave
1.25      Consideration and Findings
REASONS FOR JUDGMENT
JUDGE STREET:
1.1      Introduction

These proceedings were commenced on 4 March 2020 for the wrongful dismissal of the applicant by the first respondent on 31 October 2019 and for contravention by the first respondent of s 44 of the Fair Work Act 2009 (Cth) (“the Act”) in respect of the notice required under s 117, and contravention of s 44 in respect of redundancy pay under s 19 of the Act, and an alleged knowing involvement by the second respondent in the contraventions under s 550 of the Act. The proceedings are within the Court’s jurisdiction pursuant to s 566 of the Act.
1.2 The Central Issue and Outcome
The central issue in this case is whether the applicant, who was at the relevant time the chief financial officer of the first respondent, engaged in serious misconduct that justified his summary dismissal. There was no genuine dispute in relation to damages as to the calculation of the entitlements owing to the applicant if the summary dismissal by the first respondent was not justified.
1.3 Background to the Dismissal
The applicant had been a senior executive in a senior executive position with the STS Group of companies since 11 March 2013. As a result of a share purchase of limited number of companies from the STS Group by Optic Security Group Limited completed at the end of November 2018, the applicant, on 30 April 2018, became an employee of the first respondent in the position of the chief financial officer, and remained in that position until his purported dismissal for serious misconduct on 31 October 2019. On 29 November 2018, Optic Security Group Limited, a New Zealand company, became the ultimate holding company of the first respondent. Optic Security Group Limited did not, however, purchase all entities that had been in the STS Group.
Prior to the completion of this purchase on 26 November 2018 a director of the first respondent Mr Rakkas forwarded to the applicant an email attaching an email from Mr Cherrington the CEO of Optic referring to the settlement and attaching a staff briefing with a fact sheet in relation to which paragraph 7 under the heading “How will my job be affected and who will I be reporting to moving forward” relevantly said “ As stated above, it’s business as usual so you will continue reporting to your existing line manager.” The circular customer letter attached relevantly said “Rest assured that whilst we move through this evolution of our business, our commitment and focus will remain business as usual”. This was, on its face, authority from the first respondent to the applicant to carry on business as usual which, fairly understood, included the continuation of the back office services being provided by the first respondent to Integrated Products and which included use of the first respondent’s Xero accounting work for Integrated Products including payroll. The first respondent initially did not charge for those back office services but did charge Integrated Products $30,000 for the financial years ending 2016, 2017 and 2018. Those back office services, which had been provided for years by the first respondent, continued to be provided by the first respondent to Integrated Product until 25 September 2019 with the only difference being that the first respondent reverted to not charging for those services in October 2018. There was no instruction given to the applicant to cease providing those back office services to Integrated Products prior to 25 September 2019.
On 10 June 2019, more than 6 months after completion of the share purchase, the applicant commenced reporting to a Mr Ranyard, who was the chief financial officer of Optic Security Group Limited. Mr Ranyard held no corporate mind position in respect of the first respondent and held no written delegation or authority by director resolution from Optic Security Group Limited in respect of his role or authority to act on behalf of the first respondent. The acquisition of the companies by the Optic Security Group Limited was from a company within the STS Group of companies called Security & Technology Services Group Pty Ltd. The directors of that company, at the time of acquisition, were Mr George Rakkas and Mr Gregory Ireland, and they were the joint managing directors.
Relevantly, the entity Security & Technology Services Group Pty Ltd, had caused the relevant shares in the first respondent and shares in certain other companies within the STS Group to be transferred to Optic Security at the end of November 2019. That transferring of shares entity then changed its name on 30 November 2018 to YC Investments (NT) Pty Ltd. Both Mr Rakkas and Mr Ireland remained directors of YC Investments (NT) Pty Ltd. There were ongoing purchase price adjustments required after November 2018 in respect of the share sale, a locked box mechanism in the sale contract, and YC Investments remained the owner of the premises occupied by the first respondent in Darwin.
Both Mr Rakkas and Mr Ireland had been employees of the first respondent before and after the share acquisition by Optic Security. Mr Rakkas held the title of managing director of the first respondent, but ceased to be a director of the first respondent on 29 November 2018, being the date the share acquisition by Optic Security Group Limited took place. Mr Ireland remained a director of the first respondent until 31 March 2020.
On 12 September 2019, the applicant was sent an email by Mr Ranyard, together with an attached letter, being a purported notice of termination under cl 11.1 of the Contract of Employment, sending the applicant on gardening leave and terminating his employment on 12 March 2020. The email identified a meeting the day before, and referred to the clarification required by the applicant, referring then to payments to be made of holiday pay, retention bonuses, long service leave, redundancy payment, normal pay, superannuation, fuel card, laptop retention, and outplacement support. The applicant sent a response email at 7.40pm, noting beside each item in red “confirmed”, and included in red “For clarification during the gardening leave period the constraint clause is valid as an employee of the STS business. I can confirm that following the termination date this clause is waived”. Mr Ranyard responded by email dated 13 September 2019 relevantly “Thanks for your email and confirmations. I confirm our agreement that the email trail out-ranks (takes precedence over) the termination letter if inconsistent as it is supplementary and later in time. We are all in agreement per below”.
The applicant was sent a show cause email on 22 October 2019 from Mr Ranyard based, in substance, on work for Integrated Products and taking sick leave to ensure work for YC Investments was completed by end July 2019 and demanding a response by Friday 25 November 2019. On 14 October 2019, the applicant was certified unfit by a Dr Welch from 14 October 2019 until 25 October 2019 inclusive. On 28 October 2019, the applicant was certified by Dr Welch as unfit from 28 October 2019 to 8 November 2019 inclusive. These certificates were provided to the first respondent.
On 23 October 2019, the applicant’s solicitor sent an email to Mr Ranyard, confirming that the applicant was currently on sick leave “As you are aware”, complaining about the response demand and expressing the hope to obtain instructions over the next 48 hours, the applicant’s health permitting. The email response from Mr Ranyard, dated 24 October 2019, asserted that “this is a serious matter that must be addressed by the company with some urgency” and required a response by close of business on Tuesday 29 October 2019. On 29 October 2019, a response was provided by the applicant to the show cause letter. The applicant was summarily dismissed under cl 11.4 (c) of the Contract of Employment for alleged serious misconduct, in a letter sent by email on 31 October 2019, signed by Mr Ranyard.
1.4 Applicant’s Contract of Employment 30 April 2018
The Senior Executive Employment Agreement, dated 30 April 2018, between the applicant and the first respondent identified that it was updating and to be read with the Employment Agreement dated 1 October 2014. The contract was signed on behalf of the first respondent by Mr Rakkas, a director, and by Mr Ireland, described as director. The applicant was employed in the “Position” of Chief Financial Officer of the STS Group of Companies. That STS Group has a definition in cl 1.1 that includes YC Investments. Clause 2.1 makes clear that the employment is in the “Position” as identified in Item 2 of the attached Schedule. The business was identified as integrated provider of high technology based security/fire systems and other low voltage systems. The “Duties” referred to “All executive, management and financial duties normally expected of the position” including responsibilities in the “Position Profile” provided to the Executive as updated. There was no such “Position Profile” provided by the first respondent.
There was a Position Profile attached to the 15 February 2013 Agreement, which the applicant signed, in relation to a different position, being that of Financial Controller with Security and Technology Services Group Pty Ltd, when he commenced his employment on about 11 March 2013. The Position Profile referred to being responsible to the company directors and included in responsibilities assisting the directors in evaluation business opportunities including investment appraisal and due diligence processes. The structure of the agreement is similar to that in the 30 April 2018 agreement albeit a different employer. There was then an employment agreement entered into between the applicant and Security and Technology Services Group Pty Ltd dated 1 October 2014 for the position of Chief Financial Officer that picked up the position profile provided to the executive during the recruitment process as updated. The structure of the 2014 agreement is similar to the 2013 agreement and is similar to the 30 April 2018 agreement, albeit the latter is a different employer of the applicant.
The duties in the 30 April 2018 Contract also referred to such further duties as may reasonably be required, assigned or delegated to the senior executive from time to time by the Board, the Managing Director(s) or the Chief Executive Officer of the first respondent. There was, through the relevant period the subject of these proceedings, no Chief Executive Officer of the first respondent. Clause 1.1 defines Managing Director and as a matter of construction of this contract the obligation of performance of duties by the applicant included a person that the first respondent held out as being “the Managing Director”.
Clauses 3 and 4 are as follows:
3. MANAGER’S RESPONSIBILITIES
3.1. The Senior Manager must throughout the Term of the employment:
(a) assume and exercise all powers and perform all Duties competently and always in the best interests of the Company. The Senior Manager will in all respects comply with all lawful directions given by the Board and/or a Managing Director and/or by such other General Manager or person as the Board or Managing Director may nominate; and
(b) faithfully serve the Company and use best endeavours to promote the interests and welfare of the Company.
3.2 Apart from ill-health or injury, the Senior Manager undertakes to commit the whole of the Senior Manager’s time and attention to performing the Duties during ordinary business hours and otherwise as may be reasonably required for the Business.
3.3. The Senior Manager will not be engaged or concerned or interested in any other business without the prior written consent of the Board.
3.4 The Senior Manager must not receive any payments or other benefits from any person as an incentive or reward for an act or decision relating to the Duties or to any transactions of the Company.
4. DUTIES OF THE MANAGER
4.1 In addition to the Duties, the Senior Manager covenants and undertakes to the Company that the Senior Manager will in the course of his/her employment by the Company:
(a) at all times act with due skill and care;
(b) always act in the best lawful interests of the Company;
(c) follow all lawful directions which the Company may give the Senior Manager;
(d) Conduct himself/herself in the best interests of the Company;
(e) avoid all conflicts between the Senior Manager’s personal interests and the best interests of the Company;
(f) protect and promote the Company’s reputation;
(g) act ethically, lawfully and properly in furtherance of the interests of the Company;
(h) comply with all laws;
(i) abide by all codes of conduct, policies, manuals and procedures of the Company;
(j) at all times act in such a manner as not to put at risk of injury any Person;
(k) take responsibility for his/her own actions and decisions and act with initiative in the exercise of all powers conferred on him by the Company;
(l) comply with all Occupational Health and Safety/Workplace Health and Safety procedures and practices of the Company;
(m) any additional duties as set out in part 4 of the Schedule.
4.2 The Senior Manager must not, during the course of his/her employment by the Company;
(a) permit or condone any person or other Employee engaging in any unlawful activity or conduct contrary to any Legislation; and
(b) allow or condone the payment of any sum as a direct or indirect bribe or improper conduct to any person.
4.3 Performance Reviews will be held every six months.
Clause 10.1 identifies an obligation on the applicant to develop contacts and relationships with relevantly supplies who may deal with the company. That provision clearly includes the relationship with Integrated Products.
