Luc Daigle v SCT Operations Pty Limited

[2022] NSWDC 364

District Court

New South Wales

Medium Neutral Citation:

Luc Daigle v SCT OPERATIONS PTY LIMITED [2022] NSWDC 364

Hearing dates:

3 August 2022
4 August 2022
8 August 2022
9 August 2022
10 August 2022

Date of orders:

19 August 2022

Decision date:

19 August 2022

Jurisdiction:

Civil

Before:

Montgomery DCJ

Decision:

(1)   Judgment for the plaintiff against the defendant in the sum of $132,555.58 inclusive of interest.

(2)   Defendant to pay the plaintiff’s costs of the proceedings.

Catchwords:

CONTRACT OF EMPLOYMENT - conventional estoppel - conduct - certainty of contract – employer discretion - implied term of reasonable notice on termination - Fair Work Act – section 117

Legislation Cited:

Fair Work Act 2009 (Cth)

Civil Procedure Act 2005 (NSW)

Cases Cited:

Heldberg v Rand Transport (1986) Pty Ltd [2018] FCA 1141; (2018) 280 IR 93

McGowan v Direct Mail and Marketing Pty Ltd [2016] FCCA 2227; (2016) 313 FLR 370

NSW Cancer Council v Sarfaty (1992) 44 IR 1; (1992) 28 NSWLR 68

McAlister v Yara Australia Pty Ltd [2021] FCCA 1409; (2021) 307 IR 300

UGL Rail Services Pty Ltd v Janik (2014) NSWCA 436

Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32

Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410

Brackenridge v Toyota Motor Corporation Australia Limited (1996) 67 IR 162

Gumland Property Holdings v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; (2008) 234 CLR 237

Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357

Biotechnology Australia Pty Ltd v Pace (1988) 26 IR 411; (1988) 15 NSWLR 130

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424

Sha v Liu [2022] NSWSC 325

Category:

Principal judgment

Parties:

Luc Daigle, plaintiff/cross defendant
SCT OPERATIONS PTY LIMITED, defendant/cross claimant

Representation:

Counsel:
Ms Kumar, Counsel for the plaintiff/cross defendant
Mr Latham, Counsel for the defendant/cross claimant

Solicitors:
Hall Payne Lawyer, solicitors for the plaintiff/cross defendant
Kells, solicitors for the defendant/cross claimant

File Number(s):

2021/00173343

Judgment

THE CASE AS PLEADED

1. By Amended Statement of Claim filed 21 November 2021 the plaintiff sues for damages for breach of contract in the sum of $357,690.53. It is agreed that the plaintiff and the defendant on 28 June 2004, entered into a written contract by which the defendant employed the plaintiff in the position of Engineer Geologist. The contract letter, terms of which the plaintiff accepted, was entitled “Letter of Offer for Position of Engineer Geologist” and was dated 1 June 2004. It was signed by Mr Mills, a director of the defendant.

2. The plaintiff says that on 26 September 2006 the parties entered into a separate contract providing for a Performance Bonus which was partly written, partly oral, partly express and partly implied. At ASOC [4] the plaintiff says that the express terms of the Bonus Scheme Contract were constituted by:

1. An oral discussion in or around June 2005 between himself and Mr Mills and Mr MacGregor, the defendant’s Managing Director; and in a letter entitled “Process for Payment of 05/06 IAS Profits” dated 26 September 2006, singed by Mr Gale, the then managing director of the defendant.

2. The alleged express terms are set out at ASOC [5]. The implied terms are set out at ASOC [6] – [8] including that the Performance Bonus be paid quarterly, within a reasonable time, and that the defendant would conduct itself toward the plaintiff reasonably, and in good faith and would exercise any contractual discretions honestly and conformably with the purposes of the contract. The plaintiff pleads that the Good Faith Term is implied in fact and in law (ASOC [8]) and I note that the words pleaded reflect the expressions used in the Silverbrook case, detailed reference to which follows.

3. In its Amended Defence (“AD”) at [2] – [6] the defendant denies a further or separate contract, as the plaintiff put its case, to have commenced on 26 September 2006 and denies each of the express and implied terms. The defence says that there was ever one contract of employment and the express terms pleaded by the plaintiff (ASOC [5]) were not an ongoing obligation as the plaintiff alleges, but rather a method and manner of calculation of any payment to be made by the defendant to the plaintiff at the defendant’s discretion, to be determined by the defendant’s directors from year to year.

4. At ASOC [10] the plaintiff pleads that the defendant was entitled to terminate the further contract summarily for serious beach, by giving reasonable notice or by paying the plaintiff in lieu of reasonable notice (“the termination term”), which “term was inferred or implied in the absence of an express term as being necessary for the reasonable effective operation of the further contract”. At AD [9] the defendant denies that allegation and pleads that “this term is only implied into the contract of employment where it is necessary for the implication of that term. The giving and payment of notice is provided in Section 117 of the Fair Work Act and in those circumstances the term is not implied. In any event, the defendant was entitled to terminate the contract on the least onerous basis being the statutory notice period set out in section 117 of the Fair Work Act”.

5. The balance of the initial pleading between the parties included the plaintiff’s claim that the Performance Bonus for FY 2019 in the amount of $312,545 including superannuation was agreed to be paid in 4 instalments, but that in breach of contract, the defendant did not pay the plaintiff the 4th quarterly payment in the sum of $94,452. The plaintiff pleads that, alternatively, the defendant in breach of the “Good Faith Term” withheld that payment from the plaintiff.

6. It is common ground that the defendant did not pay that 4^th instalment. On 23 July 2021 the defendant gave the plaintiff notice of termination of employment by reason of redundancy. That date was the plaintiff’s last day of employment. The defendant notice informed the plaintiff that he would be paid 5 weeks’ pay in lieu of notice and 12 weeks on account of redundancy pay.

7. Against those provisions on termination, the plaintiff claims that reasonable notice as at 23 July 2021 was 24 months (ASOC [18]) and that in breach of the contract the defendant did not give the plaintiff 24 months’ notice of termination. The plaintiff claims 99 weeks’ pay in lieu of notice (104 weeks less the 5 weeks paid) (ASOC [17] – [22]). The defendant case is that the plaintiff was paid the whole of his entitlement to pay in lieu of notice, that being 5 weeks as calculated according to s 117 of the Fair Work Act.

8. The plaintiff’s claim for loss and damage is made up of the alleged failure to pay the quarterly instalment of the Performance Bonus in sum of $94,452, and the amount of $263,238.53 made up of pay and superannuation entitlements in lieu of notice, totalling $357,690.53. The defendant denies the whole of the plaintiff’s claim of entitlements.

9. The defence also pleads with reference to Ss 368 and 570 of the Fair Work Act; but the parties said their decision as to whether or not consideration of those statutory provisions is required, should follow their receipt of this judgment. I do not consider those statutory provisions.

10. By Reply filed 7 June 2022 the plaintiff repeats the allegations of fact in the ASOC and that:

At R [2] the periods provided for in section 117 Fair Work Act are “simply minimum periods of notice”;

At R [3] that the proceedings do not arise under that Act.

But most significantly at R [1] the plaintiff pleads, estoppel by convention on the basis of common assumptions set out in the ASOC, that the plaintiff would suffer loss if the defendant would depart from the assumptions and it would be unconscionable to depart from those assumptions

11. By Amended Statement of Cross Claim filed 9 November 2021 the defendant/cross claimant makes claims damages for breach of contract. The defendant/cross claimant pleads that a term of the contract of employment was that the cross claimant would pay to the cross defendant an additional $28,000 per annum toward the costs of a vehicle and that it was agreed that in the event the cross claimant paid additional funds above the figure of $28,000 per annum toward the costs of the vehicle, those additional funds would be repaid by the cross defendant to the cross claimant. At ASOCC [6] – [12] the cross claimant says that in financial years from 2011 to 2018/2019, vehicle expenses paid by the cross claimant that exceed the capped allowance were agreed by the parties to be deducted from payments made to the cross defendant.

12. The cross-claimant claims that the cross defendant is indebted for the balance of those additional payments in the sum of $31,408.

