Mimmo v Fernando

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2013 04746

MATT MIMMO	Plaintiff
v
WARNAKULASOORIYA HERBERT EMMANUWEL FERNANDO	Defendant

S CI 2015 02816

WARNAKULASOORIYA HERBERT EMMANUWEL FERNANDO	Plaintiff
v
AMR HEWITTS PRINTPACKAGING PTY LTD	Defendant

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JUDGE:	CAMERON J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 April - 15 April, 19 April, 22 April 2016
DATE OF JUDGMENT:	26 August 2016
CASE MAY BE CITED AS:	Mimmo v Fernando
MEDIUM NEUTRAL CITATION:	[2016] VSC 510

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PRACTICE AND PROCEDURE – Self represented litigant – Lay person acting as counsel – Browne v Dunn (1893) 6 R 67 – Standard of proof – Evidence Act 2008 s 140.

CONTRACT – Whether payment was made pursuant to an oral loan agreement – Whether payment was made pursuant to alleged oral agreements for performance of services.

CONTRACT – EMPLOYMENT – Whether the employment agreement was terminated by way of summary dismissal – Whether the employee was suspended – What were the grounds for termination – Was there any breach of fiduciary duties – Can the employer rely on matters not communicated to terminate the employee – What were the employee’s legal entitlements under his employment contract – Was reasonable notice period required alternatively what is the appropriate quantum of damages.

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APPEARANCES:	Counsel	Solicitors
For Matt Mimmo and AMR Hewitts Printpackaging Pty Ltd	Ms C Gobbo	Cornwall Stodart
For Warnakulasooriya Herbert Emmanuwel Fernando	Appeared in person and represented by his daughter, Ms Kulathi Thisara Fernando

TABLE OF CONTENTS

What is this case about?.................................................................................................................... 1

Mr Fernando’s representation.......................................................................................................... 2

What is claimed in the Supreme Court Proceeding?................................................................... 3

What is claimed in the County Court Proceeding?...................................................................... 6

Matters for determination................................................................................................................. 9

Legal principles................................................................................................................................ 10

Rule in Browne v Dunn............................................................................................................... 10
Standard of proof........................................................................................................................ 12
Reasonable period of notice upon termination...................................................................... 13
Summary dismissal.................................................................................................................... 16
Ready and willing to perform................................................................................................... 19

Issues for determination by the court........................................................................................... 19

Was a loan agreement entered into on around 22 April 2013 or was Mr Fernando simply being paid his ‘dues’ for extra work performed?....................................................................................... 20

Mr Mimmo’s case.............................................................................................................. 20
Mr Fernando’s case............................................................................................................ 23
Accounting services agreement......................................................................... 24
Commercial Ready Grant agreement................................................................ 25
Export Grant agreement...................................................................................... 27
2008 Business Review Grant............................................................................... 28
Re-zoning project agreement.............................................................................. 28
The Variation agreement..................................................................................... 28
Motor vehicle agreement.................................................................................... 28
2011 Business Review agreement...................................................................... 29
Lean Manufacturing Systems and Methodologies agreement...................... 30
Manufacturing Technology Grant agreement.................................................. 30
The final agreement............................................................................................. 31

Analysis............................................................................................................................... 31
Other documents.................................................................................................. 33
(a) Final Price Adjustments sheets..................................................................... 33
(b) The claims sheet.............................................................................................. 34
(c) 25 April letter................................................................................................... 36
Demands for repayment of the $700,000 payment.......................................... 40

Conclusion as to the $700,000 payment......................................................................... 43

Who were the parties to the loan agreement?........................................................................ 50
What were the terms of the loan agreement?.......................................................................... 51
Did Mr Fernando breach his employment contract with AMR and/or his fiduciary duties to AMR?........................................................................................................................................................ 54

Changes to AMR’s ASIC company records................................................................... 54
The Heidelberg five-colour press (the printer)............................................................. 56
Credit cards........................................................................................................................ 58
Wages, directors’ fees between 2 May and 11 July 2013............................................. 60

What was the status of Mr Fernando’s employment between 11 July 2013 and 10 February 2014? Is there any amount owing to Mr Fernando for the period between 11 July 2013 and 10 February 2014?........................................................................................................................................................ 61

Was Mr Fernando’s employment terminated on 11 July 2013 or was he suspended? 66
Can AMR rely on matters not communicated to Mr Fernando on 11 July 2013 as grounds for termination?........................................................................................................................ 68
Conclusion as to the status of Mr Fernando’s employment between 11 July 2013 and 10 February 2014...................................................................................................................................... 71

What was the amount of accrued entitlements owing to Mr Fernando after the employment agreement was terminated?....................................................................................................... 73
What is a reasonable period of notice for termination of the employment agreement alternatively, what is an appropriate measure of damages in this case?................................................... 78

Conclusion and decision................................................................................................................ 81

HER HONOUR:

What is this case about?

AMR Hewitts PrintPackaging Pty Ltd (AMR) is a small printing business located in Tullamarine. It was established in 1985.[1]
[1]Transcript, 5 April 2016, 22.

Mr Matt Mimmo (Mr Mimmo) is a director of AMR.

Mr Warnakulasooriya Herbert Emmanuwel Fernando (Mr Fernando) was employed by AMR as an accountant in February 2002. Mr Fernando ceased working for AMR in 2013. There is some controversy in relation to Mr Fernando’s title and responsibilities over the extensive period of his employment with AMR.

On 11 September 2013, Mr Mimmo commenced proceeding number S CI 2013 4746 against Mr Fernando in which he claimed the sum of $700,000 together with interest and costs pursuant to an alleged loan agreement (the Supreme Court Proceeding).

On 10 June 2014, Mr Fernando commenced proceeding number CI-14-02804 in the County Court of Victoria against AMR (the County Court Proceeding) in which Mr Fernando claimed:

(a) $138,421 on account of unpaid remuneration;

(b) $474,586 on account of damages for breach of notice; and

(c) $77,485 on account of accrued long service and annual leave entitlements.

The County Court Proceeding was uplifted to this court by consent and the proceedings are to be heard and determined together.[2] Notwithstanding the uplift, for convenience, I will refer to this matter as the County Court Proceeding.
[2]Proceeding number S CI 2015 02861; Orders of the Honourable Justice Almond made 11 September 2015 [2].

Mr Fernando’s representation

Mr Fernando was self-represented. Mr Fernando has a speech impairment. The court was urged to allow his daughter, Ms Kulathi Thisara Fernando (Ms Fernando), to speak on his behalf in these proceedings. This application was opposed by Mr Mimmo and AMR. The court ruled in favour of Mr Fernando (allowing his daughter to present his case).

Ms Fernando is not legally trained. For that reason, Ms Fernando was guided in relation to her obligations to the court.[3] Ms Fernando confirmed on oath that she was aware of her responsibilities and obligations to the court. The court was satisfied that Ms Fernando understood the full import of the role she adopted in presenting her father’s case.
[3]Transcript, 6 April 2016, 126-128.

The principles in relation to the role of a judge in matters dealing with self-represented litigants were summarised by Derham AsJ in Owerhall v Bolton & Swan Pty Ltd.[4] In that case, his Honour stated:
[4][2016] VSC 91.

8The plaintiff is a self-represented litigant. A judge has a duty in relation to represented and unrepresented litigants alike to ensure that the hearing or trial is conducted fairly and in accordance with law. It is a frequent consequence of self-representation that the Court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy. What a judge must do to assist a litigant in person depends on the litigant, the nature of the case, and the litigant’s intelligence and understanding of the case. The judge cannot be the advocate of the self-represented litigant, for the role of the judge is fundamentally different to that of an advocate. The judge must maintain the reality and appearance of judicial neutrality at all times and to all parties. The assistance must be proportionate in the circumstances — it must ensure a fair trial and not afford an advantage to the self-represented litigant.

9 In Rajski v Scitec Corporation Pty Ltd, Samuels JA said:
In my view, the advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored. But the court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent … At all events, the absence of legal representation on one side ought not to induce a court to deprive the other side of one jot of its lawful entitlement … An unrepresented party is as much subject to the rules any other litigant. The court must be patient in explaining them and may be lenient in the standard of compliance which it exacts. But it must see that the rules are obeyed, subject to any proper exceptions. To do otherwise, or to regard a litigant in person as enjoying a privileged status, would be quite unfair to the represented opponent.[5]
[5]Owerhall v Bolton & Swan Pty Ltd [2016] VSC 91 [8]-[9] (citations omitted).

On the basis of the authorities, the court has extended certain assistance during the trial to facilitate Ms Fernando making submissions and examining witnesses.

By way of example, during the course of the hearing, Ms Fernando was given the following guidance by the court:

What … Mr Fernando needs to describe to the court is if his evidence is that agreements were reached how they were reached, the circumstances in which they were reached, the substance of any conversations or documentation that establish such agreements; [6] and
That an agreement needs to be established by virtue of the date of the agreement, how it was arrived at, the terms of the agreement and the parties to the agreement, whether it be written, oral or partly to be implied.[7]

[6]Transcript, 14 April 2016, 608-608.

[7]Ibid 610-611.

In providing guidance such as this, the court sought to strike a balance between ensuring that a self-represented litigant was properly cognisant of the legal hurdles that needed to be met to establish his defence (in this case, in the Supreme Court Proceeding) and ensuring that justice between both parties to the two proceedings was served.

What is claimed in the Supreme Court Proceeding?

Mr Mimmo claimed that on or about 22 April 2013, he agreed to lend Mr Fernando $700,000 (the $700,000 payment) to assist Mr Fernando, together with his associates, Lakshman Gamini Kalupathirana (Lakshman) and Roshan Fernando (Roshan) – to which I will later refer – to purchase the shares in AMR.[8] Mr Mimmo said that the payment was made pursuant to an oral agreement between him and Mr Fernando (the loan agreement).[9]
[8] Mr Mimmo, ‘Amended Statement of Claim’, S CI 2013 4746, 21 November 2013, [1].
[9] Ibid [1].

It was said that Mr Fernando approached Mr Mimmo and his wife, Rose Mimmo (Mrs Mimmo), for the payment so that he could repay the mortgage on his home in Wantirna.[10] Once he did that, it is alleged, he could satisfy the financier as to the robustness of his financial position and then obtain a new loan to finance the purchase of the shares in AMR.[11]
[10]Ibid [1(b)].
[11]Ibid [1(b)], [2(c)].

Mr Mimmo claimed that the terms of the loan agreement are partly oral and partly to be implied.[12] He said that the terms of the loan agreement were that Mr Fernando would repay half of the payment to Mr Mimmo, $350,000, by 30 June 2013. The balance of the payment was, it was said, to be paid in monthly instalments of $10,000 over the following 35 months.[13]
[12]Ibid [1].
[13] Ibid [1(c)].

On 19 July 2013, having not received any repayment from Mr Fernando, Mr Mimmo instructed his solicitor to send a letter of demand to Mr Fernando’s then solicitor demanding the $700,000 payment to be repaid immediately.[14] Mr Fernando has not repaid that amount. Mr Mimmo now seeks the repayment of the $700,000 payment plus interest from Mr Fernando.
[14] Ibid [5].