Clause 11 is a termination clause relevantly in cl 11.1 and 11.4 provided:
11. TERMINATION OF EMPLOYMENT
Termination
11.1 At any time, either party may terminate the employment of the Senior Executive. The Senior Executive by giving six (6) month’s prior notice in writing or, in the case of the Company by giving twelve (12) months’ notice, or subject to the CorporationsAct 2001, making a payment in lieu of notice of twelve (12) months’ salary as a minimum even if the notice period is worked out by the performance of duties by the Senior Executive. To be clear, a golden parachute payment of 12 months remuneration package is payable to the Senior Executive on the termination date in addition to any payment in lieu of notice; and in the case of redundancy, this payment will be treated tax effectively in line with the company’s redundancy policy.
11.4 Termination for Cause
The Company may terminate the employment of the Senior Executive forthwith without notice on the happening of any of the following events:
(a) if the Senior Executive becomes of unsound mind or becomes a person whose person or estate is liable to be dealt with in any way under any legislation relating to mental health;
(b) if the Senior Executive is declared bankrupt or enters into a composition or arrangement with or for the benefit of his creditors;
(c) if the Senior Executive commits a breach of an Essential Term of this Agreement;
(d) if the Senior Executive is convicted of a serious criminal offence during the Term and the offence impairs the Senior Executive’s ability to perform and carry out the Duties under this Agreement or adversely affects the reputation of the Company;
(e) if the Senior Executive is unable due to injury or ill-health to perform the Duties under this Agreement for seventy-five (75) consecutive days or for a total period of four (4) months in any period of twelve (12) months;
(f) if the Senior Executive breaches any of the Duties or continues to neglect or not perform the Duties to a reasonable standard satisfactory to the Managing Director and/or the Board;
(g) if the Senior Executive unlawfully discriminates or sexually harasses any other person or is involved in any misconduct involving fraud, dishonesty or the lack of good faith on the part of the Senior Manager or any other Employee;
(h) if the Senior Executive refuses to follow any lawful directions of the Managing Director, the Board or any other Senior Executive to whom the Senior Executive reports, or is insubordinate in a way that would reasonably lead to dismissal or in any way disregards the best interests of the Company.

Clause 1.1 defines Essential Term as being “a clause expressly stated to be an essential term.” There is no clause expressed to be an essential term. The definition also catches “Any other clause which is so important to one or other party that its inclusion is essential to that party’s decision to enter into this Agreement “. Clause 14 refers to the relationship being a contract of employment and an acknowledgement that the employee owes fiduciary and common law duties to the company. Under cl. 15 amendments must be in writing signed and by both parties. Clause 18 refers to waivers of any breach of this Agreement must be in writing and signed by the party granting the waiver. Clause 19 is an entire agreement provision.
There is an Optic Security Group conduct policy called Code of Conduct, signed on 19 April 2019 by the applicant with the description CFO of Optic Security Group, and Mr Cherrington with the description CEO of Optic Security Group. That document refers to a non-exhaustive list of misconduct and examples of serious misconduct as well as setting out a disciplinary procedure. The Conflict of Interest section referred to obtaining the prior approval of their manager before pursuing an activity. The Court notes that activities of the applicant on behalf of the first respondent for Integrated Products had the approval of the applicant’s reporting manager being Mr Ireland and Mr Rakkas. The Court also notes that none of the activities described as within the heading “Serious Misconduct” were in fact engaged in by the applicant. The defence alleges a failure to follow a lawful direction being the Code of Conduct as constituting a breach of cl 11.4(f). As the applicant had authority to perform the work undertaken there was no breach of cl 11.4(f).
1.5 Deeds of Variation
On 22 October 2018, the applicant executed a deed of variation to his contract of employment dated 30 April 2018 which, by cl 1, deleted the preamble requiring the contract to be read with the agreement dated 1 October 2014 and substituting a new termination cl 11. The deed of variation also inserted a new release clause by the applicant for the benefit of the first respondent in respect of previous agreements of employment. Both Mr Rakkas and Mr Ireland signed this deed as directors for the first respondent.
The new clause 11.1 and 11.4 relevantly provided:
11 Termination of Employment
Termination
11.1 At any time, either party may terminate the employment of the Senior Executive, in the case of the Senior Executive by giving one (1) month’ prior notice in writing or, in the case of the Company by giving six (6) month’s prior notice in writing.
11.4 Termination for Cause
The Company may terminate the employment of the Senior Executive forthwith without notice on the happening of any of the following events:
(a) if the Senior Executive becomes of unsound mind or becomes a person whose person or estate is liable to be dealt with in any way under any legislation relating to mental health;
(b) if the Senior Executive is declared bankrupt or enters into a composition or arrangement with or for benefit of his creditors;
(c) if the Senior Executive commits a breach of an Essential Term of this Agreement;
(d) if the Senior Executive is convicted of a serious criminal offence during the Term and the offence impairs the Senior Executive’s ability to perform and carry out the Duties under this Agreement or adversely affects the reputation of the Company;
(e) if the Senior Executive breaches any of the Duties of continues to neglect or not perform the Duties to a reasonable standard satisfactory to the Managing Director and/or the Board;
(f) if the Senior Executive unlawfully discriminates or sexually harasses any other person is involved in any misconduct involving fraud. Dishonesty or the lack of good faith on the part of the Senior Executive or any other Employee;
(g) if the Senior Executive refuses to follow any lawful directions of the Managing Director, the Board or any other Senior Executive to whom the Senior Executive reports, or is insubordinate in a way that would reasonably lead to dismissal or in any way disregards the best interests of the Company.
On 30 October 2018, a second deed of variation was executed in relation to the applicant’s employment agreement inserting a new cl 11 on termination, a replacement release clause and a clause recording that this deed supersedes the variations in the first deed of variation to the extent inconsistent.
Clause 11.1 and cl 11.4 in the second deed is as follows:
“11. TERMINATION OF EMPLOYMENT
Termination
11.1 At any time, either party may terminate this Agreement by providing the other party with six months’ written notice. The Company may also terminate by making a payment of base salary in lieu of notice plus any superannuation as required by law.
11.4 Termination for Cause
The Company may terminate this Agreement forthwith without notice for serious misconduct including (without limitation) on the happening of any of the following events:
(a) if the Senior Executive becomes of unsound mind or becomes a person whose person or estate is liable to be dealt with in any way under any legislation relating to mental health;
(b) If the Senior Executive is declared bankrupt or enters into a composition or arrangement with or for the benefit of his creditors;
(c) if the Senior Executive commits a breach of an Essential Term of this Agreement;
(d) if the Senior Executive is convicted of a serious criminal offence during the Term and the offence impairs the Senior Executive’s ability to perform and carry out the Duties under this Agreement or adversely affects the reputation of the Company;
(e) if the Senior Executive unlawfully discriminates or sexually harasses any other person or is involved in any misconduct involving fraud, dishonesty or the lack of good faith on the part of the Senior Executive or any other Employee;
(f) if the Senior Executive refuses to follow any lawful directions of the Managing Director, the Board or any other Senior Executive to whom the Senior Executive reports, or is insubordinate in a way that would reasonably lead to dismissal or in any way disregards the best interests of the Company.
On 9 June 2019, Mr Cherrington as Group CEO sent an email, relevantly, referring to the finance team and identifying that in the finance teams STS the applicant would now have direct line of reporting to the Group CFO Mr Mark Ranyard. On 3 September 2019, Mr Ranyard advised the applicant in person at Darwin that his role as CFO for the STS companies was no longer required and that his position was redundant.
1.6 12 September Notice of Termination and Redundancy Agreement
On 12 September 2019, the first respondent provided the applicant with written notice of termination that his employment would terminate due to redundancy ending no later than 12 March 2020. The notice of termination was provided in accordance with cl 11.1 of the employment agreement dated 30 April 2018, as varied by the second deed of variation dated 30 October 2018. It is apparent by email communication sent on 12 September 2019 that Mr Ranyard, on behalf of the first respondent, agreed to pay the applicant certain entitlements including a redundancy payment. The emails dated 12 and 13 September 2019 were in language which clearly evinced an intention to enter into contractual relations as to the obligation to pay those entitlements including a redundancy payment.
The language of agreement was patent in the email communications and reflected a binding agreement by the first respondent to pay particular additional entitlements including a redundancy payment to the applicant. Those entitlements and that language were confirmed and agreed to by the email dated 13 September 2019, as referred to above. The language and the continued employment, being the continued holding of office by the applicant including express agreement as to the restraint are obvious and good consideration referrable to the binding redundancy agreement alleged by the applicant.
On 26 September 2019, the applicant emailed Mr Ranyard a copy of the draft termination pay in line with the agreement that had been reached. Those figures had been provided to the applicant by Ms Jane Fuge by email on 25 September 2019 and were consistent with the applicant being contractually entitled to receive payments in accordance with the above redundancy agreement.
1.7 Mr Ranyard’s Discovery of Alleged Conflict
On 25 September 2019, Mr Ranyard is said to have discovered that the applicant had had access to Integrated Products’ bank account and was on their bank mandate, as well as ascertaining that the applicant had access to the Xero accounting records of Integrated Products. Mr Ranyard also became aware at that time that the applicant was being paid by YC Investments for work done in June 2019 for YC Investments.
On 30 September 2019 Mr Ranyard sent the applicant an email that relevantly said:
I just wanted to remind you that as per your employment agreement you must not engage with any work (whether paid or unpaid) for a supplier, customer or employee of STS while you are still in employment.
Mr Ranyard agreed in cross-examination that he was aware, at that time, of the work performed for YC Investments and Integrated Products and provided no satisfactory explanation as to why he did not, insofar as his mind was relevant, instruct the applicant not to provide any further services if it was, in fact, a source of genuine concern to either YC Investments or Integrated Products.
The fact that the email on 30 September 2019 was sent at a time that Mr Ranyard knew of the work being undertaken for those two companies and did not seek to give an instruction referable to those two companies impacts only on the reasonableness or unreasonableness of the first respondent’s conduct in relation to s 570 of the Act. This is not a case where the applicant was the subject of a direction to cease providing work to either YC Investments or to Integrated Products and then deliberately disregarded that instruction nor, in the first respondent’s case, has the first respondent in fact proved relevant work being undertaken by the applicant post the 30 September 2019 email and prior to the purported dismissal for alleged serious misconduct.
1.8 Mr Ranyard’s Erroneous Misconduct View
Mr Ranyard, whose state of mind is not determinative of the issue of serious misconduct which must be objectively assessed on all the evidence, formed the view that the applicant:
(a)Acted as the CFO/accountant for Integrated Products without disclosure to Optic Security Group or STS (NT).