13. By Defence to Amended Statement of Cross Claim filed 16 November 2021 the plaintiff/cross defendant denies that pursuant to the contract of employment the provision for motor vehicle expenses was capped at $28,000 per annum and denies that there was any cap on vehicle overheads or other expenses. At [4b] of the DASCC the cross defendant pleads that provision of the vehicle expenses was included in the calculation of the plaintiff’s Costs Bar (a figure above which the Bonus was calculated). The cross defendant pleads that any overheads associated with the vehicle use were invoiced to clients by the cross defendant (at [5c] of DASCC). No evidence was advanced or submission made on this point and so I disregard it. It is agreed that the cross claimant did not deduct the sum of $31,408 from the redundancy payment.

14. The cross defendant pleads that should the Court accept that the cross claimant is entitled to monies exceeding $28,000 per annum car allowance, that there was a shared assumption between the parties that any overheads or other payments in relation to the provision of the vehicle to the cross defendant were not payable to the cross claimant and the cross defendant relied on this assumption (at [13] – [14b] of DASCC). In being influenced by this assumption the cross defendant did not object to the cross claimant including such overheads or other payments in the calculation of the Costs Bar. That having accepted that the cross defendant relied on the above assumption, in the circumstances it would be unconscionable or unjust to permit the cross claimant to assert otherwise.

15. The jurisdiction of this Court to hear a matter in relation to s 117 of the Fair Work Act (pleaded in the Amended Defence) and (equitable) promissory estoppel as an ancillary basis of claim to the pleading of conventional estoppel in the Defence to Amended Cross Claim was the subject of submissions by both parties and subsequent ruling: T 7. And T 11.

ISSUES OF LAW

Regarding section 117 Fair Work Act

16. I drew to the attention of the parties that section 117(2)(b) which the defendant says has application in this case, speaks of “…of at least the amount” being words fitting the character of expression of a minimum standard rather than a term of contract or entitlement. Section 117(2)(b) provides: “the employer has paid to the employee (or to another person on the employees behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employees behalf) at the full rate of pay for the hours the employee would have worked had the employee continued until the end of the minimum period of notice”. In my opinion, Section 117(3) prescribes the calculation of the “minimum period of notice” as a standard.

17. The plaintiff took me to an extract from the obiter reasons of White J in Heldberg v Rand Transport (1986) Pty Ltd [2018] FCA 1141 at [105] – [106]. His Honour considered pertinent views expressed by Judge McNab in McGowan v Direct Mail and Marketing Pty Ltd [2016] FCCA 2227; (2016) 313 FLR 370 at [85].

18. I agree with the plaintiff’s submission, which appears to be consistent with his Honours reasoning; that section 117 does not grant a right but prohibits the defendant employer the exercise of an express or implicit right found elsewhere unless the minimum stipulated notice is given.

19. In this way, by imposing a minimum standard, section 117 does not on its face preclude or modify, the general rule at common law that if the parties to a contract of employment make no provision as to the circumstances in which it may be brought to an end, the law will imply a term to the effect that the contract is terminable by either party upon reasonable notice; NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68 at pages 74 – 75. I respectfully agree with the observation of White J, that section 177 differs from terms of awards and enterprise agreements which are drafted with circumstances of particular industries of employment in mind.

20. In McAlister v Yara Australia Pty Ltd [2021] FCCA 1409 at [2005] – [2007] Judge Obradovic considered the analysis of White J to be correct when concluding that section 117 does not displace the common law term of reasonable notice, such term being implied by law.

21. Both parties confirmed that their research had not found any consideration by the NSW Court of Appeal on these issues.

22. Both parties agreed that there are cases for and against section 117 posing a statutory regime which prevents implication of terms. The defendant argument appeared to be primarily based on those cases in which there was an award or an industrial agreement. The defendant conceded that such formal arrangements were of a sub-legislative force and character. My observation is that the defence approach to these principles unsatisfactorily attempts to elevate the provisions of section 117 to the character of a term of employment contracts whether they be by express contract, industrial award or employment agreement.

23. Because White J in the Heldberg case observed that section 117 falls within the part of the Fair Work Act dealing with National Employment Standards and is intended to provide a standard of minimum period of notice only; acceptance of the submitted approach by the defendant would require me to be persuaded that White J was wrong. I repeat that I respectfully agree with the observations of White J. In my view the words “of at least the amount” in section 117 must have work to do. As a matter of statutory construction, one would not assume them to be superfluous. Those words do not speak of a term of contract, but rather of a standard, according to normal language used.

24. The defence took me to Brackenridge v Toyota Motor Corporation Australia Limited (1996) 67 IR 162, a judgment of Beazley J as her Excellency then was. In that case at page 188, in relation to the applicants allegation that there were implied terms of the contract of employment, one relating to notice; her Honour acknowledged the application of NSW Cancer Council v Sarfaty but distinguished Brackenridge in the circumstance that the employment was governed by the Toyota Australia Vehicle Industry Award 1988 in which clause 5(c) provided for the periods of notice which the employer was to give upon termination. At page 189, after noting that terms of an award are not implied into the contract of employment her Honour said: “However, the award still governs the employment to the extent that the express terms of the employment do not make some greater or more beneficial provision”. Quoting from the plurality in Byrnes case at [35] – [36]: “in a system of industrial regulation where some, but not all, of the incidence of an employment relationship are determined by award, it is plainly unnecessary that they contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits but cannot derogate from the terms and conditions imposed by the award (authority cited) and, as we have said the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations.” Her Honour then stated “it follows that where an Award governs a particular aspect of employment, there is not room for the implication of a term relating to precisely the same subject matter. Accordingly, I reject the submission that there was an implied term as alleged.” The Brackenridge Case is not contrary to my earlier expressed view. This is because s 117, Fair Work Act does not “govern” the termination notice period. The section sets a minimum standard for the notice period. The term of contract providing for a reasonable notice period is implied by law.

25. The defendant then opened the hearing submitting that the court must ask the question is there a contractual gap? And does section 117 fill the gap in regard to reasonable notice. For the reasons stated, I answer those questions in the negative.

Regarding the Bonus Claim

26. I now turn to principles of approach to the disputed claim of a contracted bonus entitlement. Both parties referred to the principles of contractual discretion elucidated by Allsop (Beazely JA agreed) Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357. I referred the parties to Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130. The facts of that case are easily distinguished because whilst there the “company’s senior staff equity sharing scheme” referred to in the letter of offer of employment (accepted) did not exist and Mr Pace knew that it did not exist at the time of the making of the contract; in the present case the “employee profit sharing scheme” referred to in the defendant’s letter of offer dated 1 June 2004 to the plaintiff, did, to the knowledge of both parties, exist. The majority of the High Court found that the promise to participate in the non-existent equity sharing scheme, being dependant on its formulation on factors special to the particular employment relationship, was incapable of being valued according to any existing or reasonable standards and was therefore illusory and did not give rise to an enforceable contractual obligation.

27. As will be seen, unlike in Biotechnology Australia v Pace, in the present case structural matters of the bonus scheme, were communicated from the defendant to the plaintiff in writing, orally and by conduct. The question here is: whether or not, the evidence establishes the essential terms of contract for the parties to go about their business of employment, which terms were sufficiently clear for the basis of some manifested mutual consent, such that on the balance of probabilities it is to be found that at a point, the parties mutually assented to a sufficiently clear regime, which must, in the circumstances, have been intended to be binding and upon which basis the court will recognise the existence of a contract: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424.