In essence, in his defence, Mr Fernando claimed that the $700,000 payment was not a loan at all. Rather he said that it was a repayment of ‘the dues’ owed to him by Mr Mimmo for all the extra work that he had done at Mr Mimmo’s request. That is, Mr Fernando said that certain additional duties he performed were over and above what was within the scope of his employment with AMR in respect of which it was agreed he would be paid. Accordingly, Mr Fernando said that he had no obligation to repay the $700,000 payment to Mr Mimmo.[15]
[15] Mr Fernando, ‘Defence’, S CI 2013 4746, 23 December 2013, [4(c)].

Mr Fernando alleged that there were nine agreements that he entered into with Mr Mimmo, which gave rise to the debt owed to him by Mr Mimmo in respect of the additional duties he performed. The alleged agreements concerned:

(a) Accounting services provided to Mr and Mrs Mimmo and related entities;

(b) An application for commercial ready grant;

(c) An application for export grant;

(d) An application for 2008 business review grant;

(e) A re-zoning project;

(f) The purchase of a Mercedes Benz motor vehicle;

(g) A 2011 business review;

(h) An application for a grant in relation to lean manufacturing systems and methodologies; and

(i) An application for investing in manufacturing technology grant.[16]

[16]Ibid [12] – [55].

Mr Fernando said that in or about January 2010, the parties entered into a variation agreement. The terms of the alleged agreements in subparagraphs (a), (b), (c) and (d) above were varied to the effect that the amount owed under those agreements was to be deferred until the completion of the re-zoning project referred to in subparagraph (e).[17]
[17]Ibid [56] – [57].

On or about 23 April 2013, Mr Fernando said that the parties came to a final agreement. Mr Fernando said that the terms of this final agreement were that Mr Mimmo would pay Mr Fernando $1,000,000 to settle the outstanding amount owed to him in respect of the above alleged agreements.[18]
[18]Ibid [58] – [60].

Mr Fernando claimed that the payment comprised $650,000, the amount which Mr Mimmo agreed to pay him in cash, and $50,000, as contribution to the purchase of a vehicle for Mr Fernando. The balance of $300,000 amounts, Mr Fernando contended, to a sale commission payable to him on the sale of AMR; that is, that the additional amount of $300,000 would be paid to him on the sale of Mr and Mrs Mimmo’s shares in AMR to him and his associates, Lakshman and Roshan.[19]
[19]Ibid [58(iii)(b].

What is claimed in the County Court Proceeding?

Mr Fernando claimed that he was unfairly dismissed by AMR and, that pursuant to his employment agreement with AMR, he was entitled to a number of outstanding payments and damages arising from the dismissal.

Mr Fernando said that his remuneration as at 11 July 2013 was $237,293 per annum made up as follows:

(a) Salary of $121,089.80 (gross) per annum;

(b) Superannuation of 9.25% of (a), being $11,200 per annum;

(c) Directors’ fees of $1,672 per week, or $86,944 per annum;

(d) Private use of a fully maintained motor vehicle, being valued at not less than $319.60 per week, or $16,619.20 per annum; and

(e) Private use of a mobile telephone, being valued at not less than $120 per month, or $1,440 per annum.[20]

[20]Mr Fernando, ‘Statement of Claim’, CI-2014-02804 (S CI 2015 2816), 10 June 2014, [4].

Mr Fernando claimed that on 11 July 2013 he was directed to leave AMR’s business premises and not to return until told to do so.[21] I will consider the background circumstances of this direction later in this judgment.
[21]Ibid [5].

Notwithstanding that Mr Fernando did not resume work at AMR after 11 July 2013, Mr Fernando contended that his employment at AMR only ended on 10 February 2014 when he accepted AMR’s repudiation of his employment contract. He said that between 11 July 2013 and 10 February 2014, he was ready, willing and able to work for AMR.

Mr Fernando claimed that his employment was terminated wrongfully and in breach of a reasonable period of notice, which he said should be no less than two years. He claimed that he should be entitled to damages in terms of unpaid salary for that period in the sum of $474,586, an amount equivalent to two years’ remuneration.

In the period between 11 July 2013 and 10 February 2014, Mr Fernando claimed that AMR owed him unpaid remuneration of $138,421.[22] Mr Fernando further claimed that as at 10 February 2014, he was entitled to a payout of $77,485 being his unpaid accrued long service leave of 10.3 weeks and annual leave entitlement of 6.68 weeks.[23]
[22]Ibid [10].
[23]Ibid [13]-[14].

AMR counterclaimed that Mr Fernando breached the terms of his employment with AMR, including breaching his fiduciary duties and his duty of good faith.[24] Whilst AMR claimed that, as a result of Mr Fernando’s conduct, it suffered loss and damage due to loss of business, AMR abandoned this loss of business claim at trial.
[24]AMR, ‘Defence and Counterclaim’, CI-2014-02804 (S CI 2015 2816), 28 July 2014, [19], [21].

AMR contended that Mr Fernando breached his employment contract and fiduciary duties by:

(a) Preparing remittance documents with an unknown bank account rather than the AMR bank account;

(b) Removing documents belonging to AMR from its premises without authorisation;

(c) Failing to return property when requested, including the key to an industrial printing machine without which the machine is inoperative;

(d) Incurring unauthorised credit card charges in an amount of approximately $38,061 (an amount later reduced at trial);

(e) Drawing unauthorised wages and directors fees in an amount of approximately $110,216.11;

(f) Changing ASIC records to record himself as a director and shareholder of AMR without the knowledge or consent of Mr Mimmo and/or AMR; and

(g) Using information obtained during his employment for his own personal gain.[25]

[25]Ibid [19], [21].

I observe at this point that AMR’s counterclaim in the County Court Proceeding enunciated claims which were not entirely consistent with the issues that were agreed by the parties to be determined at trial and which were the subject of cross examination and closing submissions.

AMR contended that Mr Fernando’s employment was summarily terminated on 11 July 2013, consistent with the provision of a letter by AMR’s solicitors to Mr Fernando and his associates on that day. It was further submitted that such termination was a unilateral act that did not require Mr Fernando’s consent.

In the alternative, AMR submitted that if the court finds that Mr Fernando was not summarily dismissed, a term of reasonable notice should be implied by law in the absence of an express term in Mr Fernando’s employment contract defining the period of notice.

AMR further submitted that Mr Fernando bears the onus of establishing that the reasonable notice period was two years. AMR contended that there is no evidence before the court upon which it could make any determination that a reasonable notice period for terminating Mr Fernando’s employment was two years or any other period.

Matters for determination

The matters for determination in the two proceedings are:

(a) In the Supreme Court Proceeding:

(i) Was a loan agreement entered into on around 22 April 2013?

(ii) And, as an associated issue, was money advanced by Mr Mimmo to Mr Fernando under the loan agreement or pursuant to oral agreements for remuneration for work outside the scope of Mr Fernando’s employment?

(iii) If so, who were the parties to the loan agreement?

(iv) What were the terms of the loan agreement?

(b) In the County Court Proceeding:

(v) Did Mr Fernando breach his employment contract with AMR and/or his fiduciary duties to AMR?

(i) What was the status of Mr Fernando’s employment between 11 July 2013 and 10 February 2014?

(ii) Is there any amount owing to Mr Fernando with respect to the period of 11 July 2013 and 10 February 2014?

(iii) What was the amount in terms of accrued entitlements owing to Mr Fernando after the employment agreement was terminated?

(iv) What is a reasonable period of notice for termination of the employment agreement alternatively what is an appropriate measure of damages in this case?

Legal principles

It was contended in submissions that various matters were not put to Mr and Mrs Mimmo by Mr Fernando’s representative. For this reason, I need to consider the rule in Browne v Dunn.[26]
[26](1893) 6 R 67.

Rule in Browne v Dunn

It is trite law that in eliciting evidence from witnesses, the rule in Browne v Dunn ought be observed.[27] It is of importance that all witnesses be given the opportunity to respond to allegations of facts that contradict her or his testimony.
[27]Ibid.

In Amcor Ltd v Barnes,[28] Vickery J concisely summarised the principles:
[28][2012] VSC 434.

106Although in a large and complex trial excessive and clinical ‘puttage’ is not to be encouraged in the interests of proper case management, here too judgement is called for in the interests of fairness. A major allegation, particularly one of which a party has no prior notice, must be put so as to provide an opportunity for the accused party to give an account of themselves.
107The rule in Browne v Dunn was analysed by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm). From this and other authorities the following elements of the rule may be discerned:
(a)The rule in Browne v Dunn is a rule of fairness which requires a party or a witness to be put on notice that a statement made by the witness may be used against the party or witness or to be put on notice that an adverse inference may be drawn against the witness or an adverse comment made about the witness in order that the witness may respond to that issue and give an explanation.
(b)The significance of the rule is that it requires notice to be given of a proposed attack on a witness or on the witness’ evidence where that attack is not otherwise apparent to the witness. The rule does not require that there be put to the witness every point upon which his or her evidence might be used against him or her or against the party who calls the witness.
(c)Where, it is manifestly clear that the party or witness has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling, such as where notice has been so distinctly and unmistakably given, and the point upon which he is impeached, and is to be impeached, is so obvious, that it is not necessary to waste time in putting questions to him upon it, the rule may be dispensed with, where no unfairness will arise.
(d)Notice of the relevant attack need not necessarily occur in cross-examination so long as it is otherwise clear that it will be made.
(e)The necessary notice may be effected in pleadings, in an opening or in the manner in which the case is conducted. To this list I would add notice given through witness statements or affidavits exchanged in advance of the trial.
(f)The rule has its foundation in the fair administration of justice.[29]

[29]Amcor Ltd v Barnes [2012] VSC 434, [106]-[107] (citations omitted).

Whilst it was urged upon the court that certain matters were not put directly by Mr Fernando to the Mimmos or other witnesses, I consider that, in the case of an essentially self-represented litigant, some latitude ought be extended.

Of course, any such latitude cannot and should not cross the boundary of fairness such that a witness does not understand, because it is not apparent to her or him, what attack is to be made upon their evidence nor, indeed, the substance of the case put against them.

In this case, I consider that the fact that, as submitted by Mr Mimmo and AMR, certain issues were not put directly in cross-examination is not determinative and should not, of necessity, mean that the court ought have no regard to certain evidence. The court will, of course, determine the weight that should be afforded to such evidence.

As Goldberg J said in White Industries (Qld) Pty Ltd v Flower & Hart (a firm), it is a matter for the court to decide upon the appropriate weight that should be given to each piece of evidence:

[A] failure to observe the rule in Browne v Dunn does not mean that where evidence of a witness is not the subject of cross-examination and where evidence is led in contradiction of that evidence, the Court is required to accept the former evidence. It is a matter of weight for the Court to take into account.[30]

[30]White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, 221 (citations omitted).

I am satisfied that on the pleadings, the way in which the case was conducted, the evidence and the submissions filed on behalf of the parties that the fair administration of justice dictates a somewhat more liberal application of the principles enunciated in Browne v Dunn in this case.[31]
[31](1893) 6 R 67.

