Nuttall v Hatch Pty Ltd
[2024] FCA 339
•9 April 2024
FEDERAL COURT OF AUSTRALIA
Nuttall v Hatch Pty Ltd [2024] FCA 339
File number(s): VID 562 of 2019 Judgment of: HESPE J Date of judgment: 9 April 2024 Catchwords: EMPLOYMENT LAW – employment – adverse action – whether the applicant was subjected to adverse action contrary to s 340 of the Fair Work Act 2009 (Cth) (FW Act) – whether applicant made complaints or inquiries amounting to the exercise of “workplace rights” pursuant to s 341 of the FW Act – whether adverse action was taken because the applicant exercised a workplace right
CONTRACT LAW – construction of shareholder agreement – whether applicant was absent from “active employment for a continuous period of twelve (12) months or more”
Legislation: Corporations Act 2001 (Cth) s 175
Fair Work Act 2009 (Cth) ss 13, 14, 22, 334, 339, 340, 341, 342, 360, 361, 545, 546, 547, 793
Cases cited: Alam v National Australia Bank Limited [2021] FCAFC 178; (2021) 288 FCR 301
Australian Workers' Unionv BHP Iron-Ore [2001] FCA 3; (2000) 106 FCR 482
BHP Iron Ore Pty Ltd v Australian Workers’ Union [2000] FCA 430; (2000) 102 FCR 97
Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 248 CLR 500
Cigarette & Gift Warehouse Pty Ltd v Whelan [2019] FCAFC 16; (2019) 268 FCR 46
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41; (2014) 253 CLR 243
Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Limited [2015] FCA 1014
Construction, Forestry, Mining and Energy Unionv Pilbara Iron Company (Services) Pty Ltd (No 3) [2012] FCA 697
Dorsch v HEAD Oceania Pty Ltd [2024] FCA 162
Environmental Group Ltd v Bowd [2019] FCA 951
Ermel v Duluxgroup (Australia) Pty Ltd (No 2) [2015] FCA 17
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Khiani v Australian Bureau of Statistics [2011] FCAFC 109
March v E & MH Stramare Pty Ltd [1991] HCA 1; (1991) 171 CLR 506
Messenger v Commonwealth of Australia (Represented by the Department of Finance) [2022] FCA 677
Monash Health v Singh [2023] FCAFC 166
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1
PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15; (2020) 274 FCR 225
Qantas Airways Ltd v Australian Licensed Aircraft Engineers’ Association [2012] FCAFC 63; (2012) 202 FCR 244
Qantas Airways Ltd v Transport Workers Union of Australia [2023] HCA 27
Serpanos v Commonwealth of Australia [2022] FCA 1226
Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271
Walsh v Greater Metropolitan Cemeteries Trust (No 2) [2014] FCA 456
Wong v National Australia Bank Ltd [2021] FCA 671
Wong v National Australia Bank Ltd [2022] FCAFC 155
Division: Fair Work Division Registry: Victoria National Practice Area: Employment and Industrial Relations Number of paragraphs: 258 Date of last submission/s: Respondent (11 October 2023)
Applicant (27 October 2023)Date of hearing: 17 – 19 July 2023, 27 September 2023 Counsel for the Applicant Mr J Tracey SC Solicitors for the Applicant Kennedys Counsel for the Respondents Mr A Pollock and Ms S Cheligoy Solicitors for the Respondents Milner Lawyers ORDERS
VID 562 of 2019 BETWEEN: TIMOTHY NUTTALL (IN HIS PERSONAL CAPACITY AND IN HIS CAPACITY AS TRUSTEE FOR THE NUTTALL FAMILY TRUST)
Applicant
AND: HATCH PTY LTD (ACN 008 630 500)
First Respondent
HATCHCOS HOLDINGS PTY LTD
Second Respondent
MOTUS COMPANY LTD
Third Respondent
AND BETWEEN: MOTUS COMPANY LTD
Cross-Claimant
AND: TIMOTHY NUTTALL (IN HIS PERSONAL CAPACITY AND IN HIS CAPACITY AS TRUSTEE FOR THE NUTTALL FAMILY TRUST)
Cross-Respondent
ORDER MADE BY:
HESPE J
DATE OF ORDER:
9 APRIL 2024
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The cross-claim be allowed.
3.The applicant deliver the share certificates for the shares the subject of the Exercise Notice to Hatchcos Holdings Share Registry Office.
4.There is no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
HESPE J:
PART 1: OVERVIEW
The applicant, Mr Timothy Nuttall is employed by the first respondent, Hatch Pty Ltd, in the role of Manager Infrastructure – Southern Region. In his role, Mr Nuttall is required to report to the Director Infrastructure – Australia. At the relevant times, this role was held by Mr Nathan Wild. Mr Wild in turn reported to the Managing Director Infrastructure – Australia‑Asia, Mr David Moran.
Prior to Mr Nuttall’s employment with Hatch, a company controlled (indirectly) by Mr Nuttall conducted an engineering consulting business. From about 1 July 2017, Hatch acquired this business and Mr Nuttall became an employee of Hatch. Pursuant to a shareholder agreement dated 10 July 2017 between Hatch’s parent company, Hatchcos Holdings Pty Ltd (second respondent) and Motus Company Ltd (third respondent), Mr Nuttall, as trustee of the Nuttall Family Trust, became a holder of 2,050 shares in Hatchcos Holdings.
Mr Nuttall has not attended work at Hatch following a meeting on 4 September 2018 with Mr Moran and Mr Wild (4 September Meeting). Mr Nuttall suffers from a psychiatric condition and remained an employee on unpaid leave as at the date of the hearing.
In around September 2019, Motus purported to acquire the 2,050 shares registered to Mr Nuttall as trustee of the Nuttall Family Trust pursuant to the terms of the shareholder agreement. The sum of $1,475,000 was deposited in Mr Nuttall’s bank account as the purchase price for those shares on or around 3 October 2019.
By his amended originating application, Mr Nuttall claims that:
(1)Hatch contravened s 340 of the Fair Work Act 2009 (Cth) (the FW Act) by taking adverse action against him. Mr Nuttall seeks declarations, compensation (pursuant to s 545 of the FW Act), pecuniary penalties (pursuant to s 546 of the FW Act) and interest (pursuant to s 547 of the FW Act).
(2)The purported acquisition of the Hatchcos Holdings shares that were held by him as trustee of the Nuttall Family Trust was of no effect because Motus had no contractual right to acquire those shares and Mr Nuttall (as trustee) remains the holder of those shares. Mr Nuttall, as trustee, seeks orders pursuant to s 175(2) of the Corporations Act2001 (Cth) requiring the correction of Hatchcos Holdings register of shareholders and compensation.
Mr Nuttall alleges the direction to attend the 4 September Meeting without notice, the conduct of Mr Moran at that meeting and the communication to Mr Nuttall at that meeting that he was to cease performing his role as Manager Infrastructure – Southern Region (which was to be reassigned to Mr Wild) and instead perform the role of Structures Team Lead, constitute adverse action. Mr Nuttall contends that those actions occurred because, or partially because, Mr Nuttall had made various complaints or inquiries about various matters.
Hatch denies that Mr Nuttall was unlawfully subjected to any form of adverse action. Hatch denies that any of the actions taken constituted adverse action and maintains that none of the actions taken was actuated by complaints or inquiries made by Mr Nuttall in relation to his employment.
By cross-claim, Motus seeks specific performance of the shareholder agreement, claiming that it had validly exercised its rights under that agreement to acquire the 2,050 shares and requiring that Mr Nuttall deliver up the share certificate. In the alternative, Motus seeks restitution by the repayment of the sum deposited to Mr Nuttall’s account.
Mr Nuttall accepts that if he is to remain the registered shareholder of the 2,050 Hatchcos Holdings shares, he is to repay the proceeds he received as the purchase price of those shares. In so far as the cross-claim is concerned, the issue is whether Motus validly exercised a contractual right to acquire those shares.
PART 2: BACKGROUND AND EVIDENCE
2.1 The trial
The trial initially ran across three days (17–19 July 2023) during which evidence was received. Some weeks after the hearing of evidence, the parties filed comprehensive written closing submissions, upon which they elaborated at a further hearing on 27 September 2023.