The Court notes that this view was incorrect. It was the first respondent that provided the back office services which had been provided for years to Integrated Products. Further, Mr Ranyard was not the corporate mind of the first respondent and there was no obligation upon the applicant to make disclosure to the Optic Security Group;
(b)Was on the bank mandate for Integrated Products and signing off payroll.
The Court notes that these were part of the back office services provided by the first respondent by its financial team to Integrated Products and, relevantly, was the same role that the applicant had been performing prior to the share acquisition, and that he had continued to perform to the knowledge of the first respondent through Mr Ireland and Mr Rakkas.
(c)Produced year end accounts and tax workings for Integrated Products.
The Court notes that this is not correct. The first respondent, through its Xero accounting system and its financial team, provided financial information and services for Integrated Products a matter known by Mr Rakkas and Mr Ireland.
(d)Performed work for Integrated Products without disclosing it to STS (NT).
The Court notes that this is a proposition in respect of which the evidence of the applicant is to the contrary, which the Court accepts, and is also contrary to the evidence of Mr Ireland and Mr Rakkas. Further, Mr Ranyard was not himself in a position to identify the corporate mind of the first respondent.
(e)Performed work for Integrated Products during business hours and using STS (NT) systems.
The Court notes that this was a continuation of the same activities and services by the first respondent through the finance team that had been performed prior to the share acquisition to the knowledge, relevantly, of Mr Rakkas and Mr Ireland of the first respondent.
(f)Instructed the first respondent’s finance team in Darwin to process invoices and payroll on behalf of Integrated Products.
The Court notes that these again were services that had long been provided by the first respondent to Integrated Products. Further, the invoices in respect of a liability of the first respondent owing to Integrated Products had been separately approved and were outstanding and overdue invoices, and the steps taken by the applicant were consistent with the same conduct and role that the applicant and the finance team of the first respondent had undertaken prior to the share acquisition to the knowledge of Mr Ireland and Mr Rakkas.
(g)Continued to work for Integrated Products despite the charging for the services ceasing in October 2018 prior to Optic Security Group’s limited ownership of STS (NT).
The Court notes that it was the first respondent that was providing these services to Integrated Products which had occurred for years and was only the subject of charges for the financial years ending 2017, 2018 and 2019. The work undertaken by the applicant and the finance team of the first respondent was, in substance, the same as had been undertaken before.
(h)Had not revealed to Mr Ranyard the relationship between himself and Integrated Products since Optic Security Group Limited’s ownership.
The Court notes that this, again, entirely misunderstands the obligations of the applicant as the chief financial officer employed by the first respondent. The applicant was not employed by Optic Security Group Limited and did not have obligations of disclosure to Optic Security Group Limited as an employee of the first respondent. Further, the relationship was with the first respondent, which had been providing the services of which on the evidence of Mr Rakkas and Mr Ireland were aware.
(i)Contacted Integrated Products on his last official day in the office, advising them that he would continue working for them whilst on gardening leave, which it was alleged was against his employment conditions.
The Court notes that this was official notification by the first respondent to Integrated Products that the services of the first respondent had ceased. The wrap up assistance foreshadowed by the applicant was of no actual prejudice or adverse impact upon the first respondent. If anything, as a major supplier of products, it was in the interests of the first respondent.
(j)Attended a supplier conference in Thailand, having been invited by Integrated Products management whilst on gardening leave and without the prior consent of Optic Security Group Limited or the first respondent.
The Court notes that, through the corporate knowledge of the directors, Mr Ireland and Mr Rakkas, the first respondent was aware of the attendance by the applicant at Thailand. Further, the applicant did not require the consent of Optic Security Group Limited or the first respondent whilst on gardening leave to attend a conference in Thailand. The attendance was also in the interests of the first respondent.
(k)Issuing of credit notes in the Xero accounting system for private work done on Mr Ireland’s boat and house without any evidence as to why they were issued.
The Court notes that this view was not correct. The credit notes were not for the benefit of the applicant and the applicant explained the transaction and payment process. Further, at no stage did the first respondent take any steps to council, discipline, or summarily dismiss Mr Ireland, who continued, relevantly, to be a director of the first respondent in respect of the time of the alleged first respondent up until the time of the purported summary dismissal of the applicant.
(l)Emailed Mr Creed, director of YC Investments, advising him that he is working on their matters and would take sick leave to ensure it was completed by the end of July 2019.
The Court notes that the applicant gave evidence that he did not, in fact, take sick leave, which the Court accepts. Further, the applicant, on behalf of the first respondent, was undertaking work of the same kind he had been undertaking prior to the acquisition of the shares in the first respondent by Optic Security Group Limited.
1.9 Show Cause Letter 22 October 2019
On 22 October 2019, Mr Ranyard, purportedly on behalf of the first respondent, sent the applicant a show cause letter alleging misconduct that had come to his attention and giving the applicant an opportunity to respond by 4 pm on Friday, 25 October 2019. The brevity of the time of response and limited extension of time when on notified sick leave supported by medical certificates is of significance in respect of the reasonableness or unreasonableness of the conduct of the first respondent in relation to s 570 of the Act. That brevity and limited time extension when on sick leave is not consistent, objectively, with a genuine belief that the applicant was being given an adequate and proper opportunity to respond to serious allegations, the subject of the show cause letter.
The Court finds that the purported dismissal for serious misconduct was an accelerated and unfair process because of the intention of Mr Cherrington to summarily dismiss the applicant because of a perceived urgency to do so and that this was an unfair process that is relevant to whether there was unreasonable conduct within s 570 of the Act.
1.10 Applicant’s Response on 29 October 2019 to the Show Cause Letter
The applicant did respond to the show cause letter on 29 October 2019. That letter correctly pointed out the inaccuracy of the first sentence of the show cause letter that, over the last few weeks, Mr Ranyard had attempted to have discussions with the applicant. The applicant correctly pointed out that only two attempts were made and that there was, in fact, a response given by him and further identified that the applicant sent a medical certificate on 14 October 2019 at 1.45 pm upon return from having seen a doctor. That medical certificate is one that Mr Ranyard alleged he did not see and was not aware.
The Court does not accept that evidence and finds that Mr Ranyard was aware that the applicant was the subject of a medical certificate at the time that he was seeking to take action in the limited time and limited extension of time for response given to the applicant. The medical certificate was not sent in response to the show cause letter, which is a further error in the second sentence of the show cause letter. In response to the whole of the assertions that the applicant was not undertaking employed work during ordinary business hours, the applicant identified that he had been working, on average, 6.5 days a week and more than 60 to 70 hours every week. The applicant identified the limited amount of weekends that he had taken off. The applicant, in response to the assertion of work being undertaken without consent of the board, identified that the directors of the first respondent, being George Rakkas and Gregory Ireland, were aware of the work being undertaken and that Mr Ireland, as of 23 October 2019, is still a director.
The applicant pointed out that the pre-ownership directors were all aware of the work being done for Integrated Products by the first respondent. The applicant correctly pointed out that there was no change in his employment agreement following the share acquisition and no new obligation was expressly imposed upon him not to undertake the work for Integrated Products or YC Investments. The applicant pointed out that no moneys were received by him for any work for the Integrated Products business. The applicant pointed out that most of the work for YC Investments was undertaken for the sale of the shares to the Optic Security Group Limited, described as project Malibu and the distribution of the funds from the sale of the shares and that this was approved by directors of both YC Investments and Optic Security.

The applicant contended that he had always acted in the best interests of the company in accordance with cl 4 of his duties. The applicant contended that he had always complied with the best interests of the company and that, in fact, the majority of the work or rework for Integrated Products was to assist and improve the relationship with the first respondent’s major supplier. The applicant alleged that he had avoided all conflicts between his personal interests and best interests of the company and maintained that there was knowledge of the work undertaken through the directors of the first respondent. The applicant contended that he had complied ethically. The applicant maintained that he complied with all codes, policies, manuals and procedures of the company.
The applicant also pointed out that he had not received any training or instruction in relation to those procedures and manuals and did not recall any PowerPoint slide presentation or request for him to acknowledge any particular codes of practice and policy. The applicant had in fact signed a code of conduct, as referred to above, on 19 April 2021 being at a time at which he was still reporting to Mr Ireland and Mr Rakkas. The applicant identified having no copy of the email or policy in his possession has he had no email address and was cut off on the last day of his office from the email.
The applicant responded in detail to the allegations in relation to Integrated Products, relevantly, as follows:
(a)The applicant said it is important to understand the background of the matters and that the applicant is not now in the office and able to access his computer and the plethora or emails and documents that explain the close and trusting relationship which assisted the success of the first respondent and Integrated Products in the marketplace.
(b)The applicant explained that the close relationship was one concerning Mr Greg Ireland, Mr George Rakkas and Mr Stuart Fowler and, to a lesser extent, the applicant both operationally and business development-wise.
(c)The applicant explained that the success in the marketplace in the integration industry followed with the use of IndigoVision cameras in IT equipment software and pricing relationships for customer proposals.
(d)The applicant explained the key dates in relation to the relationship changes. After 2009, Integrated Products commenced the appointment of Stuart Fowler who had with shares Greg Ireland and George Rakkas both being directors. In 2012, 50 per cent of the shares sold to Stuart Fowler entity and his wife who were appointed directors in addition to Greg Ireland and George Rakkas. The applicant, on his appointment to the first respondent in 2013, assisted shareholders in back office and final negotiations and deeds and assisted advising Stuart Fowler with Integrated Products financials and his personal affairs and to obtain credit with the IndigoVision camera supplier. The Court notes this was all for the benefit of the first respondent as Integrated Products was a major supplier to the first respondent.
In 2014, the second tranche negotiations were finalised and deed of sales relating 50 shares and director changes for Integrated Products, resulting in the resignation as Security & Technology Services Group Pty Ltd directors, Greg Ireland and George Rakkas, leaving Stuart Fowler and his wife as directors with no involvement in the financials by the ex-directors thereon and only back office support by the first respondent continuing. The applicant identified that, in January 2015, a new investor joined Integrated Products as a senior executive. The applicant identified that, in 2015, a foreign exchange deal with Westpac at institutional rates resulted in large savings on imported cameras and that the first respondent piggybacked on that deal to receive savings.
In July 2016, the payroll was split from the first respondent as a step in transitioning Integrated Products away from the first respondent’s back office support. In February 2018, new CBA banking relationships in Sydney with all transactions to go through that account with new CBA credit cards and no access by the applicant or the personnel of the first respondent and that the Westpac Bank was to be phased out once payroll direct debit was transferred, transitioning of supplier payments to Stuart Fowler and then to his staff over the next six months or so. In September 2018, the applicant attended to assist in transition away from the first respondent’s back office.