Standard of proof

This case presents particular hurdles in relation to the consideration and weighing of the evidence.

As is well known, in a civil trial, the standard of proof is the balance of probabilities. Section 140 of the Evidence Act 2008 (the Evidence Act) provides that:

140 Civil proceedings—standard of proof
(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account—
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.

In Nom v Director of Public Prosecutions, the Court of Appeal emphasised that the standard of proof under s 140 of the Evidence Act required the observance of the principle established in Briginshaw.[32] Mere mechanical comparison of probabilities of opposing cases put forward by the parties is not sufficient to discharge the requisite standard of proof. It is necessary for a court to be satisfied that there is actual occurrence or existence of the fact in issue. Redlich, Harper JJA and Curtain AJA held that:

106The preponderance of authority at common law is that the civil standard is not treated merely as a mathematical probability but as requiring actual satisfaction as to the occurrence or existence of the fact in issue. Dixon J had emphasised in Briginshaw that:
… when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality … it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal …[33]
[32]Nom v Director of Public Prosecutions [2012] VSCA 198 [104]-[124] quoting Briginshaw v Briginshaw (1938) 60 CLR 336, 361-362.
[33]Ibid [106] (citations omitted).

Reasonable period of notice upon termination

An employer is ordinarily required to give a reasonable period of notice to an employee prior to terminating an employment contract, except in cases of summary dismissal for serious breach.[34] It is the act of giving notice that brings the employment contract to an end.[35]
[34]Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 422–3, 429; Gardiner v Woolworths Ltd [No 2] [2010] WASC 290 [146]-[147].
[35]Riordan v War Office [1959] 1 WLR 1046, 1054 (Diplock J).

In final written submissions, Mr Fernando relied on the Fair Work Act 2009 (Cth) (‘Fair Work Act’). I note that this was not a matter agitated at trial.

Division 11 of Part 2-2 of the Fair Work Act deals with the notice of termination or payment in lieu of notice.[36] Because AMR is a corporation incorporated under the Corporations Act2001 (Cth), Part 2-2 of the Fair Work Act applies.[37]
[36]Fair Work Act 2009 (Cth) ch 1 pt 2-2 div 11.
[37]Ibid ss 12-14, 42.

Relevantly, s 117 of the Fair Work Act provides the following:

117 Requirement for notice of termination or payment in lieu
(1) An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).

(2) The employer must not terminate the employee’s employment unless:
(a) the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b) the nature of the subject-matter of the proceeding; and
(c) the employer has paid to the employee (or to another person on the employee’s 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 employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.

Absent any express terms on termination in an employment contract, a court will imply, as a matter of law, a term of reasonable notice.[38] The length of notice that is required to be given depends upon the terms of the employment contract. The issues for determination in this matter put these principles squarely in focus.
[38]See, eg, Ma v Expeditors International Pty Ltd [2014] NSWSC 859 [53].

What amounts to a reasonable period has to be determined on a case by case basis at the date notice is given.[39] The approach to be taken in determining the reasonable length of notice is well settled and was summarised by Gillard J in Rankin v Marine Power International Pty Ltd:

The issue as to what length of notice is reasonable is a question of fact, to be determined after consideration of all relevant circumstances. There have been many decisions dealing with the issue but each case must be considered in relation to the particular circumstances. The cases do not lay down any rule of law. At best, they furnish a guide. But the tribunal of fact must be cautious of applying decisions which were made in different times, when attitudes to industrial relations were different.
In determining what is a reasonable period in respect to an employee, it must be steadily borne in mind what the primary purpose of giving a period of notice is. It is to enable the employee to obtain new employment of a similar nature. Some types of employment are readily available, whilst others are not. Those who are at the top or near the top of their chosen fields, invariably have very few opportunities to obtain similar employment and hence, the period of notice is usually many months to in excess of a year.
…
Factors that have been taken into account vary, according to the circumstances, but the nature of the employment, the degree of responsibility and the required dedication to the job usually result in a longer period of notice being reasonable.
In the Law of Employment by Macken, McCarry and Sappideen, 4th edition, the learned authors, at p.166, have listed relevant factors which have been taken into account in the cases, in determining what was a reasonable period of notice. The authors have listed the cases which support their list of relevant factors. The factors include the high grade of the appointment, the importance of the position and the size of the salary. Further, it is clear that the nature of the employment is a relevant factor. In addition, factors which pertain to the particular employee which are relevant are the length of service, his professional standing and his age, his qualifications and experience, and the expected period of time it would take for him to find alternative employment.[40]

[39]Rankin v Marine Power International Pty Ltd [2001] VSC 150 [223]-[225] (‘Rankin’).

[40]Ibid [219]–[223] (citations omitted).

Some guidance in the application of the principles as to reasonableness of a period of notice can be found in the following authorities.

In Quinn v Jack Chia (Australia) Ltd, the plaintiff was a trained quantity surveyor and was employed by the defendant construction company in relation to the construction of a large long-term building project valued at $1.30 billion.[41] As part of taking up the job, the defendant required the plaintiff to give up his business interests, including shareholdings, directorship and regular income, in a building company he and a business partner had created. The plaintiff was employed for just over two years with the defendant in different roles with quite different responsibilities, including assistant to the construction manager, construction manager and general manager and had been appointed to the boards of two of the construction companies involved in the project. At termination, the plaintiff’s salary package was, gross, $100,000, and the plaintiff was aged 51. The trial judge found that after his termination, the plaintiff had made a ‘sustained attempt to resume an active role in his area of expertise’ and that his earnings pattern since dismissal had been one of ‘progressive substantial increase’. In all the circumstances, the trial judge found the reasonable period of notice of termination to be 12 months.
[41][1992] 1 VR 567 (‘Quinn’).

In Susanna Ma v Expeditors International Pty Ltd, the plaintiff was employed for more than 24 years with the defendant, a multi-national corporation operating a logistics and shipping business.[42] For almost the entirety of her time with the defendant, the plaintiff was in the position of regional financial controller for the South Pacific region, as well as company secretary. An accounting team of 14 people reported to the plaintiff. At the time of termination, the plaintiff was receiving a base salary, a car allowance, a cash allowance for medical insurance bonus and superannuation. The plaintiff’s annual average remuneration for the five years prior to termination was $750,000 gross. The plaintiff was 49 years of age at the time of termination. The plaintiff had made numerous applications and enquiries for positions commensurate with her qualifications and expertise, but without success. In the circumstances, the trial judge found 10 months was the proper period of notice.
[42][2014] NSWSC 859 (‘Ma’).

Flowing from the relevant factors that need to be taken into account in deciding the reasonable period on termination, an employee should act reasonably to minimise his or her loss, or suffering at least in a monetary sense, post termination. The principles regarding the issue of mitigation were analysed by Nicolas AJ in Ma, of which its determination depends largely on the evidence adduced by the parties.[43] As Giles JA commented in Karacominakis v Big Country Developments Pty Ltd with Handley and Stein JJA agreeing:

A plaintiff who acts unreasonably in failing to minimise his loss from the defendant’s breach of contract will have his damages reduced to the extent to which, had he acted reasonably, his loss would have been less. This is often misleadingly referred to as a duty to mitigate, although the plaintiff is not under a positive duty. The plaintiff does not have to show that he has fulfilled his so-called duty, and the onus is on the defendant to show that he has not and the extent to which he has not.[44]

[43]Ibid [57]-[60].

[44][2000] NSWCA 313 [187] (citations omitted) (‘Karacominakis’).

In Quinn, Ashley J cautioned that in assessing whether the employee’s conduct to mitigate his or her damage is reasonable, the conduct has to be viewed at the time it took place, but not with the benefit of hindsight.[45] Giles JA in Karacominakis also noted that:

Since the defendant is a wrongdoer, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did.[46]

[45]Quinn [1992] 1 VR 567, 582.
[46]Karacominakis [2000] NSWCA 313 [187] (citations omitted).

Summary dismissal

I respectfully adopt Gillard J’s analysis of the principles relevant to summary dismissal in Rankin.[47]
[47][2001] VSC 150.

An employer is not required to provide notice to an employee before terminating an employment contract where the employee commits a serious breach of the contract.[48]
[48]Ibid [238]; see also Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 422–3, 429.

There are no set principles to determine the requisite degree of misconduct or breach that may justify summary dismissal.[49] In Rankin, Gillard J held:

The acts or omissions of the employee which constitute the breach may amount to misconduct, disobedience, incompetence or negligence. No doubt, misconduct would cover a multitude of sins. By way of example, conduct which results in a conflict between the employee’s interest and duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the confidence between employer and employee, may ground a right to dismiss without notice. See Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81 per Dixon and McTiernan JJ.[50]

[49]Rankin [2001] VSC 150 [240].

[50]Ibid [239].

An employee and employer relationship is one that is governed by fiduciary duties, which will ordinarily be implied into a contract of employment.[51] In Hodgson v Amcor Ltd; Amcor v Barnes & Ors, Vickery J said:

The fiduciary duty, as it applies to the ordinary relationship of employer and employee at common law is one importing implied duties of loyalty, honestly, confidentiality and mutual trust.[52]

[51]Hodgson v Amcor Ltd; Amcor Ltd & Ors v Barnes & Ors [2012] VSC 94 [1359]–[1362] quoting Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66, 74 (Starke and Evatt JJ), 81–82 (Dixon and McTiernan JJ).

[52]Ibid [1359].

As such, a serious breach of fiduciary duties may warrant the summary dismissal of an employee. In Blyth Chemicals Ltd v Bushnell, Starke and Evatt JJ said:

As manager for the appellant, the respondent was in a confidential position. And it is clear that he might be dismissed without notice or compensation if he acted in a manner incompatible with the due and faithful performance of his duty, or inconsistent with the confidential relation between himself and the appellant (Pearce v. Foster; Shepherd v. Felt and Textiles of Australia Ltd.). The degree of misconduct that will justify dismissal is usually a question of fact (Clouston & Co. v. Corry). [53]

[53](1933) 49 CLR 66, 72–3 (Starke and Evatt JJ).

Although the question of degree of the alleged misconduct is very much a question of fact, it must be serious enough to justify dismissal without notice.[54] It is for the party purporting to exercise the right to terminate the employment without proper notice to satisfy the court that summary dismissal is justified on the facts and no notice should be required.[55]
[54]Rankin [2001] VSC 150 [250].
[55]Ibid [242].

It is also well established that an employer can rely on newly acquired information, unbeknown to the employer at the time of dismissal, to justify the termination of the employee at a later time. In Rankin, Gillard J echoed Dixon J in Shepherd v Felton Textiles of Australia Ltd and held that:

At the outset, it is necessary to identify the “sin” which the employer complained of and upon which the employer justifies the dismissal. It is trite law to observe that the misconduct of the employee does not necessarily have to be known to the employer at the time of dismissal, and the employer may rely upon any information that subsequently came to his knowledge to justify the dismissal – see Shepherd v Felton Textiles of Australia Ltd (1931) 45 CLR 359 at 377-8 per Dixon J.[56]

[56]Ibid [271] (emphasis added).