The Court heard evidence from nine witnesses.
Mr Nuttall led evidence from the following witnesses, each of whom was cross-examined:
(1)himself, who gave affidavit evidence.
(2)Mr Graeme Baird, a registered psychologist who provided a report dated 27 November 2020 and a report dated 27 February 2023.
(3)Dr Duc Nguyen, Mr Nuttall’s general practitioner at the relevant times, who provided a medical report dated 22 October 2020 and a report dated 1 March 2023.
The applicant also tendered two expert reports — one from Ms Smith, dated 24 December 2020, and another from Mr Hood, dated 9 March 2023. Ms Smith and Mr Hood are financial experts who were not required for cross-examination. Each of these experts was asked to opine on the alleged losses suffered by Mr Nuttall in relation to the exercise of Motus’ rights to acquire his Hatchcos Holdings shares.
Hatch led evidence from the following witnesses, each of whom was cross-examined:
(1)Mr Kwak, Managing Director of Hatch for the Australia-Asia region.
(2)Mr Schatz, Global Managing Director for Infrastructure for the Hatch group. Mr Schatz attended by video conference.
(3)Mr D’Cruz, director of Hatch’s Metals business in Australia and a colleague of Mr Nuttall and Mr Moran.
(4)Mr Moran, responsible for Hatch’s Infrastructure group in Australia.
The Court also received joint evidence from two psychiatrists, Associate Professor Khalid and Dr Larder in the form of a joint report and were cross-examined concurrently. Each of Associate Professor Khalid and Dr Larder also provided individual reports (Associate Professor Khalid in the form of a report dated 15 January 2022 and Dr Larder in the form of a report dated 8 May 2023). To the extent that the views expressed in their individual reports differed from that expressed in the joint report, the evidence in the joint report is accepted over that in the individual reports.
At the commencement of the trial, Mr Nuttall abandoned the following:
(a)A claim that had he continued to perform his role after 4 September 2018, Hatch’s business would have reached the necessary financial milestones to entitle him to an earn-out payment as described in [22] below.
(b)A defence to the cross-claim that was based upon the Hatchcos Group Inc shareholder agreement.
(c)A contention that Mr D’Cruz was a decision‑maker or person involved in the decision to engage in the alleged adverse action.
2.2 Hatch’s business
The Hatch group, headquartered in Canada, provides engineering services to businesses operating in a range of sectors around the globe. Hatch conducted a business in Australia of providing engineering services to businesses operating in the mining, metallurgical and energy industry sectors. In about 2015, Hatch began to provide services to public infrastructure businesses in Australia. Mr Moran was recruited in September 2016 to lead this part of Hatch’s business in Australia.
Over 2017 and 2018, Hatch successfully tendered for work on several infrastructure projects in Australia, including the West Gate Tunnel, Western Roads Upgrade, Melbourne Metro Tunnel and the Melbourne Airport Upgrade.
Over this period, Hatch also acquired smaller engineering consulting businesses that provided services to the public infrastructure industry in Australia. The consulting business conducted by Nuttall Engineering Consultants Pty Ltd was one of these businesses. The shares in Nuttall Engineering Consultants were acquired by Hatch on or about 15 June 2017 pursuant to the terms of a Share Purchase Agreement. Mr Nuttall was the guarantor of the seller’s obligations under that agreement.
Hatch’s website at the time quoted its Chief Executive Officer as saying:
We are accountable to our clients, communities, and employees for conducting our business in a manner which is safe, respectful, legal, and sustainable.
The website also stated that:
We maintain a supportive, professional and positive workplace environment by appreciating the unique skills, experience, and talent of each individual, treating everyone with courtesy, fairness and respect.
Hatch had a procedure for managing grievances and complaints recorded in a document entitled “Workplace Grievance Resolution Procedure – Australia Asia”, effective from February 2015. The document stated that the procedure did not form part of any employee’s contract of employment and Hatch could alter the manner in which the procedure was conducted in respect of any particular grievance. “Grievance” was defined as a “concern or complaint about an act, behaviour, omission, situation or decision, which an individual believes is unfair or unjustified”. Relevantly, the document provided that:
(a)The procedure was available to employees, contractors/subcontractors, work experience students, volunteers and those who conduct work with and on behalf of Hatch within the Hatch workplaces of the Australia Asia region.
(b)All parties have a right to be treated fairly, including any person against whom a complaint has been made. This means that the details of the complaint will be put to the respondent so that they will have an opportunity to respond or explain.
(c)Grievances will be resolved in a sensitive manner.
(d)All parties are expected to genuinely participate and co-operate in the process and make all reasonable attempts to resolve the grievance.
(e)The nature and severity of the grievance will determine the appropriate procedure to resolve a grievance.
(f)Under a heading “Informal Resolution Procedure”, it was stated that:
5.1 Informal Resolution Procedure
Workers maintain good relationships by dealing with workplace grievances at an early stage and in an informal manner. An informal resolution process may be appropriate to address minor workplace complaints, such as personality conflicts or one-off or recent situations where the behaviour is unwelcome or offensive. For example, it may be the respondent was not aware their behaviour was unwelcome or caused offence.
A worker (complainant) should address the grievance with the person concerned (respondent) if they feel comfortable doing so. The complainant should identify the behaviour, explain that the behaviour is causing offence and ask for the behaviour to stop. Both parties should approach the informal process with a willingness to resolve the situation in line with the principles of this procedure.
If the complainant does not feel comfortable addressing the grievance directly with the respondent, or after addressing the grievance with the respondent the behaviour continues, the complainant should report the grievance to their manager or HR representative. The manager and HR representative will determine the appropriate cause of action which may include raising the concerns directly with the respondent or facilitating a meeting between the parties in an attempt to resolve the grievance.
2.3 Terms of Hatch’s acquisition of Nuttall business and Mr Nuttall’s employment
Share Purchase Agreement
Pursuant to the Share Purchase Agreement, Hatch agreed to purchase the issued shares in Nuttall Engineering Consultants for the sum of $688,000 (subject to adjustment for working capital balances at closing) plus 2,050 ordinary shares in Hatchcos Holdings. The Hatchcos Holdings shares were directed by the seller to be delivered to Mr Nuttall in his personal capacity or as trustee. An additional earn-out payment (comprising of up to $330,000 and 480 Hatchcos Holdings shares) was payable if certain income targets were met by the business of the Hatch Southern Regional Office in the 12-month period ending 30 September 2019. It was a condition of the sale that Mr Nuttall sign an employment agreement with Hatch “as senior leader of the Hatch [Southern Regional Office] and Hatch Australia Infrastructure team with a commensurate title, role description and responsibilities, a total salary package of $330,000 (including superannuation) and employee benefits generally available to Hatch employees, together with a signed confidentiality, intellectual property and non-solicitation agreement”.
Completion of the Share Purchase Agreement occurred on 1 July 2017.
Contract of Employment
Mr Nuttall’s contract of employment with Hatch, signed by him on 30 June 2017, provided that Mr Nuttall was to commence “in the position of Manager Infrastructure – Southern Regional within the Infrastructure Group” reporting to the “Director Infrastructure, Australia, Nathan Wild”. Mr Nuttall’s duties were described as:
You will be required to perform the duties of your position and such other duties, within your skill and capability, as requested of you. If you have any queries in this regard please contact Nathan Wild.
You agree Hatch may alter your position, duties, responsibilities and level of authority during your employment in accordance with the needs of the business from time to time. These changes may be made by Hatch on a temporary or permanent basis.
You agree the terms of this Contract continue to apply to you throughout the period of your employment unless varied in writing and agreed by both parties.
The contract of employment provided the following in relation to “policies”:
You are directed to read and comply with the obligations imposed upon you within Hatch’s policies and procedures as they relate to your employment. These policies and procedures may be varied from time to time at Hatch’s discretion, and you are directed to comply with such variations.