In February 2018, an ADP wage direct debit limit form was completed but misplaced and redone in September 2018. The applicant explained that he was never acting as CFO of Integrated Products and contended that he was, in fact, representing the interests of the first respondent in honouring back office historical verbal agreements in the final hand over legacy issues and transition to self-sufficiency. The applicant alleged that he had met and travelled with Integrated Products senior executives in September 2018, pre-ownership changes to initiate transition away from the first respondent.
The applicant also made reference to the fact that, in May/June 2019, he suggested to Integrated Products managing director that full transition be fully completed but that the Integrated Products managing director Stuart Fowler said no and caused it all to wait for some months. In response to the proposition that the applicant was on the bank mandate for Integrated Products and signing off their payroll, the applicant explained as follows:
(a)The applicant referred to the above history and timeline and to the Darwin casualty and close trust in the relationship of Integrated Products and the first respondent being paramount, and that for many years, Integrated Products’ manager did not have access to signing off the Integrated Products Westpac bank account;
(b)Only transitional and legacy issues were undertaken recently and time taken by the applicant to sign off payroll was about two minutes per fortnight and that he did not sign off the payroll in Westpac as there was an auto direct debit and the applicant did not have access to the ADP payroll outsourced provider;
(c)The split of banking into Optic-owned entities post-ownership change on 29 November was problematic and that the Westpac accounts was a legacy issue until the payroll transferred to their CBA Bank;
(d)The increase in the direct debit limit was done in Westpac prior to moving Integrated Products payroll to the CBA account by the Westpac relationship manager, who happens also to be the relationship manager for Integrated Products and the previous owners’ entities and their personal affairs, loans, etcetera. A form was obtained and sent to the manager around February 2019, but was misplaced and not lodged. Accordingly, this continued to hit the IP Westpac account and recently, the limit was increased;
(e)The applicant did not have access to Integrated Products main operations bank account in CBA, nor the Integrated Products SIMCO/SIMPRO suite once handed over from the first respondent, nor did the applicant have any involvement in their cash flow management, which had always been managed by Stuart Fowler as managing director of Integrated Products since the start. The applicant identified that he was representing the interests of the first respondent doing the back office legacy functions to maintain the supplier relationship for the benefit of the first respondent;
(f)The applicant explained that the payroll for Integrated Products was delayed from being transitioned due to the structural and payroll confidentiality issues to be finalised in the Integrated Products office, which was also waiting on the Integrated Products managing director;
(g)The applicant explained that the Integrated Products payroll did not take long and the amount rarely changed, other than annual or personal leave and public holidays, except recently, a pay rate change, and an extra employee commenced, and that in order for the payroll not to bounce for Integrated Products as a major supplier, an increased new form was requested and signed by the Integrated Products managing director, Stuart Fowler, and lodged with Westpac recently and that this was also, again, to the advancement and benefit of the relationship with the first respondent.
In response to the proposition that the applicant had produced year-end accounts and tax workings for Integrated Products, the applicant explained that:
(a)He had assisted in providing the completion of the tax return year for 30 June 2018 which was lodged and completed on 29 April 2019;
(b)The applicant referred to queries from the tax accountants, Merit Partners for Integrated Products, which were attended to during public holidays and annual leave as the applicant’s work hours were impermissibly large. The applicant explained that it was Merit Partners that prepared the end of year accounts and the tax return, not the applicant;
(c)In relation to the work, the applicant explained that part of the agreement with the managing director of Integrated Products, Stuart Fowler, as to work prior to the Optic ownership was not performed due to lack of the applicant’s time availability due to the excess hours he was working for the first respondent on due diligence issues and the Optic sale negotiations and advice;
(d)That, as part of the transition, other legacy issues included preparation of annual insurance coordination and other payroll-related actions, like payroll tax, PAY and GW obligations, where Mr Fowler in most cases would have organised payment from the IP CBA account.
The applicant identified that, on occasions where Mr Fowler could not be contacted due to travel, travelling on planes for business or not responding to queries, the applicant took steps to ensure the payroll did not bounce and on one occasion asked a related company in South Australia to pay their supplier payment when due into the IP account to cover the wages so that the direct debit did not bounce.
The applicant’s response identifies that this was a one-off occasion. The Court notes this was consistent with the back office services provided by the first respondent to Integrated Products as explained by Mr Fowler and was not in any way to the detriment of the first respondent.
In response to the applicant having performed work for Integrated Products without disclosing it to the Optic Security Group or the first respondent, the applicant explained:
(a)There were many legacy issues left and that this was so minimal in comparison to the applicant’s Optic duties that it was immaterial;
(b)This work was further undertaken with the full knowledge and approval of the directors pre-ownership, and one current director of the first respondent to whom the applicant was reporting after the ownership change;
(c)The applicant identified that the first respondent had charged for the back office work up until October 2018;
(d)That the work was transitioned post-ownership and that the relationship soured in February 2019 due to Integrated Products not being treated by the first respondent as a major supplier impacting on delayed supply payments in March and April, and that that timing affected completion of transitioning and legacy issues;
(e)The applicant explained he was directed by his superior and a director of the first respondent not to charge Integrated Products as the work was being transitioned and that the first respondent did not perform all back office requirements in the year before the ownership change much to Integrated Products’ frustration.
In relation to the assertion of performing work during business hours and using the first respondent’s system, applicant responded:
(a)This was performed with the full knowledge of the first respondent and ongoing knowledge and imprimatur of the current company director and that the back office support was unfinished legacy issues not able to be transitioned away due to Integrated Products availability and Integrated Product not yet being ready;
(b)That the use of the first respondent systems was therefore interrelated and required as work being performed as an employee of the first respondent, and that the June 2018 accounts were done largely outside ordinary hours.
In relation to the allegation of instructing staff in Darwin to process invoices, the applicant responded:
(a)This was performed with the full knowledge of the first respondent board pre-ownership and ongoing knowledge and imprimatur of a current Optic company director. The applicant explained the back-office support was unfinished legacy issues not able to be transitioned away due to Integrated Products’ availability and Integrated Products not being ready; and
(b)The applicant believed it was part of his job being an obligation to assist the first respondent’s major supplier.
The applicant responded to the performance of the work, notwithstanding the cessation of the charges in October 2018 by identifying:
(a)That the limited charge amount for the back office work up until October 2018;
(b)That he was directed by his superior, a direct reporting and pre-ownership director of the first respondent, given diminishing back office work, not to charge Integrated Products as work being transitioned, and also because they had not fulfilled the back office requirements in the year before the ownership change;
(c)The applicant again referred to the relationship of the first respondent with Integrated Products being a close and a trusting relationship, and the ability of Stuart Fowler to assist the first respondent in proposals to customers and an honour to the industry, upcoming projects and the ability to provide discounted pricing re the Integrated Products, and getting a discount for the international manufacturer to be competitive in tenders.
In response to the assertion that the relationship had been deliberately hidden, the applicant responded:
(a)That these allegations are false and outrageous allegations;
(b)That the applicant reported to the joint managing directors of the first respondent pre-ownership change and then post-Optic to the same joint managing directors until his reporting scheme was changed to that of Mark Ranyard in about June 2019. The applicant believed that the first respondent was fully aware of the relationship and work that had not yet been transitioned and was following directions and that most of the transactions were completed before this time when his reporting superior changed in June, but there were still some legacy issues and that these issues were minimal, representing less than about a one per cent of his time;
(c)The applicant also identified that he was representing the interests of the first respondent to improve the relationship with a major supplier with the approval of the current director of Optic.
In relation to the contention that the applicant contacted Integrated Products on the last day in the office to advise them he would continue working whilst on gardening leave, the applicant:
(a)Identified that the email does not say he will still be working for them. Instead, it refers through the applicant to enabling the final transition process to be put in place so as not to wreck the current relationship with the first respondent so that nothing fell between the cracks.
(b)The applicant to note that they had never received any payment for any work undertaken as part of the Integrated Products back office work, and that it was all about keeping the relationship unfractured and strong as directed by a director. The applicant responded to the allegation about the attendance in Thailand without prior consent explaining that he was on gardening leave and allowed vacation leave, and that it was expressly confirmed that he would not be available to perform work between 27 September 2019 and 14 October 2019. The applicant referred to be invited by Integrated Products to say goodbye to their team;
(c)The applicant made express reference to the email dated 30 September 2010 identifying it as nothing more than a clumsy attempt to set him up, but that he had not engaged in any work contrary to that direction, so that there was no noncompliance with the email dated 30 September 2019;
(d)The applicant identified that it didn’t undertake any work for the first respondent whilst on vacation leave or discuss the first respondent’s business;
(e)The applicant identified that he was already intending to have a vacation;
(f)The applicant did not represent himself to be an employee and instead was there as a friend of Integrated Products;
(g)The applicant went to Thailand from Singapore, had drinks and stayed overnight;
(h)Being on gardening leave during the notice period, the applicant believed it was appropriate to continue to maintain a relationship for networking and future purposes, and not to upset the managing director of a major supplier to the first respondent.
In relation to the allegations concerning the credit note, the applicant explained:
(a)that he didn’t have access to the alleged transaction;
(b)as the previous owner Mr Ireland had a loan account in YC Investments, and any job that was conducted, to the best of his knowledge, was invoiced to Mr Ireland in simPRO Operational Assistant and then interfaced into Xero which would show him as a debtor. The applicant explained the process post-ownership was that this transaction was settled by the raising of a credit note to a clearing account and then an invoice raised by the first respondent to YC Investments which would then be paid to the first respondent as a cash settlement for the transaction. The applicant observed that it was incredibly insulting towards the applicant, and that if they had reviewed the records properly, that would have been apparent;
(c)The applicant explained as an Optic shareholder he was pedantic to ensure that all transactions were appropriately managed and that the interests were aligned to improve the shareholder value.
In response to the criticism concerning the email that he would take sick leave, the applicant:
(a)identified he didn’t have the email;
(b)identified there was a serious and quite understandable pressure from Mr Creed to distribute funds paid by Optic on 29 November, but it has still not been finalised as at the time of the applicant’s response for the show cause letter;
(c)the applicant did not have a response to the email but it would have meant annual leave so as not to be in the ordinary hours;
(d)the applicant responded that he didn’t take sick leave to undertake work and that he was already working a greater time period than eight hours a day;
(e)that the distribution of funds is no farther advanced than July and no moneys therefore have been paid to the owners and that Optic is potentially in breach of contract of the sale agreement by not paying the purchase price adjustment, and that this has delayed work for YC Investments in the final price numbers, and the final price number is not final and will change;
(f)the applicant claimed that any work undertaken in this instance was undertaken with the full knowledge and approval of the current director of the first respondent and the directors of YC Investments.
In response to the suggestion the medical certificate was to avoid dealing with the issues, the applicant responded:
(a)the allegation is without foundation, insulting and indicative of Mr Ranyard now treating him and that the applicant suspected how he would continue to be treated as part of the misguided attempt to terminate his employment when no grounds possibly exist, to entitle the first respondent to do so.