However, the right to terminate an employee may be lost if the employer has chosen not to terminate the employee upon the full discovery of the employee’s wrongdoing.[57] In Rankin, the principle was well put, in my respectful opinion, in the following terms:
[57]Ibid [242]–[243].

An employer who has full knowledge of the misconduct of an employee, and who makes a decision to continue to employ the employee, cannot at a later date, unless of course other facts come to his knowledge, dismiss him summarily on the basis of the employee’s known misconduct. It is said that the employer has waived his right to dismiss the employee summarily, and thereby condones the misconduct.
…
Consistent with the authorities, the plaintiff, who relies upon condonation in the present proceeding, would have to prove:
(i) that the employer had full knowledge of the employer’s misconduct;
(ii) that with that knowledge, the employer retains the employee in his service;
(iii) that having made the election, he deliberately abandons his right to summarily dismiss the employee.[58]

[58]Ibid [352], [357].

Also, even in circumstances where a serious breach or repudiation of contract has occurred, the contract of employment does not automatically terminate.[59] An analysis needs to be made as to the particular circumstances of the case.
[59]Visscher v Guidice (2009) 239 CLR 361 [53] quoting Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 427-28 (Latham CJ).

Ready and willing to perform

A party seeking to accept repudiation needs to show that he or she is ready, willing and able to perform her or his duties under a contract of employment. A finding of lack of willingness and readiness should not be made lightly.

In Rawson v Hobbs, Dixon CJ held that ‘a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires’ must be shown.[60]
[60]Rawson v Hobbs (1961) 107 CLR 466, 481.

In Foran v Wight, Brennan J observed that ‘substantial incapacity’ imports a test of degree.[61] After making this observation, His Honour continued:

Where an executory contract creates mutually dependent and concurrent obligations, the dispensing of one party from performance of his obligation by reason of the other’s intimation of non-performance produces a situation analogous to that produced by rescission for repudiation. A party who gives the intimation (like the party who repudiates) exposes himself to liability for breach though the party who is dispensed (like the party who rescinds) does not have to perform. If a need to identify the party at fault imposes a requirement of readiness and willingness on the party who seeks to rescind, it imposes a like requirement on the party who seeks relief on the footing that he has been dispensed. In Forrestt and Son Ltd. v. Aramayo Lord Halsbury LC said:
“The sole point which I intend to decide upon this appeal is that whenever there are concurrent obligations the party who seeks to recover against the other must show that he has always been ready and willing to perform the obligation upon him”.[62]
[61]Foran v Wight (1989) 168 CLR 385, 425.
[62]Ibid 425-426.

Issues for determination by the court

Having enunciated the legal principles, which guide the determination of the issues in dispute between the parties, I will now turn to a consideration of those issues.

I will consider the issues of whether there was a loan agreement or whether monies were advanced pursuant to oral agreements together.

Was a loan agreement entered into on around 22 April 2013 or was Mr Fernando simply being paid his ‘dues’ for extra work performed?

The evidence of the parties in relation to these issues was contradictory and diametrically opposed in almost every respect. Of course, as far as the Supreme Court Proceeding is concerned, it is for Mr Mimmo to prove the existence of the alleged loan agreement.

It falls upon the court to determine, in accordance with the principles enunciated above, which version of events ought prevail, not by reason of a mathematical probability, but because the court is actually satisfied on the facts.

Mr Mimmo’s case

The alleged loan agreement, so it was contended, supported the sale of the AMR business to Mr Fernando and his associates. Accordingly, some general and overall background to the sale of the business may be useful at this point.

Mrs Mimmo’s health was failing and the Mimmos wanted to sell their business.

Mr Mimmo gave evidence in the following terms. He agreed to sell AMR for $4,250,000 to Mr Fernando and his associates, Lakshman and Roshan, following several unsuccessful attempts to sell the business.[63] The parties agreed that $1,300,000 would be paid upfront on 2 May 2013, the day on which Mr Fernando and his counterparts took over the business of AMR. The balance of the purchase price would be paid by equal monthly instalments over 35 months. It was not contested that there were numerous iterations of Contract for Sale and Purchase of Shares dated 20 April 2013 (the Sale Contract).[64] Mr Mimmo also said that he only received $100,000 by way of an upfront payment on 2 May 2013 and nothing at all thereafter. This evidence was not contested and I accept it.
[63]Transcript, 5 April 2016, 56.
[64]Ibid.

Mr Mimmo explained that, as part of the sale of AMR, he had left the business premises as security for a bank loan to Mr Fernando which would enable him to purchase the business.

Mr Mimmo said he did this because he trusted Mr Fernando.

It is against this general backdrop that Mr Mimmo claimed that the $700,000 payment was made to Mr Fernando. By this time, Mr Fernando and his associates had already had a failed attempt to raise finance to purchase AMR; they were on to their second financier – the Australia and New Zealand Banking Group Limited (ANZ). The Mimmos said that they wanted the business to be sold and they were, in essence, prepared to make a loan to Mr Fernando to bring about this result.

Mr Mimmo gave evidence in the following terms. On or about 22 April 2013, following a request by Mr Fernando, Mr Mimmo, together with his wife, had a meeting with Mr Fernando at Mr Mimmo’s St Kilda Road apartment.[65] During the meeting, Mr Mimmo said that he was told by Mr Fernando that he could not obtain a loan to purchase AMR unless the mortgage over Mr Fernando’s home at Wantirna was discharged.[66] Mr Mimmo’s evidence was that Mr Fernando requested $700,000 to repay that existing mortgage. In cross-examination, Mr Mimmo did not depart from his evidence, saying that the $700,000 payment was to ensure that Mr Fernando ‘had a free title so he could get a loan to buy the business’.[67]
[65]Ibid 58.
[66]Ibid 58-59.
[67]Transcript, 8 April 2016, 208.

Mr Mimmo said that he did not have all the $700,000 at the time and that he turned to his cousin, who owns a number of service stations, for a loan of $350,000.[68] His cousin allegedly agreed and later advanced the sum of $350,000 by way of cheque directly to Mr Fernando on 24 April 2013.[69] The balance of $350,000 was directly advanced to Mr Fernando from Mr Mimmo’s superannuation account in the name of Vernon Park Nominees Pty Ltd on 26 April 2013.[70]
[68]Transcript, 5 April 2016, 59, 242.
[69]Ibid 58-59.
[70]Ibid 59; Exhibit P15.

Mr Mimmo relied on two documents to support the transaction that occurred on 26 April 2013. One of the documents is a handwritten letter dated 16 July 2013, bearing the header and stamp of the Commonwealth Bank of Australia, written to Mrs Mimmo from Ms Rukshani Fernando, a branch deposit specialist of the Gladstone Park branch of the Commonwealth Bank of Australia.[71] The letter stated that the transaction on 26 April 2013 had been effected with her authorisation. The amount was purportedly coming out of the Vernon Park Nominees Pty Ltd account. However, what is puzzling is that a different account number was identified in the letter to the account number printed on the bank statement that is said to have evidenced the purported transaction.[72] However, notwithstanding this, the payment to Mr Fernando was not contested by any party.
[71]Exhibit P15.
[72]Ibid.

Mr Mimmo agreed that there was no documentation evidencing the alleged loan and that Mr Fernando did not pay back the money.[73] Indeed, this was common ground. In cross-examination, Mr Mimmo said that he told Mr Fernando that he needed $350,000 returned by the end of the financial year to replace that taken from the super fund, and the rest of the loan was to be repaid at the rate of $10,000 per month.[74] As I have observed, these were said to be the terms of the loan.
[73]Transcript, 5 April 2016, 60, 61.
[74]Transcript, 8 April 2016, 250.

Mr Mimmo said that he did not enter into any agreements as alleged by Mr Fernando.[75] Indeed, Mr Mimmo gave evidence that he never discussed anything of a financial nature with Mr Fernando.[76] He said that it was Mrs Mimmo who was in charge of payments and wages at AMR. By contrast, his responsibility was for production.[77]
[75]Transcript, 5 April 2016, 61-70, 73.
[76]Ibid 64, 66, 72.
[77]Ibid 68.

This could clearly not be the case as Mr Mimmo maintained that he discussed and agreed the $700,000 payment to Mr Fernando.[78] Mr Mimmo conceded that he did speak to Mr Fernando about money, being this alleged loan.[79] However he maintained, emphatically, that no other discussions occurred between him and Mr Fernando about money, in general, and the alleged agreements by Mr Fernando, in particular. Mr Mimmo said that the first time he was aware of the alleged oral agreements with Mr Fernando was when his solicitor raised them with him a few days before Christmas in 2013.[80]
[78]Ibid 59.
[79]Ibid 72-73.
[80]Ibid 73.

Mr Fernando’s case

Mr Fernando contended the $700,000 payment was for the additional work that he had done outside of the scope of his employment with AMR – ‘his dues’.

Mr Fernando’s job description, when he was initially employed by AMR, is encapsulated in a document dated 10 June 2003. It is the only document signed by the parties outlining Mr Fernando’s duties and employment conditions. This job description is very brief, it does not contain any terms going to Mr Fernando’s period of employment, salary, entitlements, or grounds for termination. Relevantly, it provides, in relation to Mr Fernando’s duties, as follows:

Manage the invoicing, accounts receivable and payable,
Preparation of Financial, Management and ad-hoc reports.
Liaise with Banks and other Financial Institutions.
Manage the Payroll
Approval of Account Applications.[81]

[81]Exhibit D4.

In the ‘Competencies and Responsibilities’ section, the job description list provides that ‘Other duties may be assigned’. There is no elaboration in Mr Fernando’s job description as to what such other duties may be.

Mr Fernando said that if duties were not related to his normal accounting duties, they were not part of his job.[82] However, he conceded that other duties may be assigned to him, provided it was within his role and within his capacity.[83] He also insisted that he only worked the hours for which he was remunerated.[84]
[82]Transcript, 14 April 2016, 691.
[83]Ibid 693.
[84]Ibid 690.

Mr Fernando’s evidence about the additional duties he said that he performed was in the following terms.

Accounting services agreement

Mr Fernando said that his work for other AMR-related entities was not part of his initial job description, and that an agreement had been made whereby he would be paid $4,000 per annum for each of these entities. This agreement was alleged to have been made with the Mimmos about three to four months after he began working at AMR – in approximately April or May 2002.[85] Mr Fernando explained that Mr and Mrs Mimmo told him that that the other entities were behind in their accounting records, and requested Mr Fernando ‘get their books in order.’[86] Mr Fernando said that most of the work he performed for these other entities was performed outside office hours. He said that he had asked the Mimmos for the money for this work quite a few times, around 2005. Mr Fernando’s understanding was that the Mimmos did not pay him because they were trying to buy a property in Frankston at the time.[87]
[85]Ibid 596, 597.
[86]Ibid 597.
[87]Ibid 598.