The contents of Hatch policies and procedures are not contractual and do not confer contractual benefits upon you and do not impose contractual obligations on Hatch. The policies and procedures contain provisions which set out requirements that apply to you and actions Hatch may take which may affect employees.
A breach of your obligations under Hatch’s policies and procedures may result in disciplinary action, up to and including the immediate termination of your employment.
Mr Nuttall commenced work with Hatch in the role of Manager Infrastructure – Southern Region on 1 July 2017.
Shareholder Agreement
The Hatchcos Holdings shares held by Mr Nuttall (whether in his personal capacity or as trustee) were the subject of a shareholder agreement, dated 10 July 2017, between Mr Nuttall, Hatchcos Holdings and another principal shareholder in Hatchcos Holdings, Motus.
Pursuant to cl 5 of that agreement, relevantly:
(a)Mr Nuttall granted a call option to Motus. Upon exercise of that option, Mr Nuttall was required to dispose of the Hatchcos Holdings shares for a price determined in accordance with cl 9 of that agreement.
(b)Motus could exercise the call option at any time after an “Option Event” occurred by giving Mr Nuttall an Exercise Notice in respect of a number of shares determined under paragraph 5(c) of the agreement. “Option Event” was defined in paragraph 1(i) to mean:
(i)the acceptance by a corporation associated with Hatchcos of the voluntary resignation of the Employee from employment with a corporation associated with Hatchcos or the making of an agreement between the Employee and a corporation associated with Hatchcos as to termination of such employment prior to normal retirement…
(ii)the Employee's employment with a corporation associated with Hatchcos is terminated, whether for cause or not for cause for any other reason…unless immediately thereafter he is employed by and performing active employment duties for another corporation associated with Hatchcos;
(iii)the cessation of the employment of the Employee with a corporation associated with Hatchcos upon death or normal retirement;
(iv)at the option of either party, when the Employee has been absent from active employment for a continuous period of twelve (12) months or more or for an aggregate period of fourteen (14) months or more in any twenty-four (24) month period;
(v)any leave of absence or a greater than twenty percent (20%) reduction in duties from full-time employment with a corporation associated with Hatchcos for a period which exceeds twelve (12) months; provided that no shares shall be required to be sold in connection with this subparagraph in the case of a leave to which the Employee is entitled by law or pursuant to a statutory scheme of long service leave;
(vi)Hatchcos Holdings determines that the Employee is performing his employment duties in a sub-standard or unsatisfactory manner, and, having notified the Employee of such determination, the Employee fails to achieve a satisfactory level of performance within a reasonable period of time (each as determined by Hatchcos Holdings in its sole discretion);
(vii)the Employee returns to active employment from an absence, leave of absence or reduction in duties to a position of lesser responsibility;
(viii)the corporation employing the Employee ceases to be a corporation associated with Hatchcos;
(ix)the granting by Hatchcos Holdings of approval to the Shareholder to exercise the Put Option…
(x)the breach by the Shareholder of paragraph 3 or 4 [relating to the dealing with the Hatchcos Holdings shares] or the making by the Shareholder of any assignment for the benefit of his creditors or the making of any receiving order against the Shareholder or any other event constituting personal bankruptcy.
(c)Upon the giving of an Exercise Notice, a contract was to arise between Mr Nuttall under which Mr Nuttall was required to sell to Motus:
(i)all of the Hatchcos Holdings shares he held, in the event of an Option Event other than Option Event (vi) or (vii);
(ii)the number of Hatchcos Holdings shares determined by Hatchcos Holdings, in the event of Option Event (vi) or (vii) “as placing [Mr Nuttall] at a level of shareholding that is not less than the number of shares generally held by other Shareholders having similar roles or responsibilities at a similar standard of performance”.
(d)Unless an Option Event occurs, a put option or call option could not be exercised unless Mr Nuttall made an application to Hatchcos Holdings for permission to exercise his put option.
Clause 16 required that any notice required or given for the purposes of the agreement was to be in writing “and shall be deemed to have been duly given if delivered to the Shareholder and Employee personally…or if mailed by prepaid registered mail addressed to…the Shareholder and Employee, at the last address recorded for the Shareholder in the registers of Hatchcos Holdings” and “any such notice shall be deemed to have been given at the time of delivery if delivered personally and if mailed by prepaid registered mail on the third next business day following the date of mailing”.
Mr Nuttall is also the beneficial owner of shares in Hatchcos Group Inc. These shares were held by trustees under the terms of an agreement under which the trustees held shares for certain employee shareholders of the Hatchcos group. Hatchcos Group Inc is an unlisted company owned by the employees of the Hatch group. Generally, senior employees performing valuable services are offered shares. Mr Nuttall’s Hatchcos Group Inc shares were also subject to the terms of a shareholder agreement made on 5 September 2017 between Mr Nuttall and Hatchcos Group Inc.
By the close of the hearing, neither party sought to rely upon this shareholder agreement for any purpose.
2.4 Chronology of Events
As will be seen, the relationship between Hatch and Mr Nuttall was plagued with difficulties and did not evolve as either party might have hoped or expected.
At the time Mr Nuttall commenced his employment with Hatch on 1 July 2017, Hatch’s Melbourne office was very small, with few employees. Both Mr Wild and Mr Moran were relatively recent hires.
Mr Nuttall’s employment agreement did not expressly set out the scope of his role as Manager Infrastructure – Southern Region and Mr Nuttall was never provided with a formal written description of his role. Mr Nuttall considered his role to encompass the following duties and responsibilities, in respect of the Southern Region (namely Victoria):
(a) Managing the pricing of work and projects;
(b) Bringing in business and clients, tendering;
(c) Managing the control of costs and outgoings;
(d) Hiring and termination of staff;
(e) Growing the team to meet the business plan – namely, 40-50 employees by the end of October 2019;
(f) Achieving the business plan target of revenue >$10 million in the Financial Year ending September 2019;
(g) Client meetings;
(h) Strategic growth of the business in the Southern Region;
(i) Promote the profile of the Business in the Southern Region;
(j) Manage the operations of the Southern Region; and
(k) Acting as Project Director.
Mr Nuttall considered the central elements of his role to be in winning work and recruiting and managing staff. Between 2017 and 2018, Hatch successfully tendered for a number of significant infrastructure projects in the Southern Region, including Melbourne’s West Gate Tunnel, Western Roads Upgrade, Melbourne Metro Tunnel and designs for the Melbourne Airport Upgrade.
Mr Moran considered a central element of Mr Nuttall’s role to be in delivering projects on budget and in accordance with client expectations, including understanding the details of client projects and identifying any risk areas for Hatch.
At the commencement of his employment, Mr Nuttall travelled to Portugal where his partner and children were and to return to Australia with them. Mr Moran was unaware of the purchase of that leave and received what he considered to be short notice of that leave. Mr Nuttall was absent for approximately 2 weeks shortly after the commencement of his employment. By email sent to Mr Moran on 21 August 2017, Mr Nuttall acknowledged that he “clearly need[ed] to improve my communication on leave”. Mr Moran required Mr Nuttall to purchase leave to cover his absence.
Mr Wild had a history of suffering from depression and anxiety, often away from work due to illness. Mr Moran had at one time said to Mr Nuttall that “[Mr Wild] has gone off again”.
On 2 February 2018, Mr Wild sent an email to two individuals, at least one of whom was a direct report of Mr Nuttall (Mr Taylor), with a subject heading “Western Road Upgrade Design – critical design information, inputs and issues”, in which Mr Wild set out “a few concerns” he had with the project. He forwarded a copy of the email to Mr Moran. Mr Moran responded at one point:
Great to have you all over it. Tim is clearly not, irrespective of his rhetoric.
From February 2018, Mr Moran instituted monthly project review meetings with each project team to review project progress and budgetary performance as well as weekly Regional Infrastructure Leadership Team meetings with his direct reports to review employee utilisation.
In around March or April 2018, Mr Wild broke his ankle which also resulted in a further absence from the office. Mr Moran said to Mr Nuttall at the time that “[Mr Wild] is off again, now with a twisted ankle”.