28. Albeit the facts of the present case are different, in my opinion, there is particular utility in the following passage (page 143E – 144A) from the dissenting judgement of Hope JA in Biotechnology Australia Pty Ltd v Pace:

All these decisions show how far Courts are prepared to go in order to find that there is an enforceable contractual promise where that is what the parties have intended. There are of course limitations. I have already referred to the case where the promisor has a discretion, not only as to what he shall do, but also as to whether he shall do anything. Such a promise is illusory. Furthermore, it appears that the promise will not be enforceable if the manner of performance, including the amount of money to be paid or, if relevant, the number of shares to be offered, is a matter entirely in the discretion of the promisor and no criteria by which the performance required of the promisor can be ascertained, or the minimum of that performance can be measured, is expressed or can be found to be implied….[case law referred to]….There an employer agreed to remunerate an employee for his services with a monthly sum of £50 and a commission which the promisee expressly “agreed to leave to the discretion of the company”. The Privy Council held that this part of the employment agreement was unenforceable, the court being unable to determine the basis and rate of the commission. To do so, it was said, would involve not only making a new agreement for the parties but varying the existing agreement by transferring to the court the exercising of the discretion invested in the employer.

29. At 145F – 146B, Hope JA referred to Powell v Braun [1954] 1 WLR; [1954] All ER 484 as an example of where courts have “filled innumerable lacunae in the contractual arrangements of parties by applying a doctrine of reasonableness.” In Braun’s case, the employer offered his secretary additional responsibility for which she would receive additional remuneration in the future in the form of a bonus on the net trading profits of the business instead of an increase in salary. She accepted the offer. The Court of Appeal held that the contract was enforceable, that the parties had not intended that the payment of the bonus was to be purely in the discretion of [the employer Braun] and that [the secretary Powell] was entitled to a reasonable remuneration.

30. Hope JA then referred to Meehan v Jones (1982) 149 CLR in which case the High Court found a special condition of a contract for sale of land that the purchaser or his nominee receive approval for finance on satisfactory terms and conditions in an amount sufficient to complete the purchase, was not void for uncertainty and that the contract was not illusory. His Honour noted that Mason J, as he then was, and Wilson J came to this conclusion on the ground that the purchaser was required to act honestly, and perhaps honestly and reasonably, and that those requirements took the case out of principles concerning illusory contracts.

Regarding the Mihalos Angelos principle

31. Finally, in opening, the defendant submitted that application of the Mihalos Angelos principle permitted it; if it be found to be in breach of a term to pay in lieu the sum of reasonable notice; to choose the lowest measure of damages. The defendant referred to Gumland Property Holdings v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237; [2008] HCA 10 where discussion of this principle by the Court appears at [89]. The Court there said “The Mihalos Angelos principle has nothing to do with the present case. The principle is that where a contract – breaker has a choice of methods of performance, damages will be assessed on the basis of the contract – breakers minimum legal obligation – the method which would have been least onerous to the contract – breaker in the sense that non-compliance which it attracts the lowest measure of damages.” In Gumland the court determined that between two express terms in 2 separate agreements, one contained in a deed and the other in a lease, in fact there was no choice, the contravention having been a contravention of the term of the deed, the wrongdoer was obliged to pay the amount calculated on the basis of the clause in the deed which was breached.

32. Likewise the principle does not apply here. Section 117 of the Fair Work Act is not a term of the contract. Nor is it the equivalent of a term from an industrial award or industrial enterprise agreement defining an aspect of the relationship between the parties. Section 117, as was observed in obiter by White J in Heldberg v Rand Transport, sets a minimum standard. Nothing in section 117 affects the common law position that the law will imply a term to an employment contract that the contract is terminable by either party upon reasonable notice: the Sarfaty case supra. This is also consistent with the passage quoted above from Byrnes case in the judgement of Beazley J in Brackenridge but not inconsistent with statute. The parties here were free to contract additional benefits to the minimum standard provided for by s 117.

Regarding the defendant’s discretion defence

33. The defendant turned to the case law concerning an employer’s discretion in relation to the bonus issue; UGL Rail Services Pty Ltd v Janik (2014) NSWCA 436 at [184] – [185]; and Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32 (“CBA v Barker”); in direct response to the plaintiff having pleaded implication of terms on the basis of “good faith”.

34. In CBA v Barker the holding was that a term of mutual trust and confidence should not be implied in an employment contract by law or in fact. In Barker’s case, the bank had satisfied the contracted terms relating to termination of Mr Baker’s very long term employment, for redundancy. Pursuant to that term of the agreement, CBA had exercised its discretion not to redeploy him within the bank. In consequence, CBA was entitled to terminate Mr Baker four weeks thereafter. At [19] the plurality in Barker said that “the common law in Australia must evolve within the limits of judicial power and not trespass within the province of legislative action”. And at [21] that contractual terms implied in law may be affected by the common law or by statute. If effected by the common law they may be displaced by the express terms of the contract or by statute; at [29]. Referring to Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 450, the plurality explained that the principle of “necessity” which will support the implication of a term of contract, must be kept within the limits of judicial function; “It is a necessary condition that they are justified functionally by reference to the effective performance of the class of contact to which they apply, or of contract generally in cases of universal implication, such as the duty to cooperate. Implications which might be thought to be reasonable are not, on that account only, necessary. The same constraints apply whether or not such implications are characterised as rules of construction.” At [36] the plurality said that the concept of “necessity” is to be applied mindful that the exercise of Judicial power may have significant impact upon employment relationships and the law of contract of employment in Australia. The view of the employment contract as “relational” is of uncertain content and not equal to “necessity”: at [37].

35. In Silverbrook Research Pty Ltd v Lindley, Biotechnology v Pace was not referred. In my opinion, because of the different facts in Silverbrook and in the present case, that is not significant.

36. In Silverbrook the employment of Lindley was pursuant to a written service agreement. In addition to provision for annual salary, clause 4 of the contract stipulated that Lindley was eligible to receive an Annual Performance Bonus ($40,000) subject to cll 4.2 and 4.3. Clause 4.2 provided that Silverbrook would assess Lindley’s performance against set objectives at the end of each quarter and provided her performance satisfied the set objectives and subject to cl 4.3, the bonus would be paid quarterly. Significantly, for present purposes, cl 4.3 provided that the decision as to whether Lindley should receive the bonus was entirely within the discretion of Silverbrook. At no time during her employment did Silverbrook set objectives for Lindley as contemplated by cl 4.2. She was never paid her bonus. Lindley claimed damages on three bases; Silverbooks failure to review her renumeration; Silverbrooks failure to set the objectives relevant to the bonus under cl 4.2; and Silverbrooks failure to review her performance against those set objectives.

37. The Court of Appeal dismissed an appeal from the decision of Walmsley SC DCJ; finding that the plaintiff was entitled to damages for loss of a commercial chance recoverable pursuant to the contract because the contract as a whole or a particular provision of the contract promised an opportunity to obtain a benefit, and that loss was the consequence of the breach of contract and the loss of chance was not too remote. Significantly, the majority of Allsop P and Beazley JA found that whilst clause 4.3 provided that the discretion was entirely a matter for Silverbrook; that did not permit a capricious result. The discretion is to be understood against the proper scope and content of the contract and be exercised honestly and comfortably with the purpose of the contract. Silverbrook was not permitted to arbitrarily or capriciously not set the objectives and not pay the bonus in the exercise of its discretion. At [2] Allsop P said “the task is to identify and characterise what, in substance, was promised and what has been lost or denied by the breach of contract.

38. Because in Silverbrook, the promise was to set objectives at the end of each quarter for calculation of the bonus but the payment of the bonus was subject to Silverbrooks discretion even if the objectives had been set and were satisfied, the President (as he then was) at [3] determined there was no promise to pay the bonus. He found that Lindley had been promised the setting up and undertaking of a process of assessment performance with the contractual opportunity or chance of obtaining bonuses should the results of the process be favourable and subject to the exercise by Silverbrook of its discretion under cl 4.3. At [5] his Honour reasoned:

“The task then is to value that loss of opportunity or chance. This process begins with a proper understanding of the contractual content of the obligations and entitlements arising out of cl 4 and in particular cll 4.2 and 4.3. That the decision as to whether the respondent should receive the bonus was “entirely within the discretion of” the appellant should not be construed so as to permit the appellant to withhold the bonus capriciously or arbitrarily or unreasonably; it should not be construed so as to give the appellant a free choice as to whether to perform or not a contractual obligation. The relevant discretion should be understood against the proper scope and content of the contract. This was a bargained for bonus to be assessed against set objectives. Such a clause should receive a reasonable construction and not permit the appellant to choose arbitrarily or capriciously or unreasonably that it need not pay money the set objectives having been satisfied.