In cross-examination Mr Fernando explained that the term of the agreement was that the Mimmos would pay him this money when they could.[88] He also said that the money was to be paid by Mr Mimmo personally.[89] It was put to Mr Fernando that such an arrangement made no sense from a tax perspective as if AMR, or any of the other corporate entities, paid him for this work, they would be entitled to a tax deduction on account of that expense.[90] Mr Fernando agreed.[91] Mr Fernando also agreed that he never rendered an invoice for this work — but queried why he would have to as that was not part of his agreement with Mr Mimmo.[92]
[88]Transcript, 15 April 2016, 735.
[89]Ibid 735.
[90]Ibid 736.
[91]Ibid.
[92]Ibid 738.

It was asked of Mr Fernando why there is no written record of him making the requests for this money as he alleged occurred.[93] Mr Fernando responded that there was an agreement of sorts that these matters would not be discussed by email, ‘because emails can be read by some other parties in the business’.[94] Counsel for Mr Mimmo correctly noted that this was not raised in Mr Fernando’s defence.[95]
[93]Ibid 739-740.
[94]Ibid 740.
[95]Ibid.

Counsel for Mr Mimmo queried why Mr Fernando continued to perform this work, when the alleged debt was accumulating yearly.[96] Mr Fernando responded that as he was working for AMR, he could not be in a dispute with the Mimmos.[97]
[96]Ibid.
[97]Ibid.

It was then put to Mr Fernando that if he had charged for these professional services, he had a liability to remit GST.[98] Mr Fernando did not give any adequate response to this question.
[98]Ibid 738.

Mr Fernando insisted that doing that work was not part of his role at AMR.[99]

Commercial Ready Grant agreement

[99]Ibid 741.

Mr Fernando said that he was promised a 30% commission on the completion of this project, because the grant money was paid on a mile-stone or progress basis.[100] The SLR project the subject of the grant lasted for three years, and the application took six to seven months to complete, and was over 100 pages in length.[101] Three to four versions of the application were submitted.[102]
[100]Transcript, 14 April 2016, 598-599.
[101]Ibid 598, 602.
[102]Ibid 599.

Prior to Mr Fernando’s involvement, a private firm, Russell & Lawrence, had assisted AMR in attempting to obtain the grant.[103] They were paid for this work, but were unsuccessful in obtaining the grant.[104]
[103]Ibid.
[104]Ibid 600.

Mr Fernando said that the grant process was highly competitive, and that doing this work was not part of his AMR duties.[105] However, he said that he was spurred on by the possibility of a 30% commission to take on the challenge.[106] He said that the commission was offered because AMR really needed the grant money, and that he was never offered such an incentive again.[107]
[105]Ibid.
[106]Ibid.
[107]Ibid 605.

Mr Fernando’s involvement in this project was the subject of cross-examination. Mr Fernando was not able to recall what ‘SLR’ stood for, yet insisted that he had written ‘most of’ the application.[108] Mr Fernando was also unable to explain various technical phrases used within the report.[109] He denied that he ‘did nothing more than provide some financial data to feed into’[110] the application, and explained that Grace Mimmo (Mr and Mrs Mimmo’s daughter) assisted with the technical aspects of the application.[111] He further explained that there were many other elements to his work on the application, including, for example, how the project would be of economic benefit to Australia, the employment benefit, and the supply chain arrangement for the project.[112]
[108]Transcript, 15 April 2016, 742-743.
[109]Ibid 744.
[110]Ibid.
[111]Ibid.
[112]Ibid 745.

In re-examination, Mr Fernando was not able to identify any amounts listed on a bundle of documents headed ‘Project Timeline’ detailing the milestones for the second agreement that were expenses for Grace Mimmo.[113] To Mr Fernando’s knowledge, Grace Mimmo was paid for her work in preparing the application.[114]
[113]Ibid 807.
[114]Ibid.

It was put to Mr Fernando that although he was responsible for submitting spreadsheets of the hours worked on the project, those sheets did not indicate that he had spent any time working on the project.[115] Mr Fernando explained that his role was in obtaining the grant — once the grant was obtained he did not do work on the project itself.[116]
[115]Ibid 748, 753-754.
[116]Ibid 748.

Mr Fernando was aware that Mr and Mrs Mimmo’s son, Lou Mimmo’s (who I will refer to in this judgment as Lou) company, the LSM Group, had also done work on the SLR project.[117]
[117]Ibid 752.

Mr Fernando agreed that he had never sent a written communication to Mr Mimmo demanding payment of the approximately $416,000 he was owed pursuant to this alleged agreement.[118]

Export Grant agreement

[118]Ibid 754.

Mr Fernando gave evidence that this grant was applied for around 2007, when Mr Mimmo approached him wanting to explore business opportunities. Mr Mimmo was interested in ‘pearl’ technology and thought he could meet some buyers for this product overseas.[119] Mr Mimmo asked Mr Fernando if there was any funding available.[120] Mr Fernando said that he worked on the application outside his normal work hours.[121] On Mr Fernando’s evidence, his work on the application was done on a ‘success basis.’[122]

2008 Business Review Grant

[119]Transcript, 14 April 2016, 608.

[120]Ibid 609.

[121]Ibid 607.

[122]Ibid 609.

The alleged agreement was made with Mr Mimmo in 2008. The review was to see if AMR had any expansion or other opportunities.[123]

Re-zoning project agreement

[123]Ibid 611.

Mr Fernando said that Mr Mimmo was interested in dividing his property at Mickleham Road because Mr Mimmo was having cash flow problems at the time.[124] Mr Fernando became part of the project management team because Mr Mimmo recognised Mr Fernando’s skills.[125] Mr Fernando was offered a $30,000 commission for this project.[126] Due to State government election and changes that occurred at the time, no one was sure exactly when the project would be finished.[127]

The Variation agreement

[124]Ibid 611-13.

[125]Ibid 613.

[126]Ibid.

[127]Ibid.

Mr Fernando understood that once the rezoning project was completed all the amounts he alleges were owed to him would be repaid.[128] He understood this would be in either 2016 or 2020.[129] He agreed to wait because he was aware of the Mr Mimmo’s position and he said he could not fight with Mr Mimmo because he was his employer.[130]

Motor vehicle agreement

[128]Ibid 629.

[129]Ibid 630, 758.

[130]Ibid 630.

During the prime-ministership of Mr Kevin Rudd, a motor-vehicle incentive was offered to certain businesses.[131] Accordingly, AMR could potentially receive approximately a 30% rebate on the purchase of cars.[132] Mr Fernando contributed, it was contended, about $30,000 to the purchase of a car,[133] taking advantage of this scheme.
[131]Ibid 614.
[132]Ibid.
[133]Ibid 615.

Mr Fernando was taken to a bank statement from Commonwealth Bank of Australia in which he identified transfers from himself to AMR totalling $30,500 between 2 July 2009 and 5 August 2009.[134] Mr Fernando gave evidence that he did not deduct this amount from moneys alleged to be owed to him because, as an accountant, he did not like to mix funds related to separate transactions.[135]
[134]Ibid 615-616.
[135]Ibid 616-617, 755-756.

The car was purchased in AMR’s name in order to obtain the rebate referred to above. It was agreed, according to Mr Fernando, that after five years he would own the car.[136] Mr Fernando agreed that it was he who suggested buying the car.[137]
[136]Ibid 617.
[137]Transcript, 15 April 2016, 754.

However, the car had technical problems.[138] It was said that Mr Mimmo offered Mr Fernando $50,000 to get a new car.[139] A five-year cash-flow projection for the car was prepared, indicating that after five years the car would be fully paid off, following various government rebates.[140]

2011 Business Review agreement

[138]Transcript, 14 April 2016, 618.

[139]Ibid 618.

[140]Ibid 620.

In approximately 2011 Mr Fernando collaborated with Mr Herman Mott to obtain a further grant for AMR.[141] This collaboration arose because Mr Mimmo asked Mr Fernando to apply for this grant to help AMR move forward.[142] Mr Mimmo said if the application was successful he would give Mr Fernando around $2,000.[143] The work Mr Fernando did on this application was performed, it was contended, outside business hours.[144] The work consisted of providing Mr Mott with financial and operational input to assist with the preparation of reports.[145] The grant was obtained.

Lean Manufacturing Systems and Methodologies agreement

[141]Ibid 621.

[142]Ibid 622.

[143]Ibid 624.

[144]Ibid 622.

[145]Ibid 623.

Mr Mimmo said that this grant could improve production, and remove bottlenecks in production.[146] Mr Fernando said that he was promised $4,000 to $5,000 by Mr Mimmo if the application for this grant was successful.[147]

Manufacturing Technology Grant agreement

[146]Ibid 624.

[147]Ibid 625

Lou had travelled to Germany to inspect equipment. The Mimmos were keen to purchase a barometric machine, which was very expensive.[148] The Victorian Government had a manufacturing technology grant at the time that could help fund the purchase of the equipment.[149] Mr Mimmo approached Mr Fernando about this grant, and said, according to Mr Fernando, that if he could get it, Mr Mimmo would pay him $12,500 (approximately 25% of the total machine cost).[150]
[148]Ibid 627.
[149]Ibid.
[150]Ibid.

The grant was obtained at around the end of 2011.[151]
[151]Ibid 628.

Mr Fernando said that he approached the Mimmos about the money he believed was owed to him around the end of 2009 or the beginning of 2010.[152] He asked for the entire amount, as he needed the money to purchase a house in Wantirna.[153] He was not paid at that time. The Mimmos did not have any cash at that time as all their money was being put into installing a lift and performing concreting work at their Frankston house.[154]

The final agreement

[152]Ibid 626.

[153]Ibid 628.

[154]Ibid.

It is Mr Fernando’s evidence that a conversation took place on 25 March 2013 between him and Mr and Mrs Mimmo at Mr and Mrs Mimmo’s apartment in St Kilda Road in which Mr and Mrs Mimmo agreed to pay Mr Fernando $700,000 for his outstanding claims in relation to the various alleged agreements to which I have referred.[155]
[155]Transcript, 15 April 2016, 731.

Further, Mr Fernando said that around 23 April 2013 Mr Fernando met with Mr and Mrs Mimmo. At that meeting the Mimmos told Mr Fernando that if he was able to sell the business, they would bring the total amount he was owed up to $1 million.[156] The Mimmos said they owed him around $600,000, and would bring this up to $1 million. This was promised, it was contended, regardless of whether he managed to sell the business to another purchaser, or if he was part of the purchasing party.[157]
[156]Transcript, 14 April 2016, 632.
[157]Ibid 632.

Analysis

The alleged payment of $700,000 to Mr Fernando needs to be considered in the context of the sale of AMR. As has been referred to, Mr Mimmo contends that the very reason for the payment was to facilitate the purchase of the shares in AMR by Mr Fernando and his associates. For that reason, some further background about the sale of AMR shares is warranted.

In 2012 AMR was approached by Chesapeake to purchase the business.[158] The sale never eventuated.[159] According to Mrs Mimmo, Mr Fernando had little involvement in the previous potential sale — he was only brought in to assist in preparing financial information for AMR’s external accountant for the potential sale to Chesapeake.[160]
[158]Transcript, 11 April 2016, 297.
[159]Ibid 298.
[160]Ibid.