On 4 May 2018, an email was sent to Mr Nuttall and Mr Taylor requesting they provide their preferred time to set a recurring team meeting with Mr Wild for the Civil and Structural teams, with the first to commence the following Monday. The email also attached an organisation chart. Mr Nuttall did not respond to the request for a preferred time but asked for his version of the organisation chart to be prepared for further discussion with Mr Wild. Mr Wild sent an email to Mr Moran saying:
Tim is becoming a problem.
Why...he and [Mr Taylor] are resisting team meetings and the structure I am putting in place is beyond me.
…
Can you call them into your office for a chat?
They seem allergic to role clarity, team leadership and taking directions from me.
Mr Moran responded by email saying:
let the 3 of us get together on Monday and talk it through. Tim seems to be responsive to that sort of approach historically.
At the end of June 2018, Mr Nuttall received an email from a representative of Hatch’s South African office, seeking to arrange a visit to Australia. On 2 July 2018, a follow up email was sent to Mr Nuttall and this time, also addressed to Mr Wild and Mr Moran. Mr Moran forwarded the email to Mr Wild as a “[g]ood example of Tim not covering things off before disappearing on leave”.
Mr Moran expected Mr Nuttall to be across the details of client projects, including budget, timing and costs issues. Mr Moran made inquiries of Mr Nuttall relating to details of projects which Nuttall considered to be non-urgent but in respect of which Mr Moran required timely responses. Mr Moran considered Mr Nuttall to fail to provide timely responses to his queries.
On 13 July 2018 Mr Nuttall sent an email to himself entitled “Dave Moran”, which was in the following terms:
Notes in response to Dave Moran phone call where he said: “Nathan has been working hard these past months...and so have I (DM), and you have managed to balance your life more and have time off...”
In the past two months I have:
Single handedly written and submitted the vicroads second prequal submission
Took over the entire management of the WRU structures group, drove realistic program to completion with entire team and contractor on board with really minor issues through effective communication
Drove re-structure of WRU management through strategic changes that our entire project team now is content, as well as largely stepping all over the PD to take action where the PO should have been
Undertook the compilation and strategy of the entire structures component on the successful Monash tender
Single handedly tendered and secured the Taylors Road bridge design
Still managed to spend enough time with the staff to retain Steve R and maintain happiness of others
Work with Rob H to complete and review a new ISO9001 QMS with circa 15 new documents
Amongst all other day to day activities with strategic growth, Jeremy/commercials, HPSJV, WGTP, resourcing, Planning BD, LD
But yes you and Nathan have worked hard and I have tried to also balance my family life.
Thank you
Mr Nuttall had a practice of working away from the office, sometimes from home. Mr Moran expected employees of the Infrastructure group to work from the office and attend office meetings in-person. Examples were given of Mr Nuttall failing to return to the office in time for a Regional Infrastructure Leadership Team meeting on 16 July 2018 due to flight delays after working remotely interstate and failing to return to the office when expected due to a “non-pupil day” at school. Mr Moran sent a message to Mr Nuttall at the time stating:
It just doesn’t feel very fair to me Tim. I think it was already really reasonable to let you work remotely last Monday and Friday. And travel should be in your time not the business’s. I’m not happy.
There were also instances of Mr Moran sending messages to Mr Nuttall, enquiring of when Mr Nuttall expected to be in the office.
On 16 July 2018, Mr Nuttall sent another email to himself with the subject line “Fwd: Dave Moran” in which he recorded the above text message from Mr Moran and added the following:
Working from home is just a location. I worked at least [fulltime] if not more those days. Today was an oversight but have been working and by the end of tonight would have produced a finalised [West Gate Tunnel project temporary works] proposal. [Mr Moran’s] approach is totally demoralizing and makes me not want to continue putting in effort totally unrecognised.
Mr Wild requested Mr Nuttall provide him an outline of the key responsibilities of the senior roles under Mr Nuttall, including Mr Nuttall’s own, on at least 20 July, 22 July, 23 July and 25 July 2018.
From mid-2018, Mr Wild was experiencing mental health issues resulting in absences from the office and throughout August 2018 was on extended leave. Mr Nuttall reported directly to Mr Moran during Mr Wild’s absence. Mr Nuttall was unable to respond to questions Mr Moran asked of him in project and leadership team meetings. Mr Nuttall did not consider it to be part of his role to have direct knowledge of the details Mr Moran sought.
Over July and August 2018 one of the projects Mr Nuttall worked on was a tender for a section of the Inland Rail Project in Queensland. Mr Nuttall had concerns about Hatch’s ability to resource a role as lead designer for the tender and had prepared a submission on the basis that instead Hatch would perform a consulting role. Mr Nuttall raised his concerns with Mr Moran. Following discussions he had with the client, Mr Moran agreed that Hatch would be capable of performing the role of lead designer.
On or about 6 August 2018, Mr Moran travelled to China for a week, during which time Mr Nuttall was responsible for creating the final presentation to the client to secure the tender for Hatch as lead designer for the Inland Rail Project. Before Mr Moran left for China Mr Nuttall expressed his concerns about Hatch’s ability to deliver the project should the tender be successful. Mr Moran told Mr Nuttall that he believed Hatch would be able to deliver the project as they would have time to assemble a team should the tender be successful.
On or about 7 August 2018, Mr Nuttall had a discussion with his colleague, Mr D’Cruz. Mr D’Cruz was not part of the same team as Mr Nuttall but was part of another group and was also based in Melbourne. In that discussion Mr Nuttall expressed difficulties he was experiencing with Mr Moran and workload issues resulting from Mr Wild’s absence. Mr Nuttall expressed his disagreement with Mr Moran’s manner for dealing with staffing issues and Mr Moran’s demands on Mr Nuttall to be across the details of client projects. Mr Nuttall considered Mr Moran’s demands in this respect were distracting Mr Nuttall from carrying out the work Mr Nuttall considered he should be performing. Mr Nuttall expressed frustration with Mr Moran’s failure to communicate with him and respond to issues Mr Nuttall considered important. Mr D’Cruz suggested that Mr Nuttall speak with Mr Kwak, the Managing Director for Asia and Australia.
During August 2018, there were issues with one of the projects Hatch was working on, the Western Roads Upgrade. Mr Wild, the leader for that project was on leave and the client communicated with Mr Nuttall.
Mr Nuttall considered Mr Moran’s manner towards him over August and September 2018 to be abrupt, unsupportive and unappreciative. Mr Nuttall had no recollection of Mr Moran ever congratulating or praising him. Mr Nuttall considered Mr Moran’s demands of him to be unreasonable.
Mr Nuttall considered that Mr Moran was issuing instructions to persons reporting to Mr Nuttall without communicating to Mr Nuttall. Mr Nuttall had concerns about the stress levels of some members of his team due to the responsibilities Mr Moran was imposing on them. When Mr Nuttall raised a query with Mr Moran about one of these instances relating to Mr Parsons, Mr Moran responded by email sent on 9 August 2018 stating:
Yes I asked him to cover [Mr Wild] on the JV Committee as most of the issues are commercial in any case. I thought I’d told you, sorry I didn’t.
I have not talked to him about [Mr Wild] beyond what I told the group, however I did ask him to stop sending emails to [Mr Wild] (which I thought should have been obvious).
I thought that he was handling the stress pretty well, but I could see that he was struggling in this morning’s call. I’ll spend some time with him next week. We can bring in help if we have to.
On 14 August 2018 Mr Nuttall received an email invitation to an on-line meeting with Mr Kwak. It was Mr Kwak’s practice to have periodic catch-ups with Hatch employees in different regions. Mr Nuttall was invited to raise any issues in respect of what was happening in his region or other matters he wished to discuss with Mr Kwak.
On 15 August 2018, at a monthly Infrastructure project review meeting relating to projects including the Western Roads Upgrade, Mr Nuttall was asked by Mr Moran to explain the increases in costs to complete the project. Mr Nuttall was unable to provide Mr Moran with the responses Mr Moran was seeking but said he would follow up on the costs issues raised. During the meeting Mr Nuttall also conveyed his belief that Hatch would be paid for an overrun on a different project. That belief turned out to be misplaced.