(At [6]) The discretion is to be exercised honestly and comfortably with the purposes of the contract. There may be many circumstances in which it would be legitimate and comfortable with the purposes of the contract not to pay the bonus. There may be financial stringency or misbehaviour by the respondent or some other consideration. It is unnecessary to explore the possibilities in detail. What, however, would not be permitted is an unreasoned, unreasonable, arbitrary refusal to pay anything, come what may. This would be a denial of the very clause that had been agreed. If these parties wished to make payment under the clause entirely gratuitous and voluntary such that payment could be withheld capriciously, notwithstanding the compliance with solemn set objectives, they needed to say so clearly” (bold added for emphasis).

39. The majority found that Lindley’s opportunity or chance pursuant to the contract was not so dependent upon Silverbrook’s unrestrained discretion as to be impossible to say that the opportunity had a value (at [8]) and that the value of opportunity or chance was to be measured by the probabilities and possibilities (at [9]).

FACTUAL OVERVIEW – CONTRACT – AND THE BONUS CLAIM

40. The plaintiff was employed by the defendant from 2004 until he was issued a redundancy termination on 23 July 2021. The letter of offer of employment dated 1 June 2004 (LD-1 to plaintiff first affidavit) stipulated his salary, that salary would be annually reviewed and that his package included a fully serviced, diesel tray top Toyota Landcruiser. Other employment entitlements such as superannuation, holiday, long service and sick leave were provided but do not require further consideration here. A further term was that the defendant would contribute $5,000 and 8 days of normal work time as a 50% contribution toward the completion of his University of New South Wales Strata Control course. From 2005 the plaintiff’s work title, reflecting his tertiary qualifications, was Senior Engineering Geologist and Senior Strata Control Engineer. Of central significance is that the 1 June 2004 employment offer, which he accepted, stated:

“As your contribution to the company grows overtime, we would expect you to become eligible to participate in our employee profit sharing scheme.”

41. From the plaintiff’s acceptance of the defendant’s offer and his commencement of employment on 28 June 2004, the parties mutually hoped the plaintiff would win the defendant’s invitation, based on his performance as a fee revenue earner, to participate in the Bonus Scheme which was in the form of a profit-sharing scheme. That in fact occurred. In June 2005, for the first time, the defendant introduced to the plaintiff the structure of that profit sharing scheme. It is referred to in the evidence generally as the “IAS” or “Bonus Scheme” and in some documentation as the “Rocket Model”.

42. As to this latter term both the plaintiff and Mr Mills, a director of the defendant, who dealt with the plaintiff in relation to his employment and whose responsibility included the Bonus Scheme, were asked questions arising from a document of minutes of a management meeting of the defendant held on 21 June 2004 (LD-5 to plaintiff second affidavit) which incorporated a “Draft Procedure for Calculating SCT Profit Distribution” document. Both the minutes and the draft Bonus protocol were drawn by Mr Mills. In my view the oral evidence concerning those documents and the documents themselves are of little significance to the determination of the questions of contract and of assumption at the heart of the plaintiff’s claim. This is because there is no evidence that those documents were communicated from the defendant to the plaintiff during his employment. They are internal management documents of the defendant. To the extent that they have relevance it is that they can corroborate Mr Mill’s evidence that at the management level the Bonus Scheme was an evolving program. For the whole of the plaintiff’s employment up to the end of the FY 2019, there was no single document shared between the parties which established the terms of entitlement to and of payment to the plaintiff under the Bonus Scheme.

43. Those documents show that the defendant company adopted a purpose of profit sharing as an incentive for employees based on an endeavour to achieve a fair distribution. Further, the Minutes of the Management Meeting of 21 June 2004 show that the board appreciated, even before the plaintiff was invited to enter the Scheme, that it and the proposed Rocket Model were flawed to the extent that where the participant employee achieved revenue levels below the Costs Bar such that their own costs plus their share of the companies overheads was not covered by the revenue they brought in, the Scheme did not leave funds to cover those shortfalls. This necessarily meant that short falls were shared among the other participant employees in a sense that the Costs Bar would rise in order for the defendant to achieve the profit to distribute. I raised this with Counsel for the parties in closing submissions and they agreed.

44. In FY 2020, when the defendant withheld payment of the fourth instalment of the Bonus previously calculated by the defendant as the plaintiff’s Bonus on revenue he achieved; calculated on the basis of FY 2019, the plaintiff was in that situation. The revenue he had brought in fell substantially below his Costs Bar. This had occurred previously in FY 2014 and FY 2016, but the defendant had not withheld payment of his Bonus calculated on the basis of the revenue he brought in, in the preceding FY 2013 and FY 2015 respectively. The defendant’s refusal to pay the final instalment of the plaintiff’s Bonus calculated on the basis of his FY 2019 performance, was on the evidence, a new step. The defendant never previously refused to pay the Bonus either in part or in whole.

45. The plaintiff did not put his case on the basis that the defendant by its executive board, did not have a discretion to vary the Bonus Scheme. This was not surprising because obviously the executive board could decide on the business plan of the defendant from time to time. The plaintiff conceded that the board exercised discretions as to items falling under the Costs Bar. The plaintiff conceded that, although he was unaware of it at the time (and there is no evidence that it was communicated to him by the defendant) in the course of these proceedings, he discovered that in FY 2017 his Bonus under the Scheme was reduced both by subtraction of $11,317.59 being the sum by which his vehicle related expenses exceeded his car allowance in the FY 2016 during which earlier financial year he had not achieved revenue exceeding his Costs Bar. What is significant, for purposes of determination of this issues, is that for all of the years between FY 2006 and FY 2019 inclusive, the defendant communicated to the plaintiff the structure of the Bonus Scheme, as informed to him by the letter of 26 September 2006 and by his conversation with Mr Mills at that time when his participation in the scheme commenced and by his experience of the subsequent performance of the Bonus Scheme. The defendant’s act of recovering the vehicle related expenses excess as it did, was only a debit against the amount of Bonus which was in fact paid. The fact of that account reckoning activity does not support finding that the defendant might or could withhold payment of the plaintiff’s Bonus which entitlement had accrued to him in the preceding financial year. That the Bonus was paid is contrary to so finding.

46. The evidence to which I know come, confirms that the structure of the Bonus Scheme as communicated between the parties and as paid to the plaintiff throughout the 16 years of his employment up to the arising of this dispute in 2020, was clear and certain:

1. Mr Mills could not recall but did not contest the content of his conversation with the plaintiff in about June 2005, on his informing the plaintiff of the nature of the Bonus Scheme set out in the plaintiff’s first affidavit at paragraph [9], save for his unimportant denial that he told the plaintiff that the Scheme was a creation achieved in collaboration with his wife.

2. The only document of the structure of the scheme communicated by the defendant to the plaintiff was the defendant’s letter of 26 September 2006 entitled “Process for payment of 05/06 IAS Profits” which, whilst expressly referring to the “current profit distribution” for FY 2006 and providing for payment of the Bonus by two instalments, was otherwise consistent with the terms of the structure of the Bonus Scheme, as performed in the evidence of the plaintiff and Mr Mills. The evidence shows that it was processed on the basis of distribution of 85% of the defendant’s financial year profit from revenue after finalisation of overheads under the Costs Bar.

3. The evidence of the plaintiff and of Mr Mills is that the Costs Bar of a participant employee in any financial year was the dollar value determined by the board to cover the personal cost of that employee to the business and their share of overheads. Personal costs included: salary, superannuation, vehicle allowance plus extra vehicle costs above the allowance, net leave provision expenses, salary proportional pro-rata amount of workers compensation and pay roll tax, and sundry expenses.

4. The defendant’s overheads included directors fees, general staff bonus, shareholder distribution and usual expenses of business.

5. The plaintiff’s Bonus entitlement was calculated only on a financial year basis, to be paid by instalments in the following financial year.