Mrs Mimmo gave evidence that on 9 February 2013 she had a conversation in Frankston with Mr Fernando and Mr Mimmo.[161] During that conversation, Mr and Mrs Mimmo asked for Mr Fernando’s assistance in selling their shares in AMR. It was contended that Mr Fernando agreed.[162] Mrs Mimmo denied that during that conversation it was agreed that Mr Fernando would be paid any money (by way of commission) for selling the shares in AMR, or that Mr Fernando would be paid any money on account of his alleged outstanding services.[163]
[161]Ibid 342.
[162]Ibid.
[163]Ibid.

In relation to the alleged conversation on 25 March 2013, when questioned, Mrs Mimmo did not recall any conversation where Mr Mimmo told Mr Fernando that he would pay Mr Fernando all amounts owing under all the alleged agreements, all rebates and depreciation allowances in respect of the motor vehicle, and that Mr Fernando would need to provide a claims sheet setting out all those amounts.[164] Mrs Mimmo said that she never asked Mr Fernando to produce a claims sheet setting out his alleged claims.[165] I will refer later, in more detail, to the claims sheet. Mrs Mimmo also did not recall Mr Mimmo telling Mr Fernando that Mr Fernando would be paid the difference between $1,000,000 and the amount payable in respect of his outstanding claims (his ‘dues’ – on his evidence $700,000) as a commission for assisting with the sale of shares in AMR.[166]
[164]Ibid 343.
[165]Ibid.
[166]Ibid.

In particular, Mrs Mimmo did not recall the following:

(a) Any conversation with Mr Fernando and Mr Mimmo on 23 April 2013 in which she told Mr Fernando that she could only pay him $700,000 for his outstanding claims, $650,000 of which would be paid in cash and $50,000 of which would be offset by way of a contribution to Mr Fernando acquiring AMR;[167]
[167]Ibid 344.

(b) Telling Mr Fernando that the remaining $300,000 (the sales commission), would be paid to him on the sale of Mr and Mrs Mimmo’s shares;[168]

(c) Receiving a claims sheet on 27 March 2013, or a letter from Mr Fernando dated 25 April 2013. In fact, Mrs Mimmo denied ever having seen those documents until they were provided to her by Cornwall Stodart after proceedings against Mr Fernando had been instituted.[169]

Other documents

[168]Ibid 344-345.

[169]Ibid 345.

There are some other documents, upon which Mr Fernando relies, and to which I need refer in the context of these issues. I will have regard to them in the course of this judgment.

(a) Final Price Adjustments sheets

In Mr Fernando’s closing submissions, he asserted that the idea of the loan was ‘ridiculous’. Mr Fernando maintained that he would have received his commission upon the sale of AMR as shown in a document titled ‘Final Price Adjustments’, an attachment to an email dated 25 June 2013.[170] It was noted in that document that the upfront payment of $1,300,000 for the purchase of shares in AMR should be adjusted to $91,621, including a contribution from Mr Fernando of $300,000.[171]
[170]Mr Fernando, ‘Closing Submission WHE Fernando’, 21 April 2016, 4 [(i)(k)].
[171]Exhibit D19.

The terms of the Sale Contract relevantly provide that:

Item 3 Sales Agreement
The parties agree that they are entering into and[sic] agreement for sale of the shares in AMR Hewitt PrintPackaging Pty Ltd A.C.N. 006 394 814 of 29-31 Garden Drive, Tullamarine, Victoria, 3034, Australia on the following conditions:
(b) Agreed sale price of $4,250,000.
(c) As per the calculation based on the figures (amounts) given by AMR Hewitts PrintPackaging Pty Ltd final walk-in walk-out sale price of $4,250,000 with no adjustments as agreed by all parties.

Terms
ANZ Bank & Commonwealth Bank overdraft to equal zero on 1^st May, 2013.
Vendor to collect debtors as invoiced at end of day 1^st May, 2013.
Vendors Terms
(a) An upfront payment in the sum of $1,300,000 to be paid on 2^nd May 2013.
(b) Vendors finance of $1,300,000 to be paid in 60 equal monthly instalments commencing on 1^st September 2013.
(c) Purchasers agree to takeover ANZ Bank loan of $1,600,000 and ANZ Bank
(d) overdraft (limit of $300,000) to service and pay off within 24 months starting
(e) from 2^nd May, 2013.[172]

[172]Exhibit P2.

In my opinion, it is open to the court to conclude that Mr Fernando would have been fully cognisant of and understood the terms of the Sale Contract. On its express terms, the parties agreed that there should be no adjustment to the final sale price of AMR of $4,200,000. It was a ‘walk-in, walk-out’ sale price, a term commercially sophisticated parties could be expected to well understand.

At trial, different versions of ‘Final Price Adjustments’ sheets, of which not all of them were tendered in evidence, were put to Mr Mimmo and Lakshman in cross examination. However, consistent with the terms of the Sale Contract, Mr Mimmo’s oral evidence was that the sale of AMR did not involve any adjustments to the final sale price.[173] It was also Lakshman’s evidence that he was not aware of any contribution made by Mr Fernando.[174]
[173]Transcript, 8 April 2016, 198-205.
[174]Transcript, 12 April 2016, 461-463.

Based upon the evidence, I do not accept that the final price adjustment sheets provide evidence, upon which the court can rely, of adjustments (of any nature) to the sale price under the Sale Contract.

(b) The claims sheet

Mr Fernando claimed that he prepared a claims sheet, as it was described, as a record of the additional work that he undertook over and above his formal duties; as he described it, ‘his dues’. Mr Fernando said that the claims sheet was handed over to Mrs Mimmo around 27 March 2013.[175] The claims sheet purports to record sums owed to Mr Fernando for additional work he performed. Mr Fernando contends that he prepared the claims sheet as a working document for himself and that he had begun preparing it five years earlier.[176] It was said by Mr Fernando that this document demonstrates that he was owed money for additional work undertaken over a period of years and, so Mr Fernando said, proves that the payment was not a loan. Mr Fernando also claimed that it was Mrs Mimmo who asked for the claims sheet to be prepared.[177]
[175]Transcript, 15 April 2016, 762-763.
[176]Transcript, 14 April 2016, 634; Transcript, 15 April 2016, 763.
[177]Transcript, 11 April 2016, 343; Transcript, 15 April 2016, 753, 762.

The claims sheet is a curious document. It bears no date and contains no details, apart from an extremely brief reference to work undertaken and a broad description of various projects. Hours spent or other particulars that may be expected in a document purporting to record substantial sums owing over an extended period of time are conspicuously absent.

In contrast with another document, to which I will later refer, no expert evidence was led in relation to the creation of this document or, more generally, its provenance or evolution. Mr Fernando claimed that the USB stick containing the claims sheet has been lost and no examination could be conducted to verify the date and time that the claims sheet was created or indeed amended over a period of time.[178] There is no documentary evidence that the claims sheet was provided to the Mimmos and this was not contested.
[178]Transcript, 15 April 2016, 763-764.

Mr Fernando said that he asked to be paid the money that he was owed (according to the claims sheet) quite a few times in 2005 but that the Mimmos did not pay him because they were trying to buy a property in Frankston at the time.[179] This evidence was not persuasive, was inconclusive, lacking in any detail upon which the court could rely, and did not rise above the level of mere assertion. No emails, demands, phone records or details of meetings were given to support Mr Fernando’s claims in this regard.

(c) 25 April letter

[179]Transcript, 14 April 2016, 598.

Perhaps the most critical document to Mr Fernando’s case is the letter dated 25 April 2013. It is this document that, it is said by Mr Fernando, establishes the basis of the $700,000 payment (or, as Mr Mimmo puts it, the payment for ‘his dues’).

Mr Fernando said that he drafted a letter on Anzac Day, 25 April 2013, after he received the first tranche of the $700,000 payment. The letter purportedly acknowledged receipt of the payment of $350,000 on 24 April 2013. The letter was drafted by Mr Fernando and addressed to Mr and Mrs Mimmo. The content of the letter was as follows:

25^th of April 2013
Dear Matt and Rose
Many thanks for the part payment of commission of $350,000 via BP Energy on 24^th of April 2013.
As promised the balance $300,000 should be paid as agreed.
I highly appreciate your business and hope to do more business with you
Kind regards
Herbert [sic][180]

[180]Exhibit D1.

The letter was said by Mr Fernando to have been handed in person to Mrs Mimmo at the AMR premises on 26 April 2013. Mrs Mimmo denied that she ever received the letter. The 26 April 2013 was a Friday and Mrs Mimmo, it was said, did not, in the usual course, attend AMR’s premises on a Friday.

Mr Fernando said that Mrs Mimmo was at the AMR premises on that day. He said that on 26 April 2013, Mrs Mimmo was at the Gladstone Park Branch of the Commonwealth Bank of Australia to effect the second transfer of $350,000 to him.[181] The branch at Gladstone Park was not close to her residences either in Southbank or Frankston. Mr Fernando reasoned that that would indicate that Mrs Mimmo was in close proximity to AMR, and she would have been present at AMR to receive the letter.[182]
[181]Exhibit P15.
[182]Mr Fernando, ‘Closing Submission WHE Fernando’, 21 April 2016, 3[i(i)].

I do not consider that the fact that Mrs Mimmo attended the branch at Gladstone Park is determinative of the fact that she was present at AMR’s premises on Friday, 26 April 2013. Mrs Mimmo was ill. Routinely she did not work on Fridays. The mere fact that she attended a local bank branch does not, of itself, establish that she attended AMR’s premises on that day or being available to, or indeed did, receive a printed letter. In this instance, I cannot accept the evidence of Mr Fernando.

On 16 January 2014, Mr Geri, a forensic IT manager at Ferrier Hodgson, was instructed by Mr Fernando’s then solicitor to produce a report in relation to the 25 April 2013 letter.

Mr Geri deposed in court that the letter was indeed created on that date as evidenced by his examination of Mr Fernando’s computer. The methodology that Mr Geri employed for the forensic examination was to look at the internal metadata log of the letter on 25 April 2013, which bore the timestamp of when the letter was created. The timestamp was then cross-checked with the log on the windows operating system. In Mr Geri’s evidence, both metadata matched up with a creation date of the letter of 25 April 2013 at 7:56:54pm.[183]
[183]Exhibit D42.

In cross examination, counsel for Mr Mimmo suggested that a the document could have been first saved on a USB stick, manipulated on a different computer and saved back to the original computer. Mr Geri’s response was that such a manoeuvre would have been captured by the file system metadata and that the records in the metadata indicated that such an action did not occur.

When being asked if it is possible for someone to manipulate the windows operating system log, Mr Geri’s evidence was that if such an event occurred, the manipulation would be recorded in the log, and the log contained no such event. Mr Geri further confirmed that the time and date setting on Mr Fernando’s computer was correct and reflected the actual time and date at the time of the forensic examination. In cross examination, counsel for Mr Mimmo asked Mr Geri whether it is possible that Mr Fernando had disconnected his computer, changed the date and time, manipulated the file and then changed the date and time back. Mr Geri answered that such an action would be recorded in the logs in the operating system whether or not the computer is connected to a server. He said that he specifically looked for evidence of such manipulation and did not find any such evidence.