On 20 August 2018 Mr Nuttall received a message from a Hatch employee, Mr Taylor, telling Mr Nuttall that Mr Taylor was in hospital, having had a nervous breakdown and suffering anxiety. Mr Taylor held the role of Civil Director/Engineering Manager.
On 21 August 2018, Mr Nuttall entered Mr Moran’s office and read him Mr Taylor’s message. In addition to the absences of Mr Wild and Mr Taylor, another Hatch employee (Mr Howard, who held the role of Structures Lead) had been diagnosed with fatigue issues. Mr Nuttall told Mr Moran that there were workplace stress issues in the Melbourne office. Mr Moran did not agree that Mr Wild’s mental health issues were related to his work and considered that a level of stress in the workplace was to be expected. Mr Moran told Mr Nuttall that he considered it unlikely that Mr Taylor had suffered a nervous breakdown but was likely suffering some form of anxiety. Mr Nuttall said to Mr Moran that he was concerned about the demands being placed on employees as the business was expanding rapidly. Mr Moran told Mr Nuttall that he considered Mr Nuttall and Mr Parsons were able to deal with matters.
On 21 August 2018, there was a Regional Infrastructure Leadership Team meeting at which both Mr Moran and Mr Nuttall were present. Mr Nuttall was asked about staff utilisation in relation to a couple of projects. Mr Moran was not satisfied that Mr Nuttall was able to provide a satisfactory explanation. Costs forecast for the Western Roads Upgrade were above previous estimates. Mr Moran considered cost estimating and forecasting to be part of Mr Nuttall’s responsibility. At the meeting, Mr Nuttall was charged with responsibility for reviewing and taking control of the structures completion schedule.
On or about 21 August 2018, Mr Moran asked Mr Nuttall to come into his office and asked about Mr Nuttall’s experience in design management. He told Mr Nuttall that whilst Mr Moran knew Mr Nuttall was good at winning work, he was not sure of Mr Nuttall’s experience in managing the delivery of projects. Mr Nuttall took the question as a criticism and an insult, given Mr Nuttall’s professional experience. Mr Nuttall told Mr Moran that he had extensive design management experience, including on Brisbane Airport Link and other projects he had worked on during his time at Nuttall Engineering Consultants. Mr Moran instructed Mr Nuttall to lead the delivery of the Western Roads Upgrade project as the structure design manager and to be directly involved in the delivery of the project. Mr Nuttall raised his concerns about other issues relating to Hatch’s Infrastructure business, including staffing. Mr Moran instructed Mr Nuttall to focus on delivering the Western Roads Upgrade project.
Mr Nuttall was aware of issues with the Western Roads Upgrade project and had commenced to work on appointing a Structures director.
Mr Moran expressed concern to Mr Nuttall about what he perceived to be his lack of physical presence in the office.
On 22 August 2018 at about 8.19 am Mr Moran began to prepare a note of his thoughts about Mr Nuttall’s performance, particularly following Mr Nuttall’s responses at the Regional Infrastructure Leadership Team meeting the previous day. Mr Moran was preparing the notes with a view to informing a performance management discussion he intended to have with Mr Nuttall.
On 22 August 2018 at approximately 11.54 am, Mr Nuttall attended an on-line meeting with Mr Kwak which lasted about 50 minutes. There was difficulty in the evidence of each of Mr Nuttall and Mr Kwak in relation to the precise content of this discussion. Mr Nuttall’s evidence was coloured by his emotions, and it was difficult to distinguish between his recollection of what was said to him and what he believed or understood to be said. Mr Kwak’s evidence was given in a guarded manner and his recollections were unclear. The conversation occurred some five years ago. I make the following findings based on the balance of probabilities and the brief contemporaneous notes made by Mr Kwak.
Mr Nuttall told Mr Kwak that the business was succeeding but with Mr Wild away, Mr Nuttall was experiencing difficulties with Mr Moran. Mr Nuttall told Mr Kwak that members of Mr Nuttall’s team were suffering from stress related mental health issues. Mr Nuttall told Mr Kwak of the absences of Mr Wild and Mr Taylor due to anxiety issues and that he was struggling with Mr Moran’s management style. Mr Nuttall was struggling to meet Mr Moran’s demands (which Mr Nuttall considered to be task-driven and focussed on project details and unreasonable) while also performing the work that Mr Nuttall considered important.
Mr Nuttall said to Mr Kwak that Mr Moran was not communicating clearly and did not discuss matters with Mr Nuttall before making decisions that Mr Nuttall considered affected his work, in particular Mr Moran’s willingness to tender for the Inland Rail Project on the basis that Hatch would perform the lead design role. Mr Nuttall expressed concern to Mr Kwak that Mr Moran’s approach to this project was not consistent with the business plan for the Infrastructure group.
Mr Nuttall also expressed difficulties he was experiencing with other projects, including the Western Roads Upgrade project and West Gate Tunnel project because of difficulties Mr Nuttall saw in the way in which Hatch’s joint venture partner in those projects was performing its role.
Mr Nuttall also expressed concern that Mr Moran was working on his own organisation chart for the Southern region notwithstanding that Mr Nuttall and Mr Wild had spent significant time on creating such a chart. Mr Nuttall told Mr Kwak that Mr Moran had made a decision to hire someone Mr Nuttall had interviewed at Mr Moran’s request and had told Mr Moran was not appropriate for the role.
Along with other staff at Hatch, Mr Nuttall was working long hours. Mr Nuttall told Mr Kwak of his concerns about staff well-being and the workplace environment.
Mr Kwak told Mr Nuttall that he would look into the issues raised and that he understood that it could be difficult to discuss issues with Mr Moran. Mr Kwak said to Mr Nuttall that Mr Moran had come from a contracting background and he tended to have a different approach to someone from a consulting background. Mr Kwak’s notes of the 22 August 2018 catch-up record (emphasis added):
Tim struggling with David M- comms, task driver, project focus, needs alignment - investigate
Mr Nuttall was under the impression that he would be left to perform his own role in the way he considered appropriate.
On 23 August 2018, Mr Nuttall unexpectedly encountered Mr Wild in the street. Mr Wild was still on sick leave. Mr Wild told Mr Nuttall that he was feeling well, that he had established a routine that was working for him and was looking forward to returning to work. I accept Mr Nuttall’s evidence that Mr Nuttall told Mr Wild that he was looking forward to Mr Wild’s return and that matters had been difficult in his absence.
On 24 August 2018 Mr Nuttall’s partner was required to urgently fly to Portugal as her grandmother, with whom Mr Nuttall’s partner had a close relationship, had taken ill. Mr Nuttall was left to care for his two school-aged children. Mr Nuttall contacted Mr Moran on 23 August when he learned of his partner’s need to go and informed Mr Moran that he would need to work flexibly in the office for the following week to enable him to perform the school drop-off and pick-up but would work from home in the evenings. Mr Moran did not comment beyond remarking that he thought Mr Nuttall usually dropped his children off at school in the mornings.
Mr Kwak was concerned about the dynamics in Mr Moran’s team. On 24 August 2018, Mr Kwak spoke to Mr Moran in order to gain a better understanding of the working relationship between Mr Moran and Mr Nuttall. Mr Kwak asked Mr Moran how things were doing. Mr Moran told Mr Kwak about operational issues relating to projects for which Mr Nuttall was responsible and he was not happy with Mr Nuttall’s performance in respect of those projects. Mr Moran expressed frustration to Mr Kwak about Mr Nuttall’s absences from the office. Mr Nuttall’s strength was in business development but he was weak in project delivery. Mr Moran told Mr Kwak that Hatch was facing material write-offs in relation to some of the projects. Mr Moran raised the prospect of repositioning Mr Nuttall to improve his skills in project delivery. I accept Mr Kwak’s evidence that he did not tell Mr Moran the specifics of the matters raised by Mr Nuttall and that Mr Kwak did not revert to Mr Nuttall with a report of the things Mr Moran had said to him about Mr Nuttall.