(b)The applicant explained that the timing was incorrect.
(c)The applicant explained the medical certificate was supplied to the first respondent.
(d)The applicant identified having struggled mentally for an extended period of time as a result of the unreasonable hours and overworking and harassment and treatment of him with a target on his back, culminating in the need for him to see a doctor as per his text, and
(e)that a sick certificate for the next two weeks was received late yesterday after attending a doctor which had been forwarded to Mr Ranyard.

The letter made an assertion as to the reasonableness of the time for response, which the Court notes is not, on its face, apparent, and objectively the Court finds the timeframe was contracted in order to forge ahead with the pre-determined intention of the first respondent to terminate the applicant for purported serious misconduct regardless of his response.
The applicant responded to the proposition of the timeframe being reasonable:
(a)that he believed he was being harassed;
(b)that he would investigate options in relation to the excess hours that he had worked in contravention of occupational health and safety, and that he was considering lodging a claim for workers compensation as a result of the overwork and his health and stress issues; and
(c)requiring a response when he was under a medical certificate was troubling in itself and against proper policy.
1.11 Purported Summary Dismissal 31 October 2019
On 31 October 2019, Mr Ranyard signed a letter in the name of the first respondent purporting to summarily dismiss the applicant whereby the applicant lost the benefit of the termination notice that had already been issued and lost the benefit of the agreement to pay the redundancy agreement items.
The oral evidence of Mr Ranyard was that he had sent the summary termination letter dated 31 October 2019 on the instruction of Mr Cherrington. Mr Ranyard explained that there had been discussion between Mr Cherrington, himself, and a solicitor prior to Mr Ranyard being given an instruction by Mr Cherrington. The Court accepts that Mr Ranyard, the second respondent, was instructed by Mr Cherrington to send the summary termination letter.
The applicant gave evidence which was consistent with the response he had provided to each of the allegations in the show cause letter. The Court finds that those responses by the applicant summarised above were factually correct. The applicant was an impressive and credible witness, and the Court accepts that the applicant was a witness of truth.
1.12 The Statement of Claim
The Statement of Claim pleads a 2018 written contract of employment with the first respondent entered into on or about 30 April 2018 as the Chief Financial Officer of the first respondent. This was as a result of a transfer of the applicant’s employment from Security & Technology Group Pty Ltd with whom the applicant had been employed in a senior executive position since 11 March 2013 and which was the subject of a written employment contract dated 1 October 2014. There is then pleaded the first deed of variation dated 22 October 2018 of the applicant’s employment with the first respondent amending the preamble that the 30 April 2018 contract be read in conjunction with the 1 October 2014 contract. There is then pleaded a second deed of variation dated 30 October 2018.
The pleading alleges the giving of notice in September 2019 the applicant was made redundant on 12 March 2020 as a result of emails sent on 12 and 13 September 2019. The pleading alleges a redundancy agreement in which the applicant would continue his employment on gardening leave from 27 September 2020 until 12 March 2020 as the agreed termination date. The pleading alleged certain benefits that the applicant was to receive including a redundancy payment and bonus payments.
The pleading alleges the applicant was unwell from 14 October 2019 until 8 November 2019. The applicant pleads reference to the show cause letter dated 22 October 2019 and the provision of a response on 29 October 2019. The pleading then identifies a termination of employment letter issued on 31 October 2019 purportedly pursuant to cl 11.4(c) of the 30 April 2018 contract as varied. The plaintiff pleads that he did not engage in any misconduct as alleged or at all that entitled the first respondent to terminate his employment. The pleading alleged that there was no termination for cause event under cl 11.4. The pleading also alleged that there was no “Essential Term of this Agreement” as defined in cl 1.1 and pleads that the respondent was not entitled to terminate the applicant’s employment under cl 11.4(c). The pleading alleges an entitlement to the redundancy agreement entitlements.
The pleading alleges because of the redundancy agreement there was a failure to give the notice required by s 117 of the Act.
The pleading also alleges a failure to pay redundancy in accordance with s 119 of the Act.
The pleading alleges a failure to pay either amount required under s 117 and s 119 and that the failure to give the required notice under s 117 contravened s 44 of the Act. The pleading alleges the failure to pay eleven weeks redundancy pay under s 119 of the Act contravened s 44 of the Act.
The pleading alleges the second respondent was knowingly involved in the contraventions and by operation of s 550 of the Act is taken to have also contravened s 44 of the Act. The pleading alleges a breach of the 6 month notice requirement and failure to pay 6 months in lieu of notice. The pleading then alleges suffering damages by reason of the breaches of the applicant’s contract of employment. The pleading then seeks relief by way of declarations for the contraventions by the first and second respondent and orders for payment pursuant to s 545(1) and (3) of the Act and alternatively compensation under s 545(2) of the Act. The pleading also seeks interest under s 547(2) of the Act and penalties under s 546 of the Act.
1.13 The Defence
The defence filed on 11 May 2020 pleads an alleged fiduciary obligation not to engage in conduct where there is a conflict between his duties or the interest of the first respondent and his own interests of the interest of a third party he is associated with or is engaged by. There is then alleged a fiduciary obligation not to use his position to obtain a profit or advantage unless he has fully informed consent.
The defence then alleges an obligation owed to the first respondent under s 181(1) of the Corporations Act 2001 (Cth) to exercise and discharge his duties in good faith in the best interests of the first respondent and for a proper purpose. The pleading then alleges an obligation owed to the first respondent under s 182(1) of the Corporations Act 2001 (Cth) not to improperly use his positon during his employment to gain an advantage for himself or someone else or cause detriment to the first respondent.
The defence pleads obligations of the applicant during the employment with the first respondent to perform his duties, including imposed by legislation and common law, in the best interests of the first respondent pursuant to cl 1.1 an cl 3.1(a) of the contract of employment. Next an obligation of the applicant to comply with lawful directions of the first respondent, cl 3.1(a) of the contract of employment. Next an obligation of the applicant to faithfully serve the first respondent and to use best endeavours to promote the interests and welfare of the first respondent pursuant to cl 3.2 of the contract of employment. Next an obligation of the applicant to commit the whole of his time and attention to performing his duties during ordinary business hours and when may be reasonably required pursuant to cl 3.3 of the contract of employment. Next an obligation of the applicant not to be engaged or concerned or interested in any other business without prior written consent of the Board of the first respondent, pursuant to cl 3.4 of the contract of employment.
The defence next pleads a covenant and undertaking under cl 4.1 of the contract of employment to act in the best interests of the first respondent (cl 4.1(b)), follow all lawful directions (cl 4.1(c)), conduct himself in the best interest of the first respondent (cl 4.1(d)), avoid all conflicts between his person interests and the best interest of the first respondent (cl 4.1(e)), at ethically lawfully and properly in furtherance of the interest of the first respondent (cl 4.1(g)) and to abide by all codes of conduct, policies, manuals and procedures of the first respondent (cl 4.1(i)).
The defence then alleges the said clauses were Essential Terms within the contract of employment with cl 1.1, and or essential terms at common law and or intermediate terms where a breach serious enough to substantially deprive them of the whole benefit they were intending to obtain by performance would warrant summary dismissal.
The defence pleads cl 9(d) of the contract of employment that the applicant was obliged to comply with the Code of Conduct Policy applying to employees of the first respondent including not engaging activities which represent an actual or potential conflict of interest.
The defence then relevantly alleges that at the time of the giving of the notice of termination by letter dated 12 September 2019 pursuant to cl 11.1 that the respondent continued to be entitled to exercise its rights to terminate the applicant’s employment under cl 11.4 and at common law if the applicant repudiated the contract of employment.
The defence disputed the existence of a legally binding agreement to pay entitlements in response to the alleged redundancy agreement pleaded by the applicant. The pleading alleges no intention to be legally bound, no consideration and no signing of a variation in accordance with cl 15.
The defence alleges the conduct of the applicant alleged in the show cause letter dated 22 October 2019 had come to the attention of the first respondent since the issue of the notice of redundancy issued on 12 September 2019. The defence admits the termination with immediate effect on 31 October 2019 alleging that the applicant had engaged in serious misconduct that did not come to the attention of the first respondent until after 12 September 2019 and that the conduct warranted summary termination of the applicant. The defence also alleged that the conduct of the applicant amounted to a serious breach or repudiation of the contract of employment which was accepted by the first respondent electing to terminate the applicant’s employment with immediate effect on 31 October 2019.
The defence alleges that the applicant engaged in serious misconduct at common law and within cl 11.4(c) and (f) of the contract of employment.
The defence makes reference to the reporting of the applicant on and from 10 June 2019 to the second respondent. The defence alleges the applicant performed work for Integrated Products Pty Ltd referring to accounting functions, being on a bank mandate and signing off on payroll, producing year end accounts and tax workings and instructing the first respondent’s finance team in Darwin to process invoices and payroll on behalf of Integrated Products Pty Ltd. Identifies that prior to 30 November 2019 the alleged work performed by the applicant was performed by the first respondent for Integrated Products Pty Ltd for a fee. The defence alleges from 30 November 2018 the applicant continued to perform the work that had been performed by the first respondent for Integrated Products Pty Ltd without the knowledge or consent of the first respondent.
The defence then pleads that whilst employed by the first respondent the applicant performed work for YC Investments Pty Ltd without the written consent of the first respondent or the second respondent. The defence alleges the performed work for YC Investments Pty Ltd without disclosing it to the first respondent or the second respondent.
The defence then plead a breach of the obligations under cls 3.1(a), 3.2, 3.3, 3.4, 4.1(b), 4.1(c), 4.1(d), 4.1(e), 4.1(g), and 4.1(i). The defence then says that by engaging in that conduct the engaged in serious and gross misconduct, breached s 182 and s 183 of the Corporations Act 2001 (Cth), breached the alleged fiduciary duties, breached the alleged Essential Terms of the contract of employment and repudiated the contract of employment. The defence pleads lawful justification to terminate the applicant’s employment without notice and to accept the alleged repudiatory conduct and elect to terminate the employment with immediate effect.
The defence alleges that cl 11.4 permitted the first respondent to terminate the applicant’s contract of employment for serious misconduct and at common law where the applicant’s conduct is alleged to involve a repudiatory breach of the contract of employment. The pleading also alleges the applicant’s conduct amounted to a breach of cl 11.4(f) of the contract of employment for a refusal to follow a lawful direction of the first respondent in the form of the OSG Code of Conduct Policy issued on 16 April 2019, and/or insubordinate in a way that would reasonably lead to dismissal and/or disregarding the best interests of the first respondent.
The defence pleads that the applicant was note entitled to the benefits claimed including bonus payments because of being terminated for serious/gross misconduct and an allegation of want of eligibility for the bonus payments.