Discussions between Mr Fernando’s legal representatives and AMR regarding Mr Fernando’s employment went back and forth. By February 2014, Mr Fernando wanted certainty regarding his employment status with AMR, so he could look for other jobs.[276]
[276]Transcript, 14 April 2016, 670.

By letter dated 10 February 2014, Mr Fernando wrote to the directors of AMR and accepted termination of his employment with AMR.[277] For convenience, the letter can be summarised as follows:
[277]Exhibit D37.

·Mr Fernando asserted that his role at AMR was the Director of Finance and Planning;
·There were numerous communications between Mr Fernando’s then solicitors and the solicitors for AMR in relation to his employment with AMR. Through the communication by his then solicitors, Mr Fernando sought to confirm his employment status with AMR and demanded that all outstanding payments be paid to him;
·At all times, Mr Fernando was ready, willing and able to perform work for AMR;
·AMR failed to confirm Mr Fernando’s employment status and pay his wages and other benefits for the previous 7 months;
·AMR’s conduct of suspending Mr Fernando without pay, not letting him back to work and not paying his contractual entitlements to salary and superannuation amounted to a repudiation of his employment contract. Mr Fernando accepted AMR’s repudiation and that his employment with AMR had come to an end;
·Mr Fernando was entitled to his accrued annual leave and long service leave entitlements;
·Mr Fernando asserted that the reasonable notice of termination applicable to his employment contract was 12 months. Absent any reasonable notice given by AMR, he was entitled to payment of his contractual entitlements of 12 months in lieu of notice.

It may also be useful, in addition to the summary above, to directly extract parts of this letter in full:

On 13 November 2013, my lawyers, Maddocks, wrote to you noting that my employment with AMR had not been terminated despite the fact that payment of salary had stopped, and demanding payment of my employment entitlements.
On 27 November 2013, AMR’s lawyers, Cornwall Stodart, wrote to my lawyers largely referring to matters that relate to the Supreme Court proceedings between myself and Mr Mimmo, but which do not relate to me and my employment with AMR. That correspondence failed to confirm whether my employment with AMR was terminated or whether I would be returned to work or that the outstanding payments would be made to me.
Further correspondence was sent by my lawyers on 23 December 2013 pointing out that my employment remained unresolved, and by your lawyers on 2 January 2014, and again my lawyers on 15 January 2014, this latter indicating that unless rectification of my outstanding employment matters occurred by 21 January 2014, further steps would be taken. No further response has been received by me or my lawyers in relation to my employment.[278]

[278]Exhibit D37.

In cross-examination, Mr Fernando was asked about his contention that until February 2014 he did not know of his employment status, notwithstanding that Mr Mimmo had been in contact with him on several occasions, emails to which Mr Fernando failed to respond.[279] Mr Fernando did not contact the Mimmos after the events of 11 July to ask about his employment. Mr Fernando explained that this was because at that time they were trying to sort out the sales agreement.[280]
[279]Transcript, 15 April 2016, 767.
[280]Ibid 767-768

As I have said, however, correspondence was exchanged between Mr Fernando’s and AMR’s legal representatives in relation to the status of Mr Fernando’s employment.

I note that by way of observation, correspondence mentioned in the 10 February 2013 letter, in particular the 27 November 2013 letter, was not tendered in evidence. Accordingly, the court cannot conclude that AMR communicated termination of Mr Fernando’s employment to him at any time or sought to clarify Mr Fernando’s employment status with him after sending the letter dated 11 July 2013.

Mr Fernando gave evidence that it was not a condition of his employment with AMR that he purchase AMR; it would not breach his employment contract, or his duties as an employee of AMR, to not complete the purchase. I agree with these propositions.

As I have observed, there was no evidence before the court that Mr Fernando was informed of his summary termination, or the reasons for it, on 11 July 2013 or at all. Certainly no evidence was put before the court that Mr Fernando’s employment was summarily terminated due to alleged breach of fiduciary duties, at that date. Indeed the letter dated 11 July 2013 on which AMR relies, as I have said, is mainly focussed on the failed sale of shares in AMR to Mr Fernando and his associates.

In my opinion, it is clear on the evidence that the Mimmos had lost faith in Mr Fernando once the upfront payment for the shares in AMR had failed to materialise.

They may very well have had legitimate cause for concern at certain actions of Mr Fernando, including the transfer of the shares in AMR, the re-direction of funds consequent on the sale of the printer to an account controlled by Mr Fernando, and alleged expenditure on credit cards and the drawing of wages. However, as I have said, there was no evidence before the court that any of these matters were relied upon, nor communicated to Mr Fernando, as a basis for the alleged summary termination of his employment.

Contrary to AMR’s submission that Mr Fernando was summarily dismissed on 11 July 2013, Lou, in his reply by email on 14 July 2013 to American Express requesting Mr Fernando be removed from any signatory of the account, stated that Mr Fernando had been suspended until further notice.[281]
[281]Exhibit D31.

The weight of the evidence suggested that the catalyst for Mr Fernando’s departure from AMR (at the direction of Lou and Mr Grocott) was the failed purchase of the AMR business by him and his associates. So much was suggested by the letter from Cornwall Stodart dated 11 July 2013 and the circumstances of his exit from the premises of AMR facilitated by Lou and Mr Grocott.[282]
[282]Exhibit P8.

It may be that the Mimmos and AMR had various grounds to summarily dismiss Mr Fernando. Notwithstanding this, there was no evidence that these matters were communicated to Mr Fernando as a reason for, or the basis of, a termination of his employment on 11 July 2013 or indeed at any time thereafter.

Conclusion as to the status of Mr Fernando’s employment between 11 July 2013 and 10 February 2014

It is clear that Mr Fernando’s employment was not formally terminated on 11 July 2013. The evidence is to the effect that he was suspended.

An employer has no common law right to suspend an employee without pay for misconduct even if that misconduct would justify immediate dismissal.[283]
[283]Carolyn Sappideen, Paul M O’Grady and Joellen Riley, Macken’s Law of Employment (Lawbook, 8^th ed, 2016) 320 [7.20] nn 8.

The exclusion of Mr Fernando from his place to work, with the confiscation of his car, mobile phone, and other indicia of his employment, appears to constitute an unlawful suspension given the absence of any right of suspension in his contract of employment.

Even if Mr Fernando’s suspension effective 11 July 2013 was indeed unlawful, this does not entitle him to receive the benefit of wages during the period of suspension.[284]
[284]Ibid 323 [7.60].

In the eight edition of Macken’s Law of Employment, the learned authors observed that it is possible that the unlawful suspension be constituted a breach of contract to provide a basis on which the employee can terminate the contract.[285] The unlawfully suspended employee may have a common law action against the employer ‘to recover an amount equivalent to wages for the period of suspension’.[286]
[285]Ibid 324 [7.70].
[286]Ibid.

It is a general principle that an employee will not be paid independently of services rendered to the employer, even if it is the fault of the employer who prevented the employee from working. In the seminal case of the High Court in Automatic Fire Sprinklers Proprietary Limited and Another v Watson, Dixon J held that:

A contract for the establishment of the relation of master and servant falls into the same general category of agreements to pay in respect of the consideration when and so often as it is executed, and is, therefore, commonly understood as involving no liability for wages or salary unless earned by service, even though the failure to serve is a consequence of the master’s wrongful act.
It is, of course, possible for the parties to make a contract for the payment of periodical sums by the master to the servant independently of his service…But, to say the least, it is not usual. The common understanding of a contract of employment at wages or salary cannot be earned however ready and willing the employee may be to serve and however much he stand by his contract and decline to treat it as discharged by breach.
…
But, broadly speaking, it is enough to say that wages are for the service reasonably demanded under a subsisting relationship of master and servant. That relationship may be ended by the servant forsaking the master or the master discharging the servant, although the act of the one or of the other amounts to a breach of contract.[287]

[287](1946) 72 CLR 435, 465.

However, that is not to say that an employee, who was unfairly dismissed by his or her employer, would receive no compensation at all. Despite the fact that wages cannot be claimed in these circumstances, as a general remedy to a breach of contract, damages may be sought by the disgruntled employee. In the eighth edition of Macken’s Law of Employment, the learned authors observed:

The damages that a wrongfully dismissed employee can recover may, perhaps often will, approximate the amount of wages lost, but need not do so. The amount of lost wages is only the starting point in calculation of damages and may be reduced on account of mitigation or increased by the inclusion in the damages of other amounts which the employer is contractually bound to pay commissions, bonuses, severance payments and so on.[288]

[288]Carolyn Sappideen, Paul M O’Grady and Joellen Riley, above n 281, 165 [5.50].

In this case, the court considers that it ought have some regard to the remuneration that would have been payable to Mr Fernando, had his employment continued uninterrupted after 11 July 2013.

What was the amount of accrued entitlements owing to Mr Fernando after the employment agreement was terminated?

Mr Fernando submitted that his accrued entitlements were not paid to him after his employment contract had come to an end (by his acceptance of AMR’s repudiation) on 10 February 2014.

AMR conceded on the first day of trial that statutory entitlements are to be paid to Mr Fernando in the ordinary course.[289]
[289]Transcript, 5 April 2016, 40.

However, AMR submitted at trial that the quantification of Mr Fernando’s entitlements was incorrectly based upon an inflated salary.

It was Mrs Mimmo’s evidence that prior to the business being taken over, Mr Fernando requested Mrs Mimmo to produce a payslip which overstated Mr Fernando’s yearly salary to the equivalent of about $120,000, so that Mr Fernando’s bank could be more confident of his financial position. It was Mrs Mimmo’s evidence that despite the fact that she complied with Mr Fernando’s request, Mr Fernando did not, in fact, receive a pay rise. Mrs Mimmo’s evidence was that the reason she complied with Mr Fernando’s request was that she thought Mr Fernando was going to take over the business and she didn’t care too much at that point.[290]
[290]Transcript, 11 April 2016, 312.

Mrs Mimmo further gave evidence that about a week after Mr Fernando requested the payslip, Mr Fernando told Mrs Mimmo that his bank was not satisfied with the payslip and wanted to see evidence of actual payment of the salary. Payment was then advanced to Mr Fernando on the basis of the agreed inflated salary. When asked why she agreed to pay this money, Mrs Mimmo testified that:

… it was only on [Mr Fernando’s] request that he needed – he said that the bank needed to see the money go into his account, and that’s the only reason why I did it.[291]

[291]Ibid.

It was conceded in closing submissions that Mrs Mimmo’s preparation of this document knowing it to be wrong does not reflect well on Mrs Mimmo. It was further submitted that this document should not be seen as anything other than a bad reflection on Mrs Mimmo.[292]
[292]Transcript, 22 April 2016, 890.