On 28 August 2018, Mr Moran finalised the note he had commenced to draft on 22 August. That note was finalised in the following terms:
It was apparent to me from the Project reviews on 15th August and the RILT meeting on the 21st August that Tim was: -
1.Not on top of the detail of the majority of the Southern Region projects. This includes status of contracts, financial (revenue and cost) performance etc,
2. Not across detail of utilisation of many of the staff,
3. Was over optimistic about the likely project outcomes and defensive of the obviously poor performance of the structures team,
4. Displays of lack of ownership of issues [sic]. Blames JV partners or Project Managers under his control. Displays surprise at bad news.
…
Evidence of poor internal performance is incompetent design of the Airport gantries for Civilex and subsequent $150k write-down, reputational damage and exposure to delay damages. The need for large provisions on WGT, WRU.
Had no idea on the status of Taylor’s Road bridge.
Possible reasons for Tim’s performance are: -
1.An over reliance on subordinates and on Jeremy Parsons. Huw Taylor on leave for three weeks and Rob Howard sick from 14th to 17th August. Tim clearly did not cover these absences directly.
2.Spending inadequate time in the office to get across the detail. Estimated time in office <20 hours per week. Starts 9.30 to 10am and leaves 4.30 to 5.00pm each day. Often out of office inside those hours.
3.Possibly operating above capability level. Either overwhelmed or incapable of getting accurate forecasts from Project Managers. Appears to be unable or unwilling to self-perform these tasks. Is possible that career to date included insufficient direct commercial management of projects.
4.Has a tendency to be biased towards optimism. This is a strength in winning work but very dangerous in the delivery of work as real issues can be masked until it is too late to meaningfully intervene.
5.Optimism [bias] means that poor internal performance is not adequately managed.
On top of this need to cover the issue of not responding to texts and emails etc. Just look at DM’s texts to Tim and the lack of responses as evidence.
Some time after preparing the note, Mr Moran had a discussion with each of Mr Kwak and Mr Schatz in which Mr Moran expressed his intention of repositioning Mr Nuttall into the role of Structures Team Lead.
On 31 August 2018, shortly before 7.00 am, Mr Moran sent Mr Nuttall and others an email in which he proposed that the Infrastructure team work 12-hour days through September with some critical functions also working Saturdays in order to deliver the Western Roads Upgrade project. Mr Moran proposed that staff would receive time off in lieu after the completion of the project and “perhaps some sort of reward”. In that email Mr Moran said he expected “the leadership should make similar commitments” and that he was “personally willing to do whatever is necessary”. Mr Nuttall responded by email in the following terms:
I think our biggest risk is [attrition]. If we lose any more key people we will guarantee failure to meet program. I [don’t] support this.
I believe that we manage the program tightly and request the guys to put in extra effort to meet the program as required. We should decide how we incentivise this.
Two weeks ago Hui had to work through until 3am to deliver a package with others from the Hatch team. He resigned the following [M]onday…The biggest risk to the [project is] losing any more key people.
Mr Moran’s proposal did not proceed.
Towards the end of August 2018, Mr Moran engaged in discussions with Mr Wild about Mr Wild’s return to work.
On the afternoon of 3 September 2018, Mr Wild returned to work. Mr Wild asked Mr Nuttall about Mr Moran. Mr Nuttall told Mr Wild that Mr Moran was trying to control everything, including by increasing the number of roles that reported directly to him and making decisions without consultation. Mr Nuttall told Mr Wild that Mr Moran’s approach was making things difficult and causing Mr Nuttall stress. Mr Nuttall told Mr Wild that he felt Mr Moran did not think highly of him and made him feel he was underperforming. Mr Nuttall told Mr Wild that he considered Mr Moran made excessive demands for the completion of unnecessary tasks. Mr Nuttall understood that Mr Wild had similar experiences with Mr Moran setting expectations that could not be met. Mr Nuttall told Mr Wild he was pleased Mr Wild was back and that he would look to Mr Wild for support.
On the afternoon of 3 September 2018, Mr Moran had a discussion with Mr Wild. Mr Moran informed Mr Wild of a change Mr Moran proposed making to Mr Nuttall’s role and that Mr Wild would be stepping into that role.
Mr Nuttall was aware Mr Moran met with Mr Wild some time after Mr Wild returned to the office prior to the 4 September Meeting.
At 10 am on 4 September 2018, Mr Nuttall and the leadership team had a meeting with Mr Moran. This meeting was in accordance with usual weekly practice. At the conclusion of that meeting Mr Moran said to Mr Nuttall that they should “catch-up” together with Mr Wild that afternoon. Mr Nuttall thereafter sent an email invitation to Mr Wild and Mr Moran with a description “catch-up”.
At about 2 pm on 4 September 2018, Mr Nuttall met with Mr Wild and Mr Moran in a meeting room. Although their perspectives not surprisingly differed, the recollections of Mr Moran and Mr Nuttall about the principal matters discussed at that meeting were broadly consistent.
After the meeting concluded and Mr Moran and Mr Wild had left the room, Mr Nuttall remained in the room and made notes of the meeting. The notes record Mr Nuttall’s feelings and perspective of the meeting. Given the importance of the 4 September Meeting to Mr Nuttall’s claim, the contents of the notes are set out below:
DM [David Moran], NW [Nathan Wild] and TN [Tim Nuttall] catch-up 4th Sept 2018.
DM not happy about operations and he is losing sleep.
DM blames me as responsible for WRU [Western Roads Upgrade] and every project. DM very abrupt that I am accountable and not doing my job, that I am not capable of role and not fulfilling role and that he questions my capability overall to do role.
Says [T]im responsible for everything. My fault. Must be accountable for everything and everything going badly.
In charge but not accountable – DM says about me.
[DM] says that [I’m] over positive then he finds out facts afterwards and things are bad. DM failed to give any example of this where I requested three or more times for an example stating that his comments were unfair and unjustified.
I request specific examples and DM repeats WRU and airport. Both of which have exceptional circumstances and reasons. NW present and he reinforces that WRU was not Tim[‘]s fault. NW was appointed as the lead for Hatch on the project but sits quietly while DM blames fault all on TN.
In fact WRU had M Rutter as [Project Director] and NW as the lead for Hatch but apparently DM thinks its all TN accountability.
Two weeks ago DM addressed the team stating that it was outstanding that our infrastructure business had made a profit in its first year (circa 800k – 1m) and that normally it would take 3 years to commence making a profit.
I ask for specific examples where I have been over positive and actual scenario is bad, and DM has none. I reinforce that I was negative on WRU, but that no matter how much action we took to PD, PM and NW as the Hatch rep, they either didn’t respond or simply didn’t act. Tim[‘]s hands were tied as D[M] trying to buy P&S and wanting the relationship. TN was forced into this from DM as this was DM[‘]s initiative to buy P&S. When TN told JB that he didn’t think they were a good fit for Hatch I think this negatively affected DM[‘]s opinion of TN.
DM clearly made it clear that he doesn’t think I am capable of the role I am in, that he has decided to demote me to structures lead and NW put in my current role. DM made it clear that he doesn’t think I am [up] to the role, again I requested specific examples which he refused to give, by saying, I think that I have already given you them.
Constructive firing based on my conversation with Jan.( It was two days after my discussion with Jan that D[M] [brought] me in to his office to talk derogatively at me [asking] what my problem is with stepping down to design manage and whether I had any design management experience. This was bullying and putting me down.)
My feedback to DM was that I don’t agree with him, he is being unfair to me in his negative judgement, that the business is having immense success in hiring, securing of projects, [the] fact no-one has resigned and that the small projects have an overall write up as in super-profit. Again DM. The major projects going over budget have real reasons and I was doing what was in my power to amend these.
When I gave my honest opinion DM said “I don’t want to make this a formal performance review issue” and reclarified that he thinks he is right and that I don’t accept it and that’s that. This was a threat that should I disagree with Dave then he will make this a formal performance record and instigate a warning process. A threat to fire me basically if I continue to discuss calmly where the examples to substantiate what DM says are. I was calm throughout and simply requested examples which he avoided and then came with this threat.
I made it clear that I do not agree with DM[’]s view, that I understand he has a strong view that he will not change.