The defence pleads that s 117 of the Act did not apply because of s 123(b) of the Act as the applicant was terminated for serious misconduct. The defence also pleads that s 119 did not apply because of s 123(b) of the Act.
There is then a pleaded a defence that the applicant cannot obtain an amount greater that the amount specified in s 200F(3) of the Corporations Act 2001 (Cth) because of the operation of s 200B(1) and s 200F(2).
The applicant was not a director of the first respondent and accordingly does not fall within the definition of “managerial or executive office” as defined by s 200AA and accordingly gives rise to no defence. The “relevant period” and the value of benefit amount under s 200F(2)(b) for the applicant has not been pleaded and for this further reason this gives rise to no defence. Further the Court would have found given the transfer of employment that the “relevant period” for calculation of the benefit commenced in 2013 when the applicant was first employed in a senior executive role given the breadth of past meaning of “has held a managerial or executive office in relation to a company” in s 200F(5) if the applicant had been found to fall within the definition. Accordingly over this “relevant period” of 6 years the payments required would not give rise to any applicable defence even if the provisions had been found to apply to the applicant.
Further on the evidence before this Court page 34 of the Due Diligence Report dated 30 October 2018 in Confidential Exhibit 2 confirms pre-approval shareholder resolutions for the termination benefits and payments in lieu of notice relevantly to the applicant. This pre-approval shareholder resolutions are also supported as being in place at page 242 of the said exhibit. From this evidence the Court finds there was shareholder pre-approval resolution for the contractual termination benefits for the applicant and this prevents any contravention as alleged in the defence in any event.
There is also pleaded a defence that the applicant’s pleaded conduct identified in para 29 to 32 above amounted to the applicant engaging in industrial action within s 19 of the Act by performing work in a manner different to that in which a Chief Financial Officer customarily performs his job which had the result of placing a limitation or restriction on the performance of work. It is alleged the applicant imposed a ban or restriction on the performance of work within s 19(1)(b) of the Act by banning or restricting work for the first respondent during work hours and performing work in breach of his obligations and acting for the benefit of Integrated Products and his own benefit.
The alleged “action” under s 19 of the Act, being work for Integrated Products and YC Investments by the applicant, was authorised by the first respondent being the employer of the employee within s 19(2)(a) of the Act, which means this provision gives rise to no defence. Further the performance of work by the applicant for Integrated Products and for YC Investments was not “industrial action” and did not in any event fall within s 19(1)(a) or (b) of the Act. It was work customarily performed by the applicant for the first respondent from the commencement of the contract of employment by the applicant with the first respondent. The applicant did not engage in action to ban, limit or restrict the performance of work as the work by the applicant for Integrated Products and YC Investments was authorised by the first respondent. Further the work performed for Integrated Products properly characterised was work performed by the first respondent through its employees including the applicant and was not industrial action.
The defence alleges the applicant failed or refused to perform any work for the first respondent during the times he was performing work for Integrated Products. It is alleged this was not protected industrial action within s 408 or s 409 of the Act and that in respect of any payment of amounts made during the notice period the applicant would have contravened s 475 of the Act in accepting such payment and that the first respondent would have contravened s 474 of the Act if it had made payment to the applicant and that the applicant would not therefor be entitled to damages.
1.14 The Reply
The reply in substance joins issue with the defence admits that he provided some accounting functions for Integrated Products after 30 November 2018, that he did not have written consent of the Board, but that he was not required to obtain written consent of the Board and that he did so for the benefit of the first respondent, was resolving legacy issues and transitioning Integrated Products to self-sufficiency, that he worked approximately 5.5 days per week and between 60-100 hours per week for the first respondent, that he was not concerned or interested in the business of Integrated Products, that the work he did was with the consent of the first respondent, including explicit consent of Mr Ireland and Mr Rakkas, denies the continuation of work for Integrated Products from 30 November 2018 was without the consent of the first respondent, admits that some accounting functions for Integrated Products occurred during business hours, admits performing some accounting functions for YC Investments during business hours, says that the work performed for YC Investments was with the knowledge and consent of the first respondent as was the payments the applicant received from YC Investments.
1.15 Applicant’s Evidence
The applicant gave evidence as to YC Investments having been part of the STS Group and that it was the seller’s representative entity. The applicant gave evidence that he did work for YC Investments in relation to the locked box accounts that were provided to Optic, a dispute about provision for doubtful debts reducing the sale price that was withdrawn by Optic, giving advice to the directors of YC Investments being Mr Rakkas, Mr Ireland and Mr Creed, obtaining the signing of bank documentation, finalising loan monies and provided information to the accountants who prepared the financial statements and tax returns. The applicant denied that he did the finances for YC Investments and explained that he did similar back office work as he had for Integrated Products. The applicant disagreed that there were conflicting duties and explained that the did a great deal of work after hours working at times 100 hours a week, on weekends, holidays and that it was not to the detriment of the first respondent or Optic. The applicant also explained that he was doing the work as directed by the people he reported to being Mr Ireland and Mr Rakkas.
The applicant explained that the Integrated Products back office work had happened for years and that the directors Mr Ireland and Mr Rakkas knew of and approved that work. The applicant explained that this was work being done on behalf of the first respondent. The applicant explained that there were in 2019 lots of suppliers who had overdue invoices because the business was being underfunded by Optic and because of the input of its accounts KPMG. The applicant explained that there was a separate approval of invoice process that he was not responsible for and that his role was deciding when funds could be released to pay invoices.

Moreover in the context of the knowledge of the first respondent and that YC Investments had been part of the STS Group of companies and was the seller’s representative the work performed and receipt of payment by the applicant was not serious misconduct or a repudiation of his employment contract. The change of reporting by the applicant that occurred in June 2019 did not remove or cease the knowledge and authority of the first respondent through Mr Ireland and Mr Cherrington for the applicant to perform work for YC Investments.
The evidence of the applicant, which the Court accepts, was that at least two of the directors of the first respondent were aware of the work, those directors being Mr Ireland and Mr Rakkas and also given the Court’s findings the director Mr Cherrington. The resignation of Mr Rakkas as a director did not remove his continuing knowledge and authority to the applicant being knowledge and authority of the first respondent whilst Mr Rakkas remained as holding the office of managing director.
The Court does not accept that there was a fresh obligation or new duty that arose on or about 30 November 2018 upon the applicant to take steps to disclose work being done for YC Investments or Integrated Products in circumstances where the corporate mind of the first respondent was aware of the work being undertaken. The applicant was not in breach of any obligation or duty owed to the first respondent from 30 November 2018 to seek out and obtain written consent from Mr Ranyard, the Optic Security Group Limited or the first respondent for the work being undertaken for YC Investments or Integrated Products. This is because the first respondent is the only relevant entity and the first respondent knew and approved that work. Equally the change in reporting line on 10 June 2019 did not give rise to any breach of duty or obligation owed by the applicant to the first respondent because the work undertaken was with the authority and knowledge of the first respondent through Mr Ireland and Mr Rakkas and given the Court’s finding the director Mr Cherrington.
This is not a case where there was, in fact, any failure to disclose to the first respondent because the applicant was already authorised by the first respondent since 30 April 2018 to undertake that work and continued to perform the same roles and work in substance as he had for YC Investments (NT) and for Integrated Products, whilst being chief financial officer of the first respondent, as he was performing prior to the acquisition on 30 November 2018. This was work of which the first respondent was aware though Mr Ireland and Mr Rakkas.
The Court accepts the first respondent’s submission that the expression “serious misconduct” as used in cl 11.4 as a matter of construction should be given same meaning as the common law. The Court also accepts that in determining whether conduct justifies summary dismissal the conduct must be “incompatible with the fulfilment of an employee’s duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee. Conduct which is repugnant to employment relationship and which destroys the mutual trust and confidence between employer and employee will generally be grounds for summary dismissal. The Court also accepts that a breach of contract and a failure to give full and frank disclosure and thereby avoid a conflict of interest and duty may justify summary dismissal.
As a matter of construction of the contract of employment there was no definition of the “Essential Term of this Agreement” and the Court does not accept that the terms the subject of the alleged breach were “essential to that party’s decision to enter the agreement”. Nor does the Court accept that there was any breach of the alleged essential terms pleaded by the first respondent. Accordingly there was no breach of cl 11.4(c). With the two deeds of variation the first respondent had ample opportunity to identify the Position Profile for the positon of Chief Financial Officer and did not do so. The language of incorporation of the Position Profile was changed so as not to refer to the timing of the provision and the deletion of the reading of the contract with 2014 contract. Construing the contract of employment as a whole incorporating the two deeds of variation the omission of a Position Profile diminishes the objective importance of the Executive’s Responsibilities in cl 3 and Executive Duties in cl 4. Clause 14 further diminishes objectively the importance of cl 3 and cl 4 in determining whether essential objectively to the employer’s decision to enter into the contract. The reference in cl 11.4 as inserted by the second deed of variation under the heading Termination for Cause refers to “may terminate this Agreement forthwith without notice for serious misconduct including (without limitation) on the happening of any of the following events” and where no Essential Term is specified despite the opportunities to do so there appears little reason to treat cl 3 or cl 4 as satisfying the definition of Essential Term. There is still work for the definition to do as it would still have application to objectively essential terms for one or other party being cls 2, 5, 10 and 11.
Taking these matters into account the Court does not accept as a matter of construction that either cl 3 or cl 4 should be treated as within the meaning of Essential Term of the Agreement. Further the manifestly serious and readily identifiable nature of the cause events identified in cls 11.4(a), (b), (d), (e) and (f) support an ejusdem generis meaning for cl 11.4(c) when read with the relevant definition in cl 1.1 of Essential Term that does not pick up every contractual provision. Further what is to be picked up by that definition is a “clause” not or part thereof. The aspirational breadth of “events’ that might be picked up by cl 3 are so broad and high-level as not to support the same being construed as an Essential Term within cl 11.4 as defined in cl1.1.
Further the reference to Duties as defined in cl 1.1 are as set out in Item 4 of the Schedule is expanded by cl 11.4(d) which expressly picked up cl 4 “Duties under this Agreement” albeit connected to a criminal offence. This supports a reading of cl 11.4(c) and the meaning of Essential Term that does not pick up cl 4. Again the aspirational breadth of cl 4 and in particular the 13 subclauses of cl 4.1 and breadth and uncertainty of events connected therewith support a construction of Essential Term that does not pick up cl 4. On its proper construction cl.1.1 in the definition of Essential Term does not pick up parts of a clause and the Court rejects the respondents’ submission that cl 3 and cl 4 are Essential Terms within cl 11.4. Taking the above into account the Court rejects the contention by the respondents that the alleged pleaded breaches of cls 3.1(a), 3.2, 3.3, 3.4, 4.1(b),(c), (d),(e) (g) or (i) are within the proper construction of Essential Terms in cl 11.4(c). Further even if a different construction as to Essential Term were adopted so as to include cl 3 or cl 4 because of the findings of the Court as to the authority given by the first respondent to the applicant no breach as pleaded of those subclauses is made out.