A number of weekly payslips for Mr Fernando were produced in court. These payslips are dated for the period between 29 April 2013 to 23 June 2013 and consistently state that Mr Fernando’s annual salary was $121,089.80. Two additional weekly payslips for Mr Fernando for the two weeks between 24 June 2013 to 7 July 2013 were also produced. These payslips indicate an annual salary of $121,089.80.[293]
[293]Exhibit D36.

A string of PAYG payment summaries for Mr Fernando starting from the 2005-2006 financial year to the 2013-2014 financial year were also produced.[294] Relevantly, these payment summaries provide as follows:
[294]Exhibit P13.

Financial Year	Gross Payments	Total Tax Withheld
2005-2006	$61,154	$14,993
2006-2007	$60,000	$14,446
2007-2008	$65,641	$15,511
2008-2009	$67,967	$15,719
2009-2010	$71,898	$16,540
2010-2011	$80,346	$18,549
2011-2012	$87,814	$20,811
2012-2013	$98,772	$24,665
2013-2014	$4,657	$1,330

A second version of the 2013-2014 PAYG payment summary was produced by Mr Fernando. This payment summary provides as follows:

Financial Year	Gross Payments	Total Tax Withheld
2013-2014	$87,814	$20,811

When asked to explain the inconsistency, Mrs Mimmo gave evidence that the second version was incorrect. Her evidence was that the second version was created because she had entered the wrong year in the computer when she printed the document and had forgotten to override the year that would appear on the document.[295] I note that the figures in the second version of the 2013-2014 PAYG payment summary are identical to those in the 2011-2012 PAYG payment summary. In addition, the ATO’s records for the 2013-2014 financial year for Mr Fernando match the first version of the 2013-2014 PAYG payment summary.[296] As such, I accept Mrs Mimmo’s explanation for the inconsistency to be true. Accordingly, I will disregard the second version of the 2013-2014 PAYG payment summary.
[295]Transcript, 11 April 2016, 355-358.
[296]CB 1232.

I note that not all of these payslips and PAYG payment summaries are tendered as evidence. However, noting the fact that Mr Fernando is a self-represented litigant and that these documents were put to the witnesses in court, I make note of this for completeness.

In cross examination, Mr Fernando was asked to justify his approximately 40% pay rise in 2012-2013.[297] When asked to explain the reason why he received this pay rise, Mr Fernando gave evidence that he had asked the Mimmos for a pay rise many times and that he received the pay rise because Mrs Mimmo wanted him to be paid on a similar level as her sons who were directors of AMR at the time.[298] Furthermore, it is Mr Fernando’s evidence that in that same year, he received the $700,000 payment on account of his ‘dues’.
[297]Transcript, 15 April 2016, 795.
[298]Transcript, 14 April 2016, 596; Transcript, 15 April 2016, 795.

Here, again, the evidence of the two parties is completely at odds: Mr Fernando insisted that he received a pay rise in 2012-2013 and Mrs Mimmo said that he did not. It falls on the court to reconcile this conflicting evidence.

I have considered the payslips and the PAYG payment summaries and the oral evidence given by Mrs Mimmo and Mr Fernando.

On the one hand, Mrs Mimmo’s evidence that Mr Fernando had asked for the overstated payslips is supported by the fact that the first of the payslips produced start from 29 April 2013, just prior to the takeover of AMR. However, to accept Mrs Mimmo’s evidence as it is, the court would be required to come to the conclusion that Mrs Mimmo had deliberately concocted documents to help Mr Fernando obtain a loan from a bank and thus obtaining a financial advantage.

As I have observed, Mrs Mimmo’s evidence was that, as the date for the transfer of the business drew near, she did not care too much about what Mr Fernando was paid. A significant pay rise for Mr Fernando, then, is not entirely far-fetched. Mr Fernando, on the other hand, claimed that Mrs Mimmo wanted him to be paid on a similar level as her sons, who were directors of AMR.

As plausible or implausible as the versions given by each side are, the weight of evidence demonstrated by the numerous payslips and the PAYG payment summary for the 2012-2013 financial year cannot be overlooked. On the basis of the evidence, I accept that a pay rise was in fact given to Mr Fernando in the 2012-2013 financial year and that Mrs Mimmo agreed to it. It is not up to the court to speculate as to the reasonableness of such a pay rise nor, ultimately, the motives for its granting.

It is Mr Fernando’s evidence that his entitlements in AMR also included the use of mobile phone and car. However, apart from his assertion that his entitlement in relation to the car was ‘everything included’, there was no detailed evidence before the court as to the actual use of a mobile phone or car. There is no reference to such benefits in Mr Fernando’s employment contract, nor was any detailed evidence advanced to support this claim, nor any detail of any other agreements establishing this benefit as an entitlement. Furthermore, in the nine consecutive PAYG payment summaries produced in court starting from the financial year ending 30 June 2006, fringe benefits only appeared in the 2011-2012 and 2013-2014 financial years in the amounts of $6,621 and $5,921 respectively.[299]
[299]Exhibit P13.

An employer may, from time to time, choose to give a benefit or financial support to an employee for a certain purpose. However, in the absence of clear evidence, it cannot be said that a benefit afforded to an employee equates to an entitlement of that employee on an ongoing basis.

As I have said, there was no contractual entitlement to such benefits, only isolated incidents of disclosure of such benefits in PAYG payment summaries over the years and no other evidence was led to substantiate such an entitlement.

In its closing submissions, AMR further argued that Mr Fernando failed to lead evidence to prove that his statutory leave entitlements, as pleaded, were $77,485.[300]
[300]Mr Mimmo and AMR, ‘Mimmo and AMR’s Written Outline - Closing Submissions’, 21 April 2016, [91].

The accrued entitlements that Mr Fernando is claiming comprise Mr Fernando’s long service leave and annual leave entitlements. As at 10 February 2014, Mr Fernando claims that he has accrued the following:

(a) 391.4 hours, equivalent to 10.3 weeks, of long service leave in his twelve years of employment with AMR;

(b) 252.92 hours, equivalent to 6.68 weeks, of annual leave.

The accrued entitlements, calculated on the base of $237,293 (comprising salary and other benefits) as pleaded by Mr Fernando, would total $77,485.[301]

[301]Mr Fernando, ‘Statement of Claim’, CI-2014-02804 (S CI 2015 2816), 10 June 2014, [4], [13]–[14].

However, in Mr Fernando’s closing submissions, the amount claimed was reduced to $46,646.[302] Mr Fernando did not explain to the court how he arrived at the reduced figure, the evidence upon which his calculation was based, nor was there any proof of the hours that were said to have been accrued.
[302]Mr Fernando, ‘Closing Submission WHE Fernando’, 21 April 2016, 19 [(v)(a)].

In reaching my conclusion concerning the appropriate measure of damages, I have had regard to and carefully considered, but not in a strict mathematical sense, certain other matters such as expenditure (albeit modest) for which Mr Fernando may be personally liable (being amounts spent utilising AMR’s credit card), his purported contribution to the purchase or a motor vehicle which he utilised whilst employed, including, as alleged, for his private purposes and recognition of his previously enjoyed benefit of the use of a mobile phone.

What is a reasonable period of notice for termination of the employment agreement alternatively, what is an appropriate measure of damages in this case?

Mr Fernando is in his early 50s and has been an employee of AMR for some considerable time.

Whether it is to be accepted or not that his role was Financial Controller (as opposed to an accountant), he is the most senior finance and accounting employee within the business. I do not consider that this fact is contested.

In light of these observations, I must turn to Mr Fernando’s personal situation.

The evidence was that Mr Fernando was capable of earning, and did in fact earn, some limited income after his effective departure from AMR. However, I do not consider that these endeavours presented an obstacle to him returning to full-time employment with AMR.

Mr Fernando’s seniority, experience and age suggests to me that his prospects of securing employment of an equivalent status, standard and remuneration are, in all likelihood, limited.

Although not determinative in my decision, I recognise that Mr Fernando’s speech impediment may also hinder his prospects of success in the employment market.

Taking these considerations into account and having regard to the legal principles outlined above, I take notice that Mr Fernando may face some considerable challenge in securing employment of a similar nature and at a comparable level of remuneration to that which he has experienced and enjoyed at AMR.

It is also of significance, as I have referred to above, that Mr Fernando’s employment was never officially terminated. The situation remained unresolved. Notwithstanding this observation, it is clear, as I have said, that the employment relationship came to an end, at least in all practical senses, on 11 July 2013 after it was apparent that the acquisition of AMR’s business by Mr Fernando and his associates would, in all likelihood, not proceed.

It was Mr Fernando’s oral evidence that he had part-time employment. He worked for a company called Australian Food Industries. He started working for this company on a part-time basis from 2001 and maintained his employment ever since. He worked there about three hours a week.[303]
[303]Transcript, 14 April 2016, 595.

Mr Fernando said that he applied for hundreds of jobs. He was invited for interviews for some of these jobs. However, in response to questions as to why he was not successful in securing a job, he said that it was because he could not provide any reference from his recent employment.[304]
[304]Ibid 549.

AMR submitted that there was evidence that Mr Fernando had set up an accountancy practice of his own and that should be taken into account in determining what amount, if any, ought be paid to Mr Fernando.

From the tax return of Mr Fernando in the financial year of 2014 (the 2014 tax return), it is evident that he engaged in business activities. Contrary to the submissions of AMR on the issue of mitigation, engaging in business activities by Mr Fernando, similar to the plaintiff in Quinn, who built a consultancy business after being terminated by his employer, should be seen as conduct that, in my opinion, went at least some way to discharging his obligation to mitigate his loss post the alleged termination.[305] As in Quinn, I find Mr Fernando’s efforts to conduct his own business, in light of the circumstance that he had failed to secure an employment, reasonable.
[305]Quinn [1992] 1VR 567, 582.

During cross-examination, Mr Fernando denied that his business was an accounting business, notwithstanding the business description on the tax return; he asserted that the business was involved in equities trading. Regardless of what the business was, the 2014 tax return appears to show, at least on the face of it, that the business suffered a loss of $70,585 in that financial year.

None of the above evidence, in my opinion, supports AMR’s submissions that any period of reasonable notice or an award of damages ought be reduced, by reason of Mr Fernando’s conduct.

Conclusion and decision

Based on the matters and reasons set out in this judgment, I find:

(i)The sum of $700,000 paid to Mr Fernando was a loan advanced by Mr Mimmo to Mr Fernando;
(ii)Mr Fernando’s salary was $121,089.80 as at 11 July 2013;
(iii)Mr Fernando is entitled to be paid an amount equivalent to seven months’ salary, calculated on the basis of an annual salary of $121,089.80, together with long service leave and annual leave;
(iv)That Mr Fernando incurred personal costs in the sum of $33.20 in respect of credit card charges, for which he is liable to AMR.

Given the paucity of the evidence, I make no findings in relation to:

(i)Mr Fernando’s entitlement to fringe benefits (being the use of a mobile phone and car); and
(ii)Other expenses allegedly incurred by Mr Fernando on AMR and other credit cards (subject to the amount of $33.20).

I will hear the parties on the form of orders and on the question of costs.

[2016] VSC 510

26 August 2016