6. In each year the board determined on the basis of the costs and distributions identified above (from the letter of 26 September 2006) the Costs Bar.

7. For every $1,000 the plaintiff earned above the Costs Bar in any particular year, the plaintiff was allocated one Bonus Scheme point.

8. At the end of each financial year, the points earned by all participants in the defendant’s Bonus Scheme were aggregated.

9. 85% of the defendant’s profits above the Costs Bar in the respective financial year were distributed to the participants in the Bonus Scheme whose revenue had exceeded their Costs Bar in the financial year.

1. The proportion of the defendant’s profits payable to the plaintiff in respect of each financial year would be equivalent to the portion of the points earned by him relative to the total points earnt amongst all participants in the Bonus Scheme in that financial year; and

2. The Bonus was be paid in four consecutive quarterly payments in the following financial year as calculated by Ms Blackley, the defendant’s financial controller – see plaintiff first affidavit LD-3 and LD-4 for Ms Blackley’s communication to the plaintiff on 25 February 2020 of the before payments to be made to him between September 2019 and May/June 2020 of his Bonus in the total sum of $312,545 – the final payment of $94,452 being the amount unpaid and sued for.

3. Consistent with the defendant’s letter of 26 September 2006, throughout the whole of the relevant period from 2006 until the defendant’s refusal to pay the fourth instalment of the plaintiff’s Bonus calculated for FY 2019, the defendant, did not deduct the plaintiff’s shortfall of revenue below the Costs Bar in any other financial year or refuse to pay the whole of the Bonus.

47. The plaintiff conceded that he was not “privy” to the board’s calculations for determination of the Costs Bar or “how the external accounting was used to confirm the companies financials” but continued in his employment on the assumptions arriving from the above communication to him of the structure being as it continued to be distributed to him and with no awareness of entitlements of or distributions to other participants in the Scheme: T 77. 40 – 47; T 78. 4 – 6; T 79.20 – 80. 21 and T 86. 4 – 7.

48. The affidavit of Mr Mills did not challenge those terms of the structure of the Bonus Scheme as it operated in relation to the plaintiff up to the time the defendant withheld the fourth payment in 2020. The following is the important passage of Mr Mill’s oral evidence conceding those terms and that structure: T 101. 20 – 102. 25

Q. A component of the IAS bonus scheme is what SCT refers to as “the cost bar”, correct?

A. Yes.

Q. That is calculated for each employee depending on their overheads for the year, correct?

A. Not quite like that but yes, in essence, but it’s - it’s a little more complex than that.

Q. But it includes things like their salary, their superannuation contributions, their vehicle allowance and their leave entitlements?

A. Correct.

Q. For every $1,000 the employee earns for SCT above that calculated cost bar, they’re entitled to a point. Correct?

A. Yes.

Q. At the end of each financial year all employees’ points are tallied, correct?

A. Yes.

Q. Each employees’ bonus is determined according to how many points they have accrued relative to the other employees. Correct?

A. It’s a little more complex than that but, yes, in essence.

Q. If an employee does not exceed that calculated cost bar in a given financial year, then they’re not entitled to a bonus for that year, correct?

A. Correct.

Q. And they won’t receive a bonus for that year.

A. Correct.

…………….

Q. Payment of the bonus, Dr Mills, depends on an employee exceeding the cost bar that’s been fixed in a particular financial year?

A. Yes.

Q. Payment of the bonus is also in exchange for an employee exceeding the cost bar that’s been fixed in a particular financial year?

A. Yes.

49. There is nothing in the evidence of the other witness for the defendant, Mr MacGregor, to the contrary. Even if that were the case, I would prefer the evidence of the plaintiff and Mr Mills on the questions of contract and assumptions upon which the plaintiff sues. This is because Mr Mills was, on the whole of the evidence, the architect of and the administrator of the Bonus Scheme and it was him with whom the plaintiff dealt.

50. In my opinion, the evidence confirms both expression and conduct which evidences the commercial essentials in place of the necessary structural terms for and by which the plaintiff and the defendant went about their commercial business of his employment. In my opinion, the evidence provides a clear basis of a manifest mutual consent. Applying the principles referred to by Leeming JA in Shar v Liu [2002] NSWSC 325 at [84] above, in particular his Honours approving reference to passages of the Judgment of Allsop J in Branir Pty Ltd v Owston (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833, I am persuaded that the “essential question”, is answered in the affirmative – by their conduct, including what was communicated between them and what was not said and including their respective evident aims and expectations, an agreement or understanding speaking their intention to be legally bound to the essential elements of the contract of the Bonus Scheme is to be found.

51. When this was put as a preliminary view to counsel for the defence during closing submissions, he properly conceded for the defendant that there is nothing in the evidence to be found of any specific discretion of the nature “We are entitled to not pay you a specific bonus once it has been determined to pay you that bonus.”: T 149. 5. This fact distinguishes this case from the facts in Silverbrook. The plaintiff is not limited to recovery of damages for loss of a chance, as the plaintiff was in Silverbrook. Here the parties are shown to have assented to a sufficiently clear regime identifying the contract terms of the Bonus Scheme.

52. In closing submissions, the defendant made two responses to the point I just made:

1. The evidence supports that the board of the defendant possessed “broader discretions that refer to questions – for example – of fairness. And broader discretions relating to how the amounts have been determined.”; and

2. That because the plaintiff conceded that he didn’t change his manner of working in response to the offer of the Bonus Scheme, it was an arrangement which was not a legally binding promise, contract or there was not between the parties a legally enforceable assumption.

53. The simple response to the defendant’s first argument above is that the broader considerations of fairness were firstly matters of an evolving contemplation and consideration at the defendant’s executive meetings, but those considerations were not communicated to and were entirely unknown by the plaintiff. They did not form part of the contract and/or mutual assumption between the parties. Those concepts of fairness were uncertain and illusory.

54. I reject the defendant’s second argument above for the following reasons:

1. The above referred to evidence of communication and conduct of dealing under the Bonus Scheme between the parties establishes that during the FY 2006 and thereafter the performed according to the terms of the contract on or about 29 September 2006; and

2. I found that that the plaintiff remained in the defendant’s employment working to achieve revenue above the Costs Bar which was both consideration under the contract and performance communicating ongoing acceptance of the terms of the Bonus Scheme being acceptance of the terms of that arrangement as it continued: see Leeming JA in in Shar v Liu at [74]

55. In my opinion, on the whole of the evidence, the defendant was contractually bound to pay to the plaintiff the fourth instalment of the Bonus to which he was entitled, being a right, which crystallised in FY 2019, which determination by the defendant was communicated to him by Ms Blackley on 25 February 2020 (plaintiff affidavit one LD-3 and LD-4). The plaintiff was entitled to receive payment of $94,452 in May/June 2020 as he was then informed.

56. Before leaving the evidence on the Bonus issue, I would add only the observation that the communications and correspondence between the parties commencing with the plaintiff’s email to Mr MacGregor, dated 9 July 2020 is not inconsistent with the plaintiff’s entitlement sued for. Indeed, Mr MacGregor’s email to the plaintiff 21 July 2020 at 3:01 pm (annexure D to the affidavit of Mr MacGregor made 31 March 2022) spoke of “….the additional constraint of quarantining the balance of the final payment (subject to FY 20 and FY 21 finalisation) is considered fair and equitable….”, by which words, Mr MacGregor conceded in that he did not challenge that the plaintiff’s entitlement to the final payment had earlier crystallised.

57. What occurred in June 2020 was that the defendant unilaterally changed position, in breach of the contract and contrary to the assumptions which were mutual between the parties pursuant to which the plaintiff’s entitlement to the FY 2019 Bonus had crystallised; by attempting to introduce a new term or assumption to the effect that the defendant could withhold part of the Bonus previously earned, in the event of the plaintiff’s revenue falling below his Costs Bar, such withheld sum to be paid by the defendant to the plaintiff on the event of the plaintiff next being entitled to payment of Bonus he having exceeded the Costs Bar of a subsequent financial year.