The applicant did not engage in any serious misconduct that entitled the first respondent to summarily dismiss the applicant under cl 11.4(c) or cl 11.4(f). There was no requirement for the applicant to obtain the written consent of the board of the first respondent where the first respondent knew of and had authorised the applicant to undertake that work. As the whole of the applicant’s conduct was authorised by the first respondent there was breach of cl 3 or cl 4 as pleaded. No breach of an Essential Term is made out. Nor given the said authority did the applicant breach cls 3.1, 3.2, 3.3, 3.4 or 4.1 of the Contract of Employment. The authority of the first respondent for the performance of the work by the applicant also means there was no breach of obligation under the Code of Conduct or any breach of fiduciary or statutory obligation.
The authority of the first respondent for the applicant to perform work for Integrated Products and YC Investments also means that there was no breach of the exclusive service obligation. The written consent provision was not exhaustive of the ability of the first respondent to authorise the performance of work by the applicant and that is what occurred in the present case. In other words the Court rejects the construction that the prior written consent was the sole mechanism for the first respondent in authorising the performance of work by the applicant. Further the first respondent cannot be heard to complain of a want of written consent where the first respondent knew of and authorised the work. Clause 19 does not assist the first respondent because the contract of employment is not, as a matter of construction, exhaustive of the authority of the first respondent to authorise conduct by the applicant. Further the contact of employment as referred to above authorised work for YC Investments being within the meaning of the STS Group in respect of the applicant’s “Position” and was also was within the authority of the Managing Director which was within the scope of authority given to the applicant under the contract of employment.
There was no breach of the contract of employment because the first respondent knew of and had authorised the conduct by the applicant alleged by the first respondent to constitute serious misconduct. Equally there was conduct by the applicant repugnant to or incompatible with the contract of employment as the first respondent knew of and authorised the conduct alleged by the first respondent. The knowledge and authorisation of the conduct of the applicant by the first respondent means there was no conflict of interest and no impeding of the applicant’s performance of his obligations. The knowledge and authorisation of the conduct of the applicant by the first respondent also means that there was no conduct destructive of the employment relationship or destructive of mutual trust and confidence. The authorisation and knowledge of the first respondent of the conduct by the applicant also means that this is not a case of failure to make full and frank disclosure and further that authority means there was no conflict of interest and duty. The Court accepts the applicant’s evidence given the long work hours performed that the work for Integrated Products and YC Investments the subject of the alleged misconduct was authorised work and that the undertaking of the same benefited the first respondent.
The first respondent has failed to establish that there was any unauthorised conduct by the applicant and has failed to establish that the applicant engage in any serious misconduct given that the first respondent knew and authorised the alleged conduct. The authorisation amounts of the alleged conduct in this case also amounts to the first respondent having given informed consent for the alleged conduct. There was no breach of any fiduciary or statutory duty by the applicant given the first respondent’s knowledge and authorisation of the alleged conduct. Given the authority of the first respondent to undertake the work for Integrated Products and YC Investments there was no concealment of the work from the first respondent and given the facts of this case there was no serious misconduct. There was no entitlement of the first respondent to terminate the contract of employment either as a matter of construction under the contact or at common law. Further the applicant did not engage in conduct repudiatory to the contract of employment because the first respondent knew of and had authorised the allege conduct. Further the employee’s reasons for the conduct were not destruction of the employment relationship or mutual trust. The Court finds that there was no serious misconduct by the applicant. Given the authority and knowledge of the first respondent the Court further finds that the nature of the conduct taking into account the seniority of the applicant as a CFO, his duties and responsibilities as a CFO, his obligation of fidelity and the Code of Conduct, the benefits for the first respondent from the applicant’s work, the open honest nature of the work, the work being consistent with faithful service to the first respondent and the work being consistent with the best interests of the first respondent and finds that the work undertaken lacks the gravity of unauthorised work so as to make out serious misconduct.
The Court also accepts, as a matter of construction, that the first respondent was not entitled to purport to terminate the applicant under cl 11.4 in respect of conduct of which it was aware at the time of issue of the termination notice under cl11.1 The Court has found the first respondent was aware of the conduct at the time of issue of the termination notice under cl 11.1 and accordingly the purported termination was unjustified, wrongful and a breach of contract by the first respondent.
The central issue, as identified above is whether the applicant, who was at the relevant time the chief financial officer of the first respondent, engaged in serious misconduct that justified his summary dismissal by the first respondent because of the work performed by the applicant for Integrated Products and YC Investments. In circumstances where this was work that had been authorised undertaken prior to the share acquisition and where there was at least one director of the first respondent who was aware of that continuing work, the Court does not accept that the conduct was so serious as to be incompatible with the applicant’s continued performance of his duties as an employee to his employer. The Court does not accept that any of the conduct engaged in by the applicant for Integrated Products or YC Investments amounts to serious misconducted that justified the dismissal of the applicant.
One of the two core grounds upon which the alleged dismissal for serious misconduct was justified by the first respondent was said to be the work performed by the applicant for YC Investments (NT) during his period of employment with the first respondent from 30 November 2018 following the share acquisition. The central contention advanced in respect of this work was the alleged failure from 30 November 2018 to disclose the fact of the ongoing work for YC Investments to Optic Security Group Limited. In this regard, it should be noted that Optic Security Group Limited was not the applicant’s employer, rather the first respondent was the employer of the applicant. The second foundation for this argument is the fact that this work was not disclosed to Mr Ranyard on and from 10 June 2019. Mr Ranyard held no corporate position in the first respondent at the time of dismissal of the applicant or prior to the dismissal of the applicant.
The pleading of the alleged defence makes patent that the applicant was authorised to engage in work for YC investments up to 30 November 2018. There was no instruction or revocation of the applicant’s authority by the first respondent to undertake work for YC Investments that occurred on 30 November 2018. The contract of employment with the first respondent had been on foot since 30 April 2018 and the applicant was clearly at that time authorised by the first respondent to undertake work for YC Investments. Indeed YC Investments was within the STS Group which on the face of the applicant’s “Position” in the contract of employment authorised work for that entity. The change of share ownership of the first respondent on 30 November 2018 did not create a fresh obligation upon the applicant to disclose to the first respondent or to seek fresh authority to continue to undertake work for YC Investments. Given that the applicant had since 30 April 2018 been authorised by the first respondent to undertake work for YC Investments and given the continued knowledge of undertaking that work by the first respondent through its director Mr Ireland no fiduciary obligation or contractual duty arose on 30 November 2018 for the applicant to disclose to the first respondent or to seek fresh authority from the first respondent to undertake work for YC Investments.
The case by the first respondent was, in substance run along the lines that this was a failure to disclose information in relation to the purchase of the group of companies by Optic Security Group Limited. Mr Ranyard’s state of mine might well be relevant had he played a particular decisive role in the acquisition of the group in a purchasing dispute.
But Mr Ranyard was not the corporate mind of the first respondent, whether or not there was a reporting role put in train for the applicant as chief financial officer of the first respondent to report to Mr Ranyard as the chief financial officer of the Optic Security Group Limited, did not create an employment relationship between the applicant and Mr Ranyard or between the applicant and Optic Security Group Limited. Further it is material that the case of the alleged non-disclosure as advanced by the first respondent is as and from the appointment of Mr Ranyard on 10 June 2019 as a person to whom the applicant was to report.
There was no examination process or questioning by Mr Ranyard that of the applicant at that time as to financial affairs of the first respondent or inquiry as to what other services, roles or activities the applicant had been undertaking in his role as chief financial officer of the first respondent. A material flaw in the first respondent’s alleged justification for dismissal of the applicant is the unestablished premise of an obligation to disclose any of the conduct alleged to Mr Ranyard. The further flaw in the alleged justification for dismissal is the unestablished premise that Mr Ranyard was at any time the corporate mind of the first respondent. The next material flaw is that the appointment of a reporting line on 10 June 2019 by the applicant to Mr Ranyard did not mean that knowledge of the first respondent prior to that date of the alleged conduct was irrelevant to the alleged misconduct. On the contrary the knowledge of the first respondent, through its corporate mind was material as to whether there was any misconduct as alleged.
Mr Ranyard’s state of mind and when he became first aware of the performance by the applicant for the work for Integrated Products and for YC Investments (NT) is not the mind of the first respondent and does not establish any want of disclosure by the applicant to the first respondent in respect of the work undertaken for YC Investments (NT) or Integrated Products. The core foundation being Mr Ranyard’s state of mind for the alleged serious misconduct by the applicant to justify his dismissal by the first respondent was entirely wanting.
Mr Ranyard was not the corporate mind of the first respondent and held no director role and held no written authority from the first respondent as to the governance of the first respondent or as to the power to hire or fire senior employees of the first respondent. Whilst the communications with Mr Cherrington and Mr Ranyard concerning the proposed dismissal do amount to authority to dismiss the applicant as an employee of the first respondent it does not make Mr Ranyard’s mind that of the first respondent. The authority conferred upon Mr Ranyard by the line reporting from 10 June 2019 also does not make Mr Ranyard the corporate mind of the first respondent.
The respondents’ proposition that the work was undertaken without the written consent of the board of directors of the first respondent goes nowhere as the applicant was authorised by the first respondent to undertake work for YC investments from the time of the commencement of his employment with the first respondent. It is patent that the work was undertaken with the knowledge of the directors of YC Investments, being Mr George Rakkas and Mr Gregory Ireland and further given the Court’s findings Mr Cherrington. There was no requirement in these circumstances for written consent. The further proposition advanced by the respondents was the use of the first respondent’s resources in providing work to YC Investments does not make out any serious misconduct. That use had been authorised by the first respondent and following the share purchase was in the context of post purchase price issues which did not cause any detriment or disadvantage to the first respondent As to the further complaint that the applicant received financial compensation in the amount of $46,350 including GST for the work undertaken by him for YC Investments this was through his personal corporate entity, this was for work which the Court accepts was substantially done outside work hours and during weekends and holidays. No sick leave was taken by the applicant to perform any such work. The first respondent suffered no detriment or disadvantage because of the provision of that work or the payment to the applicant.

The second core basis for the alleged dismissal for serious misconduct is the work undertaken by the applicant from 30 November 2018 for a company, Integrated Products Pty Limited that had been and continues to be in a commercial relationship with the first respondent for the supply of security equipment including IndigoVision camera products. The applicant or more accurately the first respondent from 30 April 2018 undertook back office work for Integrated Products in respect of accounting functions, including being on the bank mandate and signing off the payroll, producing interim accounts and tax workings and releasing funds from Westpac to pay outstanding invoices that had been separately approved for payment by the Operations Team of the first respondent as well as attending to payroll functions on behalf of Integrated Products. The first respondent wrongly characterised the applicant’s conduct as being involved in the approval of the invoices for payment. The first respondent wrongly characterised this as work by the applicant for Integrated Products when in fact the Court finds it was ongoing work by the first respondent for Integrated Products and was not serious misconduct by the applicant.