DM reinforced that he is taking charge of org chart, implementing that I am structures lead now, and he will send that out today and he is implementing it regardless of if I agree. He also wanted to make it clear, which I already understood, that I had no necessary progression back to the role as infrastructure director and that this demotion was permanent unless proven that I could step up into my current role.
So D[M] was telling me that today he was going to show all of my employees that I was being demoted formally to the structures lead role, a role I was doing 8 years ago and had progressed over 6 years ago effectively into the current role I am in when I was at KBR (where I reported directly to the Asia Pacific Director Infrastructure – same title as Dave)
The facts are that under my leadership we have grown the team to circa 53 people, an order book of over 10m per annum and are making a profit. There have been some glitches but not actual financial losses. We have had no resignations and I achieved ISO9001 QMS certification last month, again way ahead of schedule. I said this to Dave that he was ignoring all the incredible work I had [done] and achieved and that he was announcing to the team only in the last two weeks about my success.
At the end Nathan said that if we don’t buy Lyndsay Dynan then he will need to leave as there is no justification for Hatch to require all Dave, Nathan and I. – Clearly given my demotion this really means that I need to go and am not required.
After the meeting, Mr Nuttall felt a state of shock and anxiety at a level he had not experienced before. Mr Nuttall left the office building and called a lawyer.
On 6 September 2018, Mr Nuttall received a copy of the notes Mr Moran prepared of the meeting of 4 September 2018 by email from Mr Moran entitled “Nuttall Performance Discussion”. Mr Moran’s notes reflect Mr Moran’s perspective on the messages he sought to convey at the meeting and were largely based on the note he prepared for himself on 28 August 2018. Mr Moran’s notes of the meeting of September were in the following terms:
Notes on the discussion between Tim Nuttall, Nathan Wild and David Moran at 1pm 4th September 2018.
David expressed concern that in the Project reviews on 15th August and the RILT meeting on the 21st August and recent discussions generally that Tim was: -
1.Not on top of the detail of the Southern Region projects. This includes status of contracts, financial (revenue and cost) performance etc,
2.Not across detail of utilisation of many of the staff,
3.Was over optimistic about the likely project outcomes and defensive of apparent poor performance of the structures team,
4.Displayed of lack of ownership of issues [sic]. Blames JV partners or Project Managers under his control. Displayed surprise at bad news.
For example, on WRU, the latest detailed forecast on time and cost to complete was substantially [worse] than previous estimates. Tim acknowledge[d] that it was probably correct although a bit conservative, but was not across the detail. Tim could not explain the reasons for the delayed completion, but advised that he would review. Did not present confidence that current program could be met.
Not across the reasons for the poor internal performance and apparent incompetent design of the Airport gantries for Civilex and subsequent $150k write-down, reputational damage and exposure to delay damages.
David noted that we were now looking at write downs on WRU, WGT, Portsea and Airport Gantries.
Tim was not aware of the status of Taylor’s Road bridge and advised that he would have to check with Rob Howard.
David suggested possible reasons for Tim’s performance were: -
1.An over reliance on subordinates and on Jeremy Parsons. Huw Taylor on leave for three weeks and Rob Howard sick from 14th to 17th August. However, Tim clearly did not cover these absences directly.
2.Spending inadequate time in the office to get across the detail.
3.Possibly operating above capability level. Either overwhelmed or incapable of getting accurate forecasts from Project Managers. Appears to be unable or unwilling to self-perform these tasks.
4.Has a tendency to be biased towards optimism. David noted that this is a strength in winning work but can be dangerous in the delivery of work as real issues can be masked until it is too late to meaningfully intervene. David believe[s] that this over optimistic view had contributed to the current projected write-downs on projects.
On top of this David noted the issue of Tim not responding to texts and emails from David in an adequate timeframe or not at all which was unacceptable at this level of management.
Tim did not accept that these allegations of poor performance were true. Tim said that he was aware of issues and that he was progressively getting on top of them. Tim advised that all of the things raised by David were symptoms of the rapid growth of the business and the associated lack of systems, project reporting etc. Tim also said that he had been distracted from doing his job by David asking him to assist with things outside of Southern Region such as Lindsay Dynan and the Acciona submission for the Inland Rail PPP.
David did not accept Tim’s reasons as an adequate excuse for the four performance issues raise[d].
David advised that he was restructuring the business to move Tim in the role of structures lead for southern region and moving Nathan into the role of Southern Region Manager. These changes in positions were to get the management closer to the delivery teams so that issues in the business could be resolved. David noted that Tim should look at this as an opportunity to improve. David advise[d] that this change would be communicated as being temporary and subject to improvement Tim would be reinstated to the role of Southern Region Manager. David noted that Tim would be provided with coaching and mentoring to assist with this. Work would also be undertaken to make expectations of each role much clearer.
The following findings concerning the 4 September Meeting are made on the balance of probabilities having regard to the evidence in its totality. In this respect, I find that neither Mr Nuttall’s note nor Mr Moran’s note conveyed the terms of what was said in the meeting. Rather the notes largely reflect Mr Nuttall’s feelings in response to what he thought he had heard and Mr Moran’s intentions of what he wanted to convey.
Mr Moran commenced the meeting by expressing his dissatisfaction with the way in which the business was operating. Mr Moran told Mr Nuttall that Mr Nuttall was responsible for the performance of the Southern Region and that many of the projects were not progressing well. Mr Nuttall tried to draw Mr Moran’s attention to the achievements of the business, including its recruitment and retention of staff, its success in securing projects and its profitability. Mr Moran told Mr Nuttall that he was overly positive and there were problems that needed to be addressed. Mr Moran mentioned problems with the Western Roads Upgrade project and the Airport project.
Mr Wild and Mr Nuttall tried to explain that the issues relating to the Western Roads Upgrade project were not of Mr Nuttall’s making.
Mr Moran expressed reservations about Mr Nuttall’s capacity to perform the role of Manager Infrastructure – Southern Region. Mr Moran was making a change to the organisational structure by putting Mr Nuttall as Structures Team Lead and giving Mr Wild responsibility as Manager Infrastructure – Southern Region. The responsibilities of a Structures Team Lead were different from those of the Southern Region Manager.
If I am wrong, for the reasons set out at [146] above, I am satisfied that the adverse action taken in the form of restructuring Mr Nuttall’s position and announcing that restructure during and after the meeting of 4 September 2018 aggravated Mr Nuttall’s psychiatric condition to the point where Mr Nuttall could no longer cope or attend work at Hatch. I accept that the existence of Mr Nuttall’s condition was caused by a number of stress factors that Mr Nuttall experienced in 2017 after he sold his business to Hatch and after he changed his work role to become an employee of Hatch, his fixation with the 4 September Meeting and complex issues in his personal life. However, what caused Mr Nuttall to cease to be able to perform his employment duties was the aggravation of that existing condition which occurred as a result of the 4 September 2018 Meeting.
Mr Moran’s own evidence was that he had been planning since 22 August 2018 to have a performance management discussion with Mr Nuttall. That was the purpose and intent of the 4 September Meeting. When Mr Moran asked Mr Nuttall to arrange a meeting for 4 September 2018, he did not tell Mr Nuttall of the nature of the meeting. The psychiatric evidence was that because Mr Nuttall was not prepared for the discussion as it eventuated, Mr Nuttall felt he was ambushed and it impeded Mr Nuttall’s ability to deal with the meeting. That sense of ambush contributed to the deterioration in Mr Nuttall’s psychiatric condition.
Mr Nuttall has since 20 September 2018 not earned wages by performing services for Hatch. The extent to which Mr Nuttall may have been able to make a claim under income protection insurance was not explored in evidence.
I do not accept Hatch’s submission that Mr Nuttall may have mitigated his loss had he agreed to take anti-depressant or anti-anxiety medication. The psychiatric evidence, which I accept, was that Mr Nuttall suffers from a mood disorder which in the absence of any medication, has persisted and therefore has become entrenched, or harder to shift. The mood disorder means that Mr Nuttall’s sense of well-being does not improve by being away from Hatch. The psychiatric evidence was that medication is available that:
corrects that imbalance, and then the person’s cognition may become more positive, and they can problem solve ..... negative cognitions, you have work problems ..... problems here, but he’s – he’s not able to solve them. The antidepressant is not going to solve their life problems. It’s not going to solve his relationship problem, nor it is it going to solve his financial problem, but it will put him in a better frame of mind to think positively and look at problem solving his problems.