58. Because I have found that the plaintiff’s FY 2019 Bonus was a contractual entitlement; for completeness I reject the defence argument that the defendant retained a discretion to withhold the fourth instalment payment. Not only did that unilateral act contravene the contract which I have found, it cannot be found to be in accordance with a discretion described in the evidence. The defendant does not put that it was a term of the contract that it held a discretion which is described on the evidence in terms certain such as to be a term of the contract. The defendant presses for a broad discretion related to its executive level business plan to protect viability of the company and to profit share through the staff bonus scheme and through the Bonus Scheme. The plaintiff was a participant in the latter scheme.

59. If I am wrong in regard to my findings of contract; then because the withholding of the fourth payment was contrary to 16 years of dealing between the parties, the proposition that the defendant could unilaterally withhold a payment to which the plaintiff’s entitlement had already crystallised, characterises the proposed discretion to withhold payment as capricious or arbitrary. This is because the defendant’s argument in relation to discretion amounts to not more than its unilateral, free choice as to whether or not to perform its contractual obligation to pay the Bonus which was assessed against set objects. See Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357 per Allsop P (Beazley JA agreeing) at [5] – [6].

60. Although it is unnecessary given my finding of contract, I wish to expand on my reasons stated for the plaintiff’s entitlement to succeed also on the basis of common assumption and conventional estoppel. To succeed in this cause of action, the plaintiff does not have to convince the court that the original terms of contract persisted. This is because estoppel by convention requires the finding which I make, that the parties adopted an assumption as to the conventional basis of their relationship, being that the plaintiff’s entitlement to payment of the bonus was as calculated on the criteria, and would be paid according to the prescription for instalment payments in the email to the plaintiff attaching Mr Blackley’s calculation and informing the plaintiff of the sum and timing of each of the four instalments to be made in FY 2020. In Con-stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226; [1986] HCA 14 at [22] the court said:

….Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. The existence of an estoppel based on a convention between the parties has often been recognised: Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 at p 547; Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, at pp 657, 675 – 677; Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406, at pp 430 – 431; Amalgamated Investment & Property Co Ltd (In Liq.) v Texas Commerce International Bank Ltd (1982) QB 84, at pp 121, 126, 130 – 131; Spencer Bower and Turner, Estoppel by Representation (1977) 3^rd ed., at pp 157 – 177.

61. In this case I have found that over the 16 years of the plaintiff’s employment with the defendant, the above observed assumptions were in fact adopted by the parties as the conventional basis of their relationship; see Dabbs v Seaman [1925] HCA 26; (1925) 36 CLR 538 at p 549. In Moratic Pty Ltd v Laurence James Gordon and anor [2007] NSWSC 5 at [30], Brereton J referred with approval to observations of Lord Denning MR in Amalgamated Investment & Property Co Ltd (In Liq.) v Texas Commerce International Bank Ltd (1982) QB 84, at p 121, which in my opinion are applicable here. The principle is that if parties to a contract by their course of dealing put a particular interpretation on its terms, on the faith of which each to the knowledge of the other acted and conducted their mutual affairs they are bound by that interpretation just as much as if they had recorded it as a variation of the contract. Lord Denning MR continued, with reference to Grundt v Great Boulder Pty Gold Mines Ltd, to explain that “such parties had by their course of dealing adopted a conventional basis for the governance of their relations and were bound by it – because, having regard to the dealings between the parties it would be unjust to allow either to insist on the strict interpretation of the original terms.”

62. As I have found in this case, the parties by the written letter of 26 September 2006, what was spoken by Mr Mills to the plaintiff and the course of calculation and payment of Bonus Scheme entitlements, was such a course of dealing.

63. Accordingly, if I be wrong in my determination pursuant to contract, in my opinion the plaintiff is entitled to succeed on the basis that the defendant is estopped from refusing to pay the fourth instalment when it fell due. I reject the defendant’s closing submission (at [42]) that there is no evidence the defendant adopted any assumption held by the plaintiff as to the terms of their legal relationship. The subjective state of mind of the executive board is not the test. By it’s performance under the Bonus Scheme and the making of payments on that regular basis, the defendant did adopt the common assumptions.

THE REASONABLE NOTICE CLAIM

64. My earlier consideration of principles applicable here and of the construction of s 117 leads me to reject the defendant’s argument that section 117 Fair Work Act fills a contractual “gap” where, in a case such as the present, there was no express term in the contract of employment prescribing the period of notice on termination. I have found that in the absence of an express term of contract prescribing the reasonable notice period, on the Safarty case principles, an implied term of reasonable notice is to be found.

65. On 19 July 2021 the defendant informed the plaintiff in writing that as part of a proposed restructure due to the economic impact of COVID-19, his role had been identified as one which the defendant proposed to make redundant. The letter stated “The loss of international business, the ongoing inability of SCT to work internationally, and the ongoing and protracted lockdowns and restrictions to domestic travel have taken a heavy toll with no clear end in sight.” (MacGregor affidavit exhibit I). The letter invited the plaintiff to a meeting with the defendant’s Human Resources personnel in order to permit the plaintiff the opportunity of feedback. On 23 July 2021, the plaintiff was advised; in confirmation by Mr MacGregor, that his role had been made redundant. The letter of same date from the defendant to the plaintiff again advised that his termination of employment and redundancy was on the basis of the turndown of revenue experienced by the defendant in the economic conditions at the time. It also confirmed that considerations of redeployment of the plaintiff did not meet with the defendant’s business objectives. On termination the defendant paid to the plaintiff:

1. Outstanding wages for the period 1 July 2021 to 23 July 2021 - $8,218.65

2. Five weeks salary in lieu of notice - $12,086.25

3. Twelve weeks salary as redundancy pay - $29,007.00

4. Annual accrued leave (including leave loading) - $4,203.60, plus long service leave entitlements - $33,197.90

5. Outstanding superannuation entitlements - $821.86

6. Less tax withheld on items (1 – 4) - $14,013.00

66. This equated to a final payment made on 29 July 2021 in the sum of $72,622.09 plus superannuation of $821.86.

67. The common ground is that the plaintiff’s employment was not terminated on the basis of his performance. The plaintiff was one of five employees of the defendant who were made redundant around the same time, which included two senior engineers (of which he was one), one technician, one accounts team member and one fitter and machinist.

68. The plaintiff is presently 59 years of age. He holds tertiary qualifications in geology and in engineering – a Bachelor of Science majoring in Geology (1985) and a Graduate Diploma in Geotechnical/Mining Engineering (2004). Prior to his commencing employment with the defendant in 2004 he had progressed from the position of Junior Geologist to the position title Senior Project Geologist with Mcelroy Byran Geological Services Pty Ltd. In 2005, his employment title with the defendant changed to Senior Engineering Geologist and Senior Strata Control Engineer. Whilst working with the defendant, his duties and consultancy involved underground geology, geotechnical and hazard mapping, compilation of geological hazard plans for longwall mining operations, structural geological mapping, stratigraphy and sedimentology, strata control investigations and support design, roof fall investigation and remedial support design, design and installation of pore pressure monitoring systems, design and installation of geotechnical monitoring systems such as inclinometers and vibrating wire piezometers, mineral industry risk management, design and supervision of exploration programs, archaeological site investigation including on sacred indigenous sites, as well as training, mentoring and project management according to his senior geological engineering role. The common evidence is that the plaintiff enjoyed significant autonomy, freedom from day-to-day oversight and independence to manage his own time and activities. The defendant did keep a style of log recording work activity of the plaintiff as it did for its other employees.

69. The plaintiff claims that his role was of such importance to the defendant, particularly as he worked with large client projects of the defendant such as for BHP that he was instrumental in introducing new methodologies and that he exercised specialised and technical skills.

70. In his affidavit, Mr MacGregor deposed that during the plaintiff’s employment there were four other employees in the same job role as the plaintiff. Mr MacGregor also deposed that the plaintiff was not part of the defendant’s leadership team and did not have staff members reporting directly to him. In closing written submissions, the plaintiff put that Mr MacGregor’s evidence does not support finding that his role was not particularly specialised or technical within the defendant and that it is unremarkable that other persons within the defendant would have obviously been performing the same sort of work. I agree with that submission on the basis of the evidence in the hearing. The evidence is not that the plaintiff’s work was more specialised, technical or innovative of new methodologies than his peers within the defendant’s engineering and geology team. In my view it fairly paints the employment role of the plaintiff as a Senior Engineering Geologist and Senor Strata Control Engineer.