The contention advanced in respect of this entity was that it was work undertaken after 30 November 2018 by the applicant without disclosing it to Optic Security Group Limited, which was not the applicant’s employer and without disclosing it to Mr Ranyard from 10 June 2019 in circumstances where Mr Ranyard held no position of authority as to the corporate mind of the first respondent and in circumstances where it is alleged it was without the consent of the first respondent’s board of directors. That board of directors relevantly included both Mr Rakkas and Mr Ireland and Mr Cherrington. It was also alleged that, in undertaking this work from 30 November 2018, it was done during, in part, work time and using the resources of the first respondent. Mr Ranyard identified that the corporate governance of Optic Security Group Limited was at the relevant time one in which there was no separate chief operating officer or the chief risk operator or, indeed, a CEO until he was given two hats sometime towards the end of 2019. As earlier identified, the corporate governance of Optic Security Group Limited lacked any written authority to Mr Ranyard in respect of the first respondent.
There was no instruction or revocation of the applicant’s authority by the first respondent on 30 November 2018 to undertake work for Integrated Products. Given the contract of employment had been on foot since 30 April 2018 the applicant clearly had authority of the first respondent to undertake work of Integrated Products. The change of share ownership of the first respondent on 30 November 2018 did not create a fresh obligation upon the applicant to disclose to the first respondent or to take steps to seek fresh authority from the first respondent to undertake work for Integrated Products. This is particularly so when the applicant continued to report to the same management being Mr Rakkas and Mr Ireland.
Given the authority for the applicant from the first respondent to undertake work for Integrated Products since 30 April 2018 and given the continued knowledge of undertaking that work by the first respondent through its director Mr Ireland no fiduciary obligation or contractual duty required the applicant to disclose to the first respondent or to seek fresh authority from the first respondent to undertake work for Integrated Products. This is because the directors Mr Ireland and Mr Rakkas and given the Court’s finding the director Mr Cherrington where aware of that work.
No board meeting of the first respondent was held to support the assertions advanced in the show cause letter as to the knowledge of the first respondent and the assertions advanced by Mr Ranyard in the show cause letter dated 22 October 2019 as to the first respondent’s knowledge were patently deficient and baseless.
The process undertaken by Mr Ranyard to ascertain the knowledge of the first respondent as at the timing of the show cause letter was completely inadequate and deficient. The central proposition as to his acquisition of knowledge between 12 September 2019 and 22 October 2019 completely failed to grasp that Mr Ranyard was not the corporate mind of the first respondent.
The limited oral and written communication with the director Mr Ireland by Mr Ranyard fell well short of proper steps to ascertain the corporate mind of the first respondent as to the authorised work undertaken by the applicant. Indeed counsel for the first respondent conceded orally in final submissions that the state of mind of Mr Ranyard was not relevant in determining whether the first respondent was entitled to summarily dismiss the applicant. That concession was properly made and reflects the want of authority of Mr Ranyard as to the corporate mind of the first respondent. The concession also highlights the unfair process taken by the first respondent after the contractual notice of termination issued on 12 September 2019 to summarily dismiss the applicant on 31 October 2019. The first respondent was in fact aware of the work undertaken by the applicant through Mr Ireland, Mr Rakkas and Mr Cherrington as at 12 September 2019 and in those circumstances was not entitled to issue the purported notice of termination under cl 11.4 on 31 October 2019.
There was no proper basis for the sweeping assertions as to knowledge of the first respondent and an alleged disclosure duty as advanced in the show cause letter dated 22 October 2019. The show cause letter dated 22 October 2019 reflected little more than Mr Ranyard’s limited state of mind that was not the corporate mind of the first respondent. Admittedly Mr Ranyard was authorised, whether actual or by ratification, by a director of the first respondent to send the show cause letter however it was a most unfair, self-serving and inaccurate dismissal procedure by the first respondent.
The assertions as to knowledge of the first respondent in the show cause letter were false and misleading because the applicant had in fact, been authorised since 30 April 2018 to undertake work for both YC Investments and Integrated products, and because the first respondent knew of that work. There was no serious misconduct by the applicant that amounted to a repudiation of his contract of employment or that amounted to a breach of his contract of employment that permitted summary dismissal.
Moreover, as the first respondent was in fact aware of the work undertaken by the applicant for both YC Investments and Integrated Products through at the time of the giving of the contractual notice as per cl 11.1 on 12 September 2019 the applicant could not validly rely upon that conduct to issue the purported notice of dismissal on 31 October 2019 under cl 11.4 of the contract of employment. The first respondent could not rely upon that conduct either under the contract of employment or at common law to justify the summary dismissal of the applicant and for the reasons given that conduct did not in all the circumstances amount to serious misconduct. The summary dismissal of the applicant was wrongful and a breach of the contract of employment by the first respondent.
The Court finds that the summary dismissal of the applicant by the first respondent was not justified. The Court finds that the applicant was authorised by the first respondent to engage in the work performed by the applicant. That authority was in place at the time of the entry into the 2018 contract of employment and was not revoked by the share purchase by Optic. As explained above here was no requirement for written consent of the board of the first respondent.
The first respondent knew the applicant was performing the work the subject of the alleged grounds for summary dismissal as at 12 September 2019, being the date of the notice of termination under cl 11.1 of the Contract of Employment (“the Contract”). Further, the first respondent has not proved that the first respondent was unaware of the alleged conduct as at 12 September 2019. Accordingly, the first respondent was not entitled to issue the purported notice of termination on 31 October 2019 under cl 11.4 of the Contract and the first respondent was not entitled to summarily dismiss the applicant at common law.
The Court finds that the applicant did not engage in breach of the alleged fiduciary duties, did not engage in the alleged breach of obligations, did not engage in any conflict of interest, did not engage in any breach of an Essential Term, did not engage in any serious breach of the contract of employment, did not engage in any serious misconduct and did not engage in any repudiatory conduct.
The summary termination of the applicant’s Contract on 31 October 2019 was a breach of contract by the first respondent for which the applicant is entitled to the damages claimed. Further, the damages payable by the first respondent include the binding agreement by the first respondent to pay additional entitlements that included a redundancy payment.
The contravention of s 44 of the Act by the first respondent in relation to s 117 of the Act is made out and the applicant is entitled to appropriate declarations. The contravention of s 44 in relation to s 119 of the Act is not made out because whilst the first respondent agreed to make a redundancy payment where the applicant was not being replaced by a new CFO employed by the first respondent, the evidence supports that the job of CFO for the first respondent was to be done by the Optic CFO.
Given the contravention, the applicant is entitled to compensation under s 545 of the Act for the loss suffered by reason of the contravention by the first respondent which the Court finds are the amounts claimed by the applicant in the sum of $308, 401.83. The table of that loss is as follows:
The causal link for the compensation to the contravention arises because the respondent’s alleged defence to the contravention of s44 of the Act referable to s117 of the Act was that the employment was terminated for serious misconduct within s123(1)(b) of the Act. There was no serious misconduct within s 123 of the Act, or under the agreement or at common law and but for the wrongful and unjustified termination for alleged serious misconduct the applicant would the Court finds have received the full payments claimed including under the redundancy agreement. Given the binding email agreement to pay the additional entitlements including the redundancy payment, but for the contravention and unjustified alleged serious misconduct the applicant would have received those payments and accordingly they fall within the scope of the compensation that is appropriate to order in the present case under s 545(2)(b) of the Act for the loss suffered because of the contravention.
Interest under s 547 of the Act on the amount of $308, 401.83 to date amounts to $21,598.04.
The first respondent has failed to establish any defence to the applicant’s pleaded claims including the alleged defence under the Corporations Act 2001 (Cth) and in respect of alleged industrial action. Both those defences were spurious as well as completing lacking merit.
The Court finds that the second respondent, Mr Ranyard, was directed to summarily dismiss the applicant by Mr Cherrington, a director of the first respondent. The contravention of s 44 of the Act arose because the written notice required under the Act was not given by the first respondent and this was because Mr Cherrington was the real decision maker and gave the direction to Mr Ranyard to summarily dismiss the applicant. Taking into account all the circumstances the Court finds that there was no knowing involvement by the second respondent in the said contravention by the first respondent. The Court is not satisfied that the second respondent was “involved in” the contravention of s 44 by the first respondent, within the meaning of s 550 of the Act.
The issue of penalty against the first respondent for the said contravention will be determined separately. The Court will hear the parties on any issue as to costs.

I certify that the preceding two-hundred and sixteen (216) paragraphs are a true copy of the reasons for judgment of Judge Street.
Associate:
Dated: 2 November 2021

File number(s):	SYG 530 of 2020
Judgment of:	JUDGE STREET
Date of judgment:	2 November 2021
Catchwords:	INDUSTRIAL LAW – FAIR WORK – whether the applicant wrongfully dismissed – whether the first respondent contravened s 44 of the Fair Work Act 2009 (Cth) – no serious misconduct summary dismissal not justified – contravention of s 44 of the Fair Work Act 2009 (Cth) in failing to give notice required under s 117 of the Fair Work Act 2009 (Cth) – failure to make out serious misconduct within s 123 Fair Work Act 2009 (Cth) – compensation awarded under s 545 of the Fair Work Act 2009 (Cth) – interest under s 547 of the Fair Work Act 2009 (Cth)
Legislation:	Fair Work Act 2009 (Cth), ss 19, 44, 117, 119, 123, 408, 409, 474, 475, 545, 546, 550, 566, 570 Corporations Act 2001 (Cth), ss 181(1), 182, 183, 200AA, 200B, 200F Fair Work Regulations 2009 (Cth), reg 1.07(1)
Cases cited:	National Tertiary Education Industry Union v University of Sydney (2021) FCFC 159
Division:	Division 2 General Federal Law
Number of paragraphs:	216
Date of hearing:	31 August 2021 1 September 2021 17 September 2021
Place:	Sydney
Counsel for the applicant:	Ms C Ronalds Ms R Kumar
Solicitors for the applicant:	Nicole Dunn Lawyers
Counsel for the first respondent:	Mr M Seck
Solicitors for the first respondent:	Seyfarth Shaw Australia

SYG 530 of 2020
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:	MARK HURLEY Applicant
AND:	SECURITY & TECHNOLOGY SERVICES (NT) PTY LTD ACN 110 544 753 First Respondent MARK RANYARD Second Respondent

order made by:	Judge street
DATE OF ORDER:	2 November 2021