However, the psychiatric evidence was also that counselling and medication would not be sufficient to overcome a breakdown in Mr Nuttall’s employment relationship with Hatch. Medication was not going to address the sense of mistrust between Mr Nuttall and Hatch in a way that would have enabled Mr Nuttall to return to work at Hatch.
Mr Nuttall was reluctant to take such forms of medication because of concerns he had about side-effects. He had seen his ex-wife suffer from side-effects from similar forms of medication. The psychiatric evidence was that such medication can have material side-effects. Mr Nuttall was not acting irrationally in his reluctance to take such medication.
I find that Mr Nuttall’s refusal to take medication was not a cause of his loss.
PART 4: THE SHAREHOLDER AGREEMENT CLAIM AND CROSS-CLAIM
4.1 Mr Nuttall’s Claim in respect of the Shareholder Agreement
Mr Nuttall claims that the purported exercise of the call option by Motus was a breach of cl 5(d) of the shareholder agreement because no Option Event had occurred as at 6 September 2019 when the option was purportedly exercised. Mr Nuttall contends that as at 6 September 2019 he had not been absent from active employment for a continuous period of 12 months or for more than 14 months in a 24-month period; rather, Mr Nuttall had been on extended unpaid leave.
4.2 The Cross-Claim
Mr Nuttall retains the share certificate for his shareholding in Hatchcos Holdings. By cross‑claim, Motus seeks specific performance of the shareholder agreement and in particular, the return of the share certificate. Alternatively, it was claimed that if the Exercise Notice was not valid, Mr Nuttall ought to be ordered to repay the sum of $1,475,000 he had received.
By the time of the hearing, Mr Nuttall accepted that if his contentions as to breach of the shareholder agreement were accepted, he would be obliged to refund the amount paid to him as the purchase price of the shares.
4.3 Had an Option Event occurred?
The crux of the issue in relation to the shareholder agreement is whether, as at 6 September 2019, an Option Event had occurred. The Option Event relied upon by Motus was that provided for in cl 1(i)(iv), namely that Mr Nuttall had been absent from active employment for a continuous period of 12 months or more or for an aggregate period of 14 months or more in any 24-month period.
It is not contended that Mr Nuttall was absent from active employment for an aggregate period of 24 months or more in any 24-month period. The issue is whether as at 6 September 2019 Mr Nuttall had been absent from “active employment” for a continuous period of 12 months or more. Mr Nuttall contends that he was not so absent because he had been on paid sick leave for the period at least from 5 September to 9 September 2018 and thereafter has been on approved leave. Under the FW Act, Mr Nuttall had a statutory entitlement to a period of paid personal/carer leave. By reason of s 22 of the FW Act, the period of paid personal leave was “a period of service” by Mr Nuttall with Hatch. It followed, says Mr Nuttall, that he was not absent from active employment whilst on paid personal leave.
Mr Nuttall further submitted that a period of authorised leave did not result in Mr Nuttall being “absent from active employment”. Clause 1(i)(iv) should be interpreted as not applying to periods of authorised leave as “leave of absences” were the subject of cl 1(i)(v). Hatch could not rely upon cl 1(i)(v) because as at 6 September 2019 Mr Nuttall’s leave of absence had included a period of leave to which Mr Nuttall was entitled by law (being his period of paid personal leave).
I do not consider that the term “active employment” necessarily bears the same meaning as “period of service” in s 22 of the FW Act. I accept that Mr Nuttall remains employed by Hatch and that he has been continuously employed by Hatch. However, the issue is whether he has been “actively employed” as that term is to be construed in the context of the shareholder agreement as a whole.
Interpreting cl 1(i)(iv) in the context of the shareholder agreement as a whole, I consider that the term “absent from active employment” applies to a period during which the employee is on any leave, whether approved or otherwise. So much is apparent from cl 1(i)(vii). A period of absence from active employment is a period during which an employee is not actively performing employment services. An absence from active employment conveys a state from which an employee might “return”. It is not synonymous with a state of being employed.
In the context of cl 1(i)(iv), “absent from active employment” does not require that an employee be on unauthorised leave. It makes no commercial sense for an employee to be granted an option to trigger an Option Event (noting that cl 1(i)(iv) can be triggered “at the option of either party”) when on unauthorised leave. Clause (1)(i)(v) does not require that cl 1(i)(iv) be construed as requiring that an employee be on unauthorised leave. The scope of cl (1)(i)(v) is different from cl 1(i)(iv) because cl (1)(i)(v) contains no requirement for a continuous period or for an examination of any 24-month period. Furthermore, unlike cl 1(i)(v), there is no carve out in cl 1(i)(iv) for leave to which an employee is entitled by law.
The recitals to the shareholder agreement provide:
WHEREAS the Shareholder is the owner of shares in Hatchcos Holdings and may acquire additional shares in Hatchcos Holdings;
AND WHEREAS the Shareholder is one of the principal shareholders of Hatchcos Holdings and, as an Employee, is engaged in performing valuable engineering and consulting services for Hatchcos Holdings or one of the corporations associated with Hatchcos;
AND WHEREAS the parties hereto deem that it is in the interests of Hatchcos Holdings and its shareholders and corporations associated with Hatchcos that shares of Hatchcos Holdings to be held by the Shareholder shall be held subject to and in accordance with the provisions of this Agreement;
I am satisfied that as at 6 September 2019 an Option Event had occurred. As is apparent from the recitals, Mr Nuttall’s shareholding in Hatchcos Holdings was provided to him in a context of him being engaged to perform valuable services to corporations associated with Hatchcos Holdings. Mr Nuttall had been unable to attend work or perform active employment duties for a continuous period of 12 months. In accordance with the contract, Mr Nuttall was taken to have been given notice on the third next business day following the date on which the notice was mailed by prepaid registered mail. Motus is entitled to the order for specific performance requiring Mr Nuttall to deliver the share certificates for the Hatchcos Holdings shares. Damages are not an adequate remedy. Mr Nuttall has been removed from the list of registered shareholders. Mr Nuttall is not entitled to retain the share certificate to shares in an unlisted company that he was contractually obliged to sell and for which he has been paid.
I appreciate that the outcome appears to Mr Nuttall to be unfair. He had sold his business to Hatch, a business he had built by his own endeavours. He was in a colloquial (not psychiatric sense) traumatised by the meeting of 4 September 2018. Barely 12 months later he has shares that were issued to him in consideration for the sale of his business compulsorily acquired. The psychiatric evidence before the Court was that Mr Nuttall continues to suffer because he cannot move on. None of these matters, however, are relevant to the construction of the shareholder agreement.
DISPOSITION
A large part of the issues between Mr Nuttall and Hatch arose from a misalignment of expectations and poor communication. The evidence demonstrates a discordant workplace with high levels of stress. At the relevant times, Mr Moran’s strengths were in technical and financial performance management rather than people management. Mr Nuttall’s strengths were in people and relationship management. Instead of complementing each other, their differences resulted in a breakdown in their working relationship, with frustration on both sides.
From Mr Nuttall’s perspective, the results have been emotionally devastating. The business he established has been subsumed into an organization in which he no longer participates. He has been left in emotional and psychological pain and continues to struggle to move on with his life. He feels he has been treated unfairly and unjustly.
Whether Mr Nuttall was dealt with fairly by Mr Moran is not a question that is required to be resolved in these proceedings. Adverse action is not a statutory claim for unfair treatment. Its parameters are statutorily defined and this case does not sit within those statutory confines.
Mr Nuttall’s application is dismissed. The cross-claim is allowed and an order is to be made for specific performance requiring Mr Nuttall to deliver the share certificates for the shares the subject of the Exercise Notice to Hatchcos Holdings Share Registry Office.
I certify that the preceding two hundred and fifty-eight (258) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hespe. Associate:
Dated: 9 April 2024
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