71. The plaintiff described the sharing of work between his peers, seniors and juniors whilst working with the defendant as a bit like a “dentist practice”. On the whole of the evidence I consider that an understandable analogy. His role was not unique.

66. There being no evidence from or about industry competitors of the defendant, the strong inference is that such competitors would employ like expert senior geologist engineering personel when participating in what was described as the strongly competitive market between service providers for work from mine operators. Mr MacGregor said that the plaintiff’s base salary of $125,697 was “entirely consistent with consulting professionals in the mining industry”: T 121. 12. There is no other evidence such as of salaries and earnings of comparable employees. In cross examination the plaintiff gave the following evidence, which I find persuasive amongst what is generally pretty vague evidence of the description of the degree of specialist, technical skills role which, for the purposes of assessment of the period of reasonable notice, weighs in consideration of his opportunity to find appropriate alternative employment: T 91. 10 – 31.

Q. Mr Daigle, I’m almost finished. I just wanted to ask you some questions about your role in the company. There were four senior engineering geologists in the company, were there, at the time of your departure. Would that sound right?

A. The number varied, that sounds approximate.

Q. And there were two geotechnical engineers?

A. There were two strictly geotechnical engineers I believe, yes.

Q. And there was a surveyor and two mining engineers?

HIS HONOUR: How many?

WITNESS: Individual labels of mining engineers - I didn’t actually believe we had a proper mining engineer. We had a surveyor, yes.

LATHAM

Q. Your role was essentially the same as the other senior engineering geologists, wasn’t it?

A. It was similar. We all had different specialisations.

73. The evidence leads me to conclude that the plaintiff, is a senior engineering geologist practicing in a field where every client’s needs are often determined by mine site conditions. His being a professional role, training and skill development is ongoing. The evidence does not cause me to find on the balance of probabilities that the plaintiff’s professional consultancy role was so refined as to make consideration of his opportunity of employment in the industry marketplace, to be in any particular way refined or limited. On the vague and may I say the paucity of evidence available to me, the evidence does not bring me to consider other than availability for employment of a Senior Engineering Geologist and Senior Strata Control Engineer in that employment market within application of the principles, for assessment of sufficient notice on termination.

74. Due to his illness and medical treatments, the plaintiff took 102 days of paid sick leave between July 2019 and May 2021. When assessing his work performance, allowance must be made for his illness on those latter years. There is no evidence before me which gives me to understand the extent of the ongoing effect of his ongoing illness upon his ability to continue at full or partial energy within his role. The affidavit of Mr Mills refers to repeated medical assessments of the plaintiff having found him to be fit for work during the period of his illness. That evidence is, with respect, particularly vague.

75. The evidence in the case does not include expert opinion evidence regarding vocational placement of the plaintiff in the market of his employment. There is, for instance, no occupational therapist report assessing as to his abilities and impairments toward fulfilling roles available to him in the market. There is no expert medical evidence at all to describe how his illness affects and how it will continue to affect his workplace abilities. I therefore cannot place much weight on his illness when considering what would be a reasonable notice period.

76. I repeat, it is common ground, that the plaintiff was not terminated for poor performance. He had an exemplary work history with the defendant. Only one work, health and safety issue is to be found in the evidence, which given the well-known structure of compliance requirements of mining sites, does not satisfy me that the plaintiff was other than a very careful and professional operator in his senior consultancy role with the defendant.

77. In the final years of employment with the defendant, having exceeded the Costs Bar in all but two of his final years of employment, the plaintiff’s performance was as follows:

1. FY 2019 exceeded his Costs Bar of $269,240 by $343,808;

2. FY 2020 fell short of his Costs Bar of $250,363 by $136,415: and

3. FY 2021 fell short of his Costs Bar $228,380 by $108,265. (affidavit Mills at [37])

78. Although it was not addressed by the parties, it is obvious that during the pandemic years of 2020 and 2021 the defendant lowered the Costs Bar for the plaintiff. Whether or not that indicated the defendant’s appreciation of lower revenue earning by fee earners because of the pandemic conditions was not addressed by the parties. The court was not informed of the performance of other participants in the Bonus Scheme against their Costs Bars for the same period. Whilst Mr MacGregor deposed in his affidavit at [20] “in the circumstances, I believed that paying Mr Daigle a further ($94,420.00) when his financial performance was so poor that his revenue generated ($113,948.00) was about $136,000 less than his cost to SCT for FY 2020, would undermine the integrity of the IAS”; I find it a comment against which I do not have the evidence of performance of other Bonus Scheme, participant Senior Engineering Geologists to weigh.

79. The whole of the evidence, including competition for winning of work to the defendant and that shortly before his termination, the plaintiff was able to win some substantial contracts for the defendant, infers a pool of comparable consultancy service providers competing for the work from miners.

80. Annexure P to the affidavit of Mr MacGregor is a SEEK (an employment source platform) search performed by the defendant’s solicitor on 29 March 2022. The evidence did not examine any of the advertised positions and therefore their broad descriptions give little insight to the seniority of the placements for Geotechnical Engineer advertised. Given that in the plaintiff case, there is sparce evidence, of his energies to take up the opportunities available for him in the marketplace; the bar for persuasion by the defendant of the availability of appropriate employment positions is not to my mind a high one. That said, on that single day only five months ago, in the Sydney – Wollongong region four of the positions were labelled “Senior” Geotechnical Role and four of them used descriptives inferring that the position offered required experience or, a disciplined engineering specialist.

81. In his case, the plaintiff in his oral evidence did not extend beyond the following: first affidavit at [58] – [59]:

[58] Due to the specialised and technical nature of my expertise and role, which I have developed during my approximately 16 years of employment with the defendant, it is now difficult for me to find alternative employment in the same or similar role within another organisation.

[59] Since 23 July 2021 the date of termination, I have been unable to find employment in the same or similar role within another organisation.

82. As I put to the plaintiff during closing submissions, those paragraphs are subjective, self-serving and without content of applications made and otherwise his efforts to win appropriate employment and his lack of success.

83. Subsequently the defendant tendered four of the plaintiff’s invoices for separate pieces of work since his termination. Excluding motor vehicle expenses and GST, the plaintiff billed a total of $13,600. He charged $200 per hour. The invoices are dated 26/11/2021, 08/03/2022, 04/05/2022 and 30/06/2022. In addition to the absence of expert opinion evidence assessing the opportunity of the plaintiff to gain appropriate employment in his employment market; the plaintiff did not give evidence of applications made for positions, acceptance or rejection of applications or any detailed evidence at all of his attempts to but failures to achieve other employment. He did not give evidence, even in regard to those four single placements of why he was only able to contract single pieces of work and not more regular employment. He did not give evidence of how he came upon those four pieces of work.

84. The plaintiff evidence did not provide a case available for test in cross examination other than his acknowledgment that he hoped to obtain more work in the future.

85. Adopting the summary of principles governing the determination of reasonable notice employed by Judge Manousaridis in Ertekin v Euro Natural Stone Pty Ltd [2021] FCCA 512 at [58], with which statement of principle the parties did not during closing submissions seem to disagree, the evidence in this case makes evaluation of the plaintiff’s opportunity to find appropriate employment in the discretionary judgment involved, a difficult one. The principle is:

To enable the recipient of the notice sufficient time either to seek other similar employment or employ a replacement. The length of reasonable notice is assessed at the time the notice is given by reference to five critical factors. First, the length of the service; the longer the service the longer the notice required. Second, the employee’s age, which is a particularly important factor for employee’s aged over 50. Third, the character of the employment; that is, the relative seniority of the position within the business, the responsibility attached to the position, whether the employment requires specialised qualifications, experience or technical skills, the employee’s remuneration and nature of engagement. The higher the status, the longer the period of notice that tends to be awarded. Fourth, the availability of similar employment or the availability of replacement employment. Longer notice will be justified when the circumstances or position of the employee make finding similar employment harder, such as when the employee has a particular or narrow skill set. Or suffers from ill health, or needs to relocate to find employment, or there is high unemployment. The employer’s financial circumstances are not, however, relevant in determining the length of the notice.

86. Employing those considerations here:

1. Plaintiff’s 17 years of employment with the defendant was long;

2. The plaintiff’s age of 58 or 59 years at the date of termination places him in an age group where full time employment opportunities might be limited. I only say might, because as I raised with the parties, that age might be a significant disadvantage in the market for some employment types but not for others. A lawyer or a surgeon in their late 50s might be considered at the peak of their skills;

3. The plaintiff as a Senior Engineering Geologist was working within a highly technically skilled team of peers, without there being evidence persuading me of a personal, limited field within the consultancy of his professional calling within the mining industry;

4. The plaintiff’s skills are only as technical as is the professional calling of Senior Engineering Geologist. He was not an executive, Senior Manager or even a Team Leader during his employment with the defendant;

5. The only evidence is that the plaintiff’s pay was normal before his Senior Consultancy;

6. The description of competition to win work for the defendant and the plaintiff’s success in winning substantial new contracts for the defendant near the end of his employment, infers a field of like positions because he was competing with senior engineering consultants employed by the defendant’s competitors;

7. The evidence does not persuade me of a peculiar or narrow skill set within his employment role of Senior Engineering Geologist; and

8. For the reasons given, the effect, if any, of the plaintiff’s ill health is hard to assess in the consideration of reasonable notice period. For instance, there is no claim by him of an impaired ability to work within the Sydney – Wollongong region and there is no evidence describing specific disabilities for duties of his role.

87. Both parties referred me to case law, however, every case must be decided on its own facts.

88. The plaintiff closing submission put that 24 months was the reasonable notice period: at [65] – [66].

89. The defendant closing submission put;

[56]….even were a Court to find reasonable notice did exist and was to be paid; the Court would find the appropriate amount was 6 months. Despite his own views Mr Daigle was no more senior than the other senior engineering geologists in the company. He had no direct reports. While his role was important, it was not vital.

[57] further, Mr Daigle in oral evidence that he had gained work since his redundancy (reference if made to the exhibit 1 invoices). They show four amounts of some $4,000 being paid. Mr Daigle was hopeful the work would continue. (I note that $4,000 is a rounded amount and fails to deduct GST and motor vehicle expenses).

[58] the writer does not know of any case whereby a person was granted more than 12 months reasonable notice (except for Jager which was overturned on appeal). To provide more than 12 months reasonable notice would respectfully lead the court into error.

90. The plaintiff in closing written submissions annexed a table of authorities entitled “Reasonable notice awards in excess of 12 months”. While those cases have assisted with the court’s determination of the reasonable notice period, I am not persuaded that any of those decisions is instructive, given the facts of this case. In the large majority of the cases to which I was referred, the individuals held positions in which they were required to make executive decisions and manage large groups of people. It is uncontentious to indicate that years of service is a significant factor in determining reasonable notice.

91. Doing the best I can with the evidence and bearing in mind the range of periods of notice determined on the different facts in other cases, it being the plaintiff’s burden of proof; I assess the reasonable notice period at 8 months.

92. The defendant, in closing written submission (at [59]) claims deduction from the amount of reasonable pay in lieu of notice of the following sums:

1. The amount of 5 weeks notice paid;

2. The amount of severance pay of 12 weeks paid.

93. The plaintiff concedes the first but contests the second of these deductions. At the date of termination the plaintiff’s remuneration package included gross weekly salary of $2,417.25. The defendant’s liability for damages arises because it breached the implied term for reasonable notice under the contract of employment. The plaintiff’s entitlement is to compensation for the benefits he would have derived had the contract been performed by provision of reasonable notice; see Black v Brimbank City Council (1998) 152 ALR 491 at [32]; Furey v Civil Service Association of WA (inc) [1999] FCA 1492 at [32]. The evidence does not address whether or not the redundancy payment would have been paid regardless of the reasonable pay in lieu of notice. Redundancy pay is generally considered to be distinct from pay in lieu of notice: Heldberg v Rand Transport Pty Limited [2018] FCA 1141 at [112] – [114]. In my opinion, the evidence does not persuade me that the redundancy pay component it is to be deducted.

94. I assess damaged on account of entitlement to reasonable notice on termination as follows:

1. 8 months (35 weeks) wage calculated at $2,475.25 per week: $84,603.75

2. Payment in lieu of notice deduction: $12,086.25

3. Work invoiced in 8 month period post redundancy deduction: $8,734.00

4. Balance: $63,782.50

CAR ALLOWANCE – CROSS CLAIM

95. The defendant’s letter of 1 June 2004 contained the offer of employment which was subsequently accepted by the plaintiff. Under the subheading “Salary and Conditions” the letter provided:

“A fully serviced diesel tray top Toyota Land Cruiser will be provided for work and personal use on a novated lease basis”

96. The common evidence is that a motor vehicle expenses allowance was included in the plaintiff’s salary package from year to year and that the allowance increased over time. The common evidence is that in each of the following financial years the plaintiff exceeded his Costs Bar and the sum of his received excess over his motor vehicle expenses allowance was deduced from his bonus, before it was paid: 2011; 2012; 2013; 2015. In the FY 2016 the plaintiff did not exceed his Costs Bar and was therefore not entitled to a Bonus for that financial year. He had exceeded his motor vehicle expenses allowance by $11,317.59. In the following FY 2017, the plaintiff did exceed his Costs Bar and the defendant deducted from his Bonus before payment both the plaintiff’s excess over his motor vehicle expenses allowance for the FY 2016 and as occurred in FY 2017. The only year in regard to which the defendant did not recover the excess of motor vehicle expenses paid to the plaintiff over his motor vehicle expenses allowance was FY 2014.

97. That in each of those financial years except for expenses incurred in the FY 2014, the recovery was by way of deduction from the plaintiff’s Bonus, in my opinion, does not detract from the straightforward contractual proposition that the excess of motor vehicle expenses received by the plaintiff over his contracted car allowance was a benefit received by him beyond his contractual entitlement. It was at the discretion of the defendant if and when it sought to recover it, which recovery it did make in all the years except for FY 2014. Indeed Mr Mills said that one reason the defendant tried to recover those excesses from employees’ bonus payments was because there was a tax advantage in doing so.

98. The parties contested whether or not the plaintiff had been informed by Mr Mills or Mr MacGregor that he had to repay the excess. I have already acknowledged that the plaintiff was clear in his evidence, which I accept, that he was not aware of the motor vehicle allowance excess having been deduced from his bonus payments in those prior years. But that cannot distract from the simple contractual proposition that it was recoverable and had in fact in all but one year been recovered, by the defendant. The evidence of the defendant’s recovery of motor vehicle expenses received by the plaintiff in excess of the annual allowance is contrary to the plaintiff’s argument that there was no cap on that allowance in the terms of contract.

99. On the termination of his employment, the excess, in the sum of $31,408.00 is a benefit had by the plaintiff to the use of the defendant and is a debt repayable. If I am wrong that this sum is refundable on a contract basis; then the plaintiff is estopped from denying his liability because the course of recovery of excess of motor vehicle allowance over time established a common assumption being a convention between the parties: Con-stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226.

100. The plaintiff is entitled to damages as follows:

1. Bonus payment in the sum of $94,452.00

2. Payment in lieu of notice in the sum of $63,782.50

3. Excess above car allowance deduction in the sum of $31,408.00

4. Balance: $126,826.50

101. The plaintiff is entitled to interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW). Calculated on the whole of the damages for the whole of the period from 23 July 2021. I allow for the sum of $5,729.08

ORDERS

102. Judgment for the plaintiff against the defendant in the sum of $132,555.58 inclusive of interest.

103. Defendant to pay the plaintiff’s costs of the proceedings.

**********

Decision last updated: 20 August 2022